Nineteen months and one general election have passed since Premier Clark announced “establishment of a new British Columbia Prosperity Fund.” However, we still have no word on exactly how LNG is going to make BC cash rich and debt free. At least $278 million a month should be flowing into the provincial treasury for 30 years so we’re already billions behind.
The following was published in May 2014.
A few tech companies are noted for vapourware, which are products announced with much fanfare that never materialize. In my view, BC Liberal assurances of more than $100 billion new money from 30 years of LNG production is nothing more than vapourtax. These were promises issued solely for marketing purposes, not to be realized but to be replaced with updated political scams.
Jim Quail is the Executive Director of the B.C. Public Interest Advocacy Centre in Vancouver. BCPIAC is a non-profit law office in the field of social justice law. Jim Quail’s Blog has an important post about the difficulty of collecting tax revenues from liquid natural gas. I suggest you visit his site for the full article, BC’s Elusive LNG Tax.
We remember Premier Christy Clark’s pre-election promise:
Liquefied natural gas is the industry that will make British Columbia debt free. …Development in natural gas can stimulate $1 trillion in new economic activity across the province — 100,000 new jobs, $100 billion in 30 years.
With that debt soon to rise beyond $70 Billion and future gas markets uncertain, the promises were extravagant. Credible observers say Clark’s words, at best, represent wishful thinking. I believe they were fantasy and Clark knew it.
My work demonstrates the Liberal government has had no eagerness to collect more than a tiny share of value from BC’s resource production. Their inability, more than a year after Clark’s announcement, to state an LNG taxation scheme demonstrates commitment to change is absent.
Quail raises a separate issue. If Liberals were willing to tax an expanded gas industry, how would they do it?
Because figuring out how to extract significant provincial revenue out of LNG exports is a very difficult problem – and this is on top of the uncertain prospects for the LNG industry to happen at all, or on the kind of scale the Premier heralded on the campaign trail.
There is no obvious point in the process for a provincial government to insert itself and extract a share of the money…
Update, May 14, 2014:
Before the May 2013 election, BC Liberals talked of LNG paying off provincial debt (which approaches $70B or $130B, depending on whether BC Hydro contingencies are included or not), funding a $100B ‘Prosperity Fund’ and creating a secure economic future for the province. Pre-election puffery though seems to be just that. In reality, the first concrete move of the Clark government was to grant another $116M in subsidies to gas producers.
Last October, the Vancouver Sun reported words from the Minister of Gas,
Coleman told reporters the province has been negotiating with global energy firms ‘on a very confidential and detailed basis’ to determine a taxation ‘sweet spot’ that will work for the industry and the province.
“‘We’re very close to that sweet spot and very close to having a situation where we can probably announce what it is,” Coleman said. “We think that will come sometime in November.”
Eight months has passed. Those behind-closed-doors negotiations may be complete, they may be continuing. The public is not entitled to that information, nor is the Vancouver Sun interested in examining this supposedly vital subject. Here’s a Twitter exchange I had with the newspaper’s [(correction) former] business editor:
Penner was defensive and he might have reason to be. Previously, I engaged him on what I believed to be the Sun’s innaccurate and incomplete reporting on resource revenue issues. I might have suggested they were more interested in rewriting government talking points than doing independent examinations. In this week’s exchange, I asked Penner to point to any analysis of gas revenues done by the newspaper in the past 15 month. He did not respond.
May 14, Derrick Penner advises through comment here that he is not and has not recently been the Vancouver Sun’s Business Editor. I apologize for the error. Apparently my source was not trustworthy. I should have known better than to rely on a Postmedia website.
|Screen capture from Vancouver Sun website, May 14, 2014|