NDP governments in both BC and Alberta. A dubious unprecedented political anomaly that could spell economic disaster for both provinces, as well as the rest of Canada, in coming months.
An excellent article was written recently by Terry Etam and published in the BOE Report July 26, 2017 (boereport.com). Entitled ‘Wake up Canada! Get behind energy mega projects or get ready for the consequences’, the article connects the current stall in oil sands investment with the newly announced cancellation of the $36 Billion Pacific North West LNG export terminal in BC.
As indicated by Etam, ‘Canada is about to have two of its major economic engines strangled into near oblivion while we stand around and watch.’
There is a reason why governments at any level, federal, provincial or municipal, should not involve themselves in economic projects other than to provide the necessary environment in which projects can succeed – or fail, on their own merits.
Governments do not create jobs. Governments do not stimulate the economy. Governments do not create wealth and economic well-being for citizens and future citizens.
Governments do, unfortunately far too frequently, become economic killers by imposing regulations, social policies and politically driven strategies that are designed to benefit those governments at the polls for their own selfish short term gain while at the same time inflicting widespread pain on the future growth and economic viability of the provinces and Canada, itself.
An anecdotal illustration of the problem. I have an acquaintance, living on Vancouver Island, who is a talented photographer and enthusiastic supporter of the ‘green movement’ and it’s currently unsustainable social and political agenda. She proudly displayed the motto ‘No Pipelines. No Tankers‘ on her Facebook page and in her musings. Just don’t ask her how she heated her home in the cold of winter. Fuel oil, of course, piped into BC and refined in Alberta, then transported by tanker to Vancouver Island to eventually fill her heating oil tank. And how did she take her children to school every day in her SUV? How did she travel around Vancouver Island to find lovely wilderness places to capture in her photography? Gasoline, of course, refined in Alberta, pipelined into BC and poured into tankers to navigate Georgia Strait so she could pump her gasoline into her energy consuming SUV.
This acquaintance illustrates the apparent naivety and the widespread disingenuous refusal to face economic realities. She is not alone in ‘pretending’ that she supports an ideal while living her life totally divergent to her espoused philosophy. She, like you and I, depends daily on the benefits derived from a healthy energy sector and a healthy economy.
The reality is that we all benefit from the largesse, the widespread economic wealth, the technological advancements that have been made in Canada, because of – not in spite of, the role of the energy sector in the Canadian, and particularly the Western Canadian, economy.
The recent announcement by Petronas (a foreign energy company) that it was abandoning its LNG ambitions in BC came as no surprise to the writer. I had projected the failure of the LNG fantasy in BC almost 3 years ago. (Just for information purposes, I once was a corporate banker working in Calgary, Alberta and involved in financing the oil and gas industry through a sophisticated and mature banking system that understood – and still understands, the complexities of the energy industry at a far more advanced level than a conglomerate of unsophisticated politicians and civil servants).
The energy sector cannot be driven by ‘supply side’ management. The energy industry is too vast and too important a part of our physical existence to be manipulated by such ridiculous situations as the Canadian dairy industry where ‘whole milk is being poured into the sewage system’ because of oversupply and a virtually guaranteed price committed to quota producers. Fill your quota – you get paid. Whether your product every reaches the market and the consumer – or not.
The energy sector cannot ‘stop producing energy’ because starry-eyed idealists believe that the incredibly small negative side effects and the occasional oil spill justify the potential collapse of our entire economic system – and degrading our standard of living to unacceptable levels. I wonder at the logic of mothers and fathers who are carrying signs, waving placards, marching in the streets and standing in the path of bulldozers. The reality is that they are ultimately standing in the way of progress, their own welfare and the ability of future generations to flourish and thrive in a country and in provinces that have undeniable environmental challenges – specifically cold winters with freezing temperature with snow and vast distances that have to be navigated using sophisticated and energy-consuming vehicles, most still burning petroleum derivatives.
Would these same idealists wish to return to the days of their forefathers and foremothers (to be politically correct) and fell their own trees, split their own logs and stack their own woodpiles for the upcoming winter in order to maintain a living environment for themselves and their offspring? They would, of course, not consider coal (dirty, environmentally poisonous coal) as an alternative because they have been indoctrinated into believing that coal is a ‘dirty fuel’, noxious and poisoning the planet. Coal, of course, is still the fuel of preference in China and elsewhere in the world, for those who aren’t familiar with the facts). Does the Paris Accord ban the use of coal in these countries? Of course not. Such is the naivety of the average Canadian or American. In the future, coal will of course be refined similar to petroleum and coal extracts and derivatives will become far more popular and acceptable.
Technology, if uninhibited by short-sighted and damaging political constraints, finds ways to make things better – for people and for the environments in which people exist. I am firmly convinced that I will be driving an environmentally friendly electric vehicle and kept warm by energy produced by some alternative source – at the appropriate time. That time will come when those alternatives are economically viable and sustainable. Just common sense.
The problem occurs when governments seek to ‘take advantage’ and gain beneficially from policies and initiatives that become popular at election time – even when there is questionable science and even more questionable overall benefit to us all from implementing those policies.
The disturbingly unethical government of Christy Clark and the Liberals seized upon the ‘potential for wealth’ and personal political gain for both Clark and her Liberal caucus by over-promoting and over-selling the benefits of a fantasy LNG industry to be developed in BC. I have no little doubt that the decision by Petronas to abandon a proposed BC export terminal and distribution facility was made long before the May, 2017 BC election. I further believe that the announcement of the Petronas decision was willfully and deliberately suppressed by the BC Liberals in order to ‘milk’ one more potential successful term of office using an economic pipe dream that we all now know to be a lie. The failure of the BC LNG industry was due to poor timing, poor execution and global economic realities that cannot be changed by the political fantasies of a politician or government.
‘Laissez-Faire’ Economics 101. Governments must stay out of things they know little about. What do government know about, or care about, risk and risk capital? Not a damn thing. Why? Because they don’t spend their own money. They are spending yours! The taxpayers. And once governments have squeezed out every last tax dollar possible, they continue their fiscal irresponsibility by borrowing – on your behalf and ensuring that future generations pick up the tab.
The NDP/Green ‘not a coalition’ will take the blame for a growing number of poorly designed and poorly implemented economic and social initiatives, but the BC Liberals cannot hang the failure of the LNG debacle on the newly sworn-in BC government. The Liberals, under Christy Clark, are solely responsible – and the Liberals must own this failure. The voters will not be deceived and we will remember (or be reminded) in time for the next election.
Similarly, the eventual fate of Site ‘C’ dam and the future of BC Hydro rests with the policies implemented by the BC Liberals. As a proper ‘neutral and unbiased’ cost-benefit analysis, needs analysis or even the formal approval of the established provincial regulator was sought by the BC Liberals, the project rests solely on the political gain the Liberals anticipated from the Site ‘C’ dam. As evidenced in other jurisdictions, the need for single source ‘mega-project’ power is diminishing as more cost-effective, regionalized and alternative power options seek to gain in relevance and economic viability. BC may well find electrical power rates escalated to unprecedented and unaffordable levels under the NDP/Green government however the BC Liberals will ‘own’ the responsibility as the BC Liberals were the government who personally benefitted from millions in corporate and energy industry donations while abandoning the due diligence safeguards that should have absolutely and without exception been implemented and enforced.
The BC Liberals will also try to hang the failures of ICBC to provide adequate insurance coverage at affordable rates on the NDP/Green ‘not a coalition’. Again, the BC Liberals and Christy Clark own the problem. While the NDP initially created the ICBC concept, the Liberals had 8 years to fix the problem – and did nothing. A potential for skyrocketing premiums (30% has been suggested for this year) exists and the disposable income of BC residents drops again – due in large part to poor and self-serving government policies. Is there a solution? Of course there is. Just look at other jurisdictions. Competition lowers overall prices to consumers. Competition increases flexibility, options and alternatives. Common sense. Just not sense that bloating bureaucracies and insensitive governments want to consider.
Do we have time to discuss the unaffordability of housing in the lower mainland, specifically Vancouver and now Victoria? Again, the Liberals have had 8 years to mitigate the problem created by real estate speculation from foreign buyers. Why did the BC Liberals do nothing? Just check the Liberal Party war chest and see how much money was contributed by foreign investors, their lobbyists and a real estate industry that benefits from inflationary prices. How does the average wage-earner expect to be able to buy a home in the foreseeable future? Or the children of those wage-earners? The reality is that it just cannot realistically happen – without a major ‘correction’ or partial collapse of the real estate values in those communities.
And if there is a major correction or collapse of real estate under the NDP/Green ‘not a coalition’? While renters and non-owners will benefit, an alarming and growing number of homeowners who are artificially supplementing their incomes through higher leveraging of ‘deemed equity’ in their homes made possible only through inflationary real estate values will face economic ruin as their properties will no longer have positive equity. Banks and near banks will curtail lending and severely restrict borrowing opportunities if there is a major price correction in the BC lower mainland market and elsewhere.
Just as Rachel Notley inherited a shrinking economy in Alberta when elected, there is a good chance that John Horgan, Andrew Weaver and their ‘not a coalition’ is on the precipice of a shrinking economy potential in BC.
What should be most alarming to residents and taxpayers in both BC and Alberta is the historical reality that NDP governments are demonstrably not good at handling shrinking economies and only ‘appear’ to succeed in previously healthy, vibrant and flourishing economic environments.
The policies of the NDP are not predicated on financial responsibility or making tough decisions when those decisions must be made. The unrealistic premise of ‘universal wealth’ and social, financial and environmental well-being for all has to be financed. Financed by the taxpayer – or financed through increased government debt. Once an economy starts to decline, the ability of the government to ‘borrow’ at reasonable rates declines as the credit rating of the province and the provincial government drops. At the same time, the ability to generate taxes drops as businesses begin to fail, taxpayers lose jobs and the economic goes into a tailspin.
Couple this spectre with the very real possibility of increasing interest rates as the US economy begins to rebuild and flourish. The high debt levels many BC individuals, businesses and most importantly the BC government have rung up in recent years will increase due to the historic unsustainable economic policies of the NDP. The ‘interest component’ will increase and more money will be required to service the debt. The borrowing cycle will spiral into an alarming tailspin.
Is this scenario realistic? Unfortunately, far too realistic. History has shown the same economic pattern developing over and over – with the same disastrous and debilitating results.
BC is overdue for an ‘economic correction’ as is Canada under the starry-eyed tutelage of the media star Prime Minister who doesn’t have a concept of common sense economic realities. The national Carbon Tax and similar measures will further cripple the economic engine that drives the country – namely the energy sector. NAFTA is being re-negotiated and the US is not interested in benefitting Canada by offering a ‘sweetheart’ deal to our juvenile, gullible Prime Minister.
It is ‘pie in the sky’ fantasy to believe that the Canadian economy can currently be competitive and healthy without a strong energy sector component. Transfer payments to ‘have not’ provinces depend on a strong energy sector.
NDP governments are historically and demonstrably not friendly to the energy sector. John Horgan, Andrew Weaver and the ‘not a coalition’ promises made during the 2017 election campaign coupled with the increasing economic problems in Alberta under the NDP reign of Rachel Notley puts BC in a precarious financial situation which could result very shortly in unaffordable and unsustainable tax increases, a further shrinking of the ‘economic engine’ that drives the Canadian economy and a lowering of the standard of living here in BC.
Only the BC and Alberta voters can restore a level of economic accountability and prevent further damage to all BC and Alberta residents and future generations. This has to be done with the election of accountable, economically aware politicians who will not compromise the future of their respective provinces by unsustainable policies and accelerating debt creation.
It is not alarmist to be raising these issues at this time. A frank, honest discussion must be demanded with our politicians and our government. It is a travesty that the Liberal government under Christy Clark did not have the integrity or the skill to deal with the issues that are confronting us. Instead, the Liberals concentrated on personal gain through unregulated political contributions and donations – to the detriment of BC and its residents.
What is concerning is that the ‘rookie’ government of the NDP and the Green Party will be too naive and too content with their ‘new found’ power to deal decisively with the challenges that are looming. It is possible that this fledgling government will refuse to face up to the growing mountain of evidence until the time for action has passed – in order to maintain their fleeting moment in the sun.
Again, it is only the BC voter who can take decisive action and force government to do the right thing – to introduce policies and initiatives that will continue to make BC the preferred and sustainable home to the millions who live here and who enjoy BC’s largesse. We are truly blessed to be living in one of the best places possible – and it is our individual and collective responsibility to keep BC prosperous and sustainable. Pay attention to what is happening, locally, provincially and federally and be prepared to demand appropriate action from our politicians when that action is necessary.