Ford’s government acting like it’s closed for business
White Pines decision could deter investment
Doug Ford is keen to send a message to the world that Ontario is “open for business.”
The platform on which he was elected makes clear that governments don’t create jobs on their own.
“What government can do, however, is create the conditions that make it easier to start a business, grow a business or invest in Ontario.”
Unfortunately, governments can also make boneheaded, ideological decisions that close businesses, kill jobs and drive away investment, which is exactly what Ford is doing with the hasty introduction of the Urgent Priorities Act, in particular the White Pines Wind Project Termination Act.
White Pines is a project to build nine wind turbines on the shore of Lake Ontario in Prince Edward County. Four of the turbines have already been built, as part of a development the German company, wpd Europe, has been planning for a decade.
The project is unpopular with the local municipality, and the new Ontario government House Leader Todd Smith, but it has followed every regulatory requirement of Ontario’s Independent Electricity System Operator, including reducing the number of turbines from 27 to nine.
Ford is said to be particularly upset that the IESO granted wpd Canada notice to proceed two days into the election campaign, when the government was meant to be in caretaker mode.
You can disagree with the generous rates offered to producers by the provincial Liberal government, and you can respect the right of the newly elected government to follow its own path.
But you cannot summarily close down a company that has sunk $100 million into a project, after following all the rules, and then say it has no right to seek compensation in the courts (the legislation gives the government full power to limit compensation through regulation).
Or at least you can’t say all those things and say you are “open for business.”
White Pines promises to be a test case for Ford. John Manley, the president and CEO of the Business Council of Canada, has written a letter to the premier saying he is concerned about the broader impact of the new legislation on Ontario’s business climate.
“(The Act) would revoke permits several years after the proponent obtained them from the appropriate regulatory bodies, cancel contracts with the Independent Electricity System Operator that were negotiated in good faith, and unilaterally set the terms upon which the proponent may be eligible for compensation,” he said. “We believe this legislation, if enacted, will undermine investor confidence and set an unfortunate precedent for how the government intends to deal with the private sector.”
Manley said the principles at stake are similar to those arising from the political fight in British Columbia over the Trans Mountain pipeline expansion, where a new provincial government is trying to block a project that has already received all the necessary federal and provincial permits.
He urged caution. “Among Ontario’s strengths are its reputation for fair dealing and respect for the rule of law,” he said.
Manley’s point was reinforced by Sabine Sparwasser, Germany’s ambassador in Canada, who said she is concerned about the threat to a project that is near completion. “Germany wants to do more with Canada and Ontario, but this would not send a good message to investors,” she said.
It is disconcerting in the extreme that governments across Canada keep getting in the way when what the country really needs is for them to get the hell out of the way.
Bill Morneau, the finance minister, signalled a Damascene conversion to the competitiveness agenda in an interview with Bloomberg on the weekend, months after introducing a budget that sprinkled $6.5 billion on a variety of social programs, and showed no tangible concerns that investment is seeping south of the border, attracted by lower tax rates and less stringent regulation. Morneau now says he will introduce a fiscal update later this year that will address business taxation, oil pipelines and the renegotiation of the North American Free Trade Agreement.
It’s about time. The foreign direct investment climate in Canada has deteriorated steadily since 2013, a combination of external factors, such as U.S. tax cuts and a falling oil price, as well as internal political moves like rising electricity prices, tighter regulation, an increase in the minimum wage, carbon taxes, the failure to push through oil and gas pipelines, higher debt costs, and increased taxes on high-income individuals and small businesses.
White Pines is less about “progressive” environmental politics than politically motivated NIMBYism.
In that regard, it is similar to Dalton McGuinty’s gas plant decision and, regardless of the attempt to block compensation, the results are likely to be similar, with the taxpayer on the hook.
Ford should think again before White Pines’ turbines thresh his reputation for trustworthiness among international investors.
THIS WOULD NOT SEND A GOOD MESSAGE TO INVESTORS.