Eugene Lang

Opinion: Labour is key to being an energy superpower

December 6, 2012
This article also appeared in Thursday’s Report on Business (link).
By Eugene Lang and Christopher Smillie

For six years now Prime Minister Stephen Harper has been referring to Canada as “an emerging energy superpower.” It is a very ambitious goal that comes with significant geopolitical clout, the likes of which this country has not enjoyed in decades, if ever. And it will not be achieved without considerable public policy action, especially from the federal government

While the idea of a “national energy strategy” has been rejected by the Harper government, this government has, nonetheless, taken two steps over the past year to facilitate achieving its energy superpower objective.

The first step has been to open the door to more foreign investment into the oil and gas sector so that this capital-intensive resource can be developed. This was symbolized by agreeing to a Foreign Investment Protection Agreement with oil-thirsty China. Enter the Chinese National Offshore Oil Company (CNOOC), which promptly walked right through that door with a takeover bid for Nexen. If this transaction is approved by the feds, we can expect much more investment from China in Canada’s oil and gas sector in future

Ottawa’s second step has been to take an unambiguously supportive position on the building of pipelines to get Canada’s oil and gas into global markets. Earlier this year, Mr. Harper said: “Our government is committed to ensuring that Canada has the infrastructure necessary to move our energy resources to those diversified markets.”

These are the first two steps of the government’s energy superpower plan: attracting capital investment into the oil and gas sector from abroad and building pipelines to deliver product to market.

Both are important but turn out to be rather academic because the third step – ensuring we have the skilled labour pool to execute on these projects – has yet to be taken. 

Put bluntly, we simply have nowhere near the skilled trades labour force to satisfy even today’s demands, let alone to fulfill our lofty aspiration to become an energy superpower.

The Construction Sector Council estimates a skilled trades deficit of nearly 160,000 people over the next seven years (which, according to the Canadian Energy Research Institute, is still five years before projected peak oil sands capital investment). Labour force growth is slowing to a crawl, as the country ages, while demand for skilled labour is skyrocketing. This is particularly true in the energy sector (including electricity generation and distribution) where a capital investment spree is under way, the likes of which has not been seen since the 1950s.

It is naive to think Canada can become an energy superpower given the labour market constraints we face and lack of public policy action to address this.

So what might a labour market fix look like?

First, Ottawa should play a greater role in co-ordinating the efforts of provincial governments, industry and educational institutions. It should place a particular focus on apprenticeship training needs. According to Statistics Canada, the graduation rate from skilled trades apprentice programs has been stagnant since the early 1990s, when skilled trades demand was vastly lower than it is today. Apprenticeship systems need to be reformed to meet today’s demands. Ottawa can play a direct role in this through tax incentives to encourage employers to hire apprentices and by doubling the Apprenticeship Incentive Grant. The federal government could also consider providing assistance to employers who train and certify the work force of the future.

Second, the federal government should hold provinces more accountable for the billions of dollars transferred in Labour Market Development Agreements to ensure we get the outcomes industry needs.

Canadians deserve value for money in Labour Market Development Agreements.

Third, it is time to assist Canada’s regional work forces to get to where the work is. A tax credit or an Employment Insurance grant that covers travel to seek employment will improve labour market efficiency. The existing provision in the Income Tax Act that offsets costs of permanent relocations does not apply – this would be to assist shorter-term labour mobility as is required in construction.

Fourth, skilled trades workers from the United States, most of whom are already trained to our standards, should be granted special status to enable them to work on large energy projects in Canada.

The idea of becoming an “energy superpower” is bold and ambitious, characteristics not normally associated with Canadian governments. But let us be clear: You do not become a superpower in anything – in military prowess, in economic might, even in Olympic achievement – without significant public policy action. The federal government seems to realize this, and has taken two important steps by attracting investment, and delivering product to market. But all of it – all of it – hinges on whether or not Canada’s labour market is prepared. On this, the federal government can and must show leadership.

Two steps are good; it is time to take the third.

Eugene Lang is co-founder, Canada 2020: Canada’s Progressive Centre, a non-partisan, public policy think tank based in Ottawa. Christopher Smillie is senior adviser for the building and construction trades department of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), Canadian office.

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  1. It is unfortunate that the picture chosen to illustrate the above article featured the giant trucks used to haul mined materials, for – as is being demonstrated elsewhere, the people employed to work the drills, (place the explosives,) operate the shovels and the bulldozers, and drive the trucks, are being eliminated and replaced by autonomous systems controlled at a great distance from the mine site.

    Having – many years ago – been employed to maximize the availability of vehicles (of all types and forms) employed in “off-road” operations such as those found in the mining industry, I can attest that on site maintenance requirements are also being minimized or eliminated, reducing the need for skilled personnel in the mining industry.

    The skills required to achieve these levels of automation reside within the equipment manufacturers – now (increasingly) located in the Far East. (Likewise, the fixed capital equipment used in the extractive industries is often constructed of imported sub-assemblies.)

    So, is the stated “skilled trades deficit of 160,000 people over the next seven years” real?

    Notwithstanding the recommendations contained in your article, I believe an analysis of current levels of skilled employment will reveal that Canada is (still) dependent – to a greater or lesser degree, on immigrants trained in countries that have long recognized apprenticeship to be a key component in formal technical training. And, whilst you have – correctly – emphasized the role of apprenticeship, Apprenticeship is a Provincial responsibility where – going back to the 1960′s or before, efforts to “co-ordinate” at the Federal level have fallen on deaf ears.

    Here in Canada, apprenticeship is a ‘choice of last resort,’ as evidenced by the fact that the average age entering an apprenticship program now approaches 30 years. Elsewhere in the world the age is around 16 years. How many of the high school population that currently pass into university – deliberately avoiding the more challenging fields of science and engineering, would prefer – as I and many of my colleagues did – to get their hands dirty?

    But, if Apprenticeship is one of the solutions, excellent – high level – training schools must be established. And, centered on the growing technical needs of the Military, the Federal Government could lead from the front!

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