The chief executive of one of Canada’s largest banks is adding his voice to the chorus of concern over the fate of Kinder Morgan Canada Ltd.’s Trans Mountain pipeline expansion project, warning that the country could lose its competitive edge and the suspension of work could have a broader chilling effect.
Bank of Nova Scotia’s Brian Porter said Tuesday that it is crucial for the pipeline project to go ahead.
“It’s important to look at the cost of not doing these things for the Canadian economy, in terms of GDP and what it means for per capita income of people in Canada,” he told reporters after the bank’s annual general meeting of shareholders in Toronto.
“And we’re going to lose our competitive advantage on a number of things. Canada has a productivity issue and it has a competitiveness issue. And we’d like to see the project proceed. But we understand the difficulties involved.”
Kinder Morgan announced on Sunday that it was suspending all non-essential construction on the Trans Mountain project, and said it plans to consult with stakeholders on the viability of the $7.4-billion project in light of continuing government opposition in B.C. The pipeline company set a deadline of May 31 to reach a deal, or consider scrapping the project altogether.
On Monday, the Canadian Energy Pipeline Association said these uncertainties undermine the country’s ability to attract capital, grow the domestic economy and provide jobs for Canadians. Federal Natural Resources Minister Jim Carr also called on the B.C. government to end all threats of delay, as its actions “stand to harm the entire economy.”
Porter said Tuesday that Canada’s third-largest bank is seeing an outflow of investment capital going south of the border with some corporate clients that have cross-border businesses. This is driven by a basket of factors including U.S. tax reforms and Buy America policies, he added.
“They might be expanding the Buffalo piece, a little more than they would the Canadian piece,” Porter told reporters. “That’s a reality today.”
Porter expressed concern that the latest Trans Mountain developments could have a broader chilling effect on investment in Canada, beyond oil and gas.
“There are some sectors into the country, whether it’s technology or AI, that are doing exceedingly well … I’m concerned about the resource-based economy, and access to tidewater for our product,” Porter said.
Meanwhile, Scotiabank is investing $250 million over the next decade to help its employees adapt to the digital economy, including funding to help workers who have or will be displaced by technological change.
This learning and re-skilling initiative, to be launched next January, will also include an online training portal for all employees, career counselling and an enhanced tuition allowance for those looking to re-educate themselves.
Technology continues to disrupt the banking industry and Canadian lenders have been investing heavily in innovation as consumers do more of their banking online and via mobile, rather than physical branches.
More than 60% of its customers now interact with the bank digitally, Porter said.
Scotiabank spent $3.1 billion on technology last year, up 14%, and has hired 2,000 technology professionals over the past four years. Last year, Scotiabank unveiled a 70,000-square-foot “digital factory” separate from its main campus to lure high-tech skilled workers and develop technological innovations.
But in 2015, Scotiabank had also warned employees that certain offices across the country would close over the next two years as it digitizes a number of document-processing functions.
“It’s evident that technological change is delivering meaningful benefits across our society. It’s also demanding new skills and mindsets … All stakeholders have a responsibility to address the financial and non-financial effects of rapid technological innovation,” Porter told shareholders.