Clear and Present Danger

May 14, 2019

On Wednesday morning you will receive an email from us launching the second major Suits and Boots campaign since our inception one year ago.

This campaign will address a clear and present danger, much like Bill C69 has been, to a huge swath of the Canadian economy. We will be asking you to stand up and help defend businesses that are under attack – many of them are family-owned and operated – primarily in the Prairie region, but extending all the way from British Columbia to Quebec.

We are going to be asking you to put your shoulder to the wheel of this campaign the same way you have done with #KillBillC69. Phone calls, emails, donations and outreach to everyone involved.

No other group in Canada – political or otherwise – has taken the stance we will be taking tomorrow morning. We will be showing the same leadership on this issue that we have done on #KillBillC69. And the focus of our campaign will involve an entity that is infinitely larger and more powerful than the Canadian Senate. We will need all hands on deck.

This will be a huge effort. It will take time, money, focus and courage. We’ve demonstrated that before, at Suits and Boots, and we know we can do it again. We are confident that, with your help, we’ll be as successful on this issue as we have been on Bill C69. Watch for our email tomorrow morning and please step up and support this cause. When you see it, you will get it.

How important has your effort been to the Bill C-69 cause? Here are three ways that clearly measure the power and influence of your work:

  1. Listen to this radio interview with Danielle Smith from last Thursday, and judge for yourself.  The segment featuring Suits and Boots starts at the 5:15 minute mark, and you’ll hear what she has to say about our effort right off the top. And she repeats it again at the 15:00 minute mark, close to the end of the interview.
     
  2. Here is a link to the 37 letters addressed to the Committee from Suits and Boots supporters, and now posted on the Senate website. These are powerful, moving, honest and heartfelt letters from our supporters across Canada. As I mentioned in the Danielle Smith interview above, the Senators present at our Committee meeting acknowledged how very important it was for them to hear these voices. We – everyone who presented at that Committee meeting – received a standing ovation at the end of our session.
     
  3. And here is the link to the full transcript  of the Senate Bill C69 Committee meeting that we attended on your behalf on April 9th: If you don’t have time to read through the full minutes, I’ve copied for you below the passages where Brad Schell and I spoke on your behalf, as well as comments from Mr. Mick Dilger, President & CEO of Pembina Pipelines Corporation and Senator Paula Simons of Alberta, as they related to Suits and Boots:

Rick Peterson, Founder and President, Suits and Boots: I want to thank Madam Chair, the honourable members of the committee and all the francophones and francophiles from Quebec and New Brunswick for coming to Calgary to discuss issues of vital importance to Canadians.

[English]

My name is Rick Peterson. I’m the President of Peterson Capital. We are an advisory firm. I’m speaking before you today from the investment industry, but also as my role as the founder and president of a not-for-profit called Suits and Boots. I’ve spent 31 years in the investment industry working for a number of large companies: Merrill Lynch Canada, HSBC Securities, Midland Walwyn, CIBC Wood Gundy. Since 2003 Peterson Capital has helped finance companies across Canada. We have a staff of seven employees in Vancouver, Calgary, Toronto, Montreal, Halifax, and Geneva.

Suits and Boots is a not-for-profit. We have 3,700 people. We started a year ago, in April. I believe in the front and back rows we have some of our supporters. We are a true grassroots not-for-profit. We receive no financial backing from any company. We receive no financial backing from the resource sector.

Mr. Brad Schell is the chair. Mr. Schell will be speaking on behalf of the boots in our organization. We are in every single province and territory in more than 300 communities across Canada. I think you’re going to find his testimony of interest.

As an investment banker and as somebody who works in the capital markets, I’m here today to simply reflect what my capital markets colleagues are saying and are hearing. Unanimously since that bill sailed through the house and landed on your desk, there is not one investment banker in Canada who has put up his or her hand and said this is a good bill. There is not one fund manager in Canada that has said this is a good bill. There is not one investment advisor who helps manage portfolios, TFSAs, RRSPs, who has put up his or her hand and said this is good for the resource sector and for Canada.

You don’t have to believe me. What you have to believe are the people who are involved every single day of raising capital for our resource sector.

It was interesting, the speaker — scientific lady, and I apologize for not knowing her name, before ours. Our view of the capital markets is there’s a fundamental flaw in the 2012 act, and you have an opportunity to correct that. That flaw was stripping the National Energy Board of its ability to make a final decision and making that go into cabinet. As the remark was said before, it was like letting the fox in the henhouse. That was so true. Bill C-69 adds about ten more foxes in the henhouse. Bill C-69, and this is in the view of everybody in the capital markets, adds more risk. Investment decisions are being made across Canada, across the world every single day.

[Translation]

The most important factor is risk. What risk is associated with the capital that I’ll invest in Canada?

[English]

What’s the risk of getting your money back and making a reward? Well, the capital markets have spoken very clearly and very loudly. They’re gone.

This evening, if you get a chance to walk around Calgary — and this is ground zero of the pain, ladies and gentlemen. This is ground zero of the flight of capital. This is ground zero of the results of poorly thought out policy of the oil and gas companies, of the oil and gas sector. When you walk around Calgary tonight for a break there will be some lights on at the top of the towers, but don’t be mistaken. The lights are on, but there’s nobody home. The official vacancy rate in downtown is 25 per cent. The real vacancy rate is probably 60 per cent. You can rent floors of downtown Calgary, commercial space, for operating costs and nothing more.

It’s important to know that all of us in the capital markets want clarity and respect the need for Indigenous consultation and environmental concerns. We want that. We want that clarity. We want that clarity so that capital comes in and supports our resource sector and the young men and women in it.

The three Canadian banks reported their results last quarter last Thursday, and it was interesting. Every single one of these three banks, RBC, TD, and CIBC, all of them committed money to alternative energy, all of them committed money to green technologies. But every single one of them doubled down on their support for the resource sector, for the oil and gas sector. Not one of these gentlemen has come out in favour of Bill C-69.

Victor Dodig, the CEO of CIBC, last Thursday, and I quote from The Globe and Mail, there is “. . . leakage in terms of revenue – tax revenues that support health-care spending and education spending and make our country a better place.”

Ladies and gentlemen, you have an opportunity to revisit a flawed bill and make this country a better place to invest. I’m going to ask you in conclusion, before I turn it to Mr. Schell, I’m going to ask you to do three things for us at Suits and Boots and for all of Canada.

Be focused. When you look at amendments on this bill, don’t try to solve the planet’s problems. Assess the pipeline, not the planet.

Number two, be honest. If you don’t think we should be in the resource extraction business, write a bill that keeps the oil in the ground. Don’t write a bill that pretends to want to exploit the oil, but then do everything you can to keep it in the ground.

The last thing I’m going to ask you is be strong. I’m very encouraged by some very strong amendments that I’ve heard so far that go a long way towards satisfying all the different interests. If you forward amendments to the house and you all agree with them and the Senate passes them on third reading, if that comes back to you, you need to be strong and you need to support and stand up for your amendments.

It wasn’t the case in Bill C-49. Eighteen amendments were sent by your Senate to the house; they came back with two, and the Senate caved. Don’t cave on Bill C-69.

Be strong, be realistic, because it’s the fabric of Canada, the fabric of our federation which is at risk.

Brad Schell, Honorary Chair, Suits and Boots: Senators, I just want to tell you I’m deeply honoured to be here and thank you very much for coming to Calgary, the oil capital of the world. I would like to give you a little of my history and background.

I started out at 17 years old driving a truck. I worked my way up through the ranks. I started a family-owned and operated heavy oil outfit. My wife counted the beans and paid the bills, my son came to work alongside me in the field, and when my daughter was going to university she came to work part-time in the office.

In our prime, we employed 40 people. We had top-shelf men and women. We paid them well and treated them like gold. We had quite a few long-term employees. They were key to our success.

About 12 years ago we sold out. I had a really hard time with that. I wanted to see my son and my grandkids take that company and run with it.

Today I’m very grateful we sold because I probably would be flat broke and pushing a shopping cart around downtown Calgary picking up bottles.

When I go to a Ritchie Bros. sale, I will see four or five trucks sitting in a line-up, all painted the same, good-looking rigging, and you’ll hear people talking. Well, the bank called his loan, he’s broke, he has no work. That’s going on all through Alberta. Every small town where the oil patch operates, those key little companies are finished. Devastation in this province without access to these foreign markets for our oil is ruining this place.

It came to a point in this country where we’re almost ashamed to say that we work in the oil and gas industry. Well, I’m here today on behalf of Canadians and the oil and gas industry and every Canadian who feels the same way I do. We should be proud of our oil and gas. There are pundits who oppose the oil and gas industry and pipelines. Without oil and gas in this world we’re dead in the water. Look around. How did you get here? How did your groceries get here? It takes diesel fuel and gas.

Thank you.

                                                            ****

Mr. Dilger: We’re doing what we can with the hydrocarbons that exist.

Mr. Peterson spoke of capital markets. The ripple effect of losing hydrocarbon investment, which used to be the largest capital investor in the country by a long shot, is going to be traumatic. Balance sheets are stressed and weakening and people are hanging on now. They’re just hanging on. Another few years of this, it’s going to be absolute chaos. We’re going to see the real tragedy of a sector that was the envy of the world just brought to its knees.

                                                            ****

Senator Simons: Thank you very much, Madam Chair. I know we’re not supposed to have a long preamble. I want to say what a privilege it was to have Mr. Schell and Ms. Smith here representing — I don’t want to say the past — the legacy and the future of the industry. I mean, you both spoke with so much heart and so much intelligence and so much love for your field. I think that was really important for my colleagues who are not from Alberta to hear. I want to thank you both for just speaking so eloquently.

I’m going to ask my question of Mr. Peterson. I understand what you and Mr. Dilger are saying about the flight of capital in response to Bill C-69. The timeline you outline suggests that capital was leaving before C-69 came to the forefront of public attention. And obviously it’s not the law now. What are some of the other factors that you think are driving that flight of capital? And if we can pass an amended C-69, how do we regain the confidence of international investors, that they can come and do business here and see a project come to fruition?

Mr. Peterson: The capital markets are a leading indicator. The capital markets look to the future. As Mr. Dilger eloquently pointed out, the issues that Pembina and others are facing are not new to the capital markets.

If a fund manager sees on the horizon the possibility or the probability of regulations coming in that could add risk to his or her investment portfolio, it’s already built in. The flight of capital that we’re seeing and the negative views on our market are built in because the expectation is that C-69 largely in its form is going to pass.

I’m not a legal expert. I think we had some very good testimony from Andrew Roman, a litigator out of Toronto. I think CAPP has done a good job.

Those of us in the capital markets, we simply want clarity. We would like to know where it’s going to be going. We would like fewer potential triggers for litigation. My understanding is there are now 22 mandatory considerations on the review side of it instead of 12, as there were before.

What the capital markets are looking for is clarity, succinctability to understand what the cost to the capital is for the people on the ground, and what can be done is for the Senate to send back a very clear set of guidelines and amendments. I think it can be done. I’ve seen very strong amendments that have come forward, ideas that have come in these committees so far.

Have you invited a fund manager here to speak to you?

Senator Simons: I don’t think we have somebody coming here, but I know that —

Mr. Peterson: Do you have a fund manager?

Senator Simons: Our colleague Howard Wetston was looking —

Mr. Peterson: I’m an intermediary between Pembina and the fund managers, but I would strongly suggest, senator, that you ask that question of the men and women who are pulling the trigger on investments in Canada. That answer will be the clarity that you seek.

Senator Simons: Thank you. I know that we are looking for someone.

The Chair: Yes.

Mr. Peterson: You are looking, or do you have someone?

The Chair: No. We have a panel on finance.

Mr. Peterson: You have a fund manager? You have an institutional —

The Chair: We have a panel on finance.

Mr. Peterson: Okay. That’s very good news. Please ask that question to that person.

Senator Simons: I shall. Thank you very much.

                              ******

Mr. Peterson: I’m venturing onto territory where I’m not an expert, but Andrew Roman put out a very interesting piece. You can see it on his blog. He talks about the use of the word “must” versus the use of the word “may.”

Senator Richards: Yes, I know that.

Mr. Peterson: From a layman’s viewpoint, from a capital markets viewpoint, it seems obvious to me that there will always be potential litigants who can find issue with something that must be done but maybe isn’t done in the full scope of what they would wish.

As Mr. Dilger pointed out, the fact that there’s no more standing, the fact that thousands of people can come and make a presentation — those two together is a fiery pool of octane ready to go off to blow off a project.

Was the mandatory work done and did it hear from a wide enough scope of people? The lack of standing and making it a narrow definition of what must be done is probably a retirement dream for many litigators in Canada. We have to stop that.

                                             ******

Mr. Peterson: As part of our Suits and Boots brief, we sent in, I think, too many letters. We sent in 37 pages of letters. My apologies to Maxime Fortin.

I would urge senators to read these letters. We’re talking about policy today, but if you read these letters, these aren’t canned emails from a lobby group. These are heartfelt, endearing, tearful, frustrated letters that I think reflect the tearing of the social fabric in Canada. We’re tearing Canada’s social fabric apart. I mean, people from Nova Scotia write to us, from Quebec, from Newfoundland, from Nunavut. They’re writing to us and saying, “What’s happening to the Canada that I know?”

We need more companies like Mr. Dilger’s. We need more young people coming into the business. We need more people like Brad who can say to their grandchildren there’s a future.

Read those letters, reflect that in your amendments, and we’ll be fine.

Thank you.

                              *****

Thanks for your support. RIck Peterson,
Founder, Suits and Boots