Varcoe: Canadian chamber warns ‘business could be caught in the middle’ of sovereignty act fallout

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Premier Danielle Smith told early critics of her sovereignty act to wait until it was drafted before making a final judgment.

Well, the Alberta Sovereignty within a United Canada Act was introduced into the legislature this week.

Early reviews from the business community are decidedly mixed.

With billions of dollars of investment proposed for the petrochemical sector, clean technology, oil and gas, and manufacturing, the business and investment community is watching closely to see how this political manoeuvre plays out in the real world.

“Anything that creates uncertainty, unfortunately, discourages investment,” Perrin Beatty, CEO of the Canadian Chamber of Commerce, said Thursday in an interview from Ottawa.

“It does create uncertainty because where there is a prospect of having a fight between two levels of government — where business could be caught in the middle — business just doesn’t know . . . what the impact is going to be. So it’s important that the two levels of government work together.”

The act, a marquee promise made by Smith during the UCP leadership race, was the first piece of legislation introduced by her government.

It would allow Alberta to battle federal legislation or programs that the legislature deems are unconstitutional or “negatively affect Alberta’s interests.”

If MLAs debate and pass a motion that determines an initiative from Ottawa harms Alberta or is unconstitutional, a minister could issue directives to provincial entities — such as Crown corporations or municipalities — to not enforce the policy.

The UCP government stressed the legislation won’t force businesses or private individuals to violate federal laws, and that it will respect court rulings.

Smith said the legislation is “pushing Ottawa back into its own lane.”

“We have tried different things in the past and it hasn’t worked. So, we’ve got to try something new,” she told reporters this week.

Yet, the economy is growing. Key industries are attracting significant investment and creating jobs.

“Any change, until it’s resolved, creates uncertainty and investors look for returns in exchange for risk — and risk is another word for predictability,” said Brian Boulanger, chief executive of Calgary-based ARC Financial Corp.

“It’s just too early to know (its impact). Wait and see — stay tuned.”

On Wednesday, Calgary Chamber of Commerce CEO Deborah Yedlin said she’s concerned the act could hurt investment attraction and the province’s ability to entice more skilled workers to Alberta.

Other groups and business leaders aren’t so concerned.

Investors and companies are focused on tax rates and talent attraction, not disputes over legislation that clarifies jurisdictional authority, said David Knight Legg, senior adviser to the board for Invest Alberta, the province’s economic development corporation.

“It’s such a family bun fight between the feds and the province. Investors aren’t focused on this one iota,” said Knight Legg, one-time principal adviser to premier Jason Kenney, who was an early critic of the sovereignty act.

“Not a single investor has called to ask about it . . . It hasn’t scared investment at all.”

Jason Leslie, chief operating officer of the Alberta Chambers of Commerce, said the act seems to have resolved some issues initially flagged as potential concerns, by clearly affirming the paramountcy of the Constitution.

Yet, it’s important that this brewing fight between governments doesn’t impede planned investment.

The Conference Board of Canada released a new report Thursday that forecasts Alberta’s economy will expand by 2.8 per cent next year; it projects business investment in Alberta will grow by close to five per cent in 2023.

The province has successfully attracted a number of large-scale petrochemical investments in the past 24 months through its new incentive program, although most still need the final green light from proponents.

With growing global demand for petrochemicals, a dozen projects have been proposed representing more than $20 billion of low-carbon developments — potentially up to $30 billion, said Bob Masterson, CEO of the Chemistry Industry Association of Canada.

Masterson sees the “real threat” for investment coming from the U.S. Inflation Reduction Act, and its array of incentives to attract decarbonization projects such as carbon capture and storage initiatives south of the border.

“The sovereignty act, on the surface, it looks like it’s targeted at public-sector entities more than the private sector, but there’s some truth to what the chamber says, that if you’re outside looking in, it looks confusing and it does create uncertainty,” he said.

“However, on the other side, the dynamic between Alberta and the government of Canada has not been very favourable and there has to be something that makes that dialogue more productive.”

The premier already wants her cabinet to prepare special resolutions under the act to square off with Ottawa on laws that regulate Alberta’s natural resources and economic development, such as Bill C-69.

The Impact Assessment Act is widely viewed by the province and the oilpatch as a major impediment to building new energy infrastructure in the country.

It’s too soon to say for certain the act will repel investment. But this is also an unpredictable, volatile political issue.

If a conflict between both levels of government escalates and investors decide to take a pause or recalculate their risks, it sure won’t help.

“It’s all hypothetical. What are they going to do with the act? How is Ottawa going to respond? That will be what determines whether or not it chases investors away,” said Masterson.

“Ultimately, we will not attract these investments if both Alberta and Ottawa aren’t rowing in the same direction at the same time.”

Chris Varcoe is a Calgary Herald columnist.

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