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BC Budget a work of fiction: Economist

March 3, 2014EconomicsfeaturedErik Andersen

BC Budget a work of fiction-Economist — BC Liberal Finance Minister Mike de Jong tables a fairytale budget – Feb. 18, 2014

The crafting of a government budget is always fictional because it comes from the minds of politicians who are universally optimistic about the future. All that needs doing is to determine if the exaggerations will be tolerable or drive us all into a deepening fiscal hole for no good purpose.

[quote]BC’s resource revenues have tumbled from $4.527 billion in 2006 to $2.473 in 2013.[/quote]

Exaggerating GDP

The first question we should ask is whether the BC Liberal government’s record of estimating the Gross Domestic Product (GDP) has been reasonably accurate. Unfortunately, this has not been the case. It has consistently expected greater growth than realized for at least 8 years running and is keeping with that narrative this year. Real GDP growth has been about 1.4% or less. Following the established pattern of exaggeration, this year and next year the government is looking for 2 and 2.3%, respectively. Switching to “Nominal GDP Growth”, the increases are 3.6 and 4.3%.

So where is the risk in this bullish outlook? It is, as always, in a false sense of future financial well being that it creates. If one wants to borrow and spend without inhibition, it becomes easier to do so when one self-deludes that there are better times ahead.

$125 Billion in new liabilities since 2006

This model of borrowing and spending has prevailed in BC since about 2006 and most of the fiscal consequences are only now showing up. Since 2006, the reported total liabilities of the province increased from $52 billion to over $75 billion a year ago.

In addition, there are liabilities that are indirectly backed by the provincial government and reported as “contingencies and contractual obligations”. They grew from close to zero in 2006 to $100 billion a year ago. These new liabilities must also be paid by us all and they are the principle reasons that budgets for health care and education have been so rubbished.

Just one example: BC Hydro has about $50 billion in contractual obligations that are not included on its balance sheet as liabilities. Because the corporation has not been collecting sufficient cash to meet its obligations since 2006, it has parked $5 billion – and growing – in accounts receivable that will only begin to be paid off when electricity rates are increased by at least 35%.

This is only one example of money to be recovered from the disposable incomes of BC residents and businesses. It alone is the equivalent of removing $1.5 billion a year from our annual incomes.

You can’t fool the Baltic Dry Cargo Index

Much has been made of the recent national increase in quarterly GDP but caution should be the watch-word. Half of the increase comes from a build up of yet-to-be-sold inventory and the other half from consumer spending made possible by increasing debt.

So what should the government be using as an independent indicator of GDP growth? The only index that is held to be free of derivative “gaming” is the “Baltic Dry Cargo Index”. Defined as “an assessment of the price of moving the major raw materials by sea”, it is the clearest, most honest indicator of global economic activity. Here is a link to Bloomberg’s interactive chart.

The Index fell off a cliff from its peak of over 11,000 in 2008 – and while it had recovered somewhat by 2009, it has been most downhill again since. The evidence is clear that the global economy has been in a contraction since 2008.

Currently there are hundreds of freighters standing idle and we see some of them here on the west coast. You would think that those in government would look out their windows and see all this idle shipping and then have the penny drop that an economy that is mostly dependent on exporting primary commodities is going nowhere in a hurry until the world has finished correcting for credit excesses. This reality is not evident in this year’s budget.

Seeing resource revenues through rose-coloured glasses

Drilling further into the budget, it is instructive to look at the government’s outlook for “Natural Resource Revenues” (royalties, etc.). In 2006 it reported these revenues were at an all-time high of $4.527 billion. From that point on revenues decreased every year but one, arriving at $2.473 billion in 2013.

If this were a common share of a corporation, would you be an enthusiastic investor when the global economy is on life support? This trend line does not seem to bother our government, so they show revenues from natural resources in 2014 at $3.01 billion and in next year at $3.165 billion. Given the trend of the past 8 years, this revenue amount would more likely be $2 billion, which in turn means the government is expecting to collect $1 billion more than it will likely get.

Population growth cooling off

Since this is an examination of a moving target it is also instructive to look at other trends. The population values for the province give an indication of how many there are of us to pay the bills and use the infrastructure investments made by the government. Prior to the new century, the population of BC was increasing by 20% each decade. Since 2000, the rate of increase has fallen off to 12% per decade with further decreases expected into the future. This is hardly a representation of a growing need for the level of borrowing and spending carried out in recent years nor for the rest of this decade.

Lacklustre employment figures

The record of those employed in BC is also hardly inspiring. As of August of 2006, there were 2.147 million people employed in the province. By 2012, in the same month, there were 2.348 million. That was a 9% increase over that period, in line with a population increase of 10%, but not in line with the growth in nominal GDP of 25% for the same period. This suggests that the population of BC did not fully participate in the growth of the general economy but were left with all of the liabilities.

This condition is partially authenticated by an examination of electricity consumption, as reported by BC Hydro. All three categories of customers, residential, commercial/light industrial and heavy industrial, saw no change in total amounts consumed over the same period.

BC’s economic benefits flowing outside of province

From this record, it looks like the fiscal policies of the government have resulted in transferring a large proportion of the financial benefits from the economic growth of the past 8 years to folks other than those living in the province. The 2014 budget indicates no remediation of this condition.

Big spending continues, despite rising borrowing costs

If all of the above were not enough, the fiscal risk that comes with being a large borrower and spender is that of higher interest rates to come. Presented on page 81 of the budget is a “forecast “ of interest rates by the Bank of Canada, US Federal Reserve and the BC Ministry of Finance. It is clear that those folks all agree that borrowing costs are likely to increase, yet in the face of this expectation the government is proposing new capital spending including, but not limited to, $8-10 billion for the Site C electricity generation dam. These projects, on top of the legacy of previous investments, will do much to squeeze the budgets for health care and education making BC ever more unaffordable to live in.

It is clear that the 2014 budget makes no provisions to remediate the excesses of the past 8 years that are adversely weighing on the province’s population in the form of increasing ferry rates, increasing electricity rates, increasing car insurance rates, increasing property taxes and increasing health care costs. Just like all addicted gamblers, the government shows every intention of using the province’s credit card to fund speculative investment initiatives as its way of making things right.

It is looking to make a “Hail Mary Pass” – and the only thing it has to offer is its LNG pipe dream, which is more about selling hot air than natural gas.

Justin Trudeau: Just another “Con” man?

March 2, 2014Canada, PoliticsfeaturedWill Dubitsky

Justin Trudeau-Just another Con man — Justin Trudeau addresses a progressive think tank in Washington, DC (photo: Chip Somodevllla/Getty)

Justin Trudeau wants to project a young, fresh face, representing all the good things that Canadians want – a man who would do politics differently. But the gap between reality and fairytale is extraordinary.

If one looks at what he has said to date, one finds a man with tired old ideas; a limited understanding of, and sensitivity for, many major issues; and a puppet serving Bay Street, Big Oil and other powerful interests. The same powerful interests served by the Harper administration.

A middle class fairy tale

Most telling is Trudeau’s supposed concern for the middle class. Though 80% of Canadians have seen their revenues decline or stagnate over the last 3 decades – income inequalities are at an all time extreme – Trudeau, like Stephen Harper, has concluded that low corporate taxes are the way to go for maintaining what they perceive to be a prosperous and rich Canada.

But Trudeau goes one step further to the right than Harper. He has repeatedly expressed the view that now is not the time to lower the corporate tax rate, implying that, at a later time, a lower corporate tax rate could be an option.

To put all this in context, the lowering of corporate tax began with the Liberals and was accelerated by the Conservatives. The result is that: 1) At 15%, Canada has the lowest corporate tax rate in the G8; and 2) approximately $575B lies dormant in corporate liquidity.

Together, these factors imply that having the lowest corporate tax offers very few competitive advantages and that a better distribution of the wealth could be achieved with higher corporate taxes and fewer fiscal escape clauses/deductions. The additional accrued revenues could be invested in economic development and regional diversification; youth employment; health; innovation for the jobs of tomorrow; public transportation and other urban infrastructure; day care – to name just a few examples.

Further on this theme, Kevin Page, the former Parliamentary Budget Officer, concluded that a low corporate tax rate limits government manoeuvrability to that of austerity budgets.

In his own clumsy fashion, Trudeau has confirmed Kevin Page’s analysis in that he recognizes that the Liberal Party of Canada’s (LPC’s) own Harper-like policies on wealth distribution would produce Harper-like results. To be more specific, to prepare Canadians for such an eventuality, or the “necessity” of this Bay Street accommodation, Trudeau has indicated that the post election LPC budget could very well be an austerity budget.

In other words, there is a disconnect between Trudeau’s supposed concern about the middle class and reality. In the absence of any serious attempt at redistribution of the wealth – something in which Trudeau appears not to believe in – he can only offer a middle class fairy tale. This is a backdrop for many Trudeau’s positions on other issues.

No wonder Justin has described income splitting as “a decent idea”, even though 85% of Canadians would receive no benefit, while the majority of the top 1% of income earners would get $6500 and up. So much for his preoccupation with the middle class.

Appeasing Big Oil, denying science

Turning to the environment, once again Trudeau has much more in common with Harper than most think, particularly when it comes to the denial of scientific evidence. It’s high time to debunk the myths about Trudeau’s “concerns” in this domain.

Trudeau’s position on Keystone XL is case in point. According to Justin, the opposition to Keystone XL to transport tar sands bitumen to the US Golf coast is not based on scientific evidence. Yet life-cycle emissions related to tar sands – from the extraction stage to the refining and production of major quantities of the by-product pet coke for use as a cheap, dirty fuel; and to the final consumption as fuels – place tar sands-derived substances in the range of 20% to 25% more emissions than those associated with conventional petroleum.

As if this extreme denial is not enough to put Trudeau in the same Big Oil camp as Harper, Trudeau has also complimented Premier Redford for promoting Keystone XL with references to Canada’s good environmental record! Trudeau has been critical of Harper for not doing the same – despite Harper’s disastrous environmental legacy.

This is absolutely astounding! After Harper’s dismantling of environmental protection legislation, weakening of the environmental impact analysis process, muzzling scientists, decimation of Canada’s environmental research capabilities especially as it relates to the impacts of climate change and the monitoring of Canada’s emissions, pulling out of the Kyoto Protocol, and much much more, Trudeau, like Harper, perceives the environment as a PR challenge rather than a Mother Earth/humanity state of health challenge.

But the denial doesn’t stop there. Trudeau bases part of his support for Keystone XL, as is the case with Stephen Harper, on the recent US Dept of State report which suggests that the environmental impacts pertaining to the approval of Keystone XL will be minimal.

Never mind that this report was written by authors close to the petroleum industry who concluded that if the US cannot import unrefined tar sands derivatives, the US would get it’s petroleum from elsewhere.

Never mind that a rejection of Keystone XL would be a US and global game-changer, sending a clear signal to the globe that the US is serious about reducing its dependency on fossil fuels and will be looking to clean tech to address tomorrow’s energy needs.

Indeed, under these circumstances, it should come as no surprise that Trudeau did not distant himself from Jean Chrétien’s January 2014 remarks to the effect that it makes no sense to restrict tar sands development because we are going to need petroleum for a long time to come.

Falling behind Europe on emissions reduction, green economy

And the denial goes a notch higher when it comes to Trudeau’s views on national solutions to address climate change. In keeping with the Liberals’ conciliatory legacy with Big Oil, this time, in reference to cap and trade, he claims that this environmental concept doesn’t have scientific merit. (Cap and trade is a model which penalizes companies that exceed their emissions limits and rewards companies that reduce emissions below their targets by being able to sell their credits to firms in the proceeding category.)

Never mind that Europe has had an Emission Trading Scheme (ETS) since 2005 and that the ETS has proven to be a potent compliment to other environmental policies. The results are such that at least 25 EU nations have been identified as likely to meet or beat the EU target 20% reduction of emissions by 2020, relative to 1990 levels.

Never mind that Germany has exceeded it’s Kyoto Protocol goal of a 21% reduction in emissions by 2012 with an achievement of a 25% reduction, all while having one the world’s strongest economies and a clean tech sector that has become bigger than the German auto sector.

Never mind that China has become the world’s largest investor in clean tech – with $67.7B and $61.3B invested in renewables in 2012 and 2013, respectively – and is now planning to introduce the first of seven pilot cap and trade schemes in Shenzhen.

As a former Government of Canada employee who worked in the field of sustainable development, it comes as no surprise that Trudeau’s “thinking” on Big Oil is both conciliatory and wishy-washy. Emissions spiked up during the previous Liberal reign – as has been the case with the Conservatives at the helm.

The Liberals’ oil-friendly legacy

This LPC legacy was so because of, among other things: 1) the absence of effective legislative and fiscal measures; 2) the party’s continuation of generous subsidies for the fossil fuel sectors; and 3) a fossil fuel-friendly mindset as reflected in the Stéphane Dion proposal, prior to the Liberals’ defeat, to invest billions of government funds in the fossil fuel industry to help that “impoverished” sector reduce its emissions.

It is becoming increasingly evident that Trudeau is vague as to his environmental plans because of his alignment with Big Oil, a longstanding Liberal tradition.

By contrast, Thomas Mulcair advocates a transfer of subsidies from the fossil fuel sectors to the clean tech.

Poor judgement, top-down leadership and Harper similarities

Further on the denial of science, but in a different context, is the matter of the unusually long time – over a year – that it is taking for Health Canada to approve for use in Canada the drug Mifepristone (a.k.a. RU-486), the abortion drug. This, despite the fact that the drug has been in use around the world since 1988, when it was first approved in France.

Given the views on abortion of the minister in question, Rona Ambrose, the delays are suspect. But all Justin Trudeau could say on the exceptional delays is that he is not a medical expert. Imagine the implications of him being in power with his weak judgement, when this is combined with his not wanting to upset Big Pharma and right wing groups.

Equally telling on Trudeau’s poor judgement and flippancy, was his “performance” on the Radio-Canada TV show Tout-le-monde-en-parle, on Feb 23, 2014. The Ukrainian Ambassador to Canada, Vadym Prystaiko, quite aptly called for Trudeau to apologize for his “joke” on the show to the effect that Vladimir Putin would not be in a good mood to discuss the Ukrainian turn of events because of the defeat of the Russian men’s hockey team in Sochi. As the Ambassador said, 82 deaths in the clashes between security forces and the demonstrators is no laughing matter.

Trudeau’s lightweight Senate proposal

As for the Senate, I have saved this for near the end because I think we should go beyond the scandals of the moment, to the stuff that has implications for all Canadians. Let’s get real. The case has yet to be made as to why a different Senate, made up of unelected officials and appointed by another group of unelected officials, would improve Canadian democracy. More important, with Senate retirements not mandatory until age 75, it means it would take at least two decades before this so-called different Senate would take shape.

Add to the Trudeau Senate cocktail the way in which he went about springing the news on “Independent” former Liberal Senators. Here one discovers Harper-style, top-down leadership, with no consultations outside a small inner circle. Due to the absence of internal consultation, Trudeau not only surprised Liberal Senators, but his entire caucus! Or is this another case of poor and gratuitous judgement?

Justin opposes divisive politics – except when it suits him

While Justin Trudeau presents himself as a uniter, not a divider like Harper and Quebec Premier Pauline Marois, delegates at the Feb 2014 national convention in Montreal expressed the view that a Marois majority would help the party gain votes in BC and Ontario. In other words, the LPC hopes for a PQ majority in order to falsely represent the LPC in English Canada as the saviour of national unity. This is wedge politics that places party interests above national interests in order to target specific regional voters. This is the kind of traditional LPC trick that turns off Québécois.

No wonder only 10% of the LPC delegates at their convention in Montreal, Quebec were from Quebec.

During the orange wave in Quebec, the NDP gains were in part the result of former Bloc voters shifting over to the federalist NDP. This is the way to unite Canadians, by presenting a progressive alternative for all parts of Canada – with the same themes/messages in every region of the country.

Trudeau and Harper: Other similarities

Finally, there are a host of other matters where we find Trudeau and Harper very much on the same page – such as Trudeau’s views that: 1) the sale of Nexen would pave the way for free trade with China and a more prosperous middle class; 2) health is primarily a management issue, rather than a financial challenge; and 3) guns are an integral part of Canadian culture.

Summing up the LPC policy positions to-date, it is clear is that Stephen Harper and Justin Trudeau are on the same Bay Street/Wall Street, Big Oil team.

Why would we expect anything different from Justin in 2015?

Northern Gateway: The unlikely pipeline

March 2, 2014Energy and Resources, Pipelines and SupertankersfeaturedRay Grigg

Northern Gateway-The unlikely pipeline — The 3-member panel for the Northern Gateway pipeline overruled 98% opposition to the proposal

The approval of Enbridge’s Northern Gateway pipeline by the National Energy Board’s Joint Review Panel (JRP) landed with a dismal and predictable thud. It is a view that needs to be reviewed, an assessment that needs to be reassessed, a decision that still needs multiple other decisions. “After weighing the evidence,” the JRP announced with an unconvincing finality, “we concluded that Canada and Canadians would be better off with the Northern Gateway Project than without it.”

[quote]Of 1,179 oral submissions, 1,159 were opposed to the pipeline and the resulting supertankers.[/quote]

98% opposition ignored

The pronouncement is filled with ambiguities, uncertainties and deficiencies. What evidence was weighed that supported the JRP’s conclusion? Of 1,179 oral submissions, 1,159 were opposed to the pipeline and the resulting supertankers. As noted by Stephen Hume in The Vancouver Sun, “Scientists and environmentalists who wanted to address the hearings were excluded from the process by NEB fiat.” The hearings did not consider “upstream” or “downstream” effects, except as economic factors — but even these were only conjectural or “likely”.

As for being beneficial to “Canada”, it is a land mass, a geographical territory endowed with natural features that don’t need scarring by pipelines, inevitable oil spills, threats to species and ecologies, wholesale removal of a non-renewable resource, massive environmental trauma from the tar sands development, not to mention additional greenhouse gases that are exacerbating climate change.

“National Interest”

As for the benefit of the Northern Gateway pipeline to “Canadians”, this is both conjectural and questionable. The evolution of Canadians toward oil as their single, dominant, economic driver moves us toward the status of a petro-state with all the accompanying financial instabilities, budgetary uncertainties and democratic corrosion.

Although the JRP finds that “the project, if constructed, would likely deliver economic benefits by expanding and diversifying the markets available for western Canadian crude oil exports”, it also acknowledges that it is “difficult to determine, with certainty, the effect the Northern Gateway Project may have on broader market prices once it is placed in service…”. In other words, the addition of Alberta dilbit to the international market may lower the price of oil, reduce Canadian royalties, and challenge the viability of the pipeline itself.

Enbridge could leave Canadians paying more for their own oil

Alternately, “new pipelines connecting producing regions with consuming regions change market dynamics in ways that cannot easily be predicted”, so “if constructed, the project would significantly expand and diversify the market options for western Canadian crude oil supply which would contribute to the realization of full market value pricing over the long term.” This translates to mean that Canadians could pay more for their own oil.

Canada alienating itself from global community

All these uncertainties are compounded in a country that has no coherent energy policy, is producing dilbit by furiously burning limited supplies of natural gas, is still importing “unethical” oil for its eastern needs, and is alienating itself from a global community becoming increasingly desperate to wrestle down carbon dioxide emissions. Indeed, as the world’s climate situation continues to worsens during the next decades, the pressure to reduce oil production and consumption will only intensify.

A global tax on carbon is almost inevitable, “dirty” oil from the tar sands will almost certainly be subject to increasing censure, and Canada could even be confronted with trade sanctions as it promotes a product that is deemed unacceptable by international judgment.

The dilbit wildcard

And this doesn’t even address another profoundly important environmental issue. The JRP acknowledges that no studies have been done to assess the impact of dilbit on river or marine ecologies. Nonetheless, in a leap of blind faith and an expression of amazing understatement — despite finding “there is some uncertainty regarding the behaviour of dilbit spilled in water — the Panel finds that the weight of evidence indicates that dilbit is no more likely to sink to the bottom than other heavier oils with similar physical and chemical properties.” So, uncertainty about the impact of dilbit on marine ecologies is dismissed by the Panel as inconsequential because it may not be worse than any other spill of “similar” crude.

To reassure everyone that all will be well if the Northern Gateway is built, the Panel recommends “a scientific advisory committee to study what happens to diluted bitumen when released into the environment.” Good idea. But this is essential information, required before the pipeline is approved, not after.

Besides, the Panel’s adroit use of words focuses attention on the bitumen and not the environment — surely the issue is not “what happens to the diluted bitumen” but its impact on ecologies into which it is spilled.

The JRP’s Orwellian language

But this evasive language is common in the JRP’s Report. Uncertain environmental impacts are disguised in verbal obscurity. Consider the following sentence:

[quote]The type and duration of effects would be highly variable and would depend on the type and volume of product spilled, location of the spill, exposure of living and non-living ecosystem components to the product spilled, and environmental conditions.[/quote]

This is a wonderful example of linguistic nonsense. It simply admits, that given a spill of “product” — a much more benign term than diluted bitumen — neither the Panel nor anyone else knows what will happen. Nonetheless, despite the long-term damage to Prince William Sound from the Exxon Valdez disaster more than 20 years ago, the Panel is able to conclude from no substantial information or studies “that the adverse [environmental] effects would not be permanent and widespread.”

Environmental reviews become a mere formality

Approval of the Northern Gateway by the JRP is little more than a routine formality wrapped in a symbolic gesture. Recent legislation passed by the federal government has radically altered the Canadian Environmental Assessment Act and the National Energy Board Act, transferring decision-making power to the federal cabinet.

Given its political, economic and environmental ideology, final approval of the Northern Gateway is inevitable. But a host of other obstructions lie between approval and completion. Building the actual pipeline is more unlikely than it seems.

Peter Mansbridge tries to come clean on Oilsands talk

February 28, 2014Energy and Resources, Media, Oil&Gas, Tar SandsfeaturedCanadian Press

Peter Mansbridge tries to come clean on Oilsands talk — CBC anchor Peter Mansbridge giving a talk paid by CAPP (image: facebook)

by Paola Loriggio, The Canadian Press

TORONTO – CBC News anchor Peter Mansbridge defended himself Thursday after a report that he made a paid speech to petroleum producers, saying he has never publicly promoted or opposed oilsands development.

“If I leave a speech and those in attendance think they know where I stand on any controversial issue, then they’re guessing. Because they won’t find it in the words I’ve spoken,” he wrote in a blog post on the CBC website.

[quote]I would not, do not, and have not, given a speech either promoting oilsands development or opposing it.[/quote]

The anchor of The National said he gives about 20 speeches each year, about half of them unpaid. When he receives a fee, he often donates part or all of the money to charity, he said.

Mansbridge said the network’s senior management has always approved his speaking engagements and known when he is paid for them.

Some media watchers have suggested it’s not appropriate for journalists to accept money from groups or industries that are the subject of their reports.

CBC management vetted speech

On Wednesday, a CBC report on its president Hubert Lacroix’s appearance before a Senate committee said the anchor’s speaking engagements are vetted in advance.

“And each one is looked at to make sure there is no conflict of interest with respect … to editorial coverage and to make sure that our rules are respected,” Lacroix told the committee.

“He knows that he never offers up his opinion or takes a position on anything that is in the news when he makes those speeches.”

Murphy, Mansbridge both paid to speak by oil industry

This comes after a published report said Mansbridge was paid to speak to the Canadian Association of Petroleum Producers in 2012.

He is the second CBC personality recently to face questions for reportedly receiving payment in exchange for speaking at events organized by members of the oil industry.

The network has acknowledged that Rex Murphy, who hosts the show “Cross-Country Checkup,” has given speeches supporting oilsands development.

Murphy stood by his comments in a column published last week in the National Post, saying he always speaks his mind and his opinions can’t be bought.

To suggest otherwise is “an empty, insulting slur against my reputation as a journalist,” he wrote.

News Ombudsmen beg to differ

The executive director of the Organization of News Ombudsmen told CBC Radio that neither journalist should have accepted money — and that in doing so, they’ve undermined the broadcaster’s credibility.

“The problem is in the money received,” Jeffrey Dvorkin, a former managing editor for CBC Radio, told “As It Happens.”

“In the end, there is a suspicion laid on all of the CBC,” he said.

[quote]It’s about reputation here and what Rex has done, he has, frankly, I think, sullied the reputation of all CBC journalists by doing that and Peter Mansbridge hasn’t helped particularly in taking money from that source either.[/quote]

CBC defends Murphy

The CBC has defended Murphy’s actions, saying he is a freelance commentator paid to take a “provocative stand” on issues.

In a blog post published earlier this month and updated Thursday, CBC News editor-in-chief Jennifer McGuire said freelancers are given more leeway to express their views.

Full-time staff, however, must abide by an internal policy that states “CBC journalists do not express their own personal opinion because it affects the perception of impartiality and could affect an open and honest exploration of an issue,” she said.

Joe Clark blasts PM Harper for attacks on environmentalists

February 27, 2014Canada, Energy and Resources, Pipelines and Supertankers, PoliticsfeaturedCanadian Press

Joe Clark blasts PM Harper for attacks on environmentalists — On a US book tour, Joe Clark had some strong words from one Conservative PM to another

by Alexander Panetta, The Canadian Press

WASHINGTON – Former prime minister Joe Clark says he can’t understand why the Harper government would bar the opposition from a delegation to Ukraine and suggests its combative approach to international issues sometimes hurts the country.

Speaking to a U.S. audience, Clark, who also served as foreign affairs minister, said he regularly involved opposition parties on foreign missions — and Canada benefited as a result.

He cited one example in particular: his co-operation with former NDP MP Dan Heap. Clark said the Mulroney government was on the outs with some key left-wing actors in Central America, and the Toronto New Democrat helped establish valuable connections through his NGO contacts.

“Let me tell you what we did: we involved opposition parties regularly in activities overseas. We relied on them, heavily,” Clark said.

“I do not understand why there is this exclusion of parliamentarians (in Ukraine) — if it happened.”

He made the remark when asked about reports that Canada’s main opposition parties had been refused spots in a delegation to Kyiv this week. The Conservatives called it a government trip, and added that the opposition didn’t even deserve to go after Liberal Leader Justin Trudeau told a joke about Ukraine.

Clark spent an hour taking questions about his new book on foreign policy, “How We Lead.”

The book is deeply critical of what it describes as the Harper Tories’ “megaphone” approach to international affairs — in other words, plenty of loud grandstanding and not much constructive work on the ground.

Clark questions Harper’s attacks on environmentalists

He was equally critical when asked about the Keystone XL pipeline.

He said the government deserves some of the blame if the project is stalled. If the Harper government hadn’t spent a couple of years shouting at the environmental movement, he said, it might not have attracted such opposition.

Clark told the audience that the belligerence began with verbal attacks by Natural Resources Minister Joe Oliver after the Conservatives won a majority in 2011, and continues to this day with environmental groups having their tax status threatened.

All of that, Clark said, got noticed by U.S. environmentalists who carry some influence in the White House. Clark told the forum at the Wilson Center:

[quote]One of the real problems that I think lingers over that pipeline is, before the pipeline question arose, the Government of Canada deliberately went out of his way to be seen as an adversary of environmentalists.[/quote]

“It just seems to me to have been an unwise way to set the stage for the case that we had to make… The steepness of the hill that Canada has to climb was created, in part, by the attitude of the Government of Canada on environmental questions.”

A little praise mixed in with criticism

Clark was complimentary of the government on some fronts.

He credited Foreign Affairs Minister John Baird for his sustained effort on behalf of homosexuals being persecuted around the world.

He also applauded the prime minister for embracing a free-trade agenda that includes the signing of a potentially historic pact with the European Union, and involvement in talks toward a 12-country Trans-Pacific Partnership.

But there was plenty of criticism — just like in the book.

Canada’s ‘adolescent’ tone in foreign affairs

The book calls for a more creative approach to foreign affairs, retooled for a new age, and suggests better outreach with increasingly powerful non-state actors like NGOs.

He laments that the current government, too often, leans toward disengagement.

The book cites as one example Canada closing its Iran embassy. Clark contrasts that with the Mulroney government’s refusal to close its South African embassy in the 1980s, which he says helped it successfully fight apartheid.

“Canada now talks more than we act and our tone is almost adolescent — forceful, certain, enthusiastic, combative, full of sound and fury,” says the book.

[quote]That pattern of emphatic rhetoric at the podium, and steady withdrawal from the field, raises a basic question: What does the Harper government consider the purpose of foreign policy?[/quote]

Time for open debate on big ideas

Clark also bemoans a broader reluctance in Canada to debate big ideas.

He told his audience Thursday that, by the early 1990s, Canadians were tired of activist government following a Mulroney era marked by battles over free trade and the country’s constitutional makeup.

He drew laughs by noting that Jean Chretien promised not to do anything with the constitution — and voters rewarded him with a majority.

“The problem is that, since then, Canada has not talked about much.”

Clark was also asked about a provincial issue — the Parti Quebecois values charter.

He called the plan alarming. He said it’s even more alarming that the PQ might be winning support because of it. A Quebec election is expected this spring, and the PQ has jumped to a strong lead in the latest polls.

No prosperity for Taseko: Harper govt rejects BC mine

February 26, 2014Metals and Minerals, MiningfeaturedDamien Gillis

No prosperity for Taseko-Harper govt rejects BC mine — The location of Taseko’s proposed New Prosperity Mine, west of Williams Lake

After three years, several court cases, two project designs and as many federal reviews, the Harper government has rejected Taseko Mines’ controversial Properity Mine proposal for BC.

A statement issued earlier today on the Canadian Environmental Assessment Agency’s website noted that Environment Minister Leona Aglukkaq “has concluded that the New Prosperity Mine project is likely to cause significant adverse environmental effects that cannot be mitigated.”

[quote]The Governor in Council has determined that those effects are not justified in the circumstances; therefore, the project may not proceed. [/quote]

Mine gets second life after Prentice’s rejection

The original Prosperity Mine proposal, which would have involved draining Fish Lake in Tsilhqot’in First Nation territory, west of Williams Lake, was rejected by then-Environment Minister Jim Prentice in 2010.

The company submitted a revised proposal in 2012, which First Nations leaders concluded still posed a significant threat to local watercourses, fish, and their traditional way of life.

The debate over the mine reached a fever pitch in 2013, when Taseko’s president publicly attacked Tsilhqot’in resistance to the mine.

“A recent op-ed by the President of Taseko Mines Ltd., Russ Hallbauer, argues that the overwhelming First Nations’ opposition to its controversial New Prosperity mine proposal is the result of ‘misinformed testimony by special interests’,” wrote Chief Roger William in a strongly-worded rebuttal.

[quote]This position is insulting, inaccurate and yet another example of the company’s refusal to hear the voices of our people or acknowledge the very real impacts this mine would have for our communities and our Tsilhqot’in way of life.[/quote]

Legal wrangling over mine

The issue also wound up in the courts on several occasions as the Tsilhqot’in challenged permits for exploratory drilling issued by the Clark Government prior to the conclusion of the federal review for the modified design.

Following a damning environmental assessment of the mine from the review panel late last year, Taseko even took the extraordinary step of requesting a federal judicial review into the panel’s findings.”Taseko is asking the court for a declaration that certain panel findings relating to seepage and water quality be set aside, and that the panel failed in certain respects to comply with principles of procedural fairness,” stated the company’s filing in a Vancouver court.

Door open to different mine proposal for region

In the end, the Harper government sided with the First Nation and the opinions of various scientists who presented to the review panel, including those from the Department of Fisheries and Oceans and Environment Canada who raised serious concerns with even the new version of the project. “The Government of Canada will make decisions based on the best available scientific evidence while balancing economic and environmental considerations,” said Aglukkaq, while leaving the door open to another mine in the region:

[quote]The Government will continue to make responsible resource development a priority and invites the submission of another proposal that addresses the Government’s concerns.[/quote]

2011 video on Tsilhqot’in opposition to Prosperity Mine

Measuring progress with GDP is a gross mistake

February 26, 2014EconomicsfeaturedDr. David Suzuki

Governments, media and much of the public are preoccupied with the economy. That means demands such as those for recognition of First Nations treaty rights and environmental protection are often seen as impediments to the goal of maintaining economic growth. The gross domestic product has become a sacred indicator of well-being. Ask corporate CEOs and politicians how they did last year and they’ll refer to the rise or fall of the GDP.

It’s a strange way to measure either economic or social well-being. The GDP was developed as a way to estimate economic activity by measuring the value of all transactions for goods and services. But even Simon Kuznets, an American economist and pioneer of national income measurement, warned in 1934 that such measurements say little about “the welfare of a nation.” He understood there’s more to life than the benefits that come from spending money.

My wife’s parents have shared our home for 35 years. If we had put them in a care home, the GDP would have grown. In caring for them ourselves we didn’t contribute as much. When my wife left her teaching job at Harvard University to be a full-time volunteer for the David Suzuki Foundation, her GDP contribution fell. Each time we repair and reuse something considered disposable we fail to contribute to the GDP.

Sickness, disasters raise GDP

To illustrate the GDP’s limitations as an indicator of well-being, suppose a fire breaks out at the Darlington nuclear facility near Toronto and issues a cloud of radioactivity that blows over the city, causing hundreds of cases of radiation sickness. All the ambulances, doctors, medicines and hospital beds will jack up the GDP. And if people die, funeral services, hearses, flowers, gravediggers and lawyers will stimulate GDP growth. In the end, cleaning up the Darlington mess would cost billions and produce a spike in the GDP.

Extreme weather-related events, such as flooding and storms, can also contribute to increases in GDP, as resources are brought in to deal with the mess. Damage done by Hurricanes Katrina and Sandy and the BP oil spill in the Gulf of Mexico added tens of billions to the GDP. If GDP growth is our highest aspiration, we should be praying for more weather catastrophes and oil spills.

Robert Kenney hits nail on the head

The GDP replaced gross national product, which was similar but included international expenditures. In a 1968 speech at the University of Kansas, Robert Kennedy said:

[quote]Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things…Gross national product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities…and the television programs which glorify violence in order to sell toys to our children.

Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything in short, except that which makes life worthwhile.[/quote]

“Genuine Progress Indicator”

We deserve better indicators of societal well-being that extend beyond mere economic growth. Many economists and social scientists are proposing such indicators. Some argue we need a “genuine progress indicator”, which would include environmental and social factors as well as economic wealth. A number of groups, including Friends of the Earth, have suggested an Index of Sustainable Economic Welfare, which would take into account “income inequality, environmental damage, and depletion of environmental assets.” The Kingdom of Bhutan has suggested measuring gross national happiness.

Whatever we come up with, it has to be better than GDP with its absurd emphasis on endless growth on a finite planet.

NEB audit exposes gaps in TransCanada’s pipeline safety

February 26, 2014Energy and Resources, Oil&Gas, Pipelines and SupertankersfeaturedCanadian Press

NEB audit exposes serious safety flaws for TransCanada — TransCanada CEO Russ Girling announces Energy East pipeline on Aug. 1 (photo: (Jeff McIntosh / CP)

CALGARY – Problems flagged in the National Energy Board’s audit of TransCanada Corp.’s pipeline safety practices should have Canadians worried, a group fighting that company’s proposed Energy East pipeline said Tuesday.

The audit report, released Monday, found TransCanada (TSX:TRP) to be non-compliant in four of nine areas it examined: hazard identification, risk assessment and control; operational control in upset or abnormal operating condition; inspection, measurement and monitoring, and management review.

“It’s a real cause for concern considering that they want to build the biggest pipeline in Canada, the Energy East pipeline. People should be very worried about that,” said Mark Calzavara, Ontario regional organizer with the Council of Canadians.

Calzavara said the NEB has tended to be “lenient” when it comes to energy companies.

[quote]When they finally do come out and say ‘hey, you’ve got to get your act together,’ it’s an indication of some very serious, serious problems.[/quote]

Energy East would involve converting a portion of TransCanada’s existing natural gas mainline between Alberta and Quebec to oil service, and then laying down new pipe all the way to Saint John, N.B. TransCanada expects to file a regulatory application for the $12-billion proposal this summer.

The NEB audit was also released against the backdrop of a long-running and intense debate over TransCanada’s Keystone XL proposal, which would send 830,000 barrels per day of mostly oilsands crude to Texas refineries.

The energy watchdog said in Monday’s report that it’s looking into whether some steel pipe and fittings need to be improved on the existing Keystone system, which started delivering crude to the U.S. Midwest in 2010. It says that investigation is ongoing.

In an emailed statement Tuesday, TransCanada spokesman Davis Sheremata said: “Extensive field testing of the strength of the fittings we are discussing with the NEB has confirmed that there are no safety or integrity concerns with these fittings and there is no risk to the environment or the public.”

The NEB gave the company 30 days to file a plan detailing how it will fix the problems. TransCanada spokesman Shawn Howard said Monday that the company has already taken action to address many of the issues.

“We share the NEB’s focus on protecting public safety and the environment,” he said. “We take our responsibilities to anticipate, prevent, mitigate and manage any and all hazards and risks associated with our operations seriously.”

LNG Pipedreams: Global investors getting cold feet?

February 25, 2014Energy and Resources, LNGfeaturedCommon Sense Canadian

by Anna C. Novacek

The projections supporting the BC Liberals’ prosperity fund rest on the assumption that there will be indefinite demand to buy into BC’s fledgling LNG market. However, as the Common Sense Canadian has reported, the numbers guaranteeing prosperity to Canadians, while assuring maximum profit for investors, aren’t adding up. The indicators below demonstrate examples of a rapidly shifting LNG market and early signs of hesitation from international proponents.

The BC Liberals are likely considering these factors as they race against the clock to get construction rolling before the alluring, yet ambiguous, projections behind the ‘100 billion dollar’ prosperity fund are a faded memory.

LNG proponents were probably never too concerned that provincial and federal regulatory bodies would be giving them much trouble as they applied to start operation and export. The uncertainty, however, lies in the stability and viability of international consumer markets to justify the significant costs associated with construction and export. From the proponent’s perspective, even after gaining regulatory permits, the risk-benefit analysis continues until the construction of LNG terminals actually starts.

Increasing Competition

As the Canada West Foundation discusses in Managing Expectations: Assessing BC’s LNG Industry, there may soon be more natural gas available to Asia than it needs, and other competitors are based in better geographic positions to access Asian markets.

[quote]Australian projects, although higher cost than originally projected, are much closer to completion than the BC projects. There will also be competition from Africa, the US, and potentially South American and Middle Eastern projects. China also has plans to develop its own shale gas industry, contributing 150 billion cubic metres of new supply by 2030.[/quote]

Energy editor for the Financial Times, Yadallah Hussain states that Canada comprised a smaller percent of total global upstream transaction value in 2013 (7% of total global, versus around 15% in 2012) as merger and acquisition activity shifted to emerging regions where there has recently been prolific deep water oil and gas discoveries, such as Africa (15% of global total in 2013).

Canada will face pressure to design an export tax and royalty regime that can compensate proponents for the added costs required to compete with facilities in closer proximity to Asian markets.

We learned recently that the BC Liberal government’s LNG export tax, unveiled after many delays in last week’s budget, will enable proponents to deduct capital costs for plant construction.

Early Stages of an ‘Asian Buyers Club’: Getting More for Less

There is no arguing that demand for LNG in Asian-Pacific markets has resulted in high LNG prices – the question now is how long will they last.

On December 5^th-9^th, 2013, countries importing 69.3% of the world’s LNG met in New Delhi to discuss how to get a better deal on LNG. India called on large consumers in the region like China, Japan and Korea to forge an Asian buyers’ block to extract price discounts. The Financial Post referred to this conference as “the early stages of an Asian buyers club”:

[quote]Most LNG is bought on long-term contract and it is the cost of these supplies that Asian buyers are trying to reduce. They also want to delink contracts from oil prices and eliminate the clauses that restrict the destination of shipments and prevent them from selling excess cargo.[/quote]

The article cites the historical precedent of the formation of the International Energy Agency, which was set up by western economies to counter OPEC after the first oil shock in the 1970s.

Anyone Feel Like Sharing?

The majority of proposed LNG projects in BC are located in the Prince Rupert and Kitimat areas on the province’s north coast, an area which intersects with the traditional territories of several First Nations in the region. While the duty to consult rests with the Crown, the procedural aspects of this legal obligation are often delegated to the project proponent. This means that the proponent must be proactive in engaging with potentially affected First Nations.

As Selina Lee- Andersen writes:

[quote]If it is determined that the project will have impacts on local First Nations, the Crown and project proponent may be required to accommodate Aboriginal rights or interests. At law, accommodation can include mitigating, minimizing or avoiding adverse effects of project activities on Aboriginal interests. A common business practice that has evolved in various industries across Canada is the negotiation of so-called impact and benefit agreements (IBAs) between project proponents and First Nation groups. IBAs aim to provide benefits to the local Aboriginal community and may include training and business opportunities, profit sharing, equity participation and other economic incentives.[/quote]

While this is a fundamental and important aspect of Canadian law, it may not be all that appealing to international project proponents scouting their options to develop LNG facilities in a location that will allow them to transport the resource to Asian-Pacific markets with maximum gain and minimum effort.

‘Drastic Drop in Volume’ of Merger & Acquisitions Activity

After allowing China’s CNOOC Ltd. to buy Canadian energy firm Nexen Inc., Harper brought in new rules outlining that state-owned companies will only be able to buy majority stakes in Canadian oil sands in exceptional circumstances. Uncertainty regarding the precise nature of these rules is causing hesitation in foreign investors looking to invest in Canadian oil and gas, including LNG.

Alison Redford cites this legislative uncertainty as the impetus for a ‘drastic drop in volume’ of merger and acquisition activity from foreign investors. Yadallah Hussain writes that Canadian mergers and acquisitions plunged 80% last year to US$10.2-billion compared to US$50-billion in 2012, a five-year low, according to IHS Herold Mergers and Acquisitions data. Hussain writes that lower commodity prices and competition from U.S. basins resulted in a reluctance of oil majors to open their chequebooks to acquire Canadian assets in 2013.

So, When Do We Start Construction?

One might think that after Christy Clark was re-elected in a haze of prosperity fund glory that construction of approved LNG facilities would be underway. As Brent Jang writes for the Globe and Mail, the NEB has already granted export licenses for seven BC LNG projects and is reviewing applications from another five. Kitimat LNG, for example, has all the necessary approvals to start construction but has not done so yet. Jang explains proponents have stated that approved projects are not yet in construction stage because they are still doing “internal assessments on the economics of proceeding”.

In a rapidly shifting economic climate, these internal assessments may result in cost-benefit analyses that see the BC Liberals’ prosperity fund projections go down in economic history as a nothing but a pipedream.

Anna C. Novacek earned an Honours LL.B from Durham Law School in England and has interned with West Coast Environmental Law in BC. Today, she works at Stevens and Company on Vancouver Island and co-publishes the Energy Law BC blog.

Beijing air pollution soars to alarming levels

February 24, 2014Health and EnvironmentfeaturedCanadian Press

by Didi Tang, Associated Press

BEIJING – When the air gets really bad, Beijing says it has an emergency plan to yank half the city’s cars off the road. The only problem is: It may be difficult to ever set that plan in motion.

It wasn’t triggered in January, when the city recorded extremely poisonous air pollution. And not this week, when pollution was expected to continue for several days at hazardous levels. A rare alert issued Friday was an “orange” one — the second-highest in the four levels of urgency — prompting health advisories and bans on barbeques, fireworks and demolition work, but no order to pull cars from the streets.

“Yesterday, I thought it was bad enough when I went out to eat. But this morning I was hacking,” a Beijing pedestrian who gave her name as Li said Friday, as a thick haze shrouded the city.

Still, the government did not issue the red alert. Beijing’s alert system requires a forecast of three days in a row of severe pollution for the highest level. Days of extreme pollution or polluted skies that are expected to clear in less than three days do not trigger the most stringent measures.

A period of pollution in January that saw density readings of PM 2.5 particles exceeding 500 micrograms per cubic meter prompted only the mildest, blue-level alert. That density is about 20 times as high as the 25 micrograms considered safe by the World Health Organization. PM refers to “particulate matter,” a mixture of extremely small particles and liquid droplets, the size of which is linked to their potential for causing health problems.

The measures that went into effect Friday also ask members of the public to use public transportation and to turn off their cars rather than let them run idle, as well as call for water sprinkling on the street and dust-control measures at building sites. The most stringent level, red, would order half of Beijing’s 5 million cars off the road — based on the last digit of their license plate.

Ma Jun, of the non-governmental Institute of Public and Environmental Affairs in Beijing, said that accurately forecasting three days of heavy pollution is technically difficult.

But in any case, he said, the government is reluctant to adopt the most disruptive measures, because it would be nearly impossible to notify all drivers of the rules and to adequately boost the capacity of public transportation to accommodate the extra passengers.

“When the alert is at a low level, the measures are not effective, but those for the high-level alert are not feasible,” Ma said. “The government is reluctant to raise the alert level.”

However, Ma credited the government with becoming more open in recent months about air pollution levels, and noted that many people receive real-time government updates about Beijing’s air quality on their mobile phones, so that they can take protective measures.

Associated Press video journalists Aritz Parra and Hélène Franchineau contributed to this report.