November 15, 1982 (32nd Parliament, 1st Session)


Alastair William Gillespie

The Hon. Alastair Gillespie moved

on to his reward as the Minister of Energy, Mines and Resources. The gurus in the Prime Minister's office and the Privy Council office, finding that this sectorial strategy would not work, decided that it must be a structural problem; it cannot be the fault of the Liberal Party. Therefore, they created the Economic Development Board and the position of Minister of State for Economic Development. The present occupant of that post is in the House today. Since the creation of that position, which was the new answer to our lack of industrial or economic strategy, absolutely nothing of value has been produced to this time.
However, over at the Department of Energy, Mines and Resources, Alastair Gillespie discovered the Holy Grail. He found an industrial strategy, one based on megaprojects. I recall the First Ministers' meeting of 1978 when he proudly produced that list of 40, 60 or 120 projects. It was a magnificent list. What it was, though, was a list of every project that was planned, considered or even dreamed of by every business, government, entrepreneur and wishful thinker in the country. It was mostly pure fiction. There was one part which was real. That was the megaprojects dealing with energy development, particularly oil and gas development.
With the election of a Progressive Conservative Government in 1979 these megaprojects got under way. Work had activly begun and there was even a great shortage of engineers because of the work and planning that was going into these megaprojects. Some of those projects are mentioned on page 94 of the National Energy Program. They include the Suncor expansion, the Syncrude expansion, the Cold Lake project, the Alsands project, the Canwest project, the Saskatchewan heavy oil tertiary project, the Judy Creek light oil tertiary project,
and Hibernia. It is an impressive list. Each project was actively being pursued in 1979 and work was under way in 1980.
Before I deal with what happened to those projects I would also like to mention some gas-based projects which collectively represent megaprojects in that field. They are an ethylene plant by Alberta Gas Ethylene; an ethylene plant by Esso, Alberta Energy and Hudson's Bay Oil and Gas; a polyethylene plant by CIL and Trimac; a polyethylene plant by DuPont and Alberta Energy Company; a benzene plant by Esso and Alberta Energy; a styrene plant by Esso and Alberta Energy; an acetic acid plant by Celanese Canada; a vinyl acetate plant by Celanese Canada; an MTBE plant by Alberta Natural Gas; two Dow Chemical plants at Fort Saskatchewan; and an Alberta Gas chemicals methanol plant. They number 12 in all.
What is interesting about those oil and gas projects is that every single one has gone down the tube. The energy projects that were left from the mythical industrial strategy based on megaprojects produced by the Liberal Government were all destroyed by the National Energy Program. What is really galling is the audacity or stupidity, or perhaps both, of the content of this National Energy Program. I quote from page 94 where these oil projects were listed. It says:
The positive impact of the Program-
Referring to the National Energy Program:
-on oil sands development can be illustrated by its effect on the commercial viability of the Alsands project-
Can you believe the audacity, dishonesty or perhaps plain ignorance of someone to write such trash when, in fact, it destroyed those projects? The Alsands project was under construction in early 1980. Men and machinery were on site moving earth.
I do not want once again to go over all of the reasons the National Energy Program is wrong and discuss its disaster. There is no honest person in this country who does not recognize the disaster of the National Energy Program. Why was it such a disaster? One has to acknowledge that part of it is a result of the uncertainty. The newly elected Liberal Government argued, fought and disputed with the Provinces for two years before reaching some reasonable accord. It was an incredible display of mismanagement and stupidity. No industry, entrepreneur or investor can tolerate such a delay.
Second, the Government simply took too much money. It dipped in for a huge amount of money by way of tax increases which were justified on the basis of projections on revenue flow which were pure fiction. In that respect, Mr. Speaker, if you have not read Peter Foster's book called "The Sorcerer's Apprentice", subtitled "The Super Bureaucrats of the Energy Disaster", I highly recommend it. Those geniuses-one of whom is now in Paris at our expense to the tune of $200,000 a year-projected revenues that were pure fiction. They were calculations of the kind you would learn to do when taking a Ph.D in economics at the University of Toronto. They certainly bore no relationship to reality. These bureaucrats divvied up these fictitious numbers. The share of these fictitious numbers were certainly fair but they bore no relationship to reality. The

November 15, 1982
Government simply took too much money. There was not enough left to keep people interested and provide the economic activity from which jobs and spin-off effects come.
In addition, a terrible precedent was set. For the first time in our history, the Government retroactively changed the rules in a highly pejorative way. The world being what it is, we expect that kind of behaviour, unfortunately, from a banana republic, dictatorship or some of the less stable Third World countries. No one expected that kind of behaviour from Canada. Canada was considered to be a stable, democratic country with a long history of fair play. If we made mistakes in the past, we lived with them and changed the rules in the future. We did not change the rules retroactively until this Liberal Government and this Minister did so.
The impact of all of that has caused the demise of all the energy projects which I have outlined, including oil and gas projects. If those projects were in place today, the jobs which would have been generated would not be in the thousands or the tens of thousands, but rather in the hundreds of thousands. In Canada today there are hundreds of thousands of families whose income earners are unemployed because of the National Energy Program and the demise of the only kind of industrial strategy left, the megaproject strategy.
I would refer Your Honour and the rest of the House to the seventeenth annual review of the Economic Council of Canada. Its predictions as to what disasters would befall this country if those megaprojects did not go ahead are turning out to be exactly on target. It was all there. Those were predictions of three years ago. Probably none of the Hon. Members opposite have read it because they would not like the message. However, we do not need a Royal Commission headed by Donald Macdonald and we do not need some fresh new insight. All we need is for someone opposite to read what has been done by this permanent Royal Commission, the Economic Council of Canada, and to heed its lessons.
I want to refer to what can be done and what needs to be done now. Clearly the most terrible and crucial problem facing Canada is the question of jobs. I had the misfortune of living in a home where the father was unemployed for a number of years and I know what devastation that can cause a family. The numbers involving the unemployed are so large that we sometimes do not comprehend them. We say that 12.2 per cent, 12.7 per cent or 1.5 million people are unemployed. They are numbers, but behind every one of those numbers is a family and I know, firsthand, what that means to a family. It is not enough that we say we will have a Royal Commission to look into the matter and report back in three years. It is not enough that we put together a committee of economists and say that from now on the Minister will listen to some outside advice. It is not enough that we reward the perpetrators of this tragedy by giving them year-long vacations in Paris at our expense. We must take action.
Let me speak in terms of what can be done. It has been noted by apologists on the Liberal side that there is not much we can do about world markets, and that is iccepted. There is
not much Canada can do now about the fact that the world has an oversupply of nickel, steel, copper, lumber, things that we produce in abundance, and therefore we cannot supply the world. We are unfortunately trapped in terms of those circumstances, but that is not true of our energy. The market is here in Canada. We can displace imports.
So there is no reason for us to blame the rest of the world or wring our hands and say there is nothing we can do, because we can, and we can in the area of energy. I am not referring to jobs in Alberta, Saskatchewan or British Columbia when I am referring to energy development. A recent study by the consulting firm, Foster Consultants (Calgary), on behalf of the Independent Petroleum Association of Canada illustrated that when money is spent for oil and gas in Alberta, when one dollar is spent, 40 cents ends up being spent in Ontario because that is where the pipe is produced as well as the valves, the machinery, equipment, trucks, cars and everything else used by the industry, some 16 per cent is spent in Quebec, with 28 per cent or 29 per cent actually ending up in Alberta and the remainder in the rest of the country. Therefore, we are not referring to something which benefits only one region but, rather, something which benefits the entire country.
The netbacks must be adjusted. During question period the other day, someone asked the Prime Minister (Mr. Trudeau) a question about lowering taxes. He replied by asking, "How can I lower taxes when we have such a terrible deficit? One cannot do both". I will give an example of where lowering taxes would decrease the deficit because it would produce more revenue for the Government than the current tax load. I will quote from a speech by the chairman of the board of Dow Chemical (Canada) Limited. He referred to the experience with the company's ethylene plant in Red Deer. In 1982 the company estimated that the ethylene plant would operate at 100 per cent capacity and, as a result, would create $60 million in income tax obligations, $45 million of which would go to the federal government and $15 million to the provincial government. However, the Feds put on an up front tax, the natural gas and gas liquids tax, which would supposedly gain $60 million a year from that plant, or double the the anticipated income tax revenue. Therefore, the Feds would be receiving in excess of $100 million, $105 million, and the Province would receive $15 million from income tax and, of course, would receive an additional $37 million from royalties on gas.
As a result of the natural gas and gas liquids tax, there was just enough of a marginal on the feedstocks to make it impossible for that plant to sell all its products. Therefore, instead of producing at 100 per cent capacity as planned and anticipated and for which markets were available before the federal tax was imposed, the plant was producing at 50 per cent, or half capacity. What was the result? The federal Government, instead of receiving $105 million as planned, instead of receiving the $45 million from income taxes that it would have received before it imposed the tax, will receive $20 million this year. The Province lost some $34 million in taxes and royalties. Therefore, the federal Government not only lost the extra $60
November 15, 1982

million in tax which it tried to collect but, in addition, cost themselves and the rest of Canada an additional $140 million. That is plain, stupid taxation. All the Government need do is reverse that stupid tax and it would reduce the deficit and put people back to work.
Second, the Government must cut red tape. Historically, for every three geologists working in the energy industry-those are the people who find the oil-one needed one paper shuffler. As a result of the National Energy Program, and goodness knows how many other things those geniuses in EMR have invented, the ratio is now reversed. Every geologist requires three paper shufflers to handle the red tape so he can do his job. We gnash our teeth about productivity and ask why we are so non-productive in this country. It is no wonder. All we do is produce work for paper shufflers. They do not produce anything but simply satisfy the bureaucrats in Ottawa, Edmonton, Regina and other capitals. Let us not blame it all on the Feds.

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