Stephen Harper’s to-do list before Parliament breaks for summer

Conservatives swamped with multi-billion dollar decisions on energy, trade and defence



Update: The federal government will announce its decision on Northern Gateway after markets close June 17.

In any ranking of the files on which Stephen Harper would claim an edge over his opponents in the run-up to next year’s federal election, the top three might well be energy, trade and defence. Making Canada an “energy superpower” has always been the Prime Minister’s defining economic goal. Restoring the Tory brand advantage on free trade comes a close second. And staunch support for the military underpins his bid to bind together Conservative values and Canadian patriotism.

Yet in all three of these supposed strong suits, Harper now faces difficult choices when it comes to pushing past prolonged delays and making decisions with multi-billion-dollar consequences. The federal cabinet’s to-do list before Parliament breaks for the summer is dominated by the need to grapple with a controversial oil pipeline, a fighter jet purchase that long ago turned into a political fiasco, and perhaps a sweeping trade deal with Europe. In each case, making a bold move would advance the file, but also carry serious political risks.

Of the three files, insiders say the one least likely to be punted to next fall, or beyond, is the Northern Gateway pipeline. Enbridge Inc., of Calgary, Harper’s home base, has a $7.9-billion plan to pipe oil sands bitumen nearly 1,200 km from Alberta to a new Pacific tanker port at Kitimat, B.C., and on to vast Asian markets. Harper’s cabinet received a report from a joint National Energy Board panel late last year recommending approval of the plan, with conditions. There’s a stark contrast between the deep uncertainty about whether another proposed pipeline, the Keystone XL project through the U.S., will ever be approved by Washington and the expectation that Ottawa will approve Gateway soon.

Given Harper’s enthusiasm for energy exports, even the slightest hesitation might seem odd. But the federal government could be holding off on the pipeline approval to allow its proponents time to sort out what happens next. Geoff Hill, national oil and gas leader at the consulting firm Deloitte Canada, which has Enbridge as a client, says a key aim is to prevent its future from being dictated mainly by judges. “I would think nobody is going into this process hoping it will end up in court,” Hill said.

Replacing epic court battles with some sort of constructive bargaining will require delicate behind-the-scenes manoeuvring. That joint NEB panel report to cabinet has already triggered legal challenges from three B.C. First Nations and two environmental groups. They claim it didn’t properly weigh issues ranging from Aboriginal rights to whale habitats. It’s not just those predictable adversaries who have faulted Ottawa’s handling of the ambitious project. Back in the fall of 2012, CIBC executive vice-president and vice-chairman Jim Prentice—who had previously served stints as Harper’s environment and Aboriginal affairs minister—spoke out against the government’s failure to seriously consult with Natives on the pipeline’s path. “The Crown obligation to engage First Nations in a meaningful way has yet to be taken up,” he said in a speech at the University of Calgary.

Early this spring, Prentice moved from the sidelines to the playing field by going to work for Enbridge trying to build bridges to First Nations leaders in B.C. and Alberta. Only a few weeks later, he officially entered the race to become leader of Alberta’s Progressive Conservative party. But that doesn’t take him out of the picture. “With respect to this project,” Hill said, “I suspect Jim will be engaged no matter what his future role will be.” He declined to give more detail on what’s in the works for the day after a cabinet decision.

If efforts to widen support for the pipeline are shrouded in secrecy, the drawn-out negotiation of a Canada-European Union trade deal has been even more opaque. Canada and the EU have been negotiating the so-called Comprehensive Economic and Trade Agreement (CETA) since 2009. Last fall, Harper surprised many close watchers of those talks by flying to Brussels to stage a signing ceremony with European Commission President José Manuel Barroso on a CETA “agreement in principle.” To some, the occasion had a mission-accomplished feel to it. “I thought the announcement was incredibly premature,” says Dane Rowlands, director of the Norman Paterson School of International Affairs at Ottawa’s Carleton University. “It was unfortunate and probably politicized.”

Rowlands isn’t alone in speculating that Harper, facing Senate scandals and a revitalized Liberal party last fall, wanted to draw attention to economic policy. Indeed, eight months after his Brussels excursion, there’s still no deal. A key negotiating session early last month foundered on familiar obstacles, including disagreement over protecting intellectual property in the pharmaceutical sector. The political question facing Harper’s cabinet remains unchanged: How much flak is it worth taking from industries opposed to the deal to gain bragging rights about signing the biggest trade pact since NAFTA?

Even after a final text is settled, though, doubts remain about how long it might take to put it into force. The EU will have to go back to its member countries, and European officials reportedly fear it might take as long as five years to overcome their objections. “It will be difficult for them to sell economic liberalization to their voters at the moment,” Rowlands says. “The tradition is that when economic times are tough you look inward, you don’t open up.”

At home, the Harper government would like to be selling voters on the economic upside of military procurement. Its highest-profile buy, announced in 2010, was supposed to be a fleet of Lockheed Martin F-35 fighter jets. But that tentative plan sparked fierce debate over the F-35s’ cost and critical scrutiny of setbacks in the new jet’s development. In late 2012, the government announced it was “hitting the reset button” on the project, forecast to cost about $45 billion if it went ahead, and named a task force to re-examine it, including the alternatives: Boeing’s SuperHornet, the French-made Rafale and the Eurofighter Typhoon. Public Works Minister Diane Finley told a defence conference in Ottawa late last month that cabinet will be reviewing the reports on the options over the next few weeks.

The choice, according to David Perry, a senior analyst with the Conference of Defence Associations Institute in Ottawa, could come down to the F-35’s capability versus the affordability of the alternatives. Any of the rival jets might prove cheaper in a competitive bidding process, but none is, in Perry’s view, likely to match the F-35’s cutting-edge technology.

Economic spinoffs are another key factor. Last February, the government announced a new defence procurement strategy, aimed at leveraging more lasting economic benefits, while streamlining its notoriously slow system for buying big-ticket military hardware. Meanwhile, Canadian companies already working on F-35 subcontracts are lobbying the government hard, claiming Canada will lose thousands of “high-paying aerospace jobs” if it drops out of the international F-35 consortium. One possibility, Perry says, is that the government will spend whatever it takes to keep Canada’s aging fleet of CF-18s flying long enough to put off a final decision on a new jet—perhaps until after next year’s election. “I think that’s certainly an option,” he says. As with Gateway and CETA, an electoral reckoning looms large. Bold decisions can pay big political dividends, but also extract a price. This summer, Harper’s cabinet is making that tricky calculation three ways.


Stephen Harper’s to-do list before Parliament breaks for summer

  1. The CONS proposal of spending well over +45 $Billion for a small handful of F-35’s is ridiculous. as well as being a “political fiasco”.
    That one, most canadians know is a waste of money, but wait, we have to honour our NATO buddies, and we all know Uncle Sam has a Military Store with everything that we need.
    We need those F-35’s fighters for what? -to go along with our vast Naval Armada of canoes, … ?
    Canada used to have it’s very own Aero-Space agencies, but one by one, they all literally went “South”, no thanks to Harpo dismantling all of our Science, Technology, Engineering, R&D,…, like Atomic Energy of Canada, NRC, …, just to list a coople examples.

    Canada, is primarily, and still a peaceful nation.
    If anything, give the contract to Bombardier, build them right here in Canada, we’ll produce ten times as many more Jobs, and do it at half that price.
    Use the rest of those $Billions and put them where out “Taxdollars” were supposed to go in the first place -Namely, Health-care, and Pensions, and Education, … in Canada.

    Oil-Pipeline/XL/Gateway: ….couldn’t agree more, this has been a CONS mess from Day One.

    CETA: yep, …hahaha, another CONs mess that has been going on for over 5 years.

    Harp is so foolish, that he doesn’t even know which “Lobbyists” to even turn to, anymore ?
    His own misguided loyalties, are starting to bring out his even crazier self-ambitions, as of late.

  2. ,,,and can someone please explain to me, why the average canadian, is NOW paying +1.50/litre at the pumps today?, this is now twice as much as we paid, 5 or 6 years ago.
    I mean ‘comon, we have the 2nd largest Oil patch in the world,…, blah blah blah, and yet STILL, we are paying more at the pumps for this shite, than anywhere else? -why?
    What has all this Oil Patch been about, in the first place?

    Hapro and his CONs HAVE to GO!, aka vamoose, cya later. We got skrewed.

    • You are paying $1.50 per litre because there are not enough pipeline capacity to get cheap Alberta and Saskatchewan oil to the Eastern United States and Eastern Canada, which means gasoline in Eastern Canada and the Eastern US seaboard is priced off of the more expensive Brent oil price.

      Refineries in the mid West are printing profits. Refineries in the Eastern US and Canada are barely breaking even.

      Lac Megantic happened because the Irvings were trying to get light Bakken oil to their New Brunswick refinery, which is much cheaper than importing from Nigeria, UK, or Saudi Arabia. The are not capable yet of processing and refining bitumen, which is what they eventually want to do.

      Energy East, the Enbridge line 9 reversal (re-reversal actually), and the projects that want to solve this problem high gasoline prices in Eastern Canada.

      • Isn’t it funny how China, US,… was the biggest concern for those lobbyist-controlled-puppets like Harp?
        I mean, it’s already been a decade with this (2nd)largest Oil patch in the world propoganda,…, but he’s more concerned about refinereies in China, and the US, than He is in Canada ?
        …YOU said it youself, in similar words.

        • We have a severe skilled labour shortage in western Canada that makes building refineries in the west almost impossible.

    • Gas is up all over the continent….it’s summer.

      • Does Gas ever really go down? -NO, the “up” price is the yardsticks they get away with, alternate-fuel-technogies, or not.

    • Because we don’t (and can’t, thanks to NAFTA) subsidize our gas prices. Also, Alberta would never stand for it. It would be the NEP all over again.

      • We in Alberta are paying high prices at the pumps too. There is big money to be made in the oilfields due to shortages of workers and we are all paying for it at the pumps.

  3. Interesting column. Thanks for that.
    On the easiest point first, the claim that F-35s have technology worth buying. These planes are software controlled. The software does not exist. Until it does, they have no capacity at all. Current production F-18s come with far better made in Canada industrial spin offs. So, spin offs are not the issue. They cost half as much. So economy is not the issue. They have two engines, so pilot safety is not the issue. They can carry more firepower (no fake stealth BS) so that is not the issue. In fact, the only issue appears to be bragging rights to the claim of having the most advanced jet fighter – even if you cannot tell us what its mission is.
    On the trade deal. The recent Supreme Court decision on privacy on the internet has effectively killed before signed any chance that the Intellectual Property sections of the CETA deal will be legal in Canada. Other parts of this deal are so bad no one will reveal them. The hope appears to be that the deal is so big (so many pages long) that no one will notice the Intellectual Property and Investors Right sections. Sorry, people actually can read. This is the famous Omnibus bill tactic that Harper has taken as his trademark. It won’t work.
    On Northern Gateway. No firm orders, just speculation. This pipeline will never be built because no one wants the dilbit. Harper is putting all his economic strategy eggs into a basket that no one wants.
    So, Harper can get to work on his to-do list, or he can just head for the Barbecue circuit. Either way, nothing is going to happen.
    All is not doom and gloom though. If Harper wants to get to work on something that has more potential than any of these duds, he should get back to Senate reform.

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