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View Ginette Petitpas Taylor Profile
Lib. (NB)
I'll first of all call this meeting to order.
Good afternoon, everyone. Thank you all so much for being here today.
Before I commence, I would like to mention that Madame Normandin is going to be replacing Monsieur Therrien today. Christine, it's great to see you, a former PROC committee member, again. We also have Kirsty Duncan, who is going to be replacing Mark Gerretsen today, as he was feeling under the weather. Thank you both so much for being here today.
Welcome to the first meeting of the Subcommittee on Private Members' Business.
Pursuant to Standing Order 91.1(1), we are meeting to consider the items placed in the order of precedence on February 27, 2020, to determine whether they should be considered non-votable.
I would like to start the meeting by providing you with some information following the motion that was adopted in the House on Wednesday, September 23, 2020.
The subcommittee is sitting in a hybrid format, meaning that members can participate either in person or by video conference. All members, regardless of their method of participation, will be counted for the purpose of quorum. The subcommittee's power to sit is, however, limited by the priority use of House resources, which is determined by the whips. All questions must be decided by a recorded vote unless the committee disposes of them with unanimous consent or on division.
Today’s proceedings will be made available via the House of Commons website.
To ensure an orderly meeting, I would like to outline a few rules.
For those participating virtually, members may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice, at the bottom of your screen, of either “floor” or “English” or “French”.
Before speaking, click on the microphone icon to activate your own mike. When you are done speaking, please put your mike on mute to minimize any interference. As a reminder, all comments by members should be addressed through the chair.
Should members need to request the floor outside of their designated time for questions, they should activate their mike and state that they have a point of order. If a member wishes to intervene on a point of order that has been raised by another member, they should use the “raise hand” function. This will signal to the chair your interest in speaking and create a speakers list. In order to do so, you should click on “Participants” at the bottom of the screen. When the list pops up, you will see next to your name that you can click “raise hand”.
When speaking, please speak slowly and clearly. Unless there are exceptional circumstances, the use of headsets with a boom microphone is mandatory for everyone participating remotely.
Again, I want to thank our interpreters, who do such a tremendous job at all the committees on which we sit.
Should any technical challenges arise, please advise the chair. Please note that we may need to suspend for a few minutes in that case, as we need to ensure all members are able to participate fully.
For those participating in person, moi et Christine, proceed as you would normally in any in-person meeting. Keep in mind the Board of Internal Economy guidelines concerning the wearing of masks and all the health protocols. Should you wish to get my attention, please signal me with a hand gesture or, at an appropriate time, just call out my name. Should you wish to raise a point of order, wait for an appropriate time and indicate to me clearly that you wish to raise a point of order.
With regard to the speakers list, the committee clerk and I will do our best to maintain a consolidated order of speaking for all members, whether they are participating virtually or in person.
We are now ready to start consideration of the 30 items placed on the order of precedence. Generally, the analyst takes the floor to present the votability criteria. Then the analyst would usually give a succinct summary of the first item, after which members can ask questions. If there are no questions, the chair puts the question. The same process is followed for each item on the order of precedence.
Since 2016, at times the subcommittee has accepted all items at once by way of unanimous consent. This worked well when all items remained votable, but it could have created some confusion when members had a concern about some of the items.
I have to say that I was the chair back in early 2016, and this was probably the fastest committee meeting to ever go through, actually. It was pretty quick.
If there's debate or discussion, we certainly want to make sure that it is allowed, but if we can work through these fairly quickly, we'll be able to do so by way of UC as well. I am in the hands of the subcommittee as to how to proceed. If all members agree to adopt all items at once, we can do it this way. However, if members wish to debate some items, it may be better to take the time needed to discuss and make decisions on each item.
At this time, I want to ask how the committee prefers to move forward with the first 30 items.
Agricultural productsAnimal healthArms-length relationshipC-204, An Act to amend the Canadian Envi ...C-205, An Act to amend the Health of Ani ...C-206, An Act to amend the Greenhouse Ga ...C-208, An Act to amend the Income Tax Ac ...C-210, An Act to amend the Canada Revenu ...C-213, An Act to enact the Canada Pharma ...C-214, An Act to amend the Income Tax Ac ...C-215, An Act respecting Canada's fulfil ... ...Show all topics
View Alexis Brunelle-Duceppe Profile
BQ (QC)
Thank you, Mr. Chair.
I want to acknowledge the immense relevance and competence of our witnesses today and those we heard yesterday. I thank them all very much.
My first question is for Ms. Alexeeva.
During your testimony, I understand you made a connection between the New Silk Road project and the current situation in Xinjiang province. I think that’s quite interesting. Could you elaborate on that?
Olga Alexeeva
View Olga Alexeeva Profile
Olga Alexeeva
2020-07-21 11:52
The New Silk Road is a project dear to Xi Jinping. In fact, you could say it’s his biggest project. It is directly related to the implementation of this scheme, since this road will be part of the main land routes through Xinjiang. Even today, several gas and oil pipelines from Central Asia pass through Xinjiang, and soon there will be some from Russia as well.
What worries Beijing today, therefore, is that the region is unstable and that this project may be compromised. All kinds of unrest may call into question the reliability of this project and the delivery of gas and oil to China, but also the development of gas and oil resources in Xinjiang itself. The coordination centre for the New Silk Road project should be located in Urumqi, the capital of Xinjiang. It is, therefore, a sort of showcase for the road project to the countries of Central Asia, Pakistan and Afghanistan. So, if everything goes wrong in this region, it cannot be a showcase for the project.
View Michael Kram Profile
CPC (SK)
Thank you very much to all members of the panel for joining us today. It's good to see that we're keeping well during these challenging times.
As I'm sure you're aware, pipelines are a major issue for southern Saskatchewan, for two reasons. First of all, because Saskatchewan has a lot of oil and natural gas, we want to extract and export to the rest of the world, and second, because many of the pipelines themselves are manufactured by Evraz steel just outside of Regina. As we come out of this pandemic, I would love nothing more than to see good, high-paying jobs created in both the resource sector and the steel manufacturing sector, both in Saskatchewan and across the country.
The website of Global Affairs Canada states that one of its priorities is to “deepen engagement with the U.S...on key areas such as...energy”. My question to the panel is this: How is the Government of Canada meeting this goal with regard to the Keystone XL pipeline and making sure that construction of that pipeline continues on both the Canadian and the American sides of the border?
Eric Walsh
View Eric Walsh Profile
Eric Walsh
2020-07-09 14:07
Sure, I'm happy to do that.
As you know, Canada is the leading, most secure, reliable, sustainable and competitive supplier of energy to the United States, and that includes crude oil and refined petroleum products, natural gas, electricity, hydro power and uranium. In our fight against climate change, we are taking action to move to a more carbon-free economy, but every projection indicates that economies will need significant quantities of fossil fuels up to 2040.
Canada strongly supports the completion of new and expanded cross-border energy infrastructure, and that includes Keystone XL, which the member mentioned, as well as Line 3 replacement and Line 5 projects. We believe this will benefit both Canada and the U.S., and we are working closely with provinces and other Canadian stakeholders on these projects.
View Michael Kram Profile
CPC (SK)
In a similar vein, what is the Government of Canada doing to make sure that Enbridge's Line 5 pipeline continues to remain in operation?
Eric Walsh
View Eric Walsh Profile
Eric Walsh
2020-07-09 14:08
Yes, it's one of the lines I mentioned. It's very important to us. We are engaging with partners in the U.S., both at the state and federal levels, as well as regulators to try to ensure that it continues to be the case.
View Peter Julian Profile
NDP (BC)
Thanks very much, Mr. Chair.
I have a brief comment replying to Ms. Dzerowicz. The Library of Parliament information that we've received, in terms of funding, clearly shows that the peak for funding for the Auditor General was 2011. It was a minority government going into a majority government. It was $95 million, and it's fallen to $87.9 million. You don't need to be an auditor general to know that $95 million is considerably more than $87.9 million. That's in current dollars. In constant dollars, the difference between what the Auditor General should be getting and what it is getting is even greater.
Again, Liberals and Conservatives have been finger-pointing. They've both been awful and they both should be ashamed of themselves, but a minority Parliament will restore the appropriate funding, and hopefully, Ms. Hogan will be able to get that independent funding mechanism. That's vitally important.
I have a couple of questions for Mr. Hayes, and one for you, Ms. Hogan.
The issues of the infrastructure bank, I assume, will include what has been flagged by a number of people, the executive bonuses that have been part of the infrastructure bank and the massive staff turnover. That's my question for you.
Mr. Hayes, in terms of the commissioner of the environment, when will a permanent person be chosen? As I understand it, you continue to be an interim commissioner. On July 8, will any reports be released by the commissioner of the environment and sustainable development?
Finally, on subsidies for oil and gas—
View Peter Julian Profile
NDP (BC)
—what is the problem, in terms of being able to document and respond to that?
Thank you.
Andrew Hayes
View Andrew Hayes Profile
Andrew Hayes
2020-06-22 13:18
Thank you.
In terms of upcoming reports, we do have a report that was scheduled to be tabled in May of this year and that will be presented in the fall. It's on the transportation of dangerous goods. That will come along with my annual obligation of presenting my findings on sustainable development plans and petitions.
In terms of fossil fuel subsidies, I would guess, in terms of where your question was going, the challenge is to identify a clear definition on what is an inefficient fossil fuel subsidy in the context of Canada's national circumstances.
Bill Bewick
View Bill Bewick Profile
Bill Bewick
2020-06-18 18:10
Absolutely. The oil and gas sector is actually only about 25% of our economy. We have diversified considerably over the last 30 years through various means, including a lower regulatory burden and lower taxes on companies. Alberta is raring to go.
Of course, when you have the third-biggest proven reserves of oil and it's a product that's highly in demand across the world, it's inevitable that it's going to carry a big weight in your national economy. If we can get that functioning at a somewhat competitive level, then everything else is going to take off. I'm extremely confident about that. We will be back to providing a lot of support to the rest of Canada in terms of jobs here for people who are underemployed in their home communities, or with manufacturing jobs that spin off to those communities and all the net transfers our higher incomes are able to provide for the rest of the country.
View James Cumming Profile
CPC (AB)
What are you hearing from the resource sector on the loan programs? It was suggested that it would be days. Then it became weeks, and now it's months, and we still haven't actually seen the details on a lot of these loan programs. Is that adding to the frustration with the province and with that energy sector?
Bill Bewick
View Bill Bewick Profile
Bill Bewick
2020-06-18 18:11
Yes. I mean, the $1 billion that has been earmarked for potential reclamation is helpful, but as I've pointed out, look at how much Albertans contribute to national revenues. We paid about $1.4 billion or $1.5 billion into the $9-billion auto sector bailout in 2009. We paid more to help bail out Ontario's auto sector than it looks like we're getting to help our own sector at this critical time. We certainly hope more is coming, but so far it's been pretty quiet.
Something else we've pointed out at Fairness Alberta is that the fiscal stabilization fund also really needs reform. Retroactive payments have been unanimously agreed to by the premiers. We hope we see some action on that as well.
View Philip Lawrence Profile
CPC (ON)
Thank you.
My first question is for Mr. Bewick.
I'd like to ask him a harsh question, but one that I think is raised far too often.
What would happen to Alberta if the oil and gas industry was stopped today?
Bill Bewick
View Bill Bewick Profile
Bill Bewick
2020-06-18 18:45
As I said, Alberta has diversified a great deal since the 1980s, I think in large part due to lower taxes and lower regulations, but also from spinoffs from the wealth created by that oil sector. We are in a place where we have other things we do, of course, but it would have a pretty drastic effect, just as it would in any province if 25% of the economy was a certain industry and that industry disappeared tomorrow. It would be a pretty dire recovery for a decade at least, but Albertans are resourceful and hard-working and I'm sure we'd find a way to struggle back.
Looking at it the other way, it would be a real lost opportunity for Canada to continue to profit and have spinoff jobs from an industry that provides a product that the world is going to be wanting in copious amounts for another three decades at least.
View Philip Lawrence Profile
CPC (ON)
For sure. Thank you, Mr. Bewick.
Ms. Cobden, what would be the impact to your industry if Alberta's oil and gas industry ended today?
Catherine Cobden
View Catherine Cobden Profile
Catherine Cobden
2020-06-18 18:46
Again, just to reiterate, Alberta's energy sector is a very important market for Canadian steel, so for it to continue to be prosperous is certainly a very important objective of ours.
We think of our marketplace in thirds—the auto sector is a third, the construction and infrastructure sector is a third, and the energy sector is a full third of our marketplace, so it would be very significant, clearly.
View Philip Lawrence Profile
CPC (ON)
Thank you.
Mr. Sands, what would happen if Alberta's oil and gas stopped? What would be the impact on the grocery stores in Alberta, and across the country, really?
Gary Sands
View Gary Sands Profile
Gary Sands
2020-06-18 18:47
It would significantly increase prices. The cost of transporting goods is a significant one in terms of the bottom line. It would have a huge impact on our industry, particularly because many products are seasonal and there are imports.
View Paul Manly Profile
GP (BC)
Mr. Chair, this petition is put forward by constituents in my riding of Nanaimo—Ladysmith who are very concerned about climate change and government action on climate change.
They are calling upon the government, the House of Commons and Parliament assembled to update Canada's climate action targets to reflect science and the Intergovernmental Panel on Climate Change's 2018 report, eliminate all subsidies to the fossil fuel industry, invest in a just transition for oil and gas workers, cease from purchasing, subsidizing or supporting any future fossil fuel infrastructure and invest in clean, renewable energy and/or other climate and socially conscious investment opportunities.
I'd like to thank my constituent, Vic Brice, for putting this forward.
View Tim Uppal Profile
CPC (AB)
Madam Chair, the CEO of Cequence Energy stated that the supports for the oil and gas sector are deceitful. He went on to say, “I feel like it was a fanfare by the federal government to try and provide window dressing to an industry that I am not sure it supports.”
Simply put, Madam Chair, more needs to be done to support the oil and gas sector. Will this government provide real support for the oil and gas sector, as it promised to do back in March?
View Dan Vandal Profile
Lib. (MB)
Madam Chair, the oil sector and its workers continue to be affected by COVID-19 and the global surge in oil supply. Our government has taken action, including providing funding to B.C., Alberta, and Saskatchewan, that will clean up as many as 40,000 inactive and abandoned wells while creating thousands of jobs.
In fact, a study by AltaCorp Capital said this money could double the entire market for well abandonment reclamation work in western Canada and is projected to create up to 15,000 to 21,000—
View Tim Uppal Profile
CPC (AB)
Madam Chair, we have heard time and time again that the current support is just not enough. In fact, analogies that many stakeholders are using include “loan sharking” and “payday loans” to describe the conditions for the help that is available.
The government has gutted Alberta's energy sector and taken advantage of its prosperity for far too long, and now, in a time of crisis, it is continuing to show them the cold shoulder.
On what date will this government provide real help to help Alberta's oil and gas sector get back on track?
View Dan Vandal Profile
Lib. (MB)
Madam Chair, nothing could be further from the truth. Our government understands that businesses in the energy sector are dealing with unprecedented challenges.
Through the BCAP, we are helping SMEs that make up to 85% of the jobs in the sector have access to the liquidity they need to cover operational expenses during this very challenging time.
Many companies are indeed working with their financial institutions—more than 120 financial institutions, I may add—and we—
View Elizabeth May Profile
GP (BC)
Thank you, Mr. Chair. I rise to present two petitions today. The first deals with the issue of oil tankers on the west coast of Canada. Petitioners call on the government to establish a permanent ban on the entire west coast to protect British Columbia's fishery and tourism and coastal communities.
The second petition, which is somewhat dated, obviously, urges the Government of Canada not to buy the Trans Mountain pipeline, which is described as a pipeline that is old and likely to leak, as it just did.
View Tim Uppal Profile
CPC (AB)
Mr. Chair, the economic turmoil in Alberta did not start because of COVID-19 or the decline in oil prices. Since this government took office in 2015, hundreds of thousands of jobs have been lost. Billions of dollars of investment have left the energy industry because of disastrous policies brought in by this Liberal government—policies like Bill C-69, the no-more-pipelines bill; Bill C-48, the tanker ban; and the job-killing carbon tax.
Alberta's energy industry creates thousands of jobs right across Canada and pays for much-needed infrastructure right across the country. Months ago, the Liberals promised support for the energy industry, but Albertans are still waiting.
Alberta's innovation and prosperity are necessary for Canada's economy to recover from this pandemic. It's time for this government to support the energy sector and let it prosper, not strangle it with over-regulation and half-hearted efforts of support.
Why don't the Liberals see that when Alberta prospers, all of Canada prospers?
View Chris Warkentin Profile
CPC (AB)
Thank you.
The minister continues to fail Canadians. Eighty-four days ago, the finance minister said that there would be help for Canada's oil and gas sector. He said that it would be in place within hours, if not days.
This is for the minister: How many companies have now received the liquidity support that he promised?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, I think it's important to know that we have had literally tens of thousands of companies in Alberta among the hundreds of thousands of companies across the country that have accessed the Canada emergency business account. We've had companies from Alberta look at the large enterprise—
View Chris Warkentin Profile
CPC (AB)
Mr. Chair, the minister continues to mislead Canadians. The oil and gas representatives say that not a single company has received the promised liquidity through the BDC, loan guarantees through EDC or funding through the emissions reduction fund.
When will the minister fulfill his promise and give these supports to these companies?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, we will continue to work to support enterprises across the country. The programs we put in place are having an impact. We're making sure that those programs are able to be delivered, and the reserve-based lending approach under the BCAP will certainly be there to help those companies in the energy sector in Alberta to weather this challenge.
View Chris Warkentin Profile
CPC (AB)
The minister said 84 days ago that liquidity would be available to these companies within hours, if not days.
Can the minister name one company that has received the promised liquidity support?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, we'd be happy to get to the member, if he makes the request directly to my office, the lists of companies that have received many different forms of loans. There will continue to be opportunities for companies to get further loans.
View Chris Warkentin Profile
CPC (AB)
Is the minister calling oil and gas representatives who say that nobody has received this support as of yet liars?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, of course, there are companies that are working through the program. Of course, the BDC and EDC are working to make sure that their programs are available as broadly as possible.
We will continue—
View Chris Warkentin Profile
CPC (AB)
Mr. Chair, Todd Brown, CEO of Cequence Energy Ltd., summed up the frustration of many in the energy sector when he said, “I feel deceived. I feel like it was a fanfare by the federal government to try and provide window dressing to an industry that I am not sure it supports.”
Capital expenditures continue to be cut by the energy sector. Window dressing won't help. How many jobs does the minister estimate will be lost permanently in the sector due to his inaction?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, I think we need to acknowledge that the energy sector in Alberta is going through extremely challenging times. That is absolutely the case, and it is for that reason that we've put in place a number of different alternatives for those businesses to get access to credit. We'll continue to work to make sure that those access-to-credit programs are available and that they're able to support businesses in this time of need so that they can support their employees and keep them employed.
View Chris Warkentin Profile
CPC (AB)
Mr. Chair, in budget 2018, the Liberals gave manufacturing 100% deductibility for clean tech and emissions-reducing capital investment. The oil and gas sector, which is already the largest private sector investor in clean tech, was exempt from this announcement.
Will the minister now extend it to oil and gas companies?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, we continue to be focused on measures that are going to have an impact on businesses as they face up to the COVID-19 challenge, and there will be things that we will need to continue to look at in the future. That's not a measure that we're currently examining.
View Chris Warkentin Profile
CPC (AB)
Mr. Chair, maybe he'll consider this one.
The Hibernia project was given an exemption to Bill C-69 because of flaws that we identified early when this government was passing that legislation. The exemption was given to ensure that jobs could be saved.
Will that exemption be given to all other provinces that produce energy in this country?
View Jonathan Wilkinson Profile
Lib. (BC)
Mr. Chair, I think the honourable member should go back and look at Bill C-69, which improved the environmental process in Canada to ensure that good projects could go ahead and that they were good projects.
There is a provision in there relating to regional assessments, which relates to the offshore in Newfoundland, but it is not an exemption from Bill C-69.
View Chris Warkentin Profile
CPC (AB)
The exemption was given to the Hibernia project. Will that be extended to other provinces?
View Jonathan Wilkinson Profile
Lib. (BC)
I'm sorry, but the honourable member is simply incorrect. There is no exemption to Bill C-69. This is a regional assessment that was done for the purposes of exploratory drilling off the east coast.
View Chris Warkentin Profile
CPC (AB)
Will that same regional exemption be given to Alberta, Saskatchewan, Manitoba and British Columbia?
View Jonathan Wilkinson Profile
Lib. (BC)
As I say, Mr. Chair, there is no exemption. It is a specific process, a regional process within Bill C-69, and I'd be more than happy to ensure that the honourable member has access to the information associated with how that works.
View James Cumming Profile
CPC (AB)
Thank you, Chair.
Welcome, Governor, and welcome to your new role, although given the times that we're in right now, you must wonder some days what you got yourself into.
That being said, when your predecessor last appeared at this committee, we had a discussion about the importance of the resource industry pre-COVID and, more important, how important that sector was in the recovery of the economy as we go forward. Do you agree with that?
Tiff Macklem
View Tiff Macklem Profile
Tiff Macklem
2020-06-16 16:06
There's no question. The resource sector, the oil and gas sector, is a big part of Canada's economy. As Governor Poloz and Senior Deputy Wilkins have highlighted on a few occasions, the Canadian economy is getting a double whammy. There's the COVID crisis, but we've seen a dramatic drop in both the price of oil and the demand for oil, and that is certainly affecting incomes in Canada, particularly in our oil-producing regions.
We have seen some rebound in the price of oil. On the WCS, the Western Canadian Select, the spread relative to the WTI is actually unusually small, so that's good news. Having said that, oil prices are still well below where they were, and the reality is that global demand for oil is probably going to be lower than normal for some time to come. It's probably going to take a while to work our way out of this, but yes, that is an important element of the Canadian economy.
View Peter Julian Profile
NDP (BC)
Thanks very much, Mr. Chair.
I should note that the Conservative motion from a few weeks ago, which was not voted on in Parliament, would have only given us three and a half hours for discussion of the estimates tomorrow night. We actually have more because of the NDP motion than we would have had with the Conservative motion. I think that's an important note to make.
Thank you very much to our witnesses for being here. We deeply appreciate your availability. We hope that your families are safe and healthy.
I have two questions to start for the Ministry of Finance.
First off, are there any projections in terms of corporate loan writeoffs for this year? In 2018, the federal government wrote off about $2.6 billion in corporate loans. Earlier this year, 2019-20, they wrote off $196 million. We still don't know which company received that benefit.
The second is on the amount, the line item in the main estimates around managing government assets including the Trans Mountain pipeline. We are losing $150 million a year with Trans Mountain. Is there a projection within the Ministry of Finance for the construction costs currently?
Has it been updated? The last one we had from the company is way out of date. The costs have skyrocketed since then.
Has the Ministry of Finance done an estimate of the cancellation costs? If we cancel the project right now, how much would Canadians save?
Those are my questions to start.
Thanks for being here.
Evelyn Dancey
View Evelyn Dancey Profile
Evelyn Dancey
2020-06-16 17:36
Sure.
On the first part of the question, in respect to corporate loan writeoffs, the Department of Finance does not extend loans directly to companies, to my awareness. That information wouldn't be reflected in our individual departmental reporting.
My understanding is, for example, the financial Crown corporations or the departments that extend repayable contributions are all reporting on a departmental or organization-based basis on what their provisioning is and any breakdown of the assets for which they're responsible. I don't have that kind of estimate to offer.
In respect of the TMC entities, I know this committee had a meeting last Thursday where Mike Carter from the Canada Development Investment Corporation was present. He received a very similar question. I can reiterate his response, which continues to be the timely response, which is the public cost estimate most recently provided by Trans Mountain Corporation, which is a subsidiary of CDEV, where Mike Carter is the executive vice-president. It continues to hold as our best estimate right now of the construction costs. At this point, TMC is spending on construction, but that is actually an investment activity.
Overall, the entity is not experiencing a loss. It is making investments, however, that are using up cash from that perspective.
These estimates are disclosed through the TMC reporting as a federal Crown corporation as well as subsumed in the parent's reporting—that's CDEV's reporting.
Thanks.
View Laurel Collins Profile
NDP (BC)
View Laurel Collins Profile
2020-06-16 13:29
This government is not meeting its targets, but it is meeting with oil and gas lobbyists. The pandemic has made us reflect on our priorities. Are we going to choose a just recovery with good, sustainable jobs for Canadian workers, or are we going to keep subsidizing oil and gas companies to the tune of billions, subsidies that we know are ending up in the pockets of CEOs and shareholders?
View Navdeep Bains Profile
Lib. (ON)
Again, Madam Chair, this is the fundamental difference between us and the NDP. We fundamentally believe that the entire economy needs to work together, including the energy sector, to enable us to achieve those 2030 and 2050 targets. We are going to work together to support our workers, including in the energy sector, to reduce our carbon footprint.
View Paul Manly Profile
GP (BC)
Madam Chair, the government spent $4.5 billion to buy an old, leaky pipeline. Since 1961, there have been 82 reported spills from the Trans Mountain pipeline. Over 1.5 million litres of crude oil has spilled into the surrounding environment. This weekend, the Trans Mountain pipeline leaked again, dumping 190,000 litres of oil. How much is this spill going to cost Canadian taxpayers to clean up? How much contingency funding has been budgeted to repair the environmental destruction from spills?
View Navdeep Bains Profile
Lib. (ON)
Madam Chair, I want to thank the honourable colleague for his question.
He full well knows that the acquisition that we made with regard to the TMX initiative is a reflection of the fact that we want this initiative to move forward in a sustainable manner and in a manner that protects the environment. I'll continue to work with my colleagues to endeavour to make sure that we have the appropriate processes in place to protect the environment and at the same time create good-quality, middle-class jobs for Canadians.
View Alexandre Boulerice Profile
NDP (QC)
We've been asking questions about it for months, and as I see it, we should keep doing so.
The Prime Minister's new pipeline, which taxpayers were forced to buy with their hard-earned money, has leaked. Some 190,000 litres of oil spilled, and we can't even make the company pay for it because the Liberals bought the pipeline.
Trans-Mountain, Keystone XL and the resumption of gas exploration and development off the coast of Newfoundland and Labrador—are these the projects the Liberals had in mind for their green recovery?
View Navdeep Bains Profile
Lib. (ON)
I'd like to thank the honourable member for his question.
Our priority was to protect the health and safety of Canadians throughout the pandemic, especially when it comes to the environment. That's why environmental and climate change laws aimed at protecting the environment, human health and conservation will remain in force.
View Elizabeth May Profile
GP (BC)
Mr. Chair, it's an honour to rise in meeting number 22 of the COVID-19 committee, otherwise known as something like the House of Commons.
I'm here to present two petitions containing hundreds of signatures on the issue of the treatment of Falun Gong practitioners by the People's Republic of China, particularly the practice that's alleged of involuntary organ harvesting. The petitioners ask the Government of Canada to condemn this practice and to publicly call for an end to the persecution of Falun Gong in the People's Republic of China.
The second petition is from residents throughout Saanich—Gulf Islands concerned about what was, at the time this petition was submitted, a future problem. It remains an issue, and I present it on behalf of petitioners who wish the Government of Canada not to put public funds into purchasing or maintaining the Trans Mountain pipeline or towards any expansion of the pipeline.
View Jenny Kwan Profile
NDP (BC)
Mr. Chair, I rise to table two petitions.
The first petition deals with the COVID-19 situation. The petitioners note the pandemic is having a devastating impact on many Canadians nationwide, especially those who have low to modest income, small business gig workers, freelancers, artists, film industry workers, non-salaried workers and individuals on fixed incomes such as seniors and those on disability.
It further notes that rent, mortgage and utility payments are due at the end of each month, putting countless Canadians at risk of losing their housing. It is paramount there be safe self-isolation opportunities for all individuals in this country. To that end, the petitioners are calling for the government to immediately enact a nationwide rent freeze, eviction freeze, mortgage freeze and utility freeze, enforce mortgage deferrals for homeowners without penalty or interest charges from financial institutions and provide direct assistance in the form of a monthly, universal, direct payment of $2,000 per month for all, with an additional $250 per child immediately.
The second petition deals with the Trans Mountain pipeline expansion. These petitioners join the hundreds of thousands of people who are opposed to the expansion. Trans Mountain, in building the pipeline, brings massive environmental and economic risk with no substantial benefit to British Columbia or to local residents. Approximately 40,000 barrels of oil have already leaked from existing Kinder Morgan pipelines, including two major spills in Burnaby since 2007.
I might note, Mr. Chair, that just this past weekend there was yet another spill to the tune of 1,195 barrels here in British Columbia.
There is no known scientific technology to clean up the bitumen when there is a spill, and the number of tankers would go from eight to 34 per month into the Burrard Inlet. It puts at risk many residential neighbourhoods and the traditional territories of at least 15 first nations.
View Jenny Kwan Profile
NDP (BC)
Thank you, Mr. Chair.
The petitioners are calling for the government to immediately act to prevent this new oil pipeline from proceeding through British Columbia.
View Peter Julian Profile
NDP (BC)
Thank you very much.
My first question was about executive compensation. Other pension funds have basically frozen compensation. Yours has increased this year. My question was whether you felt that was appropriate, but I want to move on to a key point of your presentation, which was the issue of radical uncertainty.
Climate change is the big radical uncertainty facing our country and the planet. It will cost us $5 billion this year, as you're well aware, and $50 billion a year as we go over the next three decades. I'd be interested in knowing what the sum total of carbon reserves held in companies that have been invested in by the CPPIB is. What's the sum total of carbon reserves, and of course, what is the risk, which goes with that, of stranded assets if we meet our climate change objectives?
Secondly, could you tell us the sum total of members of boards or managing directors within the CPPIB who are also holding positions on boards of directors in oil and gas companies? Isn't that a clear conflict of interest? What's the sum total of managing directors and members of the board of directors who also sit on the boards of oil and gas companies?
Mark Machin
View Mark Machin Profile
Mark Machin
2020-06-11 16:10
On the carbon footprint, in our sustainable investing report, on page 61, we disclose—using both scope 1 and scope 2 definitions—the amount of greenhouse gas emissions from the portfolio. We also disclose it on an equity ownership basis, so the per cent of equity ownership and also the per cent of the long-term capital structure that we own. This is across all assets across the portfolio.
To give you a number—and this is challenging work; there are a lot of estimates that go into this—we use, as much as we can, specific information that is disclosed by the companies we invest in. However, it's about 25.7 million tonnes of carbon dioxide equivalent, based on long-term capital ownership. That is the amount of our total carbon emissions across the fund.
As I say, it's challenging. We have used S&P Trucost, a division of S&P, to try to get to as accurate a number for the companies, where we are using proxies and estimates, but that is.... At the moment, the based-on proxy data is about 53% of that number, 18% is coming from company-reported data and14% from Trucost models. That gives you a sense of the amount of carbon emissions from the total portfolio.
With respect to your second question, I'm not sure I have the numbers completely at hand on how many people sit on oil and gas company boards. Generally, across all of our invested companies, we have about 190 board positions for all of the boards we sit on across all the portfolio companies. Some of these are direct. Some are our employees sitting on company boards, and some of are where we will find a particular expert we think is appropriate for that position to act on our behalf. A handful of those will be on traditional energy boards.
Again, another cut would be that if you look at the overall portfolio and how much we have invested in traditional energy, it's about 2.8% of the portfolio at year-end. Our renewables portfolio right now is over 2.2% at last count, and climbing rapidly. I would imagine that in the short term our renewables portfolio percentage will exceed the amount we have in traditional energy, and that makes sense given the move along the energy transition.
Mark Machin
View Mark Machin Profile
Mark Machin
2020-06-11 16:13
I certainly can follow up with the information on the managing directors and board directors. As far as I recall, and my colleague Michel may correct me, I'm not aware of our board of directors sitting on the boards of oil companies. I will have to double-check that.
With respect to compensation, I'll also let Michel cover that.
View Wayne Easter Profile
Lib. (PE)
You're welcome.
I'll lay out the next questioners: Mr. Barsalou-Duval will have two minutes, Mr. Julian the same, and then we'll go on to Mr. Morantz and Ms. Dzerowicz.
Before I do that, I do have a question on the oil and gas industry that partly spins off Sean's question. I do see our oil and gas industry constantly under attack. I believe that what we're seeing happen in Canada is that we're driving capital investment out of the country. We're driving human resources out of the country. We're driving innovation and knowledge out of the country. At the same time, the oil and gas industry is expanding elsewhere. We're not using the benefits of our natural resource to transition to a green economy.
We had a meeting this morning with the oil and gas industry in Newfoundland. What they told us is that there are 17 new finds in Norway. The investment isn't coming in to the offshore industry in Newfoundland, and, as a result, the working vessels, etc., are leaving Newfoundland and going to Norway.
There is a lot of politics around this, I know, but my question for you is really this: What are you seeing in terms of the global investment in the oil and gas industry? Is it increasing in other parts of the world? Are we the only ones driving it away?
Mark Machin
View Mark Machin Profile
Mark Machin
2020-06-11 16:52
As I said earlier, we're believers in climate change. Climate change is happening. We believe in the energy transition. The energy transition will be under way towards a low-carbon economy over time. However, even the most optimistic projections, whether we like it or not, see a significant role for traditional energy for quite a while yet. If I take, for example, the IEA's projections for the energy transition, the most optimistic projection they have is that by 2040 there is still 58% of the world's energy supply being provided by traditional energy.
That's probably not consistent with a great climate outcome, so there's going to have to be even more innovation there, whether it's carbon capture, other approaches or a more rapid transition. There's clearly a role for traditional energy: for airplanes to fly and for other things that it's very difficult to innovate around. We see that there will be investment in the traditional oil and gas industry for a period of time.
I'm not sure that there is a huge surge in investment right now. I think it is a challenged industry, given where prices went. It had a double whammy during COVID. There was not only the COVID pandemic and a complete dry-up in demand, but also this huge spat between Saudi Arabia and Russia that caused a massive crash in the price. It was under very significant stress at that point. I feel for the people who are in that industry, who've been really challenged during this time, but they have a long track record of battling back.
View James Cumming Profile
CPC (AB)
The oil and gas sector continues to wait. I see on the BDC site that the details for that program have yet to be announced. It was suppose to be days. Then it became weeks. Now it comes into months. I know that you're fully aware of the struggles in that sector.
When can it expect the details to be announced?
View Bill Morneau Profile
Lib. (ON)
Well, thank you for that. We've been trying to support the energy sector—in fact, all sectors—with access to financing across the country. Obviously, the emergency business account has gone out across the country to small businesses. That's been very successful. With regard to the BCAP that was specifically designed for the energy sector, the final terms and conditions, I understand, are almost ready. We wanted to make sure and they wanted to make sure that the reserve-based lending approach that's so important for that sector was appropriately tailored.
I'm encouraged to hear that is imminent. Of course, the large employer emergency financing facility is open. We are seeing firms come forward to that as well.
I'm pleased that we're moving forward on all these fronts.
Michael Carter
View Michael Carter Profile
Michael Carter
2020-06-11 18:21
Thank you, Mr. Chairman. I'm happy to give a short introduction.
The Canada Development Investment Corporation consists of a small group of people who are responsible to the Minister of Finance for looking after assets that the government gets and probably wants to resell. There are examples in the backgrounder.
When the governments bailed out Chrysler and General Motors, the shares in General Motors and Chrysler were given to us to look after and to sell. More recently, when the government purchased the Trans Mountain Corporation, the was given to us because the government does not intend to keep the Trans Mountain pipeline forever and will, presumably, sell it in the near future. More recently, we have, at the request of the government, incorporated the Canada Enterprise Emergency Funding Corporation, which is to carry out the LEEFF program, the large employer emergency financing facility program.
Thank you for inviting me to the committee. I'd be happy to field any questions on that.
View Xavier Barsalou-Duval Profile
BQ (QC)
Thank you, Mr. Chair.
My question is for the representative of the Canada Development Investment Corporation.
Due to the COVID-19 pandemic, oil prices have collapsed. As a result, investment in certain sectors will potentially be more difficult, particularly the oil sands. Indeed, the break-even point in this sector is quite high.
Mr. Carter, does this affect Trans Mountain, which is now owned by the Government of Canada?
Michael Carter
View Michael Carter Profile
Michael Carter
2020-06-11 18:36
Thank you for the question.
We have two partly related subsidiaries in the energy business.
In one case, the government owns an 8.5% interest in the Hibernia oil field offshore in Newfoundland. It is still producing, and obviously prices are lower, so the revenue is lower, but it is still producing at full steam.
The other company is the Trans Mountain pipeline. The pipeline is full and continues to be full, so COVID has no effect on its business. The expansion of the pipeline is going ahead because it was deemed by the Alberta and British Columbia governments to be an important project, so construction can continue, obviously with all sorts of safeguards for COVID.
View Xavier Barsalou-Duval Profile
BQ (QC)
With regard to additional protective measures, would it be possible to have a cost projection or an update on the costs associated with the construction of this famous pipeline? I suppose it will cost more than was originally planned. Isn't that right?
Michael Carter
View Michael Carter Profile
Michael Carter
2020-06-11 18:37
The cost estimate that was produced last January was for $12.6 billion. So far, we don't see any likelihood of an increase in that cost. At present, things are going according to plan, and the pipeline should be completed by the end of 2022. Every indication we have is that the $12.6 billion number is still a very sound number.
View Peter Julian Profile
NDP (BC)
Yes, fair enough.
I have two questions for the Department of Finance and three questions for Mr. Carter.
As a comment to CRA, I'm glad you put that out. These are all elements covered under the Criminal Code already. The police can already do a follow-up when it comes to systemic fraud or people misusing social insurance numbers. I'm glad you have publicly said that. That's very important.
My comment would be that we have publicly available information around the Bahamas papers, the paradise papers, the Panama papers, the Isle of Man scam. No corporation has ever been charged, let alone convicted. I think it's a bit rich to focus on widows and students who may have inappropriately gotten the amount.
My questions are first for Mr. Carter.
You mentioned Trans Mountain. The construction costs obviously have to be revised. I'm a few blocks from Trans Mountain and there's not a single person in the Lower Mainland who believes that the costs will not be anything less than 50% higher than what you're projecting. I think it's about time that Trans Mountain did a revised construction schedule. My question is this: How much did we lose on Trans Mountain, including interest payments last year?
In terms of the LEEFF program, I have two questions. First off, how does CDEV intend to monitor executive bonuses and all of the things that are supposed to be conditions around the LEEFF, such as not to issue executive bonuses? What is the process in terms of LEEFF loan forgiveness? We've seen a lot of loans that have turned into grants and gifts in the past, even in January of this year. What would be the process if a company just wanted their loan forgiven? Is it the finance minister going to the board? Is it the board making a recommendation?
I have two questions for the Department of Finance.
Could I have some clarity around the supplementary unemployment benefits? There is still inconsistency about whether or not somebody on the CERB can receive a SUBP. We're hearing from other ministries that they can't. We heard from Finance that they can.
Last, I have a question on ferries as designated organizations. I'm thinking of BC Ferries. Where are we in designating ferry companies as organizations that are able to obtain the wage subsidy?
Thank you very much.
Michael Carter
View Michael Carter Profile
Michael Carter
2020-06-11 18:44
Thank you, Mr. Chairman.
I'll answer them in reverse order.
There is no intention that any loans will be forgiven. Our mandate from the minister is that once we make a loan, we become purely commercial, the same as a bank.
As for the second one, with respect to executive compensation, there are limits put on executive compensation as a part of the loan program, and those will be strictly enforced. They will be attested to by the senior officers of the company and by the directors of the company on an annual basis.
As far as the Trans Mountain numbers are concerned, I don't have them in front of me. Our annual report was put up on our website and was tabled in Parliament recently. I'd be happy to come back to you with a written answer to that specific question.
View Shannon Stubbs Profile
CPC (AB)
View Shannon Stubbs Profile
2020-06-11 12:54
Thanks, Mr. Chair.
There will be no economy and no economic update if the Liberals don't help the oil and gas sector survive. After five years of bad Liberal policies that devalued Canadian energy companies.... Here is an example: If Athabasca Oil asks for a $400-million LEEFF loan, the government can own 50% of the company based on current low stock prices, on top of the crazy predatory 14% rate by year five.
The government must fix the mess it helped make. Why is the finance minister using this pandemic to seize significant control of Canadian oil and gas employers?
View Seamus O'Regan Profile
Lib. (NL)
Mr. Chair, we have been working diligently with industry to provide supports both through liquidity and of course through the inactive orphaned well program, where we have seen almost an over-subscription, working with provincial governments in three provinces: Alberta, Saskatchewan and British Columbia.
View Shannon Stubbs Profile
CPC (AB)
View Shannon Stubbs Profile
2020-06-11 12:55
Mr. Chair, it's hard not to notice that the only funding that has actually flowed is that which is required for the end of the industry. It has been 78 days since the finance minister said help for the oil and gas sector was on the way in “hours”. Forty-four days ago the Minister of Natural Resources said basically the same thing as today, that the BDC loans for small oil and gas companies would be “rolled out as quickly as possible” but oil and gas reps say that not a single company, not one, has received the promised liquidity through BDC loan guarantees, through EDC or through the methane reduction fund.
Press releases aren't real action and the Liberals aren't helping workers if companies can't or won't get the support they need. What day will the BDC loans actually be open for applications?
Anybody...? This is classic. No one knows.
View Seamus O'Regan Profile
Lib. (NL)
No, no. I was just waiting for the acknowledgement from the chair. Thank you, Mr. Chair.
I wanted to say, first of all, this is not an end of industry. The inactive orphaned well program is helping thousands of workers in good jobs. This is work that had to occur at some point anyway. We thought it would be a good time to do it now. It helps the environment. It keeps people going as we get through the COVID and financial crisis, and weeks ago we opened applications for the BCAP, the business credit availability program, to support SMEs. They make up 85% of the jobs in their sector.
We've opened applications for measures that will be available to larger players through the LEEFF program. We will continue to work with industry to support workers, and continue to do so to get through this unprecedented challenge.
View Shannon Stubbs Profile
CPC (AB)
View Shannon Stubbs Profile
2020-06-11 12:57
Mr. Chair, of course, I also support the efforts for the recovery and remediation of orphaned and abandoned wells, because I brought forward a private member's bill that would unlock the private sector to do that, but in fact, as of today, the minister should know that BDC loans are not actually available to small and medium-sized oil and gas producers, and the LEEFF program is so predatory that so far no companies have either applied or will access it.
To help the economy recover, I imagine we would support the private sector. MP Poilievre and I called on the government to work with regulators to expedite assessments for $20 billion in oil and gas projects, but guess what. The Liberals recently chose to delay the Nova Gas expansion, even though it was recommended for approval to cabinet four months ago.
Why are the Liberals again delaying yet another pipeline expansion at the very worst time?
View Mary Ng Profile
Lib. (ON)
Mr. Chair, I want to thank the honourable member for that very good question, and I want to share that BDC and EDC have been steadfast in working throughout this pandemic crisis to make sure that the range of lending products we have put out into the marketplace make their way to small and medium-sized businesses, particularly those that are so important throughout Alberta and in the energy sector.
I want to assure the member that BDC and EDC are working steadfastly to ensure that those loans absolutely get out to those small and medium-sized businesses. Nothing is more important to us than helping save those jobs and save those businesses during this very difficult time.
View Shannon Stubbs Profile
CPC (AB)
View Shannon Stubbs Profile
2020-06-11 12:58
Mr. Chair, the Liberals just keep saying the same thing over and over again, but it isn't actually doing anything in reality. It's like being in a twilight zone. The loans are not actually available for small oil and gas companies, and the Liberals should stop misleading Canadians and letting them down.
At the Hibernia oil platform in Newfoundland and Labrador, it sounds like workers may start getting laid off tomorrow. Some 260 people could lose their jobs. Again, where is the help the government has promised?
View Seamus O'Regan Profile
Lib. (NL)
Mr. Chair, I appreciate the honourable member's comment about what is happening here in Canada's offshore. As the honourable member knows, I am here in St. John's. I am fully aware of the challenges that the offshore here is going through. We are working with industry and we are working with the provinces on some unique solutions for the offshore that don't necessarily work for the onshore. There are unique challenges here. Capital is an issue and we intend to find solutions that will work effectively here on the ground.
View Pat Kelly Profile
CPC (AB)
Thousands of people in my riding work in the oil and gas industry. At the finance committee last week, a witness described the LEEFF program as “a Faustian bargain masquerading as a payday loan with a smile.”
When will the government design actual, realistic relief for the energy sector and the hundreds of thousands of Canadians who work in it?
View Seamus O'Regan Profile
Lib. (NL)
Madam Chair, we have been working with the Canadian Association of Petroleum Producers and with industry from the get-go, from the beginning of this crisis.
Their number one issue was liquidity. We have worked with them from the get-go to make sure that this liquidity was offered, and as we get further and further along, we will continue to work with them to fine-tune it and make sure it does what it is meant to do, which is to keep those companies in place to ensure that we have jobs and we get through this whole.
View Michael Cooper Profile
CPC (AB)
Thank you, Madam Chair.
It was all the way back on March 25 that the Minister of Finance stated that help for the energy sector was coming within hours, possibly days.
Well, as it turns out, it hasn't been hours. It hasn't been days. It hasn't even been weeks. Indeed, months later, help has yet to arrive. Seventy-seven days after the minister made that statement, not a single energy company has received financing under EDC, the BDC, or the LEEFF program.
As the energy sector faces an unprecedented liquidity crisis, how can this government possibly justify such a delay?
View Seamus O'Regan Profile
Lib. (NL)
Madam Chair, weeks ago we opened applications through the business credit availability program to support the small and medium-sized players that make up 85% of the jobs in our sector. We've also opened applications for measures that will be available to our larger players through our LEEFF program.
We will continue to work with industry. We will continue to support workers, and we will continue to do so to get through this unprecedented challenge.
View Michael Cooper Profile
CPC (AB)
Madam Chair, on June 2, the vice-president of the Canadian Association of Petroleum Producers said, “The entire industry is frustrated with the delay that we are facing.”
The Saskatchewan Minister of Energy and Resources has spoken about a gaping hole that exists in terms of support for the energy sector. The gaping hole that I'm speaking of is the EDC and BDC programs that this government has failed to deliver upon. Indeed, it was on April 17 that those programs were announced, and 54 days later, not only has not a single energy company received financing, but guess what? They can't even apply, and the eligibility criteria have yet to be finalized after 54 days. If that is not failing to deliver for the energy sector, what is?
View Seamus O'Regan Profile
Lib. (NL)
Madam Chair, the Business Council of Alberta has said that the LEEFF program is a positive development showing that the federal government recognizes the needs and value of Canada's large corporations. We agree. It is essential that we support our oil and gas sector as it suffers through two crises: the impacts of COVID and the effects of a global price war initiated by Russia and Saudi Arabia. That's why, weeks ago, we opened applications for liquidity measures to support the small and medium-sized players that make up 85% of the jobs in our sector. We also announced liquidity made available to our larger players through the LEEFF program. We will continue to work with industry to make sure these programs are effective.
View Michael Cooper Profile
CPC (AB)
Madam Chair, contrary to the representations of the minister, neither the EDC program nor BDC programs are accepting applications. Just yesterday officials from both BDC and EDC were before the finance committee, where I posed precisely those questions to them.
We know, Madam Chair, that the application process isn't up and running and that eligibility criteria remain to be determined, but I guess this government has some good news for the energy sector after 77 days. Now energy sector companies can go on the BDC website and apply for email updates.
Is that the kind of help the Minister of Finance had in mind after 77 days: email updates instead of real relief for the energy sector?
View Seamus O'Regan Profile
Lib. (NL)
Madam Chair, the Alberta finance minister, Travis Toews, said in a LEEFF announcement that in combination with earlier measures for small and medium-sized companies, it represented an expression of confidence in our industries.
It is essential that we support our oil and gas sector as it suffers through these two crises—as I said, the impact of COVID, and then on top of that, the effect of a global price war.
We opened up applications for liquidity measures as the Canadian Association of Petroleum Producers asked. Their top five asks were all liquidity.
We supported small and medium-sized players essential to the supply chain, who make up 85% of the jobs in that sector, and then we announced liquidity made available to our larger players through the LEEFF program. We will continue to work with industry and—
View Michael Cooper Profile
CPC (AB)
Thank you, Mr. Chair, and thanks to the witnesses from EDC.
Back in April, EDC announced a program to backstop loans for the oil and gas sector. In particular, the program was focused on companies that produce 100,000 barrels of oil or less per day. What is the status of that program?
Carl Burlock
View Carl Burlock Profile
Carl Burlock
2020-06-09 15:38
We are in the process of operationalizing that program now with financial institutions that lend to those companies. We have a guarantee developed, and we actually have application documentation now in the market that's available to companies. The guarantee is very close to being operationalized and used in the market.
View Michael Cooper Profile
CPC (AB)
You have application documents that have been out and circulated, but there is no actual application process at this time. Is that right?
Carl Burlock
View Carl Burlock Profile
Carl Burlock
2020-06-09 15:39
There has not been as of yet.
Maybe I'll just add that this type of guarantee is being provided to exploration and production companies that finance themselves based on the value of their borrowing base. That borrowing base gets redetermined twice a year, so really, we're putting the guarantee in place so that it coincides with the spring borrowing base reset. We intend to have it ready so that when banks start re-evaluating credit, it will be there to help keep liquidity in the sector during this period of stress in the markets.
View Michael Cooper Profile
CPC (AB)
Thank you.
You said that it will be operationalized imminently. I don't want to put words in your mouth, but as I interpret what you said in your answer.... It's been a number of months now. We're talking about over 50 days since the program was announced. Could you be a little more specific?
Carl Burlock
View Carl Burlock Profile
Carl Burlock
2020-06-09 15:40
Yes. We're working with the banks now and are really very close to finalizing the final details of the processes that will be used to approve the applications and provide the guarantee on the loans.
Again, the timing coincides with the redetermination period of the borrowing bases. That's really the key milestone. It's to have the guarantee ready for when the semi-annual redeterminations happen.
View Peter Julian Profile
NDP (BC)
Thank you. I'd just like to clarify something.
Thank you very much, Mr. Burlock. You said there was $2.4 billion last year for clean energy. How much in supports through the EDC went to the oil and gas sector? You didn't answer that part of Mr. Ste-Marie's question.
Carl Burlock
View Carl Burlock Profile
Carl Burlock
2020-06-09 16:12
I don't have the exact number for last year, but it is higher than the $2.4 billion. I can come back with an exact number, unless one of my colleagues has it.
View James Cumming Profile
CPC (AB)
You mentioned the mid-market financing program and the oil and gas sector financing programs. On your website, you characterize them as different programs, but you did mention them together. Are they dealt with as separate programs?
Also, you said “days”. We're often hearing that from the politicians. Days turn into months. In the oil and gas sector, it's been from the announcement politically.... It's been well over two months now. In fact, I think it's going on three months. Can you elaborate a bit on those two programs?
Michael Denham
View Michael Denham Profile
Michael Denham
2020-06-09 16:54
Yes, and again, we're not pleased with the lag in timing, either.
They are one program. Our chief risk officer would be here with Jérôme, Karen and me right now, but he's actually in a room with lawyers from Gowling's and McCarthy Tétrault finalizing the terms of the contracts with the banks. It's the same solution from our side.
The only difference is that for E and P producers, oil and gas producers, it is important to get their reserve base bolstered. What you just heard from EDC in terms of their guarantee for their reserve base is actually an important first step to make sure that the immediate cash flow requirements are met for the oil and gas companies, and our junior loan comes on top of that as liquidity for the future. Once you get outside of oil and gas, you don't have the same sort of reserve base lending dynamic. Our traditional junior loan works on its own. It's the same product, but it's more hitched to EDC's guarantee for the reserve base for oil and gas than it is for the other sectors.
That's a complicated answer to your question, but I hope it's clear.
View Michael Cooper Profile
CPC (AB)
Thank you, Mr. Chair, and thank you, Mr. Denham.
Mr. Denham, you provided some results, a survey of BDC members, indicating some reason for optimism. You've provided some additional statistics, which are good news, but I think you'd admit that the one sector that probably is not all that optimistic at this time is the oil and gas sector.
You've acknowledged in your testimony today that in terms of the rollout of liquidity support it has been imperfect, or not as good as it could be, having regard for the fact that this is an emergency situation in which the oil and gas sector, more than any sector, is in dire, dire straits. We know that the announcement for liquidity support was back in mid-April. I was on the website today. There are very few details.
Now, you've said that good news is on the way in a matter of days. Can you clarify exactly what oil and gas companies can look forward to? When will be the day that they will finally be able to apply for this much-needed support?
Michael Denham
View Michael Denham Profile
Michael Denham
2020-06-09 17:31
Thank you for the question. We have been slow getting to market and operationalizing this solution.
We've been frankly quite steadfast with respect to providing support over the years more to the SMEs that provide services to the oil and gas sector. Again, back in 2005, as I mentioned, when prices plummeted, we put in place an extra $1.2 billion, I think it was, in a financing envelope with different levels of risk to make sure in the days of that aggressive price decline that SMEs had access to the funding they needed. We get the importance.
Again, I anticipate that on Thursday or Friday of this week, or on Monday, we'll be issuing a press release and putting all the details on our website of the specifics of the junior loan financing program we're offering. Again, it's for loans between $12.5 million and $60 million. For E and P companies that need more than that, the right place for them to go is the LEEFF facility that has been set up.
As for the way this is structured, again, it's delivered through the banks because of the knowledge of the clients they have and the quality of due diligence they can provide. The basic structure is that it's a junior loan. What it means, really, is that companies pay back nothing just for the first year, and then for years two, three and four, interest payments on the principal. That principal payment is just meant to be paid in one shot as a bullet in year four.
View Michael Cooper Profile
CPC (AB)
Right, understood, and I appreciate that, Mr. Denham. It's good that the details will be announced on Thursday, Friday or Monday. In terms of the application process, when would that be?
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