This week I had a rare opportunity to have a public discourse with the Canadian Association of Petroleum Producers (CAPP). I was at the National Energy Board hearings into Enbridge’s Southern Lights application and was present on Tuesday (August 14) to answer questions about CEP’s evidence. I had no idea that CAPP’s counsel, Nick Shultz, would take us through a wide ranging philosophical debate over government’s role in the economy, free trade and the National Energy Program. You can read the transcript of this somewhat entertaining dialogue at www.NEB-ONE.ca in the hearing transcript section of the Southern Lights page.

Here is an excerpt of the transcript which gives the flavour of how the Canadian oil and gas industry sees CEP and other critics as the hoary hand of the past trying to resurrect the National Energy Program, despite our assurances that, unlike them, we have moved on.

MR. SCHULTZ: Mr. Wilson, you tell us in your evidence that Canada has an expanding energy economy, that’s correct, as a summary of a point in your evidence?

MR. WILSON: Yes.

MR. SCHULTZ: But you’re also of the view that free trade is bad; would that be right?

MR. WILSON: We’re highly critical of certain trade arrangements which limit -- which what we believe limits Canadian sovereignty. So once again, it’s very simplistic to say that we think free trade is bad; we’re in favour of what we call fair trade, we want to maximize our international trade, not to limit it, but that in the course of that we’re very critical of certain trade agreements and their provisions, such as the proportionality provisions of NAFTA as it relates to energy resources we’ve always been very strongly opposed to those particular provisions within NAFTA.

MR. SCHULTZ: So, we could say you believe free trade in energy is bad?

MR. WILSON: If free trade in energy means -- if you equate free trade in energy to the current provisions of NAFTA, relating to energy, we would say its counter to the Canadian public interest. No other country in the world, to our knowledge, has signed on to provisions that say that they will forever commit a certain proportion of their resources to a foreign country. Certainly, Mexico didn’t agree to that in NAFTA, and it didn’t stop the Americans from signing NAFTA with the Americans. So, if you mean by free trade the kind of provisions that we have in NAFTA, then yes, and not only our union but a great many Canadians find those
provisions very concerning.

MR. SCHULTZ: If I understand the thrust of your energy policy, you would like to see the government run the energy economy; would that be fair?

MR. WILSON: No, that would be a very simplistic -- a very, very simplistic summation of our policy. We believe that the Canadian energy industry has always been a mixed economy with a public role, a private role, that balance needs to be maintained and it needs to adapt itself to new conditions. So, we’re not looking for a government run energy industry, but we do say there is a public sector role in regulating this
industry. And once again, that’s why we’re here.

MR. SCHULTZ: So, if I understand your point of view it would be this: we have an expanding energy economy that’s grown over the last 20 years since government got out of the business of intervening in the energy economy but you think nothing is going to be lost and you can actually gain something by having government come back in and intervene in the energy economy. Is that, in a nutshell, your point of view?

MR. WILSON: Well, it’s not the way I would put it. No, Mr. Schultz. In fact, we do not -- I wouldn’t agree with the premise of your question that government has gotten out of the energy industry. Government has decided not to regulate price. The mandate of the National Energy Board continues to be to regulate a number of matters relating to Canadian energy industry, including energy security for Canadians and other matters of the broad public interest. We have provincial regulatory bodies all across the country that regulate -- that have similar regulatory roles with regard to energy resources. So as much as the Association of Petroleum Producers would like it, there has not been a wholesale abandonment of energy regulation by government in Canada. There still is a regulatory oversight of this industry. And, I find it odd that we always -- we seem to keep coming back to this, almost as kind of an ideological point in these proceedings.

MR. SCHULTZ: Mr. Wilson, your predecessor union supported the National Energy Program; would that be right? If you need a reference for that, it’s in your policy document which is Exhibit C-15-4a, at paragraph 63.

MR. WILSON: One of the unions that was part of the formation of CEP was the Energy and Chemical Workers Union of Canada which represented workers at oil refineries across the country, and I believe they supported the formation of Petro-Canada… and we supported certain aspects of the National Energy Program at that time. They also were critical of the National Energy Program at that time as well; I think they had a balance. But overall, they supported a public sector role through Petro-Canada and a regulatory oversight of the Canadian industry. That was a long time ago, Mr. Schultz, history has moved on from the NEP. We’re not here to debate a new NEP…

MR. SCHULTZ: Would you agree with me that the NEP was a failure?

MR. WILSON: That is one of those what my friends sometimes call a "bottle of scotch discussion". I’m not really sure if I would call it a -- I would say that politically it ended. Politically it ended; it’s over. It’s not something that we’re going to just haul out of a sack and kind of put back on the public agenda… Since the demise of the National Energy Program, there has certainly been an absence of large-scale energy policy in Canada, which perhaps today… we’re finding that we’re going to have to look again at how, as a country, we give some overall direction to our -- to the development of an energy industry for new situations, new contexts, climate change and so on.

MR. SCHULTZ: I would suggest to you that the energy policy of the country is perfectly clear. It’s based on the principle that the market works; would you agree?

MR. WILSON: No, I would not agree. I think that’s a gross oversimplification of Canada’s energy policy. Canada agreed to deregulate the price, to deregulate the price of oil and natural gas. It did not deregulate or turn over to the marketplace other matters that are essential to energy policy. And if you can show me where that has taken place, then I’ll revise my view, but in fact one only has to read the National Energy Board Act to see that there is an important regulatory oversight of the energy industry in Canada by this Board and by the federal government.

MR. SCHULTZ: Mr. Wilson, I don’t have any difficulty or find it over simplistic to say that the NEP was a failure, but you don’t want to simply acknowledge that and I take it the reason for that is that there are aspects of government intervention that were embodied in the NEP that in fact you advocate being adopted today? Would that be right?

MR. WILSON: Again, that’s a -- I’m not sure what you mean by that. That’s a difficult set of -- you know, kind of a complex set of questions. For example, the NEP included a publicly-owned oil company called PetroCanada. We supported the formation of PetroCanada. We opposed the privatization and the sell off of the shares of PetroCanada. We think the energy industry in Canada would be better off today with a publicly-owned company in it. I would submit to you that without the public role in a company like PetroCanada, we would have no Syncrude today. We wouldn’t have the development in the tar sands. We wouldn’t have the Hibernia offshore. Big parts of the Canadian oil industry have -- you know, owe their existence to a strong public role. We’re absent that today and we have new challenges. So it’s our view that yes, there should continue to be a strong public role. What is the best way to manifest, to shape, to implement that role? That’s open for discussion. Simply hauling out the NEP and bringing it back is not going to get us anywhere because that was then and this is now. We are 25 years on.

MR. SCHULTZ: Well, I’m going to suggest to you that one of the lessons of government intervention in the late 1970s and early ‘80s is that it caused Canada to go from being a net exporter of oil to a net importer of oil and you have agreed that wasn’t in the public interest. Can we agree that was a failure?

MR. WILSON: We can agree that -- we can agree that Canada becoming a net importer of oil was not in the Canadian public interest. As to whether you can, you know, put that at the feet of the National Energy Program or some other kind of government intervention I’m afraid we’d be in disagreement. I think you’d have to make a lot of arguments to prove that case.

MR. SCHULTZ: Well, Mr. Wilson, when I have read the material you filed, and I’m going to make this comment perhaps in argument, but I’ll give you the opportunity to disagree with it, but I would see the Union being here as an advocate of failed policies.

MR. WILSON: Well, that’s your opinion Mr. Schultz. No, we’re not here as an advocate of failed policies. We’re here to ask the National Energy Board to take a broad -- and a broad and generous approach towards determining the public interest in making important regulatory decisions. And we can have a philosophical discussion and I would be quite willing to do so with you afterwards, you know, about the NEP, about the role of government in the economy and so on and so forth. What we are here to talk about is that before approving, making regulatory decisions which set -- which are foundation blocks for the restructuring of our energy sector, let’s look at how these decisions are going to affect value-added processing, jobs, communities, the future of our industry. If you think that’s, you know, coming here to advocate a failed policy, I’m sorry, I guess we’re just really on different planets. But I think that’s what the National Energy Board is here to do, and that’s why we are here…

MR. SCHULTZ: So three general elections since the Free Trade Agreement and you are sitting here asking these unelected officials to do what Canadian governments, both Conservative and Liberal, with majority elected support had declined to do; is that right? Intervene in the economy?

MR. WILSON: No, that is entirely incorrect, Mr. Schultz. And you know I have sort of complied with you… you are asking the questions, and I am answering it. And so we have kind of gone on a dance through, you know, a whole range of philosophical questions about trade and free trade and so on and government intervention in the economy. We are not here to ask the National Energy Board to undue NAFTA or its proportionality provisions. We are not here to ask the National Energy Board to implement a new National Energy Program for Canada. Those are utter distortions of the position of our union and what we are here. We are here to discuss the Southern Lights application; the public interest considerations around the Southern Lights application and what that means. And we think that the existing mandate of the National Energy Board gives it all the scope that it needs in order to consider the public interest issues of employment and value-added processing and so on that we are bringing to the table.

As regards NAFTA, one of the considerations that is in our evidence, which we ask the Board to take into account is that one of the consequences of the proportionality provisions of NAFTA is that as we increase our exports as a proportion to the United States, not only as in terms of the energy resources in gross but also by our understanding as a product, i.e., bitumen blend, that we are constraining ourselves in the future because of the proportionality provisions of NAFTA. We may not like that. Maybe the members of the Board don't like that but that is a reality that Canada has entered into and until it is changed, that is a reality that we have to take into account. So our view is that given that reality, we should be all the more prudent in the regulatory decisions that we are making that especially when these regulatory decisions, as I say, in our view, are foundation blocks for the kind of industry we will see down the road.