QUEEN’S PARK – Leaders Ledger – Ontario once enjoyed bountiful supplies of affordable energy — and used it over more than a century to build our province into an industrial powerhouse and resource development dynamo.
But times have changed.
You may have seen a news article a week ago, for example, about how high electricity prices, along with a burdensome approvals process, add up to obstacles to investment in Northern Ontario’s Ring of Fire region. My caucus colleague, and Ontario PC energy critic, Vic Fedeli used a recent provincial parliamentary committee meeting to press the government for some answers about this critical issue.
Because it’s been in the news lately, I want to use the Ring of Fire to illustrate a broader point, to show how heavily energy costs can weigh on economic sectors like mining, forestry and manufacturing — where Ontario most urgently needs to kick-start job creation with more than half a million people unemployed.
The Ring of Fire should be a cause for optimism with the ongoing jobs crisis in Ontario. According to Richard Nemis, the entrepreneur who gave the Ring of Fire its name, the “economic impact of this discovery on the Ontario economy will probably run into the hundreds of billions of dollars over time.”
But there’s the catch: Ontario needs to do more than just extract the Ring of Fire’s chromite, copper and nickel deposits. Ideally, we want those minerals processed in Ontario-based facilities, by Ontarians, so we get the maximum benefit from the Ring of Fire’s true economic potential.
But with energy prices now spiking to historic highs, we’ll be lucky just to extract these and other resources in a cost-effective way — never mind process them here at home for sale and export.
Look at forestry: Ontario has already lost more than 60 lumber mills, which often point to high electricity costs as one of the primary factors of closing their front gates. In recent years, these plant closures have taken some 10,000 direct forestry jobs with them.
And if mining companies face energy costs in Northern Ontario that are vastly higher compared to those prevailing in neighboring jurisdictions, there’s a risk our mineral riches will be shipped for processing elsewhere.
Ontario today can’t afford this scenario.
This brings me to what Ontario’s energy policy for manufacturers and resource-based industries such as mining and forestry should do — but doesn’t.
As laid out in our Ontario PC Caucus Paths to Prosperity: Affordable Energy white paper, it’s time to consider a new power rate for our manufacturing and natural resources sectors. This would be set independently by the Ontario Energy Board (OEB), using objective economic criteria like the average costs of electricity for similar businesses operating in competing states and provinces.
The OEB would also have to take the impact on consumers into account, and monitor the costs and benefits of this power rate. And obviously government would need to ensure that the new rate actually creates investment and jobs.
During a visit to Northern Ontario in April, I noted that big markets such as the United States, Brazil and China are going to be eager customers for what Ontario’s resource sectors can provide. If we can ensure a reliable supply of energy at a reasonable cost in the North, we will get the full benefit of the Ring of Fire bonanza — including from the related processing work, as well as extraction. There is no question that the US housing market will bounce back — what we need to be sure of is that they’ll buy their lumber from us.
The fact is, Ontario is in a race with other Canadian provinces and U.S. states for investment and jobs. With the right energy policies in place, we will win that race. But to do it, we’ve got some tough decisions to make. We’ve got to get our economic fundamentals right. One of the big ones is energy policy. It must become a driver of job creation — not a barrier. Because without competitive energy costs, we may never be able to extract these resources in the first place — never mind developing the capacity to process them right here in Ontario prior to export.
Tim Hudak MPP
Progressive Conservative Party of Ontario