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Such delays impose a significant cost and risk on project developments. One way to measure the impact is to calculate the extra profitability needed to cover economic, tax and regulatory-delay costs. Businesses will move ahead with projects if the rate of return on capital is at least as high as a “hurdle” rate. Regulatory-delay costs increase the hurdle rate, making some projects infeasible.

Based on work I’ve done with Phil Bazel, I have estimated the impact of regulatory-delay costs on hurdle rates, using the Stikeman data mentioned above, for low, medium and high regulatory delays. If oil projects take seven years for approval, the regulatory-delay cost increases the hurdle rate, adding an additional investment cost of $127 million onto a $1 billion project. For mining, seven years is $144 million in added costs to a $1 billion project.

Regulatory-delay costs can thus have a large impact on the projected profitability of projects and, as a result, the decision whether to proceed. The estimates I provide underestimate the overall impact by not taking into account the substantial cost of preparing application proposals and the perceived risk associated with failure to get approval. So if resource projects are going to be profitable in Canada, it will be important for Bill C-69 to reduce timelines and uncertainties.

And that is where the debate lies. Will Bill C-69 make the regulatory process more efficient and certain? Or will it discourage resource projects in the future? The Alberta government has criticized its regulatory overreach and Saskatchewan’s Premier Scott Moe and Alberta’s United Conservative Party leader and premier designate Jason Kenney call it the “no more pipelines bill.” The Senate can suggest significant amendments to reduce the scope and create more clarity in the proposed process. However, if it pushes Bill C-69 through without thorough revision, it could well stoke Western grievances that are already boiling over.