By the time you read this, you will be inundated with federal election advertisements on television and pop-up ads on your favourite websites. The advertisements have been made by people who want you to decide who you think is honest, who is most like you, and even with whom you would most like to have a beer. But these are entirely unrelated to the real issues facing the Canadian mining community and the country today.
The real issues include: What will the next generation do for a living in Canada? Where we will sell what we make? Can we generate enough surplus wealth to provide for all Canadians?
How should we spend that surplus? This is the ‘vision thing’ that has been largely absent from our politics for a generation.
Without vision, we end up with political platforms that do not speak to the concerns of how to live, work, and raise a family – the kinds of things the mining economy supports in communities across the country. Vision means finding new systems to generate the ideas with substance that will allow people to see solutions to the real and complex problems that we face.
You might legitimately ask: How can the law help? How can the mining industry lead the way?
The regulatory environment impacts productivity
Productivity in Canada is a real problem. It is impacting national prosperity and our ability to fund priorities, such as maintaining our health care system. While the average annual growth rate of labour productivity has been declining in a number of countries, our relative decline against the U.S. is most alarming. By 2012, the Canada-U.S. productivity gap was 24% with private sector productivity trailing that of the U.S. by 30%.
The regulatory environment is one factor impacting productivity. The president of Japan Canada Oil Sands Ltd. said this in so many words last month. Satoshi Abe told the Canadian Press: “I think Canada itself creates significant barriers to new investment,” and that to become more attractive to additional investment, Canada needs “more certainty around its regulatory processes, which we are clearly lacking.” So, how do we talk about this big issue of productivity in mining?
The best example I have seen is in Australia, where the Productivity Commission within the Treasury Department exists to undertake research at the request of the government. It does so on a variety of topics with a scope that covers all manner of industries. We have similar undertakings from time to time, but our efforts are more ad hoc against the scope and profile of the Productivity Commission.
In Australia, the government just asked the Productivity Commission to study regulations affecting business investment in the resources sector. The report, due in March 2020, will be the source of policy options for a country choosing to compete in the world. The mining sector greeted the review with enthusiasm as an opportunity to compete for investor dollars, retain effective oversight and risk based regulation while cutting unnecessary and duplicative regulations.
A similar initiative here would be a good start.
A commitment to critical infrastructure
Infrastructure is a continuing challenge to development opportunities in mining and other industries.
Our industry associations raise it with the government regularly. The PDAC highlights some of the challenges of underserved environments. Capital costs can run up to 2.5 times higher for producing mines in remote locations, and operating costs 60% higher. Exploration projects more than 50 km away from a supply route suffer similar multiplication of costs.
The Quebec government started to wrestle with infrastructure needs through Plan Nord. The federal government proposes to join this effort through the Infrastructure Bank. Industry needs government to move from announcements to projects to encourage development.
Developments are on hold. Despite almost 200 discoveries in the three territories, by territory 69-85% of these remain undeveloped. If the government is worried about the crisis in remote communities, these projects hold the keys to life-changing employment opportunities for people there. In many cases, infrastructure will make the difference for these projects.
When they arrive on your doorstep this fall, I hope you will ask candidates what they plan to do to after the election to make infrastructure a priority in regulation, law and policy.
Our mining sector deserves attention to help generate the tools to make more golden eggs, instead of just enjoying splitting the eggs up in a cloud of rhetoric which is unseemly to both egg and goose.
SANDER GRIEVE is a partner, head of mining, and co-head of the corporate department at Bennett Jones in Toronto.