Suppose BC Liberals announced a multi-billion dollar tax rebate program for British Columbians. The rebates would not involve payments issued by the Ministry of Finance; instead people would be given credits to apply against income taxes normally withheld from their wages or other income sources. There would be no increase in government expenditures, just a reduction in government revenues.
Imagine these rebates were not available to every resident of the province; just special classes of people, like school teachers, paramedics, prison guards or other public servants.
Would the rebate program be headline news in corporate media? Would its justifications be analyzed, debated and disputed? Would it be sufficient for Government to explain that eliminating the tax burden on 100,000 public servants might result in much worthwhile economic activity throughout British Columbia?
Of course, what I suggest is an absurdity. If government were to propose policies that filled pockets of teachers and provincial employees, corporate media would lead the way in giving voice to opponents. However, when policies reward oil and gas companies, media ignores the whole story and feeds tiny parts to mislead citizens. A recent story by Postmedia business reporter Derrick Penner is misrepresentation; lying by omission.
Casual reader is expected to conclude that $120 million is modest support, carefully targeted to a handful of needy fossil fuel companies. It is not mentioned that one is chaired by Murray Edwards, owner of Mount Polley and Red Chris mines and Christy Clark’s favourite bagman. Yet, $120 million is only 1.7% of the tax breaks allowed gas producers since 2007. Vancouver Sun publisher Postmedia, self-admitted partner with the fossil fuel industry, doesn’t bother to mention the remaining 98.3% of the subsidy.
The fanciful civil service tax rebate described at the start of this article actually applies to natural gas producers, an industrial segment employing fewer than one-half of one percent of BC workers. Their work is not even a high financial risk activity. The gas industry now employs sophisticated technology during exploration and production and gone are the days of wildcat drilling when most all oil and gas activities were speculative, fraught with risks of failures. Today, as with most industries, the largest financial exposure comes from marketing product, not from producing it.
The numbers shown below are taken from audited financial statements and other Finance Ministry reports. What is indisputable is that production levels have increased (53% since 2007) yet net revenue to government from gas in the past year was negative. Instead of being paid for the right to extract this public resource, British Columbians are paying for its removal.
The almost $2 billion in credits owed to producers as of March 31, 2016 will be deducted from future royalties but is not recorded as a provincial liability. This was a matter of dispute with the previous Auditor General when the amount owed was much lower. I believe the willingness of the A-G to ignore this sum is inexcusable. However, she knows what happened to her predecessor and is dependent on the Clark Government for financial resources needed to conduct her business.
Numbers reported for natural gas subsidies are taken from audited statement of the Province of British Columbia, as reported in annual Public Accounts. Production volume statistics below are from statistical publications of the natural gas development ministry.