The heart of the Speech from the Throne in Victoria last year was the promise to establish the British Columbia Prosperity Fund to capture more than $100-billion in tax revenues from a new liquefied natural gas industry over the next three decades.
On Tuesday, it was a markedly more cautious Finance Minister who took the stage to unveil his tax measures for LNG.
There was no mention of a Prosperity Fund in the thick sheaf of documents that outline the new tax regime. Mike de Jong also laid out a severe curtailment of revenue expectations, and delivered a lecture to reporters on the dangers of counting one's chickens before they are hatched.
"The ability to establish a Prosperity Fund is tied directly to the establishment of an LNG industry," Mr. de Jong said when pressed. "That's what we are working on."
Government officials later clarified that the Prosperity Fund will still be set up before the next election, and that it will likely begin collecting some small trickle of revenue as early as 2017, assuming that five of the 18 proposed LNG projects in B.C. proceed.
From Mr. de Jong's announcement, it is clear that any money directed into the fund will accumulate more slowly than the rosy projections that were laid out just ahead of the past provincial election in May, 2013.
So if one small LNG plant is built and comes online by 2017, an income tax on net profits of 1.5 per cent might be realized. The province hopes to see a mid-sized facility in operation by 2019.
The documents suggest that a mid-sized LNG facility could, over the space of a decade of operations, deliver $8-billion in total revenue to the province. That includes royalties, sales tax and other measures. Roughly half of that is expected to be earmarked for the Prosperity Fund, if the past commitments are a guide.
At least by a back-of-the-napkin calculation, three mid-sized and two large LNG facilities could deliver something close to $90-billion to the fund over the space of three decades, if the taxes and current resource prices hold.
But there is a reason why finance officials don't want to commit to any such prediction. Resource revenues are fickle beasts, and have brought windfalls or left gaping holes in many B.C. budgets over the years.
Mr. de Jong says the original revenue estimates of the LNG tax, crafted in February, were cut in half because of market changes that only became apparent to the B.C. government in recent months.
"There have been significant changes in terms of the market revealed, I suppose, most dramatically in terms of the price liquefied natural gas is fetching or anticipated to fetch," he said. "Demand in places like China and Japan for a variety of reasons is changing, evolving."
Bruce Ralston, the NDP finance critic, scoffed at the suggestion that B.C. couldn't see the price drop coming.
"That's nonsense," he told reporters. Mr. Ralston said the government spent the summer negotiating with prospective LNG investors, and industry beat the province down. "This was certainly a failure of negotiations."
More details are still to be worked out about how the Prosperity Fund will work. It is expected to capture LNG income tax, natural-gas royalties related to LNG production and possibly whatever corporate income tax flows in.
Premier Christy Clark has said the fund will be used to pay down the provincial debt, but she has also talked about funding social programs and reducing the sales tax.
Mr. de Jong offered a caution on that note, as well: This legislature can pass tax law but it cannot bind the hands of future legislators.
Put another way, budget decisions are made year by year, and tax plans made now about what rates will be 30 years hence are worth little more than the rhetoric that can be printed on the side of a campaign bus.