The Trans Mountain pipeline application, like the Enbridge Northern Gateway one before it, has chapter and verse on the benefits to B.C.
But in reciting all the job-creation and tax-revenue benefits, both outfits are missing the point. B.C.’s requirement for a “fair share” before it will support an oil pipeline has nothing to do with the obvious benefits that would accrue from major new economic activity.
Those are taken as a given. The requirement for a fair share is above and beyond those benefits.
The problem is that it is undefined. The mechanism that would produce a share of revenue is unknown. Nobody yet knows what the fair share is, or how it would come about.
So when the companies try to address the “what’s in it for B.C.?” issue, all they have to fall back on is the fact that people will be put to work, and new tax revenue will be generated.
Under the heading “B.C.’s fair share of benefits,” the Trans Mountain application submitted last month pegs total employment benefits at 108,000 person-years, 60 per cent of it in B.C.
Construction spending in B.C. would generate $1.2 billion in combined provincial and federal tax revenue. It forecasts another few billion in tax revenues over the first 20 years of pipeline operation.
The company says B.C. municipalities would bring in another $22 million a year in property taxes, should the project proceed.
Northern Gateway put out similarly huge numbers. A billion dollars in new tax revenue, 3,000 construction jobs and 560 long-term jobs. A $36-million-a-year bump in property taxes, provincewide. A billion dollars’ worth of benefit to First Nations.
Both companies know full well the fair-share argument isn’t fully addressed by listing construction benefits. But it’s all they’ve got to go on at this point, so they churn out the numbers.
Trans Mountain gets a little closer to the mark when it refers to the corporate revenues.
“Producer revenues are forecasted to rise by $45.4 billion over the first 20 years of operations, as a result of the higher prices realized through the market access provided by the project.”
That’s where the serious money is. And it seems clear that B.C. wants a cut of that, over and above the routine taxes that would accrue.
The original outline of the fair share stated it was required to reflect “the level, degree and nature of the risk borne by the province, the environment and the taxpayers.”
In the 18 months that the condition has been on the table, it has prompted an on-and-off spat with Alberta about what it means, and whether it would cost Alberta anything.
Premiers Christy Clark and Alison Redford patched up that argument — or smoothed it over — late last year with a vague framework agreement that covers pipelines.
The relevant parts of that understanding are that Alberta agrees B.C. has the right to negotiate with industry on appropriate economic benefits, and that “Alberta’s royalties are not on the table.”
In other words, any B.C. cut has to come after Alberta gets its share.
Both governments also agree it is not for them to negotiate those benefits. They seem to be pretending that they’ll deal separately with the pipelines and make their own arrangements.
But that ignores the underlying B.C. concern. It’s not just about getting more, it’s about how much more the other governments are getting. B.C. cited an analysis when the five conditions were laid out suggesting the distribution of benefits under current arrangements is grossly unfair.
On the Northern Gateway line, the province that bears 100 per cent of the marine risk and a substantial share of the risk of a spill on land gets 17 per cent of the overall benefit, according to the study. And just eight per cent of the new taxes.
How B.C. could collect more while agreeing that Alberta won’t take less is going to bedevil the pipeline issue for some time to come.
