Fact—this isn’t the first time government investment has been used to save a major project.
In the 1970s, the Alberta Conservative, the federal Liberal and the Ontario Conservative governments collectively took a 30 per-cent equity position in Syncrude to save the project.
The east coast Hibernia project looked doomed in the 1990s until the federal Conservative government took an eight per-cent equity position and ponied up a $3.8 billion loan guarantee to the private sector owners.
Husky Oil needed government support in the 1990’s to salvage their Lloydminster Upgrader selling 50 per-cent equity to the Alberta Conservative and the federal Liberal governments.
Fact—today Kinder Morgan walked away from the Trans Mountain Pipeline project. Corporations work for shareholders. They don’t give a rip about creating jobs, it’s all about risk and returns!
Today we have a federal Liberal government and a provincial ND government purchasing one hundred per-cent of the assets of the Trans Mountain Pipeline and making a deal to retain all critical executive and technical people associated with the project, for exceptionally low bonuses.
Fact—the purchase of the Trans Mountain Pipeline is not about ideology. The examples above show that all political parties, Conservatives, Liberals and New Democrats, make these equity decisions when the private sector steps away. The job of government is to work for the best interests of their country or province. Governments save jobs and understand the long-term benefits of major projects such as the Trans Mountain Pipeline.
Fact—loan guarantees to major corporations are a costly sink hole for taxpayers. Governments end up with no seat at the board table and zero chance of a return on investment—think Bombardier! I also was at the table during negotiations between an Alberta government Crown corporation and Bow Valley Industries to build a private sector hazardous waste facility in Swan Hills. The deal was a disaster for tax payers as Bow Valley eventually (after the Alberta government chief negotiator was fired) got a sweet heart deal, one hundred per-cent cost recovery plus 15 per-cent guaranteed return. The facility was a financial bust for taxpayers!
Fact—the Syncrude investment secured the eventual oil sands boom. All governments earned a return on their investment when they divested and, of course, continue to reap benefits from royalties, direct and indirect jobs and personal income tax receipts.
Fact—Hibernia lifted Newfoundland to a have-province from a have-not-province. The eight per-cent government investment has been maintained and annual returns continue to flow into government coffers.
Fact—the Lloydminster Upgrader investment lost money for Alberta and Canadian taxpayers because of ideology. Both the Liberal Finance Minister, Paul Martin and Premier Ralph Klein believed in small governments, privatizing everything and unloading assets even at a loss. The sale of their equity cost respective taxpayers 25 cents on the dollar. The ND government of Saskatchewan bought their 50 per-cent equity portion since the private sector still was uninterested.
When Saskatchewan sold four years later, they walked away with their entire investment intact and in the interim, saved jobs.
The ND government in British Columbia is making the Trans Mountain pipeline about ideology likely because the balance of power, and their political survival, rests with the Green Party.
Just four examples given, but equity positions in ‘private sector’ projects were taken four times by a Conservative government, three times by a Liberal government and twice by a New Democrat government.
Good governance is never about ideology!
B.P. Schimke
