TRANS MOUNTAIN TURMOIL
Pipeline war heats up
VICTORIA British Columbia could face a budgetary crisis if Ottawa begins withholding federal money for health care, child care or Metro Vancouver transit amid a worsening rift between the two governments over the Kinder Morgan pipeline.
Alberta Premier Rachel Notley told her legislature Monday that she’s discussed with Ottawa the idea of curtailing funding to B.C. as retaliation for the province frustrating Kinder Morgan’s Trans Mountain pipeline expansion with court challenges.
“In fact, when it comes to the funds that would be transferred as a result of participation in the pan-Canadian framework, we’ve already made that request to the federal government, and I believe that it is under consideration,” Notley said in response to a question by Opposition leader Jason Kenney.
“As I’ve said before, there are a range of tools which the federal government needs to strategically deploy, many of which they are already working on.”
B.C. officials were quick to play down the threat Monday. Even a small financial backlash from Ottawa could imperil the province’s balanced $54-billion budget, which sits at a relatively tiny projected surplus of $219 million for 2018-19.
“It would be inappropriate, I believe, for the federal government to threaten or try to coerce B.C.,” Environment Minister George Heyman said.
Federal transfers to B.C.’s treasury accounted for $8.9 billion this fiscal year, or almost 17 per cent of B.C.’s budget. The bulk of the funding is for the Canada health transfer and Canada social transfer, though Ottawa also kicks in cash for disaster relief, housing and other transfers.
Federal money is key to B.C.’s promise for $10-a-day child care in the last election. Ottawa is promising $153 million over three years to help fund child care, which the province has said is critical.
The NDP government’s plan to expand Metro Vancouver transit would not survive should Ottawa revoke some or part of its funding. The federal and provincial governments signed a deal this month for $4.1 billion over 10 years, which includes Ottawa’s 40 per cent share of a proposed Broadway subway line and light rail in Surrey.
B.C. Finance Minister Carole James said she’s confident Ottawa will see the province is merely standing up for its rights.
“We continue to be open for business and open for investment, but it’s our job to stand up for the interests of British Columbians and we’re going to continue to do that,” she said.
Notley has also said she’ll soon bring in legislation that will empower her government to restrict gasoline shipments outside of Alberta in retaliation for Kinder Morgan delays. That could drive up the cost of gasoline at the pump in B.C., where some regions such as Metro Vancouver are already facing high retail prices.
Other measures Ottawa and Alberta could take include buying into the Kinder Morgan pipeline to protect the company from the short-term risk presented by B.C. The federal government could also send its own reference question to the Supreme Court of Canada to clarify whether B.C. has the authority to try to stop the pipeline.
Prime Minister Justin Trudeau said Monday he had a long conversation with Premier John Horgan in which he told him not to intervene in an area of federal jurisdiction.
“I impressed upon him the importance of working together and respecting the federal responsibility for protecting things that are in the national interest,” Trudeau said at a news conference in Montreal. “This is a pipeline in the national interest and it will get built.”
Trudeau’s cabinet is convening Tuesday for an emergency meeting on the Kinder Morgan issue.
The jockeying among the three governments came after a surprise announcement by Kinder Morgan on Sunday that it was suspending all non-essential work on its proposed $7.4-billion expansion of the existing oil pipeline between Alberta’s oilsands and Metro Vancouver. Kinder Morgan issued a deadline of May 31 for certainty from governments, or else the project would be cancelled.
Kinder Morgan CEO Steve Keans said Monday the issue is the B.C. government.
“What we have is a government that is openly in opposition and has reaffirmed that opposition very recently,” he said.
In February, B.C. threatened regulations to restrict an increase in diluted bitumen from any new pipelines in its borders in response to Kinder Morgan’s plan. Alberta responded with a ban on B.C. wine. B.C. then backed off and said it would send a reference question to the courts to see if it has the right to impose environmental restrictions on oil.
Ottawa has said only it has the power under the Constitution because the pipeline crosses provincial borders. Ottawa approved Kinder Morgan’s expansion in 2016.
B.C. officials expressed surprise Monday that the court reference was abruptly rejected by Kinder Morgan when both Alberta and Ottawa appeared to be OK with the idea in February.
“We’ve said with respect to one of the proposals that is contentious that we’d refer to the courts for consideration. That seemed to satisfy Alberta and the federal government at the time,” Heyman said.
“Now that people in a Texas boardroom have expressed disappointment, they are reacting. We’re just planning to do what we’ve always done: stay calm, address issues within our jurisdiction, and where that’s challenged allow the courts to determine what’s appropriate.”
Horgan was grilled for an entire question period at the legislature Monday over what the opposition B.C. Liberals described as his attempt to start a trade war. Horgan said one energy project won’t damage the national economy and reminded the Liberals about his party ’s election promise to oppose Kinder Morgan.
“It’s not about pride,” Horgan said. “It’s about the commitments we made to the public during an election campaign, and we’re living up to those commitments by using the courts to make our argument that we believe that the risks are too great to proceed with this project. That’s what we said we would do.”
The pressure is on Notley, Alberta and potentially Ottawa to invest public dollars into the pipeline project to keep it from collapsing, University of B.C. political science professor Richard Johnston said.
He described the Kinder Morgan’s threat of cancelling the pipeline as “they’ve in a sense upped the ante in a game of chicken.”