The Redford & Clark dispute: Who really benefits?

Question:  How did the regulatory process for the Enbridge pipeline go so badly off the rails?  I’m talking about the “no benefit/no pipe” rhetoric coming from the Alison Redford and Christy Clark camps which threatens to upend Enbridge’s Northern Gateway pipeline project, taking Ms Redford’s National Energy Strategy along with it.

Answer:  Politics (isn’t it always).  Using the time honoured principle of “who started it”   the blame falls squarely on Alison Redford’s shoulders.  Here’s why.

When Ms Clark requested a fair share of the benefits of the Enbridge pipeline proposal, Ms Redford responded by upping the ante.  She reframed Ms Clark’s request as an attack on Alberta’s royalties and an attempt to rip up the Canadian Constitution.  (Wow!)  Ms Redford assured Albertans she would not “blink”; she’d protect our royalties at all costs.

But that’s not what Ms Clark and her ministers said when they announced the 5 conditions upon which BC was prepared to support the pipeline.  Four of the conditions were legitimate requests for higher environmental and safety standards; the fifth condition was a request for a “fair share of the fiscal and economic benefits of the Enbridge project”.  A request for a share of “benefits” is not the same as a demand for Alberta’s “royalties”.

The CBC, bless its little vacuum tube heart, appears the only member of the media that actually thought to check this critical point with Ms Clark.  When the CBC asked the BC premier if she wanted a share of Alberta’s royalties Ms Clark said she didn’t know.

Ms Clark was a radio talk show host and a newspaper columnist before she became a politician.  She’s not a lawyer.  She appears to be scrambling to keep up with the inflammatory rhetoric and sabre-rattling coming at her from the Redford camp and one has to give her credit for her honesty in admitting she didn’t know the answer to that question.

Ms Redford on the other hand is a lawyer with extensive experience in international law.  If anyone should know what the government of BC can or cannot demand from the government of Alberta, it’s Ms Redford.  Instead of frothing with hyperbole, Ms Redford could have met with Ms Clark and transformed the discussion into a “…very positive, gung-ho, let’s make a lot of money...” conversation.*

However Ms Redford continues to demonize Ms Clark by characterizing the dispute as a constitutional battle.  In doing do she places herself closer and closer to the edge of the ledge.  Soon her only option will be to crush Clark (who’ll be replaced by the NDP leader, Adrian Dix—talk about jumping from the frying pan into the fire) or lose all credibility.  She certainly can’t say “Oops I was wrong, it’s not a constitutional problem after all”.

So why doesn’t Ms Redford have a quiet word with Ms Clark and suggest that Ms Clark look at the “benefits” question from a slightly different angle?  Instead of pressing Alberta for additional revenue, Ms Clark could focus on the oil companies planning to ship their bitumen on the Enbridge pipeline.

It’s the oil companies who pay royalties to the people of Alberta for the right to extract the bitumen.  It’s the oil companies who’ll pay Enbridge for the right to transport their bitumen to Kitimat.  It’s the oil companies who’ll pay the shipping companies for the right to load their bitumen onto tankers and transport it to markets on the other side of the Pacific.  And it’s the oil companies who will generate profits for their shareholders if all of the links in this daisy chain come together without a hitch.

Given that it’s the oil companies who get the greatest benefit from this project, it should be the oil companies, not Albertans, who foot the bill for any additional revenues demanded by BC.  This is not a constitutional law argument, it’s a practical one.

Warren Mabee, policy director for the Institute for Energy and Environmental Policy (Queens University) suggests that BC create a “targeted tax”—an export tax or port tax—that can be levied against the oil companies on each barrel of bitumen that moves through Kitimat.   Mr Mabee says “That’s the type of tax that could be applied without any big issue.”**    

So why the overheated rhetoric from Ms Redford?  There’s nothing to stop her from pointing Ms Clark in the direction of the oil companies…unless her ultimate goal is to protect the oil sands producers from additional costs.

If this is the case, Ms Redford’s National Energy Strategy—the framework to allow the provinces to leverage their energy resources for everyone’s benefit—is a sham and the people of Alberta are being pitted against the people of BC in aid of Ms Redford’s political agenda.

This is a dangerous game.  All of the participants, including the oil industry, will lose.  The oil companies will move on (they always do) but Alberta will have lost a critical ally at a time when it needs all the support it can get to reach its goal of being an energy leader on the national and international stage.

* Don Getty, quoted in Calgary Herald, July 28, 2012

**Daily Oil Bulletin, July 24, 2012

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16 Responses to The Redford & Clark dispute: Who really benefits?

  1. Pingback: B.C.’s position on Northern Gateway: Is it about the environment or is it a cash grab? | Goldfish in a Shark Tank

  2. Bravo! I agree the 2 provinces should work together. I’m tired of mudslinging politics. I’m of course supporting Clark, living on the coast. I think Redford, if she played her cards right, and Clark, instead of this turning into a cat fight which the media will soak up and fuel the flames, both women have an opportunity to stand out from their mudslinging counterparts and accomplish something between 2 provinces.

    • Welcome to the Soapbox Joanna! It’s great to get another BC perspective. I agree that cooperation between Alberta and BC is the only way to move ahead. This dispute runs the risk of getting personal (the premiers are now calling each other “silly”). This trivalizes the issues and does a terrible disservice to the people of both provinces–but the media is milking it for all it’s worth.

  3. roy wright says:

    I too am wondering what went wrong. Redford comes out swinging under the guise of representing Albertans, and standing up for our Constitution. The five points Clark puts forward should not cause problems for Albertans. The first three address environmental issues, which is clearly a BC/federal debate, the fourth point raises aboriginal issues (again a BC/federal debate) and the fifth one also does not involve Alberta. I would prefer Redford to sit down with Clark and agree in principle on the first four items, and work on solutions for #5 together. The two premiers standing together, would be a formidable pair, but they don’t appear to want to play together.

    I am starting to think Ms. Redford is wrapping herself with the Alberta flag. If #5 is really about money, and the Constitution clearly states royalties are provincially driven, then funding must come from the producers. If Ms. Redford is defending the producers under the guise of protecting us, she needs to remind herself that she represents the public interest, not privately held corporations. There appears to much to-do about nothing…petty politics means we all lose.

  4. Carlos Beca says:

    For those that hoped that women politicians would do better than men, another disappointment is sinking in. Alison Redford is playing the old game of pretending to protect Alberta interests, in order to let the Oil companies get away with almost inexistent royalties.
    So here is in summary what Mrs. Redford wants – The Oil companies get by far the biggest amount, we get whatever they determine is approriate as a royalty and BC gets the spills. Of course BC does not agree. Would Alberta not do the same?
    To me this is just another stunt to not change anything in the Oil sands agreement, just pure distraction. Just like you wrote this is much to do about nothing.
    The idea that this would brake the Constitutional agreement sounds pretty childish.

  5. Yes, this situation is one heck of a mess. I can’t understand why Ms Redford thought this gambit was going to work. She desperately needed to get Ms Clark and the residents of BC on side (or at least to stay neutral). But rather than being conciliatory she became combative. This isn’t a wrestling match where the first one to “blink” is the loser; it’s a complex negotiation involving the First Nations, environmentalists, landowners, two provincial governments, the federal government and industry. Drawing a line in the sand and daring the other guy to step over it is not helping.
    Thanks for your comments Carlos…it will be interesting to see whether Ms Redford is able to extricate herself from this one.

  6. Carlos Beca says:

    Talking about oil, here is the first article of a series that I think people should read
    http://thetyee.ca/News/2012/07/25/Norway-Oil-Wealth/

  7. “Norway produces 40 per cent less petroleum than Canada and has one-seventh our population, but has saved more than $600 billion in oil revenue” and has done this on a consensual basis. As Carlos says, this is an article well worth reading. Thanks Carlos!

  8. Carlos Beca says:

    Yes it all sounds unreal but it is happening and we are being ripped off as never before. Here is the second one in the series.

    http://thetyee.ca/News/2012/08/01/Norway-Against-Big-Oil/

    Thank you

    Carlos

  9. This is a really interesting perspective on the issue. It would be valuable to take a more open approach to see how to make this work.

  10. I am disappointed that this post has chosen to take an anti-Redford position, despite the logic of the arguments that are presented within it.
    As you point out, four of the five issues involve B.C.-federal negotiations (although some of those certainly involve other provinces, including Alberta) and the fifth is totally under B.C.’s control — they can choose to implement a variety of new taxes.
    Surely, Premier Clark should have talked about what new taxes she was proposing to capture economic value for B.C. Instead, she chose to cast her comments in a way that implied Alberta has to “share” the economic benefit — as the post points out. The economic value is there to be captured — what are Premier Clark’s plans, if any?
    Yet you leave Premier Clark off the hook (we Albertans have some experience with Premiers who chose to run elections against someone outside their province whom noone has the chance to vote for) and jump all over Premier Redford.
    Premier Redford did an excellent job of responding in terms of Alberta’s interests (and our opposition party leaders did not). Premier Clark raised an issue that is entirely inside the control of her province and government — yet proposed no action. Surely it is unfair to blame Premier Redford for a reasonable defence of provincial rights when it is Premier Clark who is declining to say what she will put into place to exercise B.C.’s quite legitimate ones.
    Premier Redford’s proposal for a national energy policy may have been somewhat naive, but it was a step forward. Premier Clark’s response may have isolated some issues — but equally it refused to say what she proposes to do in areas that are totally under provincial control. Surely, the critical response should be directed at Premier Clark’s highly partisan position, not Premier Redford’s entirely reasonable one.
    Finally, I think it is important to recognize what Tom Flanagan stated in his Globe and Mail column today: the BNA Act has a specific provision which recognizes the right of the federal government to override some provincial rights on these issues (we wouldn’t have railways if they had not exercised it in the past). That was included because sometimes national interests top provincial ones — there is at least an argument to be presented that that may be the case here.
    (On another issue, I can’t wait to see the post on the latest Alberta Health Services disaster which I am sure is forthcoming. 🙂 )

  11. Kevin, I view everything Ms Redford does, including her response to Ms Clark, through the lens of a lawyer. I’m one and she’s one and frankly she should know better. Apparently Ms Redford is the only person who didn’t know what Ms Clark meant when she set out her 5 conditions. The pipeline companies (Enbridge and Kinder Morgan) very quickly said they would satisfy Ms Clark’s first 4 conditions, even though one could argue they were the AB and Can government’s responsibility. Understandably both pipelines backed away from the 5th condition saying it fell within the purview of the provincial and federal governments. Of course this is not the case, but it would be surprising to see a pipeline tell its shippers that they should pay an additional tax to BC.
    So Ms Redford had a choice. She could have remained cool and analytical and pointed out that the 5th condition would have to be satisfied by the producers, instead she chose to throw up a smoke screen to divert attention away from the producers by making this an “us against them” battle. (A tactic she roundly condemned when it was used by Mulcair). This was a grave mistake. I hope that she tones down her rhetoric and heeds the advice of Gwyn Morgan, former CEO of Encana, who warned against turning this dispute a “gigantic existential crisis of Canadian federalism”.
    I haven’t read the Globe piece on the BNA Act being used to ramrod the proposal through over provincial objections but that’s a path I’d never recommend to anyone under any circumstances. The world has changed since we built the railroads, people have a voice and will use it to solidify their opposition even further.
    So on to your last point, yes! I’m working on the AHS post now…this is such a juicy story it’s hard to keep the righteous indignation in check! I hope you enjoy it :)! Thanks Kevin.

  12. I have to completely disagree with your second last paragraph. Far from saying “the people have a voice” to justify a narrow provincial point of view, I agree completely with Flanagan’s argument that the framers of the BNA Act were fully aware that sometimes national concerns take precedence over narrow provincial ones. The only “ramming through” that would be taking place would be if the federal government abandoned its responsibility to serve the interests of the nation, as it did when the railways were built. I do think that historical example still has immense relevance and should not be discarded — and of course it is a very sound legal interpretation of the Act.

    As for the “existential crisis”, Premier Clark identified a legitimate issue in terms of benefits to B.C. — given the tools at her disposal, surely (even to a lawyer) it is incumbent on her to outline how she proposes to exercise her powers, rather than simply pointing a finger at another premier. If Premier Redford had demanded a share of pipeline tolls in B.C., I would fully agree with any criticism made of her — yet Premier Clark seems to be portraying herself as hamstrung by Alberta when there are clear, perfectly legal, options open to her. A theme of “tax somewhere else and send the income here” hardly seems to be acceptable politics.

    And finally as for “us against them”, Premier Redford who took a proposal to the premiers’ meeting — it was Premier Clark who stormed out while the other leaders remained at the table. Just who is setting up an “us against them” proposition here? The premier who deserts the meeting without offering any alternatives (including her plans for taxation) is surely the one who is causing the problem. During the 1970s crisis, Peter Lougheed never once walked out of a meeting, although one has to admit that he did, on occasion, threaten to do just that.

  13. Sorry — bad wording in my comment implies that the federal government “abandoned its responsiblities” on the railways issue. I meant the exact oppositie.

  14. Kevin, I found the Globe article which makes the argument that the Feds could invoke section 92(10)(c) to exert jurisdiction over BC’s roads, storage facilities, bridges, hydro stations etc to prevent BC from blocking the Enbridge pipeline. While this is true, the most recent case I could find was a communications case which was heard by the Supreme Court of Canada in 1972 so it’s not a power that the Feds use lightly.

    When I referred to the voice of the people I wasn’t thinking solely of the people of BC. I think many other provinces would join BC in a Supreme Court challenge to the Feds use of the declaratory power if for no other reason than it weakens provincial autonomy. If the Feds were allowed to take over BC’s hydro and shipping industry, they could also take over Alberta’s oil sands industry, Saskatchewan’s potash industry, Quebec’s hydro industry and so on. And you can bet that Mulcair and the other opposition leaders would see this as a political bonanza—Emperor Harper strikes again.

    In any event, Harper appears to have softened his stance. He extended a quasi-olive branch in the form of Heritage Minister James Moore (of all people) who told Bill Good’s radio audience that Clark was justified in making sure that the rest of Canada understands that just because BC is the gateway to China, “it doesn’t mean that we’re the doormat for companies like Enbridge”. These are pretty strong words from an MP who will soon find himself sitting in the cheap seats if he made these comments without the PM’s blessing.

    I agree with your point that Clark could have been better prepared to explain what she meant by “benefit”, but stick with my position that Redford escalated matters into an us/them scenario when she responded that she wouldn’t be the first to “blink”.

    With that said, I look forward to your comments on the AHS expense account debacle.

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