Wednesday, September 17, 2014
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Comment: How to break the resource deadlock

Bill Gallagher, Special to Financial Post

Aboriginal communities right across the country will have likely won 200 legal rulings in the resources sector by the end of this year. This unprecedented winning streak has become the central plank in the native empowerment ‘toolbox’ and it outclasses the toolboxes of governments and industry, both of whom now seem to accept resource project delays as an economic fact of life.

Indeed the cumulative negative impact on our resources future is the biggest under-reported business story of the decade. Over the past year, I have been promoting a series of recommendations at resource symposiums to reverse this unhappy trend.

Before delving into my suggestions however, it is important to note that the Federal Government is pretty well out of the resources business. The provinces rule that roost, the northern Territories have been sufficiently devolved in order to run their affairs, and even offshore energy plays are managed under joint boards. The Feds are left with mandates in (some) environmental approvals, climate change protocols, species-at-risk, marine transportation and national infrastructure. None of these drive resource projects.

It’s precisely because Ottawa is out of the resources business that it needs to get into it. And the mechanism for returning to the fore requires the creation of an entirely new federal ministry that will act as a clearing-house. Nothing on this scale exists.

Recommendation 1: Canada needs a ‘Ministry of Access to Resources’ in recognition of the fact that the existing federal, provincial, and native approach to accessing resources is outright broken – and worse – lost in translation. This new ‘Access to Resources Ministry’ would report through the Privy Council Office direct to the Prime Minister’s Office. That will ensure high-level commitment, political will, and federal and provincial clout: these are the essential ingredients for moving the yardsticks.

Recommendation 2: An empowered ‘Native Secretariat’ would comprise a key component of the new ministry. But no staffing from Aboriginal Affairs, Department of Justice, or Treasury Board (the usual choke-points) as proper strategic recruiting will be critical. The emphasis will be on affording First Nations, Métis and Inuit the opportunity to commercialize their new-found empowerment in an atmosphere that fully recognizes their treaty, land claim, and aboriginal rights. This mandate would initially be premised upon their legal winning streak as resource gatekeepers; with the goal of having them become ‘players’ in all future project outcomes. I believe this Secretariat is long overdue.

Recommendation 3: An immediate commitment to develop and implement a national equalization program for ‘Resource Revenue Sharing’ with annual funding dispersed on a weighted-average calculation across the board. Funding would come out of the federal budget (Consolidated Revenue Fund). Administering this funding mechanism would be a central function of the new ministry – working with Finance.

Three words keep popping-up with business commentators to describe our national resources conundrum: ‘gridlocked, deadlocked, landlocked’. And they’re usually preceded by three other words, depending on the commentator’s context, namely: politically, geographically, economically’.

Although in today’s stressed project circumstances, all six terms are completely interchangeable. So I would say it this way: Empowered native and eco-activist agendas have resulted in political gridlock. Uncoordinated federal and provincial missteps have resulted in economic deadlock. Industry’s reliance on its status-quo legal toolbox has resulted in resources landlock.

If we don’t develop a new approach, news media will continue to churn out coverage of missed opportunities in the resources sector. The three proposals above recognize that native empowerment in the resources sector is here to stay, but more importantly, it’s the key to success.

The overwhelmingly stressed situation demands a federal response to a federal crisis. I believe Canadians will agree that it’s high time to get moving on considering these recommendations, as well as other silo-busting proposals to get our resources economy up-and-running for all to benefit. Let’s turn the page and make it work.

Bill Gallagher is a lawyer and author of Resource Rulers: Fortune and Folly on Canada’s Road to Resources


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