Natural Resources

Captives of industry

Regular readers are aware that British Columbia’s natural gas industry provides surprisingly little return to the province by way of royalties for depleting non-renewable public assets. In the last two fiscal years, after accounting for drilling and road subsidies taken by or owed to producers, the province’s net gas royalty receipts averaged $2.5 million a month. That is less than 1/10 of 1% of BC government revenues.

Defenders of government policy suggest the industry is contributing much economic value to BC through jobs. Yet, government statistics show that only about 3,000 people are directly employed in oil and gas extraction. Education and manufacturing each provide more than 50 times as many jobs. Retailing, almost 100 times as many.

BC employment, selected sectors

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In 2013, Christy Clark’s government resisted calls from the motion picture and sound recording industry for subsidy increases, yet this non-polluting, non-depleting industry provides four times as many jobs as oil and gas extraction. It stimulates cultural and tourism activities and costs a fraction of the subsidies flowing to oil and gas production.

As Premier, Clark pays little attention to forestry, the traditional engine of our economy. The only part of the industry that remains busy is logging, a function that cannot be moved out of province.

So questions arise. What influences a government to offer special treatment to one particular economic sector that provides scant economic return and relatively little employment?

Who and where are the real beneficiaries? In what jurisdiction, if any, is corporate income tax paid on profits of gas production and sales?

Were decisions to provide public funds and public assets fairly determined or were they improperly influenced by the flow of cash from industry to the holders of political power?

I think the answers are self-evident. British Columbia is governed by captives of industry.

Employment by Industry

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Natural Gas Subsidies by B.C.

//www.scribd.com/embeds/238470080/content?start_page=1&view_mode=scroll&show_recommendations=true

Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism. Crony capitalism is believed to arise when business cronyism and related self-serving behavior by businesses or businesspeople spills over into politics and government, or when self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it corrupts public-serving economic and political ideals. – WikipediA

15 replies »

  1. A little math this morning Norm.

    SNC Lavalin (owns 50% of the SkyTrain patents and is main player behind the Canada Line P-3) + Gwyn Morgan + Premier Photo-op = the taxpayer spending 3 times more for rapid transit than it should.

    SNC Lavalin = closed hospitals and schools.

    LNG + Premier Photo-op = School strike

    Premier Photo-op + Gwyn Morgan = ?

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  2. well that information won't be on the 6 p.m. news any time soon nor in any other MSM outlet. Too bad.
    Thank you for the information. now if everyone just e-mails their friends with this, they will know why the province is broke.

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  3. Hello Mr. Farrell
    Great research which confirms what a bunch of Northeast residents have known for as long as the liberals have been in office. There is more in the way of subsidies which some commenters and twitmachine users don't realize. The industry has lobbied for and currently enjoys a very low level of property taxation with only buildings, not expensive machinery housed inside being taxed. Any reason you can think of why an air compressor for a repair shop in town is taxable while one sold to a gas producer is not? An ex employee of BC Assessment knew of upwards of a $100 MIllion in unassessed properties since there is no link to construction permits through the OGC like there is in a municipality when a building permit is issued.
    Most work is done by out of province residents driving pickups with no BC licenses and marginally pro-rated large trucks that bring in equipment that is either exempted through producer lobbying efforts or just simply brought in without PST being paid. Since Campbell closed the weigh stations at the provincial boundaries, almost no enforcement/collection of out of province taxes or fees occurs. Not-on- the-radar HST complicated things now with myriad equipment that was brought in with no tax paid. All of which puts resident businesses which paid and must pay in a very non competitive situation.
    Tankerloads of fuel come in to Northeast BC for off road use in everything from drilling rigs to excavators hourly. Is the carbon tax being applied to fuel purchased in these out of province transactions for consumption within BC or is that another subsidy in favour of out of province businesses which helps to eliminate BC jobs?

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  4. SNC is a “Sponsor” of the Mt Polley disaster project….. still trying to figure out what that means… but most likely it means they bought into the 100 million dollar debenture Imperial “unveiled” shortly after the disaster. For which Edwards finance company bought 40 million dollars of, at a return of 6-12% good old disaster capitalism! The company has since stated its for “liquidity” to shore up Red Chris, not for clean up as originally trumpeted.

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  5. “Great news, Johnny! Mom and Dad are now the lowest paid workers in town.”
    “The lowest?”
    “Yep. We negotiated with our bosses to get the lowest wages of anybody in town.”
    “But Dad, shouldn’t you be trying to get the highest rates you can? You’re the only guy in town who knows how to run his equipment.”
    “Trust us, we know best. We may have to tighten our belts, but things will work out. You’ll see. Oh, we have to sell the TV, and the computer, and your bike to make ends meet…”
    “My bike?”
    “Yeah, my boss wants it for his son Gwynn, and we need the…”
    “Gwyn already has a bike.”
    “He wants another one.”
    “How come you guys came home in a taxi?”
    “Sold the car. You’ll have to walk to school for a while.”
    “It’s six miles!”
    “It’s just for a while, Johnny. My boss introduced me to this rich Chinese guy who’s really impressed with what I’ve done so far…”

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  6. If comment #5 is even slightly accurate, every citizen of BC should be forced to read it.
    If this is what goes on the shadows of the NE, as it does on the N coast, just imagine what may be happening between individuals in power and governments in far away places.
    Hawgwash.

    Thank you cfvua

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