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By Niels Veldhuis and Jason Clemens
The Carney government’s signature legislation in its first session of Parliament — Bill C-5, known as the Building Canada Act — recently passed the House and Senate will give the government unprecedented powers and will likely make Canada even less attractive to investment than it is now, making a bad situation even worse.
Over the past 10 years, Canada has become known as a country that is un-investable, where it’s nearly impossible to get approval for large and important projects, from pipelines to mines to highways. Even simple single-site redevelopment projects can take a decade to receive re-zoning approval. It’s one of the primary reasons why Canada has experienced a mass exodus of investment capital, some $387 billion from 2015 to 2023. And from 2014 to 2023, the latest year for which data are available, investment per worker (excluding residential construction and adjusted for inflation) dropped by 19.3 per cent, from $20,310 to $16,386 (in $2017).
In theory, Bill C-5 will help speed up approvals for projects deemed to be in the “national interest.” But the cabinet (and in practical terms, the prime minister) will determine the “national interest,” not the private sector. The bill also allows the cabinet to override existing laws, regulations and guidelines to facilitate investment and the building of projects such as pipelines, mines and power transmission lines. At a time when Canada is known for not being able to get large projects done, many are applauding this new approach, and indeed the bill passed with the support of the opposition Conservatives.
At bottom, however, it allows the cabinet to go around nearly every existing hurdle impeding or preventing large projects, and the list of hurdles is extensive: Bill C-69 (which governs approvals for large infrastructure projects including pipelines); Bill C-48 (which effectively bans oil tankers off the west coast); the federal cap on greenhouse gas emissions for only the oil and gas sector (which effectively means a cap or even reductions in production); what amounts to a carbon tax on fuel (called the Clean Fuels Standard); and so on.
Bill C-5 will not change any of these laws and regulations. It will simply allow the cabinet to choose when and where they’re applied. This is cronyism at its worst and opens up the Carney government to significant risks of favouritism and even corruption.
Consider firms interested in pursuing large projects. If the bill becomes law, there won’t be a new, better, more transparent process to follow that improves the general economic environment for all entrepreneurs and businesses. Instead, firms will have to lobby the federal cabinet, i.e., a handful of politicians vested with extraordinary new powers, and try to convince them their project is in the “national interest.”
Some senators reportedly are referring to Bill C-5 as the “Trust Me” law, meaning that because there aren’t enough details and guardrails within the legislation, senators who vote for it are in effect “trusting” Prime Minister Carney and his cabinet to do the right thing, consistently over time.
Consider the ambiguity in the legislation and how it empowers discretionary decisions by the cabinet. Cabinet “may consider any factor” it “considers relevant, including the extent to which the project can … strengthen Canada’s autonomy, resilience and security” or “provide economic benefits to Canada” or “advance the interests of Indigenous peoples” or “contribute to clean growth and to meeting Canada’s objectives with respect to climate change.”
With such “criteria,” nearly anything cabinet or the prime minister can dream up could be deemed to be in the “national interest” and therefore provide the prime minister with unprecedented and near unilateral powers.
In the preamble to the legislation, the government says it wants an accelerated approval process that “enhances regulatory certainty and investor confidence.” In all likelihood, Bill C-5 will do the opposite. It will put more power in the hands of a very few members of the government, encourage cronyism, risk outright corruption and make Canada even less attractive to investment.
Niels Veldhuis and Jason Clemens are economists with the Fraser Institute.
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