A bad day to buy a pipeline

AUDITOR’S GRIM FINDINGS ON CANADA’S ‘BROKEN’ SYSTEM BODE ILL FOR LIBERALS EAGER TO EXPAND IT

You couldn’t make this stuff up. On the day the auditor general released a report blasting “incomprehensible failures” in the government’s capability to do much of anything, the Liberals announced that Ottawa is getting into the pipeline business.

Michael Ferguson’s report found there were fundamental failures of project management and oversight in implementing the Phoenix pay system; that Indigenous people had been let down yet again by their government; and that delays in decision-making by the publicprivate partnership building the Champlain Bridge replacement in Montreal had cost $500 million — money that, it turns out, could have been spent buying roughly 127 kilometres of pipeline for the government.

Ferguson’s conclusion was that Canada has a “broken government system.” Yikes. These are the same people who have just agreed to spend $4.5 billion to buy Kinder Morgan’s Trans Mountain project — the existing pipeline, the terminal assets, the current management team and workforce and the right to build an expansion that will triple daily capacity to 890,000 barrels.

That price doesn’t include the construction costs — which Finance Minister Bill Morneau refused to reveal at Tuesday morning’s press conference but which one investor estimated at $6 billion — or the loan guarantees to get the project back up and running during this construction season.

On the additional costs, the government’s logic was that not talking about estimates Tuesday was good for taxpayers because future investors in Trans Mountain would use them to beat down the price of any potential purchase. But the lack of transparency on the sticker price will make it harder to sell to Canadians dubious about government getting involved in a business it knows nothing about — far less a government so recently accused of systemic “incomprehensible failures.”

Federal Conservative Leader Andrew Scheer accused Justin Trudeau of using taxpayers’ money to buy his way out of his own failure. And there is something in that. If the Trudeau Liberals had not shut down all other options to move Alberta’s oil — by fiat, unachievable regulatory targets and a tanker ban — we wouldn’t be in this mess.

“The message being sent is that to get anything built, the federal government has to nationalize it,” Scheer said.

All of that is true. But so, perhaps more by accident than design, is the fact that the feds may have snapped up a bargain.

Morneau and his officials kept emphasizing that the transaction represents a “sound investment opportunity.”