June,2024 – Lengthy delays and regulatory uncertainty is deterring investment in major infrastructure projects in Canada, according to a new report from the C.D. Howe Institute. In “Smoothing the Path: How Canada Can Make Faster Major-Project Decisions”, authors Charles DeLand and Brad Gilmour find that Canada’s regulatory approval process is creating high costs for investors and preventing critical projects in hydrocarbon production, mining, electricity generation, electricity transmission, ports and other infrastructure from being built.
Sectors that have historically driven business investment and productivity in Canada—mining, oil and gas—are most affected by complex regulatory procedures.
While investments in these sectors have supported high incomes for workers and high revenues for government in the past, they are now trending downwards. “Canada is struggling to complete large infrastructure projects in a reasonable time frame and at a reasonable price and the proposed amendments to the Impact Assessment Act (IAA) are insufficient,” says Gilmour.
- Canadians have been debating whether Canada’s regulatory and permitting processes strike the right balance between attracting investments in major resource projects and mitigating potential harm from those investments.
- These regulatory processes typically apply to complex and expensive projects, such as mines, large hydrocarbon production projects (oil sands, liquefied natural gas [LNG], offshore oil), electricity generation (hydroelectric dams, nuclear), electricity transmission (wires), ports and oil or natural gas pipelines. These projects often involve multiple levels of jurisdiction and can prove particularly slow to gain government approval.
- Canada struggles to complete large infrastructure projects, let alone cheaply and quickly. We propose improving major project approval processes by: (a) ensuring that provincial and federal governments respect jurisdictional boundaries; (b) leaving the decision-making to the expert, politically independent tribunals that are best positioned to assess the overall public interest of an activity; (c) drafting legislation with precision that focuses review on matters that are relevant to the particular project being assessed; and (d) confirming the need to rely on the regulatory review process and the approvals granted for the construction and operation of the project.