Proportional Representation: A Bad Thing for BC, a Very Bad Thing for BC Mining

Canada’s ability to compete in the global markets is under threat from all sides. Why? Bad policy. It’s that simple.

Every day we are hearing from Canadian business leaders that policy decisions – or policy inaction – are hampering our competitiveness and likely to have long-term negative impacts on our economy. We are all well aware of the continued uncertainty of NAFTA negotiations and the escalating trade tensions on a global basis. On top of that, there is our collective inability to get the Trans Mountain pipeline built, which is, to quote Perrin Beatty of the Canadian Chamber of Commerce, “yet another example of how Canada’s broken regulatory system is undermining Canadian competitiveness and driving away investment.”

The resource industry is struggling. Resource investment funds are shutting down, mining and exploration permits are becoming tougher to obtain, mines are becoming tougher to find-finance-build; and investment risk is higher than it’s ever been.

But that’s not it. There is another policy fight brewing here in British Columbia and it’s about time we, as business leaders, fight it head on: the referendum on electoral reform. 

Between October 22 and November 30, 2018, the current government of British Columbia is asking us to vote, by postal ballot, on whether or we want to allow Proportional Representation (PR) in our provincial electoral process.

Proportional Representation is bad for business. And it’s very bad for the mining and natural resource industries at large. Do we want to see new projects permitted or development projects get off the ground? Do we want to see new mines built that will create jobs, build capacity and fuel local economies? Do we want to get our resources out of the ground, into the global markets and into the hands of the people building the increasingly urban, high tech and green world we all expect today? Yes, of course we do. So, we need to stop proportional representation. 

PR effectively amounts to ‘tyranny of the minority,' where special interest groups and single-issue parties gain power, hold increasing sway in the halls of government and thwart the will of the people. It essentially gives policy makers a free pass to push moderate voices aside and ignore the “bigger picture” to the detriment of the greater good for all.

Let me break it down for you

Our current electoral system of “first-past-the-post” may not be perfect, but it is simple, stable and it’s working. It has created a democracy where big, important projects can and do get done. We have built clean energy projects, pipelines and LNG terminals. In 2017, mining in BC produced $8.8 billion worth of metals and minerals. Much needed progressive social system reforms are underway. 

This could all change with one vote.  Every resource project will always have vocal minority advocates – for and against the project - and their voices are an important part of the process. But under a PR system, these minority voices will be amplified.   A blossoming of fringe-groups of all kinds, including misguided, misinformed anti-resource development groups with some extreme views will add further risk to resource investment.

As documented by the Fraser Institute: Changing British Columbia’s voting system to a form of PR could result in fewer local representatives and give rise to fringe or extreme parties on the left and right of the political spectrum. Proportional representation also results in a higher frequency of coalition governments which creates:

• less stable governments
• less moderate policy platforms
• poorer representation of voters’ views
• higher levels of government spending and larger deficits
• more frequent elections
• greater uncertainty

Gone will be the style of government where the “good of the many” is looked after. Instead, we will get a litany of things that are bad for the economy as potential investors may look for more stable jurisdictions for their investment dollars.

 Why does this matter to mining?

We have enough risk to face in the BC mining industry. Do we really need to add even more risk?

All of us in the mining business are keenly aware that the resource sector has been under a vast amount of negative pressure for years now. In addition to large ore deposits being tougher and costlier to find, we are facing dwindling resource commodity prices hitting multi-year lows, coupled with a vastly reduced supply of resource funding sources traditionally used to explore for and build new mines in BC.

We have a high bar today to successfully navigate government and stakeholder permitting on mining and exploration projects. And this is important. As a group, we have evolved into more resourceful and more responsible explorers, developers and producers. But those barriers to success seem to constantly move higher and higher. This is especially the case in the province of British Columbia where we have felt the pains of drastically bloated project timelines (…or in some cases, completely halted).

So yes, we are in a risky business today. But what would it look like tomorrow under a PR electoral system? A multiplier of resource investment uncertainly and rise.

• Coalition governments will become the new norm under PR. Rudderless, indecisive and slow-moving coalition governments will further add permitting uncertainty to all elements of the resource business.
• To form governing coalitions, the party with the most seats must negotiate with smaller parties and often capitulate on key policy issues. Therefore, smaller parties (read: fringe groups) will exert disproportionate power. This would be bad for mining, for obvious reasons.
• The very nature of the extended timelines required to form coalition governments after PR elections (months and sometimes years in some European examples…), would further add to the already bloated project timelines in the resource industry when governments have key decisions to make regarding mining projects. Investors will defer dollars into sectors with more compressed timelines.
• Lastly, the totality of the evidence strongly suggests that governments elected by PR are far more likely to run deficits than those elected through the current system. Fiscal deficits usually lead to increased taxation, most especially corporate taxation. With revenues of $9 billion annually, the BC mining sector is a huge payor of tax in the province. More deficits would likely mean more tax on a business that is already in distress with squeezed margins. 

Investment risk in the BC resource sector is higher than ever before. We simply cannot let it soar. Proportional Representation might be the tipping point for BC mining, that one event that causes fund managers in the resource sector to completely defer dollars to other jurisdictions. That one event that kills responsible mining in our province for good. 

Our strategic competitive advantage – the resources in the ground – will sadly become no competition at all.

 It’s time to act!

Each and every one of us can make a difference. And it’s easy:

1. When the ballot arrives in the mail, vote “NO” to Proportional Representation in British Columbia.
2. Spread the word. Talk to your friends, families, co-workers and community members who value the resource companies proud to call British Columbia home. Proportional Representation is a risk to their jobs and their livelihoods. Proportional Representation could ultimately destroy an industry that has been a backbone of building this great province.
3. If you care, donate! Currently, the groups lobbying against PR are strapped for funding that allows them to get the word-out. Check out this link:  https://nobcprorep.ca/

 Get informed, get involved and get active.