Tuesday, July 24, 2012

Northern Gateway Pipeline: a B.C./Alberta showdown over revenues?

By Ian Bailey and Josh Wingrove, Globe and Mail, July 23, 2012
British Columbia has triggered a showdown with Alberta over energy royalties, saying it won’t support the controversial $6-billion Northern Gateway pipeline project unless it is given a bigger cut of tax revenues.

Alberta, however, quickly fired back, saying it won’t be cutting its neighbour a cheque.
“Absolutely not,” Premier Alison Redford told The Globe and Mail, saying jurisdiction over resources, and resource revenue, is “fundamental to Alberta.” Tinkering with it would amount to nothing less than an overhaul of Confederation, Ms. Redford argued, saying B.C. already benefits by the billions the province sends to Ottawa each year.

“To actually introduce the idea that we would renegotiate Confederation is quite troubling to me. At the end of the day it is true that we have resources in this province and we collect revenue from those, but those revenues are shared across the country,” Ms. Redford told The Globe.
The battle comes as premiers, including B.C.’s Christy Clark and Ms. Redford, gather in Halifax for talks this week. Ms. Redford will continue to push for a Canadian energy strategy, which would be meant to streamline major energy projects such as Northern Gateway.
The demand for a “fair share” of cash – a figure B.C. hasn’t finalized – was one of five conditions that B.C. laid out Monday as stipulations of its support for the project, which would see Alberta oil sent to Kitimat, B.C., and loaded onto tankers bound for Asia.

The other conditions include that the North Gateway project pass an environmental assessment by the National Energy Board joint review panel, which is already underway; have “world-leading” plans to respond to both marine and oil spills; and address first nations concerns and treaty rights.
Companies must go “beyond their minimum legal obligations to first nations,” said Mary Polak, B.C.’s aboriginal relations minister. Enbridge argues it’s already doing that, with 60 per cent of first nations groups signed on to support the deal.
With the B.C. premier's announcement, reasonable in all details, with the possible exception of the "tax grab" as it is seen by the Premier of Alberta, and with the B.C. NDP totally opposed to the pipeline, it may take more than an environmental assessment and Enbridge's complete agreement to the most stringent protections in the event of a spill or other form of accident, to make the Northern Gateway Pipeline become a reality.
Only recently, Enbridge has received some bad press for its handling of another spill in a pipeline in Michigan, and that event has sullied Enbridge's reputation for clean-up protection, while providing added incentive to the pipeline's opponents.
Meanwhile, the federal government has introduced legislation that would short-circuit the environmental assessment process, citing "foreign money" supporting the opponents of the proposal, as unacceptable.
The Harper government, however, does not seem to mention the "foreign money" that sustains the oil and other resource companies, as objectionable. Nor do they mention the 'foreign money' that buys Canadian companies seemingly at will. It seems they object only if and when "foreign money" is used to oppose a project favoured by the government, especially one that shows up the federal government's vaccuity of environmental protection policy and intent.
As boundaries for the flow of cash vanish, in a globalized trading world, the federal government's argument seems to vanish with those boundaries. The capitalists can't have it both ways: favouring the unimpeded flow of investor, sales, salary and profit monies across national borders (often to avoid taxes) while opposing the influx of cash from those seeking to protect the environment.
There is a battle over the Northern Gateway Pipeline that will not be resolved in the upcoming premiers' conference in the next few days and the federal government's unabashed and somewhat bullish push to have the hearings abbreviated, if not actually aborted, hardly qualifies as national leadership. Canadians need a government that is willing to take serious consideration of the multiple complex factors, including environmental protection, trade and trading conditions between provinces, in the spirit of the growing agreement between the western provinces, and revenue sharing especially with respect to resource development.
For example, why can the federal government not work with the provinces to encourage an east-west pipeline from Alberta to eastern provinces where the heavy crude from the tar sands (oh how they hate that term!) could be refined before it is shipped abroad, whether to the U.S. or to the far east?
Why can the federal government not advocate for very high environmental protection standards, thereby pre-empting the environmentalists' expectations, and bring the national position in line with the most advanced standards in the industry, while continuing to demand that the industry conduct research right here in Canada on new protections, that can then be produced and made available to prospective global customers, benefiting from Canadian research in an industry we know a fair bit about?
And why is the federal government not moving to advocate for a national energy strategy, that would provide, as a minimum, dispute processes (outside the courts) for the resolution of the kind of conditions that the B.C. premier is demanding, and the Alberta premier is resisting. Of course, that would bring the federal government into the area of "provincial politics" where it might get its hands dirty dealing with the minutiae of enhancing the way the federation operates, in the national interest, and it might also demonstrate the fact that party politics is more important to the Harper gang than the national interest.

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