BC Premier's Alberta shakedown

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Appeared in the Calgary Herald, Vancouver Sun, Waterloo Region Record, Winnipeg Free Press and Stockwatch.com

With her demand that either Alberta or Ottawa ante up more cash before the proposed Northern Gateway pipeline can proceed through parts of British Columbia, BC Premier Christy Clark is playing a risky and ill-advised game of economic chicken. But before getting into details of that, consider Clark’s five demands, some of which are reasonable, if occasionally superfluous.

Three of her five demands relate to a legitimate environmental and ecological concern about the effect of an oil spill in the ocean or on land. After the BP spill in the Gulf of Mexico in 2010, it is only prudent that a government make clear, and in legally watertight terms, that the cost of any spill be borne by the company responsible, not taxpayers. It is also fair to demand that world-class contingency plans be in place.

Demand four from the BC premier is that legal requirements regarding Aboriginal and treaty rights are addressed, and also that First Nations participate in and benefit from heavy oil development. The first part is unnecessary. By definition, a company must comply with the law and with existing treaty rights, though in BC the interpretation of both has been a moving target over the last 20 years.

As for benefits from resource development, the pipeline’s sponsor, Enbridge, would be expected to try and cut deals with some First Nations in BC—something the company no doubt realizes. But there too, demands and asserted rights from some Aboriginals in BC have proven to be opportunistic and elastic over the decades. One shouldn’t expect miracles here.

The fifth demand is that British Columbia receives a fair share of the fiscal and economic benefits of a proposed heavy oil project that reflects the level, degree and nature of the risk borne by the province, the environment and taxpayers.

Dissect that ultimatum. It is premised on the notion that British Columbia takes almost all of the environmental and taxpayer risk. But here’s the rub: If Clark’s first three demands are met—where Enbridge is quite properly made to bear all responsibility for any oil spill—where then is the risk for BC’s taxpayers, which would justify Clark’s demand for extra cash?

Clark says she wants BC to get a fair share of all revenues from the Northern Gateway project. The BC premier objects that BC’s projected eight per cent share of various federal and provincial tax revenues from the expected $81-billion over 30 years to all governments isn’t enough.

Come again? BC’s provincial treasury is to receive $6.5 billion over three decades—for not obstructing economic development—and where the company will already be responsible for any oil spill, this according to conditions one through three, and yet the BC premier wants more?

And where would that money come from? In her initial interviews on this subject with the CBC, Clark took direct aim at Alberta: Alberta gets the bulk of the benefits, takes very little of the risk. BC takes most of the risk and we get very few of the benefits. So it’s pretty obvious we have to do some talking here.

It’s clear who the we is to which Clark refers—the Government of Alberta. Later, after more than a few people including Alberta Premier Alison Redford made clear—and properly so—that sharing constitutionally protected resource royalties is off the table, Clark began to demand that Ottawa insert itself into the melee started by the BC premier.

Readers should understand that as one born and raised in British Columbia—and who has lived there, Alberta, and elsewhere in my career—I always criticize governments when they become narrowly focused and ignore the benefits of wider prosperity for all. It is a mistake to instead try and artificially boost their economies, or in Clark’s case try and hinder others’. And here’s some additional irony: if Clark torpedoes Gateway, BC loses $6.5 billion. So she isn’t even acting in BC’s wider and longer-term interest.

Applied broadly, the BC premier’s logic could mean other provinces would be justified in demanding a fair share of the mining royalties and stumpage fees paid to the BC government. After all, trains and trucks outbound from BC with such materials cause wear-and-tear on roads and railways in the rest of Canada.

It’s up to Christy Clark to prove her arbitrary demand for extra money isn’t a shakedown. As for the question some of my home-province compatriots ask, What’s in it for me? here’s the answer: The same thing every citizen gets in a free-trading, wealth-creating country: prosperity, jobs, increased tax revenues and social programs. It all makes the standard of living for Canadians closer to that of Switzerland and ever-further away from some banana republic.

Such prosperity should be encouraged wherever possible, not held hostage by the whims of a premier.

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