Extortion is never a nice thing to watch, even when it is hypocritically alleged to be for the greater good. And especially when the perpetrator is a provincial premier.
British Columbians are supposed to feel grateful and happy that Christy Clark has squeezed $25-million to $50-million a year for the next 20 years out of Kinder Morgan and its controversial oil pipeline. The better view is to see it instead as an attack on the constitutionally free movement of goods across our country.
The Premier established five conditions for approving the pipeline. Astonishingly, those demands were taken seriously. "Astonishingly?" Yes indeed, for she has no jurisdiction. Section 92(10)(a) of the Canadian Constitution specifically excludes interprovincial pipelines from provincial powers, reserving their permitting and regulation to the national government – and this makes sense. You cannot have one province tollgating another over the legitimate movement of its commerce.
The five conditions should have been ridiculed, but they were not, in part because the first four were ordinary law. (Proper aboriginal consultation? Mandated by the Supreme Court long ago.) But the fifth one demanded economic returns for B.C. explicitly linked to the project. Nothing to do with routine sales or income or property taxes, but rather as it now emerges, a tollgate charge simply as a transit fee for the privilege of shipping oil from a neighbouring province.
Alberta quite rightly said, "No way!" on that one, but the pipeline company apparently felt sufficiently threatened to agree to pay in return for a political blessing.
Let there be no mistake who will pay this toll. It will not be the oil and pipeline companies involved. They will get their usual cut. It will be Albertans (through lower royalties and other imposts) and Canadians (through lower federal tax revenue) who will pay. And as a British Columbian, I am ashamed.
Note that this has nothing to do with environmental concerns. This pipeline is going to be built (or not built) quite independent of the tollgate.
And it has nothing to do with safety concerns. These are the direct responsibility of the federal government, especially in the marine area, where the main risks lie. To deal with these responsibilities, Ottawa has spent or promised billions of dollars in new Coast Guard activity, navigational resources and so on – all without demanding a penny extra from the oil-pipeline company other than proper safety measures for its own shipping, just as it must provide for the integrity of its route across the land.
In turn, B.C. has its usual right to all of its usual taxes and permitting fees – but none at all to a tax on interprovincial movement of goods, which, among other things, is expressly forbidden by Section 121 of the Constitution.
This is big. It is indeed a precedent, as the Report on Business pointed out last week. And it is a terrible precedent, right there in line with Donald Trump demanding a share of the profits of our Keystone XL pipeline in exchange for the privilege of crossing the border. But the thinking of Mr. Trump is not the sort of thinking that made this country and will continue to bind it.
Can this kind of precedent be allowed to affect (and therefore doom) such country-building projects as Energy East, not to mention railways and trucking? What about a toll on Air Canada for use of our air space? British Columbia is capable of such things: Even now, our government taxes water flowing through B.C. Hydro turbines. The water is completely unchanged and the taxpayer is entirely in the dark about the fact they are paying an invisible tax in their hydro bill totalling about $469-million that has nothing to do with electricity.
The federal government is not entirely helpless in fighting this. It would be hard to challenge in court what could be represented as a "voluntary" agreement to pay a provincial toll by Kinder Morgan. (Some oil shipper might obtain standing to do so, I suppose, and probably Alberta.) But the federal government could surely refuse to allow the extorted payments as tax deductions. Why should Ottawa pay for bad provincial behaviour?