Federal budget fails to address key issues dragging down the Canadian economy
CALGARY, March 19, 2019 /CNW/ - The Government of Canada has acknowledged the challenges facing Canada's oil and natural gas industry but has not taken any action to resolve the underlying issues, according to the Canadian Association of Petroleum Producers.
Canada has lost billions of dollars in capital investment and wage growth as a result of a growing competitiveness gap facing the oil and natural gas industry. As global energy demand continues to grow, countries other than Canada are addressing market needs while our oil and natural gas remains stranded. Market access constraints are preventing Canada from getting our natural resources to new markets, and the sector continues to lose investment.
According to Statistics Canada, the country is missing out on about $14 billion in investment per year since the price crash in 2014, equal to more than $55 billion in lost investment.
The Bank of Canada expects capital spending in the oil and natural gas sector to fall by 12 per cent in 2019. By 2020, the Bank of Canada expects the sector's share of Canadian capital spending will fall to 11 per cent of the national total – down from about 30 per cent in 2014.
Pipelines are crucial to closing the competitiveness gap; without it, Canada cannot claim a share of the global market. The country also needs a market-driven fiscal policy that brings investment back to Canada; tax reform that keeps us competitive with the United States; protection for emissions-intensive, trade-exposed (EITE) industries; and a regulatory system that allows projects to be approved and built.
The federal budget falls short of addressing these key issues and challenges facing the oil and natural gas industry. CAPP continues to be concerned as capital leaves this country, businesses are forced to close their doors, and Canadians lose jobs.
Canada's oil and natural gas resources play a significant role in building up our country, our economy, and providing security for families. These are not industry issues -- these are Canadian issues that matter.
Canadian Association of Petroleum Producers quotes: Tim McMillan, President and CEO
- "The Canadian economy is under stress and we still have not seen action on some of the key issues the government needs to address like a lack of competitiveness on global scale. The tough times facing the oil and natural gas industry continue to drag down the entire Canadian economy. We have to address the competitiveness gap for Canada to move forward."
- "CAPP has worked earnestly with the federal government on many of the issues affecting our sector such as Bill C-69. We have identified the challenges and outlined comprehensive recommendations for consideration. We are still waiting on action."
- "The budget has not addressed the systemic issues facing industry, nor did it offer any solutions to growing competitiveness gap. In fact, it seems like it removed the oil and natural gas industry from its narrative altogether."
- "The government must take into account the impact declining oil and natural gas investment has on the overall economy. Investment has dropped in half since 2014 and continues to decline."
Supporting Information:
- Between 2014 and 2017 about 60,000 fewer people were employed in exploration and production, oil and natural gas, and oil sands construction across Canada. With falling investment expected in 2019, more jobs are at risk.
- Wage growth in Canada's largest oil-producing provinces – Alberta, Saskatchewan, and Newfoundland and Labrador – slowed during the second half of 2018, pulling down the national average. Employment and wage growth in these provinces continues to be affected by the impacts of lower world oil prices.
- According to Statistics Canada, Alberta lost a total of 30,000 full-time jobs in December 2018 - January 2019.
The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small, that explore for, develop and produce natural gas and oil throughout Canada. CAPP's member companies produce about 80 per cent of Canada's natural gas and oil. CAPP's associate members provide a wide range of services that support the upstream oil and natural gas industry. Together CAPP's members and associate members are an important part of a national industry with revenues from oil and natural gas production of about $101 billion a year. CAPP's mission, on behalf of the Canadian upstream oil and natural gas industry, is to advocate for and enable economic competitiveness and safe, environmentally and socially responsible performance.
SOURCE Canadian Association of Petroleum Producers
Tracy Larsson, Advisor, Media and Issues, (P): 403-776-1415, (E): [email protected]
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