In her weekly mail out, Minister Shirley Bond wrote: "This week, our government signed a memorandum of understanding with Pacific NorthWest LNG that sets out the steps leading toward ratification of a project development agreement between government and the company.
"This lays out the path to a final investment decision on the project and sets the stage for a potential US $36-billion investment in Northern B.C. that will be a key driver of jobs and economic activity in the province."
Things are sounding good except are they really? The MOU between the government and Petronas is "intent" rather than a "commitment". It sets out "the steps leading toward ratification of a project development agreement".
As such, it actually sounds more like a promise ring than a wedding ring. Still, it is a first step in moving towards an LNG plant on the north coast.
What did we have to give away to get to this first step?
Not really sure yet. The government has committed to legislation for a project-development agreement with the company. Presumably, somewhere in the bill, will be the expectations for both what the company and British Columbia must do and by when if they are to make this whole thing work.
Tax breaks are a certainty, though.
For now, all we have is an MOU which is only a one-page document in which both sides agreed to meeting various milestones.
What did we get?
When you put together all of the revenue streams, the government claims it will amount to about $500 million in revenue per year. Of course, that amount is based on a number of assumptions but it is nothing to sneeze at.
On the other hand, it is also probably not something to write home about. To put it in perspective, if all of that money was used to pay off our provincial debt, it would still take slightly over 130 years.
In the end, it was a good photo op and a feel good story but no one is really sure where it will lead.
The MOU even states: "This MOU is not a legally binding agreement... Nothing in this MOU creates legal or financial obligations or liability on the province or the proponent."
In other words, no real commitment was made.
Still, it would appear that the BC government has guaranteed decades of protection against any future tax or royalty increases for a LNG plant if built. Petronas appears to have been given open-ended subsidies and all in the name of economic development.
This comes on the heels of a report released last week by the International Monetary Fund which says governments will subsidize the fossil fuel industry by $5.3 trillion (U.S.) this year.
To put that in perspective, the five trillion dollar gift is about six per cent of the total global GDP (around $87 trillion). These subsidies include direct grants and tax incentives for companies along with indirect subsidies to companies from government. It also includes the costs of the effects on health as a result of air pollution.
It does not include damage as a result of increased levels of carbon dioxide and climate change.
Put simply, IMF head of fiscal affairs, Vitor Gaspar, said: "[It is] one of the largest negative externalities ever estimated." The results are even more shocking when you consider that the IMF is generally known for sober, conservative analysis.
The largest subsidies are provided by China ($2.3 trilllion) and the United States ($700 billion) but Canada is doing its part at $34 billion. As a proportion of government revenue, it is among largest for all of the wealthy nations in the world.
It seems we will go to great lengths to makes sure the stockholders of fossil fuel corporations are well taken care of. But just think of what we could really do if we were to devote the same amount of money to ending childhood diseases or malnutrition or if we devoted such funds to greening our energy supply instead of propagating carbon dioxide production.
In her weekly mail out, Minister Bond went on to write: "Speaking of jobs, in partnership with the federal government, we will provide over $582,000 in Canada Job Grant funding to Seaspan Shipyards to help 260 workers gain shipbuilding skills. To date, more than 1,280 employers have been approved for funding to train employees in British Columbia."
Again, this sounds like good news but it does beg the question as to why the government is paying for companies to train their own workers. Shouldn't that be something the companies already do?
Isn't it part of business?
Between tax breaks, royalty programs, and job training, it does lead me to wonder just exactly what part of the costs of a new business venture are being borne by the companies that will ultimately profit from these deals.
