Vancouver Sun

PM re­peat­ing cen­tral premise of Na­tional En­ergy Pro­gram

Sup­port the pipe­line, or risk more alien­ation

- John IvI­son Com­ment Na­tional Post jivi­son@na­tion­al­ Twit­­sonJ Taxes · Canada News · Politics · Elections · Business · British Columbia Liberal Party · Calgary · Saskatchewan · Ottawa · Stephen Harper · British Columbia · Alberta · Brad Wall · National Energy Board

Three years ago, the leader of what was then Canada’s third fed­eral po­lit­i­cal party made a ma­jor pre-elec­tion speech on the en­vi­ron­ment. The lo­ca­tion was sym­bolic.

“I’m the leader of the Lib­eral Party of Canada, my last name is Trudeau and I’m stand­ing here in the Pe­tro­leum Club of Cal­gary,” he said. “I un­der­stand how en­ergy is­sues can di­vide the coun­try.”

The speech was in large mea­sure a dis­avowal of his fa­ther’s Na­tional En­ergy Pro­gram — and a pledge never to re­peat the mis­take.

“A fed­eral pro­gram that harms one part of the coun­try harms us all,” Trudeau said.

We will see Thurs­day if the prime min­is­ter lives up to that prom­ise when the gov­ern­ment un­veils new en­vi­ron­men­tal as­sess­ment reg­u­la­tions that will gov­ern nat­u­ral re­source de­vel­op­ment. But the early signs are not promis­ing.

The car­bon tax reg­u­la­tions that came out last month are very dif­fer­ent from the model out­lined by Trudeau in his speech in Cal­gary three years ago. Crit­ics such as for­mer Saskatchew­an premier Brad Wall have al­ready warned that the cu­mu­la­tive ef­fect of the tax and the new reg­u­la­tions could heat up a Cana­dian unity de­bate that is al­ready bub­bling be­cause of the pipe­line is­sue.

“How is this dif­fer­ent from the Na­tional En­ergy Pro­gram, in terms of the re­al­ity of what it will do to jobs and pipe­lines and so on?” Wall asked.

Trudeau’s speech in Cal­gary was in­ter­est­ing be­cause it sug­gested a de­cen­tral­ized ap­proach to car­bon pric­ing. “The fed­eral gov­ern­ment does not have all the an­swers,” said Trudeau. He ad­vo­cated a “medi­care” ap­proach, sim­i­lar to the prin­ci­ples in the Canada Health Act, where prov­inces had con­sid­er­able flex­i­bil­ity as long as those prin­ci­ples were hon­oured.

Ot­tawa would es­tab­lish emis­sions re­duc­tion tar­gets and then al­low prov­inces the flex­i­bil­ity to achieve those tar­gets, in­clud­ing car­bon pric­ing poli­cies. The feds would even pro­vide “tar­geted fund­ing” to help prov­inces achieve their goals, sim­i­lar to the Canada Health Trans­fer.

At the time, the Con­ser­va­tives were vexed — it seemed like Trudeau had adopted Stephen Harper’s less cen­tral­ized view of the fed­er­a­tion, and they were loath to jump on it.

But, like so many other prom­ises made be­fore the elec­tion, this one has not sur­vived the tran­si­tion from party plat­form to gov­ern­ment pol­icy.

Un­der the gov­ern­ment’s pric­ing reg­u­la­tions, each prov­ince has to adopt Ot­tawa’s ris­ing car­bon tax or be forced to ac­cept the fed­eral back­stop.

The reg­u­la­tions also al­low the fed­eral gov­ern­ment to spend any car­bon tax rev­enues as it sees fit, as long as the rev­enues go back to the prov­ince in which they were raised.

The “tar­geted fund­ing” trans­fers re­main il­lu­sory.

It seems likely Western prov­inces will be fur­ther alien­ated by the new en­vi­ron­men­tal as­sess­ment reg­u­la­tions, if they fol­low the prin­ci­ples out­lined in a dis­cus­sion pa­per made pub­lic last year.

That pa­per sug­gested the new reg­u­la­tions would go far be­yond as­sess­ing the en­vi­ron­men­tal im­pacts of re­source projects to also con­sider the so­cial, health and eco­nomic as­pects, in­clud­ing gen­der-based anal­y­sis. Wall called the new im­pact as­sess­ment cri­te­ria “sub­jec­tive” and “neb­u­lous.”

Gov­ern­ment of­fi­cials said de­vel­op­ers would find out what is ex­pected of them ear­lier in the process, be­fore they end up in court. But re­source com­pa­nies would have to rec­og­nize Indige­nous rights and in­ter­ests from the out­set.

In his 2015 speech at the Pe­tro­leum Club, Trudeau talked about the “ge­nius of Cana­dian fed­er­al­ism,” where prov­inces show re­gional lead­er­ship to move Canada for­ward.

But we are at a del­i­cate mo­ment in time where the fed­eral sys­tem does not look quite so ro­bust or in­spired.

None of the re­cal­ci­trant pro­vin­cial gov­ern­ments rel­ish the car­bon-pric­ing pro­vi­sion that sees them ex­cluded from the dis­tri­bu­tion of its tax rev­enue. Few will ap­pre­ci­ate fed­er­ally im­posed reg­u­la­tions that could hin­der in­vest­ment in Canada’s nat­u­ral re­source sec­tor.

Yet in the one area where the fed­eral gov­ern­ment has clear ju­ris­dic­tion — in­ter­provin­cial trade and trans­port — it has been timid.

Though fed­eral reg­u­la­tors have waved through the Trans Moun­tain pipe­line, the Gov­ern­ment of Bri­tish Columbia is try­ing to block its ex­pan­sion. Trudeau has said he supports the pipe­line but has not as­serted his au­thor­ity by say­ing Ot­tawa will over­rule any fur­ther de­lays. In some ways, this is a mat­ter for the project’s pro­po­nent, Kin­der Mor­gan, the B.C. gov­ern­ment and the reg­u­la­tor, the Na­tional En­ergy Board. (If B.C. en­acts reg­u­la­tions to de­lay the project, the com­pany would likely ap­peal to the NEB to as­sert its au­thor­ity.)

But the coun­try is look­ing for lead­er­ship from the prime min­is­ter. Many vot­ers in Al­berta seem to be­lieve he is merely pay­ing lip-ser­vice in his al­leged sup­port for the project, with no in­ten­tion of risk­ing his po­lit­i­cal cap­i­tal.

Be­yond the prospect of los­ing votes in B.C.’s lower main­land, it’s not clear why he has not been more vig­or­ous. There is cer­tainly suf­fi­cient fi­nan­cial in­cen­tive. As econ­o­mist Trevor Tombe pointed out Thurs­day, there is now a $30 dis­count on ev­ery bar­rel of Western Cana­dian Se­lect crude sold to the Amer­i­cans (the only mar­ket it can reach with­out new pipe­lines) — with each dol­lar cost­ing Canada $300 mil­lion a year.

This hell-broth of gov­ern­ment pol­icy — an­i­ma­tion on taxes and reg­u­la­tion, lethargy on pro­mot­ing re­source de­vel­op­ment — is rais­ing hack­les across the West.

Those who don’t re­mem­ber his­tory are, it’s said, con­demned to re­peat it. The younger Trudeau does re­mem­ber the NEP, and yet he is still re­peat­ing its cen­tral premise.

The only dif­fer­ence this time, as Prof. Jack Mintz said in the Fi­nan­cial Post, is that in­stead of sub­si­diz­ing con­sumers in Eastern Canada, Western­ers are now sub­si­diz­ing Amer­i­cans.

 ?? RYAN REMIORZ/THE CANA­DIAN PRESS ?? Prime Min­is­ter Justin Trudeau faces a quandary in the West: move to ac­tively sup­port the Trans Moun­tain pipe­line amid a grow­ing tiff be­tween Al­berta and Bri­tish Columbia, or alien­ate the oil­patch as his fa­ther had done in the ’70s.
RYAN REMIORZ/THE CANA­DIAN PRESS Prime Min­is­ter Justin Trudeau faces a quandary in the West: move to ac­tively sup­port the Trans Moun­tain pipe­line amid a grow­ing tiff be­tween Al­berta and Bri­tish Columbia, or alien­ate the oil­patch as his fa­ther had done in the ’70s.
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