Ottawa launches consultations on Indigenous ownership of Trans Mountain pipeline

Ottawa launches consultations on Indigenous ownership of Trans Mountain pipeline

CALGARY – Finance Minister Bill Morneau says the federal government is launching a new set of consultations with Indigenous groups that will determine if and how they might take part in ownership of the Trans Mountain pipeline and its expansion project.

Speaking in Calgary, the minister says up to 129 communities will be consulted over the next weeks and months to ensure they have a chance for “meaningful economic participation” in the pipeline.

He says the groups will be asked their level of support for equity-based or revenue-sharing options, as well as whether groups are willing to work with each other through existing or new organizations.

In a speech, the minister welcomed a Federal Court of Appeal ruling last week that set aside a challenge of the Trans Mountain expansion project by four B.C. First Nations, noting the project is important to the economic well-being of the West.

The court found that the government had met its duty to consult, thus endorsing its response to an earlier ruling that had stalled the pipeline and clearing one of the last major hurdles for construction to continue on the conduit from the Alberta oilsands and refining hub in Edmonton to the B.C. coast.

Morneau says the federal government will earn a profit when it sells Trans Mountain, despite a new construction cost estimate made last week of $12.6 billion, an increase of 70 per cent over the previous forecast of $7.4 billion.

“We believe this new estimate is realistic and we remain confident that when it’s the appropriate time to sell, we will see a profit on this investment,” Morneau said.

The government expects to earn $500 million a year in taxes from Trans Mountain after it begins operating, he added. SOURCE

Linda McQuaig on how private enterprise took over Canada’s public wealth

Ontario Power Generation's Sir Adam Beck Generating Complex. Image: Ontario Power Generation/Adam Beck Complex/Wikimedia CommonsImage: Ontario Power Generation/Adam Beck Complex/Wikimedia Commons

In the 2015 federal election, author and journalist Linda McQuaig ran for Parliament as an NDP candidate in the riding of Toronto Centre. Her opponent was Liberal candidate Bill Morneau, who won the riding and went on to become minister of finance.

During the campaign, Morneau and Liberal Leader Justin Trudeau championed the idea of creating a Canadian infrastructure bank, which would “provide low-cost financing for new infrastructure projects.” The bank would help finance things like public transit and housing, by borrowing the funds from the public through the sale of bonds to Canadians or their pension funds. People in Canada would finance the construction of infrastructure they benefit from (and own it, collectively).

“I thought it was a good idea,” McQuaig told me in a recent phone interview. “But he was being dishonest.”

After meeting the Wall Street tycoon Larry Fink, who manages BlackRock (one of the world’s largest investment funds) at a Davos meeting in 2016, Trudeau quickly changed his tune. Private capital could have a role in public infrastructure — in fact, he asked BlackRock to help his government design the bank.

In 2017, the prime minister and Morneau introduced the Canada Infrastructure Bank. The Crown corporation gives private capital the opportunity to invest in and own the infrastructure that is built for people in Canada. This “bait-and-switch” is the subject of the first chapter of McQuaig’s latest book, The Sport and Prey of CapitalistsHow the Rich are Stealing Canada’s Public Wealth.

“Private finance looks for investments that make profits of seven to nine per cent,” says McQuaig. “Governments can borrow at low costs. You throw out that advantage if you bring in private finance.”

You also hand over any potential future profits, which otherwise could be reinvested in public programs. That’s exactly what happened when, in 1999, Mike Harris sold Ontario’s Highway 407 for $3.1 billion, in what McQuaig calls “the worst deal of the century.”

The toll highway, built in a public-private partnership, had been constructed by the NDP government of Bob Rae, who promised that the tolls would only be used to pay off the building costs, which might take about 30 years. Since its sale to the consortium 407 International, tolls have risen by more than 300 per cent. In 2014, 407’s owners reaped almost $900 million — all of it from Ontarians driving on a publicly financed highway. The highway has been valued at upwards of $27 billion.

As the book’s subtitle makes clear, McQuaig is interested in more than just our disastrous history of privatization. The bulk of The Sport and Prey of Capitalists tells a different, little-known history of public enterprise in Canada.

“When I say public wealth, it is services, benefits, things that we can publicly benefit from. Public wealth to me is a way to capture the notion that something is of value to all of us,” says McQuaig. “One of the things I was trying to do in the book, to get people motivated, was to tell them these stories about public enterprise and the kind of battles we had to go through to achieve them.”

Ontario Hydro is one such example. Adam Beck, a Conservative MPP and mayor of London, Ontario, played a key role in bringing together people from municipalities across the province to campaign for a public power utility in Ontario in the early 1900s. The campaign was successful. After the 1905 provincial election, the Conservative government rejected a corporate syndicate’s application for rights to water power at Niagara Falls. Premier James Whitney declared “that the water power all over the country should not in the future be made the sport and prey of capitalists and shall not be treated as anything else but a valuable asset of the people of Ontario.”

Such examples should inspire us, says McQuaig: “The odds against achieving these things back then were as bad then as today. But they managed to make it a popular enough movement.”

The book includes chapters describing the creation of Connaught Labs, a publicly owned pharmaceutical company that pioneered research into vaccines and new disease treatments; public banks like the Alberta Treasury Branch; and the Canadian National Railway, which helped establish nation-wide radio stations, the foundation for the CBC.

Progressives and radicals won’t necessarily praise all her examples of Canadian public enterprise (the development of the Avro Arrow — an innovative military fighter-jet created in the late 1950s, for example) but one can’t ignore the vital importance of harnessing government investment for the public good.

It remains to be seen if the results of the 2019 election will mean more Trudeau-led privatization, given the balance of power in Ottawa. One hopes the NDP will be able to use their position in Parliament to move forward on issues like public investment in infrastructure and programs, reconciliation with Indigenous nations, and climate change.

McQuaig canvasses one potential way to kickstart a “Green New Deal” in the final pages of the book: the expropriation of the GM auto-manufacturing plant in Oshawa, slated to close at the end of the year.

“Trudeau spent $4.5 billion nationalizing the pipeline. That’s taxpayer money being spent on fossil fuels, instead of a green economy,” said McQuaig. “I’d like to see Jagmeet Singh pick up on the plan put forward by workers at the GM plant to nationalize it and make vehicles for green public transit. It seems perfect. It would combine nationalization, action on climate change, and defending workers.”

Ultimately, this is the idea that lies at the heart of McQuaig’s book, for all the stories of privatization that begin it: the public good that we have achieved in the past through collective action and public investment, and the things we could still. SOURCE

TRANS MOUNTAIN’S FEE PLAN FOR FOSSIL CUSTOMERS REPRESENTS $2-BILLION TAXPAYER SUBSIDY


Logga Wiggler/Pixabay

Canadian taxpayers will be on the hook for another $2-billion fossil fuel subsidy if the National Energy Board accepts the latest request from the federal Crown corporation that now operates the existing Trans Mountain pipeline, economist Robyn Allan reports in a National Observer exposé.

“If the NEB approves the toll application Trans Mountain has filed with it, it will shift the burden for the roughly $3 billion Ottawa paid to buy the regulated assets onto Canadians, rather than into tolls charged to shippers where the recovery of these costs belongs,” Allan writes. She discovered that “unacceptable burden” after reviewing Trans Mountain’s January 4 application for toll rates between 2019 and 2021.

“Pipeline companies make money by charging tolls to fossil fuel companies that ship oil and gas on their pipelines,” Allan explains. “Trans Mountain entered into private discussions with its shippers last fall to determine the tolls that would be charged from 2019 to 2021 since its most recent three-year settlement expired December 31, 2018. The outcome of those discussions resulted in favourable terms for the oil industry borne on the backs of hard-working Canadians.” MORE

$2 billion oil industry subsidy in the making as Trans Mountain files toll application

Image result for bill morneau national observer
Finance Minister Bill Morneau speaks to reporters in Ottawa about his new budget on Feb. 27, 2018. File photo by Alex Tétreault

Trans Mountain is on track to deliver Canadian oil producers a $2-billion taxpayer-funded toll subsidy for capacity on its existing pipeline and has asked the federal pipeline regulator, the National Energy Board (NEB) for permission.

If the NEB approves the toll application Trans Mountain has filed with it, it will shift the burden for the roughly $3 billion Ottawa paid to buy the regulated assets onto Canadians, rather than into tolls charged to shippers where the recovery of these costs belongs.

The federal government has a duty to make sure Canadian taxpayers are getting a fair deal.

Pipeline companies make money by charging tolls to fossil fuel companies that ship oil and gas on their pipelines. Trans Mountain entered into private discussions with its shippers last fall to determine the tolls that would be charged from 2019 to 2021 since its most recent three-year settlement expired December 31, 2018. The outcome of those discussions resulted in favourable terms for the oil industry borne on the backs of hard-working Canadians.

This unacceptable burden becomes apparent after combing through Trans Mountain’s Incentive Toll Settlement application for 2019 to 2021, filed Jan. 4 with the NEB. Trans Mountain requires NEB approval for the rates it charges shippers for capacity on its existing pipeline, which has been operating since 1953, because it’s an interprovincial facility. MORE

John Ivison: PBO report on Trans Mountain purchase is sombre reading for a government that likely overpaid

Morneau may not have been fleeced, but certainly paid at the high end of the valuation scale, apparently assuming that everything would proceed smoothly


Finance Minister Bill Morneau speaks with reporters about the Parliamentary Budget Officer’s report on the Trans Mountain pipeline outside the House of Commons Thursday.Adrian Wyld/The Canadian Press

The sticker price Kinder Morgan put on the Trans Mountain pipeline when it entered negotiations with the federal government last year was $6.5 billion. Hence, finance minister Bill Morneau and his team thought they’d scored a bargain when they sealed the deal at $4.4 billion.

But it looks increasingly like he may bought a cat in a sack.

In all probability, the pipeline will take longer to build than anticipated; the construction costs will be greater; and the risks associated with the project mean the discount rate will be higher.

If any of those variables moves in the wrong direction, the value of the pipeline falls off a cliff. For example, PBO estimates that it is not worth the government proceeding with construction if the project is delayed a further two years and construction costs rise just 10 per cent.

What are the chances of that? As one veteran of the government infrastructure projects commented: “I’ve never seen one come in ahead of schedule or below budget.” MORE