Frank McKenna's speech at the Atlantic Energy Summit

Now I’m not going to start off with some hokey story about “grab the rope.” Instead, I’m going to start with the hokey story of an optimist and a pessimist.
Three friends had a good friend named Joe and he was, naturally, an eternal optimist. At every bad situation, he would always say, “It could have been worse.”
His friends hated that quality about him, so they came up with a story so horrible that not even Joe could come up with a bright side. So the next day, only two of his friends showed up for a golf date.
Joe asked, “Where’s Gary?” And one of his friends said, “Didn’t you hear? Yesterday, Gary found his wife in bed with another man, shot them both, and then turned the gun on himself.”
Joe says, “Well, it could have been worse.”
Both his friends said, “How in hell could it be worse? Your best friend just killed himself!”
Joe says, “If it had happened two days ago, I’d be dead now!”
I speak today as an optimist — and not for the same reasons as Joe, I can assure you!
The very existence of this conference is reason for optimism. We now have an Atlantica Centre for energy and an Atlantic Canada Energy Summit. These represent proof points as to how far we have come. Sometimes I think that we are so “in the moment” that we are oblivious to the revolution that we are living through.
It is reminiscent of the words of Chairman Mao when asked about the impact of the French Revolution which had taken place several centuries earlier. His reply: “It’s still too early to tell.”
But it’s not too early to tell how far our revolution has come. And it’s just getting going.
The secret to this revolution is infrastructure and each new investment in infrastructure opens a whole new world or opportunities.
Without Hibernia, there would be no Hebron, no White Rose, no Terra Nova, no Bay du Nord and so on. And without these projects, there would no Bull’s Arm. Without Sable, there would be no Deep Panuke. Without Sable and Deep Panuke, there would be no Maritimes and North East Pipeline.
Without Lepreau, there would be no prospect for a second Lepreau. Without the Irving Oil refinery in Saint John, there would be no chance for an upgrader. Without 40 years of tanker traffic and a marine terminal, there would have been no prospect for the Energy East Pipeline.
Without the Energy East pipeline, there would be no prospect for an upgrader or an entire petrochemical industry in Saint John.
Without a natural gas pipeline, there would be no LNG import facility in Saint John. Without an LNG import facility, there would be no prospect for an export facility. Without the potential reversal of the Maritimes and North East Pipeline, there would be no prospect of an LNG terminal in Saint John or in Goldboro.
Without the presence of natural gas, we probably would not have seen the $2.2-billion expansion of the potash industry in New Brunswick.
And without pipeline capacity, there would be little prospect of a shale gas industry in our region.
My point is that infrastructure is the critical building block in establishing an energy sector in our region. And in that respect, we have come a long way in a short period of time. That’s why I’m so optimistic.
We now have the potential to move to a whole new plateau, one with the potential for employment, growth and prosperity for our region.
No energy infrastructure, no energy industry.
The prospect of an energy Holy Grail is not a mirage. Many other jurisdictions have enjoyed extraordinary wealth from their energy resources.
Norway has become the second richest country in the world. Thirty per cent of government revenue comes from its resources. It has an $800-billion sovereign wealth fund, making every one of its citizens a millionaire on paper.
North Dakota now has the fastest growing economy in the United States and the lowest unemployment rate.
It has over 30,000 employees in energy, earning more than $90,000 per year.
British Columbia governments are receiving an average of $1.3 billion a year in royalties. Over the next 20 years, $180 billion of new investment is expected to create 54,000 jobs annually.
In Alberta, the government receives $7.7 billion, approximately, in annual royalties, which is at least 20 per cent of Alberta’s budget. Over 420,000 people are employed.
Saskatchewan, a sister province of ours, which was at about the same stage of economic development 15 years ago, now receives $1.4 billion in payments each year from royalties, which represents 10 to 25 per cent of its revenue from taxation; 34,000 jobs are directly connected to this sector.
And closer to home, our neighbour, the province of Newfoundland and Labrador, receives $2 billion a year in royalties, representing 24 per cent of their budget. This is the biggest revenue source by far.
To date, they’ve received $11 billion in royalties. This is just the beginning. The newly announced Hebron project is anticipated to bring in $24 billion of royalties. This is not counting all of the other projects that are coming on stream.
A province that was once poorer than New Brunswick only a few years ago is now a “have” province in Canada and no longer receives equalization.
New Brunswick’s royalty revenue is $95 million and less than two per cent of all revenue sources.
Nova Scotia is at $37 million. New Brunswick and Nova Scotia are not only becoming poor provinces in Canada. They are becoming poorer provinces in their neighbourhood.
I have written and talked about our energy potential ad nauseam. My positions are well known and you have far better experts here than I to talk about energy issues.
I think it would be more useful for me to spend the remainder of my time talking about a subject where I may be able to add more value —the politics of resource development.
We are facing two major challenges: firstly, the fear of the unknown and secondly, what I loosely call the law of groups.
The fear of the unknown is no stranger to our region.
Many of you may recall the furious opposition to Point Lepreau when it was first proposed. The fight was loud and bitter.
It was built. And it is a complete non-issue today. In fact, I defy you to find a place in Canada more receptive to building a new nuclear plant than Saint John, New Brunswick.
I encountered the same phenomenon many other times during my political career.
I recall the controversy that was created when we tried to shut down 300 rat-infested dumps and create five regional landfills. The opposition was strident and well-organized. Not in my backyard!
A non-issue today!
We ran into an even bigger controversy in the effort to build a bridge between New Brunswick and Prince Edward Island. The opposition was intense, particularly in Prince Edward Island, where a referendum was held, with the island split almost in two. Today, the results would be closer to 100 per cent in favour of the bridge.
Even on such a benign project as the Fundy Trail, we ran into a huge firestorm of opposition from people who believed that we would ruin the tourism industry, or destroy the bear hunting industry or whatever.
In fact, the opposite has been true, and once the trail is completed, it will be the best tourist attraction in the entire region. I doubt today if you could find a single detractor to the Fundy Trail.
There are numerous other examples where local opposition has been tempered by reality. I think of the Irving Oil refinery in Saint John and the LNG terminal. Familiarity is like sunlight. It illuminates everything in its presence.
We need much more illumination in the current battle over shale gas in New Brunswick and Nova Scotia. More light! Less heat!
We need much more communication than we have had to date. We need communication, not only on the shale gas industry per se. But also communication on the stark choices facing our provinces.
Both provinces are facing $500-million-a-year-plus deficits and you can add another $200 million to $300 million to that if interest rates are normalized.
Our regional economy is flat-lining and we are depopulating. Our population is not just leaving it’s getting older. It is aging at twice the rate as Alberta.
We are in an endless cycle of high deficits, declining population, higher interest costs, an aging population, higher cost to service the population, less equalization, less personal income tax and less consumption tax. It is a death spiral if something is not done about it.
We can keep firing premiers every election, but that’s not going to change the facts.
Citizens of these provinces need to understand that we do not face a menu of choices that allow us to pick “all of the above.” We cannot refuse to exploit our resources and continue to believe that we can balance our budgets, pay our doctors and social workers and other civil servants and continue to fund a social safety net. As long as people feel they can have it all, they will not face the hard choices that need to be made.
I also believe that much more could be done by opinion leaders to demystify the extraction industries.
People feel that it is a choice between shale gas and drinking water. This is a complete lie, but is constantly repeated.
As Winston Churchill once said, “A lie gets halfway around the world before the truth has a chance to get its pants on.”
Fracking technology has been around for over two decades. There are 15 million Americans who live within one mile of a fracked gas or oil well.
Strong regulatory environments are making the process cleaner and safer.
And rather than being environmentally damaging, the presence of shale gas in the United States has lowered U.S. carbon dioxide emissions to a 20-year low in 2012 as it displaces oil and coal.
Having said that, I get very defensive when other provinces point fingers at us back here in the East on shale gas.
The citizens of Alberta are perfectly comfortable with drilling and fracking for oil and gas.
They’re used to it.
There would be a revolution if you tried to build a nuclear reactor.
In New Brunswick, we are perfectly comfortable with a nuclear reactor, but have not yet embraced the extraction of oil and gas. It’s pretty simple. We trust what we know.
An even more graphic example is the Energy East Pipeline. There is strong support for this pipeline in New Brunswick. On the other hand, British Columbia is viscerally opposed to pipelines from Alberta.
While I’m on that subject, let me throw an entirely new thought into the energy discussion this weekend.
It is increasingly obvious that a huge disconnect exists between North American gas prices and the rest of the world. It is also increasingly obvious that Europe urgently needs access to new supplies of natural gas to reduce its reliance on Russia and the Middle East.
Why not bring North American gas to the East Coast of Canada for export overseas? This gas might be sourced from the Marcellus or Utica fields through the Maritime and North East Pipeline or it may come from Western Canada on the same right of way as Energy East.
In Atlantic Canada, we already have two sites identified and, I suggest, as broad a base of public support as there is for the Energy East Pipeline.
Perhaps the economics won’t work. I don’t know. However, that was the original knock against Energy East and it turned out to be false. I think a lot of Canadians were amazed to find out that the east coast of Canada is eight sailing days closer to India than the west coast.
Wouldn’t it be great for the country if east and west were once again working together to solve a big national problem?
And now getting back to the politics of managing change.
Somehow, we need to make people feel more comfortable. They’re certainly not going to get more comfortable listening to people like me.
The best people to do that are people who actually work in the sector. We have thousands of people from Atlantic Canada working across the country in oil and gas.
Let’s bring them back to New Brunswick, organize town hall meetings, have them on radio and television.
Let them explain to their fellow citizens what they’ve learned about working in the sector.
And let’s take Atlantic Canadians out west. Let’s allow them to see with their own eyes what is taking place in communities across Western Canada. We are not at heart negative people. Just give us the facts.
There will always be some people totally opposed to any change and some people totally for it, no matter what the evidence on either side. If this were duelling movies, it would be Dr. No vs. Meet the Frackers.
As it happens, I don’t think the majority of New Brunswickers fit into either of those camps. They are not categorically opposed, but they are categorically concerned.
I mentioned the second major issue that we need to face and that is the so-called law of groups.
The law of groups is a very simple principle. Public policy is often influenced by groups who are highly motivated, highly organized and have the biggest megaphone even when the silent majority have a different view.
This is something that governments deal with all the time and good leaders can sort out the chaff from the wheat.
After all, it is responsibility of governments to govern for the betterment of all their citizens.
In New Brunswick last year, there were countless numbers of protests. Some of them very violent. Watching on television, it would almost seem as if everybody was against shale gas. I never saw a single protester holding a sign saying, “We want fracking.”
And I know that some would construe the most recent election campaign as some type of referendum.
Let’s assume, for a moment, it was.
One party leader stated emphatically that the only real vote against shale gas was a vote for his party. I believe him. He got 6.6 per cent of the votes.
The vast majority of the population on this, and many other controversial issues, have a much more responsible position. But they want the facts, they want strong protections and they want leadership.
Good governments do not allow mob rule. They seize control of the agenda, they communicate, they make decisions and they lead.
And leadership is usually rewarded!
The bottom line is that we cannot allow public policy to be decided by the biggest blowhard. We need facts, good communication, and leadership.
Let me close by connecting the dots. Atlantic Canada is in a perilous situation of high deficits, declining and aging populations, stagnant economic growth. On the other hand, we are blessed with abundant energy resources.
These have the potential to restore our fiscal situations, reinvigorate economic growth, reverse the brain drain and improve the quality of life.
It will sustain pay for our social workers, our teachers, our nurses, our public servants. It will provide a safety net for those most in need and, for the first time in a long time, it will give us some hope for our future.
As a lifelong Maritimer, I would like to think that I know our region. We are built from sturdy stock. We are relentlessly optimistic, often in the face of great adversity. We live in harmony and with respect for our land and sea.
We are anchored to our families and our communities.
We want a better future for our children and we want our communities to survive.
We want our politicians to lead.
Let’s put the lead back in leadership.
Get the facts. Give us the facts. Be open and honest. Make the tough decisions.
And we will follow.
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