Pipeline bailout keeping up Canadian tradition
Last week’s announcement that Ottawa is buying the Trans Mountain pipeline has been called a lot of things.
Finance Minister Bill Morneau says the purchase is “of vital interest to Canada” and “a sound investment opportunity.”
“A bad deal for taxpayers” snap analysts from the pro-market Fraser Institute, who worry Ottawa will prove incompetent at shepherding the project to completion.
“How the world ends” claims hysterical anti-oil protester Bill McKibben in The Guardian. McKibben argues Justin Trudeau — “the cutest, progressivist, boybandiest leader in the world” has pushed the world closer to global warming Armageddon by “going fully in the tank for the oil industry.”
And in an editorial earlier this week, Torstar newspapers opined the Trans Mountain decision alone will determine the future of Trudeau’s political career: “It’s that big.”
OK. We get that it’s a big deal. It’s controversial, risky and in the national interest. It may even lead to the end of life as we know it on Earth.
Want to know what else it is? Repetitious.
Ottawa taking over a megaproject to ensure its completion in the national interest? And with substantial risk and controversy? We’ve heard that one before.
In buying Trans Mountain and putting the federal government’s financial muscle behind the pipeline expansion project, Justin Trudeau — our boybandiest prime minister ever — is actually following in the wellworn footsteps of some of Canada’s mutton-choppiest and frock-coatiest leaders from our distant past.
This is something we do in Canada. Over and over again.
The first of many examples actually predates the federal government. Completed in 1829, the Welland Canal was meant to protect Canadian farmers from New York’s highly profitable Erie Canal. Yet the plan failed miserably as a privately-funded venture and soon fell into the lap of Upper Canada’s government. At one point, three-quarters of the colony’s entire government debt was tied up in the canal.
After canals came railways. While early American railroads attracted dozens of private companies and were often immediately profitable, Sir John A Macdonald’s vision of a ribbon of steel across the empty Prairies proved utterly unappealing to investors. It took a decade and a half of cajoling, $25 million in cash, 25 million acres of land and an embarrassing political scandal before Macdonald was able to scrounge up sufficient interest to complete his national dream.
The St. Lawrence Seaway was yet another nation-building megaproject impossible to justify on a cost/benefit basis. After initially operating as a private sector venture, it too became a government responsibility.
All these grand infrastructure projects — today considered central to Canada’s economic development and/or our national mythology — were either started and quickly abandoned by the private sector, or were so obviously uneconomic from the onset that the federal government had to shoulder the burden from the outset.
“Canada has always been attracted out of necessity to big projects that fit the size and scale of the country,” says Doug Owram, history professor emeritus at the University of British Columbia and coauthor of the popular textbook “A History of the Canadian Economy.”
What’s different about this tradition today is the reason for Ottawa’s reluctant purchase.
Our historical examples all turned on the fact Canada was a very large country with a rather small population and could never generate the necessary market demand to make railroads or canals a going concern, as was the case in the United States.
Today, it is no longer a matter of insufficient demand. Two years ago, for example, the Canadian Energy Pipeline Association said its members were prepared to spend a stunning $68 billion building new pipelines over the next five years.
Rather, the current obstacle is politics. Big and important nationalbuilding projects have become increasingly vulnerable to the complaints of protesters or political opponents.
Recent polls show 55 per cent of British Columbia residents currently approve of expanding Trans Mountain. Across Canada, approval rates are even higher. The interests of democracy, as well as economics, fully support completing this pipeline.
And yet without federal government intervention, the project faced a slow death of obstruction and protest from the British Columbia government and various other foes.
From Canada’s early history to the present, it has always been a struggle to complete the sort of large nationbuilding projects that made this country. The solution has always been reluctant federal government intervention. What’s different today is that now the problems are selfinflicted.