The June 24 headlines read: Government of Canada investing $275 million to support LNG Canada. The debate whether this is good, bad, or indifferent will be the continuing headline.
Investments such as this, or commonly referred to as a subsidy, should be viewed through the lens on whether they are warranted or not. Are they warranted, and are they good for our country?
Of this investment, $55 million replaces a bridge that no longer fulfills a community’s needs, and a community also includes business and industry. Another $220 million is to offset higher costs for LNG Canada in purchasing and installing more energy efficient turbines used to compress the natural gas, with lower emissions.
The Haisla Bridge investment is government’s responsibility, no different than what is needed for our Taylor Bridge, or bridge upgrades in Metro Vancouver. The dollars for turbines allow Canada to better meet our national objectives. In that LNG Canada already had an approved plan and commitment to purchase different turbines, any government that arbitrarily required changes would invite chaos.
As usual, Green Leader Andrew Weaver blew another gasket, hollering about corporate welfare and how this is all wrong. Interestingly, he has no issue with governments giving personal welfare to citizens to buy electric cars, for the same reasons – emissions reductions. The common refrain from anti-fossil fuel zealots is that our oil and gas industry is subsidized and shouldn’t be.
This got me thinking. Why is it that our gas and oil industry is singled out? Are they the only ones who receive subsidies? Are they played as government favourites? Or, are these objections more half truths trying to sway people who never read beyond the headlines?
I could make this a short story and say, yes, the oil and gas industry does receive subsidies. I can also say yes, most every industry in B.C. and Canada also receives subsidies in some shape or form. And yes, every day we can read a whole bunch of half truths written for the express purpose of convincing our red-hatted grannies to give more of their pension money to the multi-billion dollar industry opposing everything related to industry, all so they can keep living their own lifestyle, while other lives are trashed.
One internet definition of subsidy is: “a sum of money granted by government or a public body to assist an industry or business so that the price of a commodity or service can remain low or competitive – ie; a farm subsidy.” Other definitions include tax breaks and incentives to employees or members of the public to reduce specific costs.
Our good ENGO (environmental non-governmental organizations) friends also spell subsidy as “hand-outs to gas and oil,” but seldom venture into the world of who else receives subsidies, and why. And they never quote their own exemptions with charitable status.
Given that our gas and oil industry receive subsidies, is our number one industry propped up by government and tax dollars? Do they receive more benefits than any other of our many industries and businesses? The short answer may be a yes, or a no, or just plain maybe. It depends upon how one views just what subsidies are.
In LNG Canada’s case, $220 million is a lot of money, but it only represents 0.56% of its $40 billion cost.
If you think Canada and B.C. would be just fine if we didn’t subsidize anyone or any industry or business, think again. Most Canadian residents receive subsidies from governments just to survive, and most all of us receive subsidies without even knowing it. Some are outright gifts, some are loans, and some just appear as a line reducing your taxes payable.
Welfare and employment insurance (EI) appear as a cheque in the mail (OK, I still use the old descriptor). These are a gift from our taxpayers via a government agency to help better our lives. Our children’s education and our health coverage appear as free, but, they are also paid by someone else on our behalf. And, we also have individual tax credits for a variety of functions.
In my short research, it was hard to find a lot of the “cheques in the mail” examples, but there are a few. LNG Canada is one, assuming they build the facility. Another was for the automotive industry in 2008-09, when our federal government gave them huge sums of money to keep them afloat, in exchange for shares.
Most industrial and business subsidies relate to programs that reduce taxes payable, or reduce fees and/or royalties, or appear in the form of rebates that reduce costs.
Generally, the necessity of subsidies can vary according to one’s viewpoint. An extremist environmental view treats any benefit to the oil sector as an unwarranted subsidy, regardless of whether they are available to other economic sectors. This can include capital costs allowance deductions, royalty credits for high cost or experimental wells, programs to reduce emissions, and BC Hydro upgrades to electrical generation and transmission to reduce emissions.
Interestingly, most all types of subsidies are available to other B.C. industries. As an example, all industries receive capital cost allowance deductions against their taxes.
The forest industry has received millions of dollars from government to reduce pulp mill emissions and upgrade efficiencies. Loggers have a logging tax credit. Our American friends maintain B.C.’s stumpage system is a subsidy, although we do not. The mining industry has flow through tax credits, the mining exploration tax credit, and the Highway 37 transmission system constructed for their mines.
The farming industry has its own agricultural land tax rate, not enjoyed by any other sector, and many business grants, subsidies, and contributions available from the federal and provincial governments.
The fishing industry has PST refunds for their fishing equipment purchases and their own rules to qualify for EI benefits, along with government fish hatcheries producing more fish for them to catch, and their own government fund in support of the entire sector.
The tourism industry enjoys its own suite of government programs that help them survive, along with government built ports for cruise ships to dock. The film industry has its own special tax incentives and subsidies/ The list can go on, and on.
In short and simply put, industry, business and citizens all receive subsidies and government supports, whether we agree with them, or not. They are a part of our economic fabric, albeit at the whim and direction of our current government’s objectives.
Only in a flat world could we get rid of them, and most of you are not ready for a truly flat world.
Evan Saugstad is a former mayor of Chetwynd, and lives in Fort St. John.