The words “banker” and “courage” don’t usually go together in Canada. Banking, as one former Scotiabank CEO called it, is a “blood sport” in our country. So for a high-profile banker to step into the public square and make pronouncements on a key public policy matter — in this case the need to get on with the Trans Mountain Pipeline — is an invitation for ridicule at best and stressful political consequences at worst.
Yet courage describes the recent actions of Victor Dodig, the CEO of CIBC, a bank born of the 1961 merger of two Confederation-era Ontario banks founded — when Ontario was “the West” — in reaction to the perceived domination of Eastern bankers accused of denying Ontario the financing its businesses and farmers needed to prosper in the new national project that was Canada.
Last month Dodig took to the public square to declare forcefully that the Trans Mountain Pipeline expansion was part of a “country-building” exercise. True, his words were couched in boilerplate undoubtedly drafted by the Commerce’s communications department, framing the energy sector as a “family business” that has “fallen on tough times,” around which the Canadian family must now come together to “find a solution” to.
Wrapped tightly in the cliché was a key message: the expansion of the Trans Mountain Pipeline is a national necessity that much of Canada’s future prosperity depends on, including the prosperity of: tens of thousands of bank employees who flood Toronto’s downtown financial core five days a week; the legions of customers they serve; and many more thousands of bank shareholders who depend on annual dividend payments and increases in share prices that they have built into their financial planning. It is a message Canada’s new Minister of Natural Resources, Seamus O’Regan, would do well to heed.
Close to a million direct and indirect jobs are tied to our energy sector across Canada. Anyone who believes windmills and Teslas will generate equivalent alternatives anytime soon — the illusion peddled in the Ontario Green Energy Plan of former premiers Dalton McGuinty and Kathleen Wynne — is being delusional.
Of course, Dodig tipped his hat to addressing climate change, yet was unequivocal in voicing the obvious facts lost in the hysterical noise generated by Greta Thunberg acolytes during the recent election: that access to inexpensive energy is key to reducing poverty globally and to building sustainable middle classes both at home and abroad while transitioning to green-energy technologies and sources.
Dodig made plain the choice that is before Canadians. We can invest in the energy sector, expand pipelines such as Trans Mountain and distribute responsibly-generated power at global prices, thus helping Canada both secure its prosperity and transition to green-energy production. Or we can withdraw from meaningful participation in responsible energy generation and jeopardize both our future prosperity and the promise that has been Canada since its inception: to build a country in which each generation can reach higher standards of living and realize opportunities not possible in many other parts of the world.
Why did Dodig speak out? If you assume it was primarily because the federal election was over, think again. More likely, it was because the Trans Mountain delay, the flight of foreign energy firms out of Canada, the loss of $30 billion in investments over the past three years, and the global competitive pressures Canada’s banks face every day are taking their toll on the banks’ ability to meet the expectations Canadians have of them —to continue to grow at a strong pace, to increase their dividends annually, to produce well-paying jobs and to help sustain broader economic development in Canada.
Cost-cutting is now the mantra across Bay Street, especially in capital markets. CIBC reportedly just let go 15 managing directors from its own capital markets division. Such cuts are becoming common, as is the downdraft in salaries and bonuses. This trend is starting to surface more generally, with the October jobs report showing unexpected losses.
The billions of dollars we lose annually because we cannot deliver more of our oil to world markets and the billions more lost as foreign energy firms withdraw from Canada is all money that is not flowing through the Canadian banking system or generating dividends or paying salaries that provide well-paying jobs in Toronto and elsewhere. Dodig’s call for change isn’t simply one banker speaking up. It is a warning that turning our back on our energy sector would mean turning our backs on the prosperity we have promised future generations.
John Turley-Ewart is a regulatory risk management consultant and a former associate editor of the Financial Post.