Licence to kill

Imagine a major economic project that creates jobs and prosperity for a region of Quebec. The promoter knows that this project must go through a long and weighty regulatory process, but is patient and acts in good faith.

The project receives all the required approvals, obtains all the necessary permits, and fulfils all the stipulated conditions. Tens of millions of dollars are invested to meet the government’s requirements and prepare the project. Then, all of a sudden, the government stops the project in its tracks on the pretext that it lacks “social licence.”

This is no longer just theoretical. As reported by Alain Dubuc, a La Presse columnist, this is the very charge levelled against the Quebec government by the developers of a mine in the Otish Mountains. Strateco Resources had obtained 22 permits in anticipation of exploiting a uranium deposit north of Chibougamau and had spent close to $150 million on preparations, only to have the Quebec government backtrack under pressure. The company, which is now suing the government, estimates that the province could have collected $800 million in taxes and royalties over 10 years if the project had gone ahead.

The way this story played out — a nightmare for all investors — illustrates the very real risk of the concept of social licence degenerating into mob rule, disinformation, and arbitrariness.

Whether it’s a pipeline, a mine, or an oil well, a developer has every interest in being transparent, in consulting local communities that could be affected, and even in improving the project within reason, in order to avoid inconveniences. Within this rational framework, social licence remains a business strategy and allows for constructive dialogue.

On the other hand, if a government tries to integrate such a fuzzy and unclear criterion into legislation, it can lead to all sorts of pitfalls. Requiring systematic consultations can give a disproportionate advantage to the most radical groups. We have already seen this with certain projects.

If the concept of social licence is understood as a threshold of support within a community, the door is opened to disinformation. It is not unheard of to have consultations in which scientific details are re-interpreted and distorted by activist organizations in order to scare local communities, to the detriment of the public interest. It’s not for nothing that technical issues have always been heard by experts and organizations with maximum independence.

Perversely, the groups using the pretext of fear to conclude that there is a lack of social licence are the same groups that generated that fear in the first place. And since this is more of a political arena than a technical one, perception is everything.

A community could also be tempted to demand unjustified financial compensation, unrelated to potential environmental damage or other nuisances. This would amount to a kind of “legalized extortion” in which each municipality, each village even, would demand its due in exchange for its support of a major project that is in the public interest.

Does this example seem farfetched? It’s exactly what the government of British Columbia demanded from Kinder Morgan in exchange for supporting its expansion of the Trans Mountain pipeline.

Using existing procedures, people’s various perspectives can already make themselves known. In the end, a decision is made that must reflect the public interest as much as possible. For such a process to function properly, our society’s institutions must enjoy a certain level of confidence. Both supporters and opponents of a project must accept that not all decisions will always be in their favour.

Without this confidence in our institutions, we will never be able to get beyond personal conceptions of justice. Nor will we be able to ensure a fair and transparent process for all projects. The door will be wide open to arbitrary decisions and will threaten the rule of law, a principle so sacred that it is featured in the preamble to the Canadian Charter of Rights and Freedoms.

If there is a crucial role that the government must absolutely play in a democratic society, it is maintaining that rule of law. Governments would be better off ensuring the proper functioning and the credibility of existing institutions rather than adding a notion as subjective and arbitrary as social licence to our democratic processes.

Youri Chassin is Economist and Research Director at the MEI, Germain Belzile, Senior Associate Researcher at the MEI. They are the authors of "The Three Pitfalls of Social Licence" and the views reflected in this op-ed are their own.

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