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Muskrat Falls is seen at the Churchill River in central Labrador -- site of the proposed Lower Churchill Hydro Project. (GREG LOCKE/REUTERS)
Muskrat Falls is seen at the Churchill River in central Labrador -- site of the proposed Lower Churchill Hydro Project. (GREG LOCKE/REUTERS)

Globe Editorial

Ottawa should underwrite the Lower Churchill project Add to ...

Stephen Harper's willingness to provide a federal loan guarantee for the building of an electricity transmission line crossing both land and sea, from the Lower Churchill in Labrador to mainland Nova Scotia, is entirely legitimate, and the outrage of Gilles Duceppe, the Bloc Québécois Leader, as well as Jean Charest, the Premier of Quebec, is misplaced, though not surprising.

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The Lower Churchill project is a remarkable venture in large-scale co-operation among the Atlantic provinces. If there is more such co-operation, the fiscal soundness of Eastern Canadian governments would be much better.

Hydro-Québec did build up its infrastructure without money from Ottawa, but Mr. Harper is not now offering cash, only the backing of guarantee in case of an unlikely default - Emera Inc., the owner of Nova Scotia Power, regards the whole project as a normal financing, not an especially risky one. But the guarantee will mean a lower interest rate and lower electricity charges for consumers and businesses.

Moreover, Mr. Harper is proposing similar treatment for the infrastructure of all provinces. That, however, is the downside. Eventually, an accumulation of liabilities of this kind would raise the federal treasury's borrowing costs - not to mention an additional complexity in the bewildering tangle known as fiscal federalism.

The Constitution Act, 1867, assigns to the federal Parliament power over "lines of steam or other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting" two or more provinces. Undersea electricity cables are just such works and undertakings - not that the present controversy is a legal dispute about jurisdictions. But a federal role in interprovincial infrastructure is firmly based in 144-year-old principles of Canadian federalism.

If only Hydro-Québec and its sole shareholder, the government of Quebec, had chosen to be more co-operative with Newfoundland and Labrador, the over-land-and-sea transmission would not have been undertaken. Differently beautiful energy synergies would have been achieved. But as things stand, the eastbound route from the Lower Churchill is a fine national project.

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