By: Premier John Hamm
Rarely in life and rarely in government can we say with certainty, “We have seen the future.” But if New Brunswick’s request to restrict natural-gas exports is accepted (as Premier Bernard Lord urged in these pages on Monday), Nova Scotia’s future bears a striking resemblance to Alberta’s past.
The National Energy Program imposed on Alberta 20 years ago is the most cogent example of energy markets being severely harmed by political interference. In Halifax last June, Premier Ralph Klein told business leaders that Alberta “worked hard to build a strong and stable regulatory environment that attracted investment and created benefits for the province.” Then the road to prosperity took a wrong turn. “In the early 1980s,” he said, “the Alberta economy nose-dived thanks in no small part to the [federal] government’s National Energy Program, which drained 50,000 jobs and $100-billion in revenue out of the province.”
After two decades, Albertans have not forgotten the many people who lost their homes, their businesses and their dreams. The rationale and rhetoric of the old National Energy Program are being echoed on the East Coast today.
In a case currently before the National Energy Board, New Brunswick is asking that all future exports of Nova Scotia’s natural gas be allowed to reach markets in the United States only “after Canadian needs have been assessed and met.”
Countering such nationalistic hyperbole with calm reason — the benefits for everyone, including New Brunswick, of open energy markets and long-term growth — is a challenge. But it is the right position, because a wrong turn like another National Energy Program will have equally disastrous results in Atlantic Canada.
An analogy may help illustrate what is at stake. Brian Crowley, president of Atlantic Institute of Market Studies, recently made this comparison: Suppose we were talking about cars instead of gas. New Brunswick would be proposing that multinational car companies stop exporting Canadian-built cars to the United States when there are Canadians without cars. Car exports would cease and desist until Canadian demand has been “assessed and met.”
The price of cars would naturally fall until the existing stock was sold off. Then we would see the end of Canada as a major car manufacturer, not to mention exporter. Refusing exports in case Canadians might want to buy the gas sounds noble, but it carries a heavy price. Already, the threat of proposed regulations has put Nova Scotia’s second major gas development in jeopardy.
On Tuesday, Calgary-based EnCana Corp. said it would put a hold on its $1.1-billion Deep Panuke project offshore Nova Scotia if the NEB decides to restrict the company’s unfettered access to vital markets, including the U.S. northeast. And others will follow, opting instead to drill in the North Sea, the Gulf of Mexico, or West Africa, where larger markets guarantee better returns and a safer environment for an industry subject to great uncertainties.
A future without these investments means Nova Scotia’s gas will stay buried deep under the ocean floor and no one will benefit, including New Brunswickers. Nova Scotia has built a strong and stable regulatory environment that benefits the province, the region and the country while also attracting investment. But although more than $4.5-billion has been spent in offshore activities over the past decade or so, a recent Conference Board of Canada study commissioned by the Greater Halifax Partnership shows a further $50-billion is needed over the next 18 years to fully realize the benefits of the industry.
If the NEB hangs out the Not Welcome sign for these indispensable investments, New Brunswick’s claim that gas supplies are insufficient to support economic development, while untrue today, would quickly become a self-fulfilling prophecy.
In reality, Nova Scotia and New Brunswick today share almost equally in more than 30 per cent of gas flowing from the Sable Offshore Energy Project. Half of New Brunswickers can now get gas into their homes or businesses by picking up the phone. Yet after nearly two years, fewer than 400 have made the call and received the gas. The result is a surplus of gas in New Brunswick — which is being exported to the United States.
If New Brunswick’s NEB application is accepted, it would prevent New Brunswick gas buyers from securing the kind of short-term export contracts they need to effectively manage the risk they took when they made their long-term commitments.
In her book The March of Folly: From Troy to Vietnam,Pulitzer Prize-winning historian Barbara Tuchman examined the great mistakes of history. She defined folly as “the pursuit by governments of policies contrary to their own interests.” There is no folly greater than the New Brunswick government proposing protectionist policies that would harm its own province. Our reputation as a stable and sound place for major energy and other investments would be irreparably harmed, and for no real benefit.
New Brunswick claims its application to the NEB is a test of our priorities as a country. The reality is less provocative, but more substantive: New Brunswick’s application to the NEB is a test of our reputation as a nation.
John Hamm is Premier of Nova Scotia.