National Post (National Edition)
Ownership change changes nothing
Getting it built has always been the problem
Everyone knows the trick of a magician is misdirection. The weakness in the illusion the Trudeau Liberals are trying to pull with the Trans Mountain pipeline expansion is that we’ve watched it unfold in such painfully slow motion, when they finally pulled their plan out of their hat Tuesday, the diversion was obvious for those watching carefully.
Where a moment ago you saw no pipeline to tidewater, see it appear now before your eyes, Finance Minister Bill Morneau announced in declaring his government’s decision to purchase the Trans Mountain project, plus the original pipeline and other assets from Kinder Morgan for $4.5 billion. “This investment represents a fair price for Canadians and for shareholders of the company, and will allow the project to proceed under the ownership of a Crown corporation,” he said.
Pay attention to the ownership, ladies and gentleman, and you might not notice that it changes nothing about whether the project will be allowed to proceed. Having added, through nationalization, an entirely new layer of politics to an already overly political project, it could well ensure that it doesn’t.
For those who badly wanted to believe it, there was magic in the air Tuesday. Alberta Premier Rachel Notley, appropriately described as “jubilant,” was photographed high-fiving members of her cabinet. “Pick up those tools, folks,” she cheered at a news conference. “We said we would get the pipeline built and we are getting it built!”
(Albertans will pony up another $2 billion as part of an “indemnity fund” against political risk, convertible into its own equity stake in the project.) Calgary Mayor Naheed Nenshi said on Twitter he’s “very pleased that the federal government has taken this step to get this vital pipeline built!”
Reporters were calling analysts to estimate the return on Ottawa’s investment. Pundits ran numbers to see if maybe, just maybe, the Liberals had pulled off a stunning business coup, buying at a price that would look puny relative to the windfall they might eventually sell it at. If, that is, Morneau meant it when he said the government has no intention of owning the pipeline in the long term and doesn’t instead find itself dazzled by all those juicy pipeline profits that he expects will soon bring all the eager buyers to the yard. “We’ve had expressions of interests from multiple investors over the course of this last month,” Morneau said Tuesday. “In our opinion, this investment has a lot of value.”
With all this talk of profits and buyers and workers and tools, it’s easy to lose sight of the fact that there is no actual pipeline to sell yet, and none of the problems that have been tying the project in knots for the past six years have gone away.
No other private investors have stepped forward. The current owner’s decision to sell means Kinder Morgan — with 20 years in this business and 130,000 kilometres of pipeline under its belt — does not see a lot of value left in its investment, either. At least not much more than the $4.5 billion Ottawa’s paying for the right to build it, along with the bigger cost it will take to actually build it, last estimated by Kinder Morgan to be more than $7.4 billion. The very things that have for years blocked the company from realizing the value of the pipeline — the protesters, the court challenges, obstructionism from not just one but two B.C. governments — they’re all still there.
Although they were asked repeatedly in their news conference on Tuesday how putting politicians in charge will make those obstacles vanish, neither Morneau nor Natural Resources Minister Jim Carr could provide an answer. Because it doesn’t make obstacles vanish; it rather makes them worse.
Investors with money on the line have a kind of skin in this game that the members of the House of Commons simply cannot match. Kinder Morgan was already despised by the extreme Suzuki left; however able the Houston company was to endure the optics of illegal protesters being dragged to jail live on CBC, politicians will surely have a far weaker stomach for it. Liberal MPS in particular will be targeted with campaigns of phone calls, emails, letters and Twitter wars with a blistering intensity they have never before experienced and won’t wish to again. “This decision will haunt the Trudeau government,” warned Tzeporah Berman, a top commander of the anti-pipeline militants. “Those of us who knocked on doors for him will not forget that he took billions of dollars from Canadian families to buy out an oil pipeline that violates Indigenous rights and our commitments on climate change … All hell is about to break loose in British Columbia.”
The Liberals just handed the bumbling NDP Leader, Jagmeet Singh, a lot of new voters and a whole new hope. And Singh clearly relishes the idea of turning the election in 2019 (before any construction can be finished) into a question of Trudeau’s climate hypocrisy, with Singh tweeting on Tuesday that “Giving $4.5 billion to a Texas oil company is a failure of leadership that demonstrates PM Trudeau has no vision for the future. Climate change leaders don’t spend $4.5B on pipelines.” And John Horgan, the B.C. premier elected to block the pipeline, has vowed that his court challenges aimed at frustrating the pipeline will not cease regardless of whose name is on the title. “It does not change the course that the government of British Columbia has been on since we were sworn in,” he said.
All of this is supposed to be meaningful progress. As Morneau spoke in his press conference to investors considering trying “big, important, transformational projects like the Trans Mountain expansion” in Canada, this is not, as it may appear, a major company fleeing, after years of harassment, a region where its pipeline has been a fixture since 1953. It is a sign that investors “have a partner in Ottawa.”
This Liberal government has been nothing if not ambitious in its attempts to prevent radical greens from throttling the economy, mainly by trying to appease them by vetoing Northern Gateway, smothering the Energy East pipeline in regulatory overkill, reinventing the National Energy Board as a social-justice regulator, and forcing us all to pay carbon taxes. Not one thing has worked. To believe that putting Ottawa’s name on a pipeline will do the trick takes a master of delusion.