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Trudeau takes big risk with Trans Mountain deal – but it was his only decent option

This was the last chance for years. If there was going to be a pipeline to carry Alberta oil to the ocean in the next decade or so, the only option left was to put public money into Trans Mountain.

When it came to it, with bad options and little time, the Liberal government of Justin Trudeau took a big political gamble. It bought the pipeline. And Mr. Trudeau put his government on the line.

The Liberal government doesn’t want to own a pipeline for long, as Finance Minister Bill Morneau made clear. It wants to flip it to private investors, preferably even before Ottawa takes ownership of the Trans Mountain pipeline in August.

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But the government has bought it, at least for now, for $4.5-billion, and with it come all the risks of cost overruns or legal challenges and the awkward discomfort of angry protests – now doubly damaging because the operator of said pipeline reports to one Justin Pierre James Trudeau, Esq.

It’s not really a massive fiscal risk for a national government. The purchase includes an existing, money-making pipeline that can be resold if the expansion is somehow blocked. Even a worst-case scenario, where money is sunk into construction before a court halts it, won’t destroy the bottom line of a federal government that spends $338-billion a year.

But it’s a rare level of political risk. Voters will judge the Trudeau government’s competence harshly if it goes awry.

The deal is already unpopular. Opinion polls show that a majority of Canadians favour the pipeline project, but most don’t want the government to put taxpayer money in it.

But there wasn’t, for all the claims to the contrary, some other magic-wand way to make construction of the Trans Mountain expansion go ahead.

This pipeline crisis was sparked, let’s recall, when the company promoting the expansion, Kinder Morgan, announced April 8 that it would pull out unless it could be certain that the B.C. government’s legal threats would not block the project – and short of B.C. dropping its objections, there was no way to to provide legal certainty by the May 31 deadline.

By the time that deadline approached, it wasn’t just a generic pipeline at stake. The cost of doing nothing was high: a festering dispute between Alberta and B.C., a loss of investor confidence, the precedent of provincial threats blocking a federally approved major project – all over and above the lost jobs and the Alberta oil patch concern about the discount on landlocked oil.

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And for Mr. Trudeau, his grand bargain on energy and environment was at stake – he insisted a pipeline to tidewater must go together with measures, such as carbon taxes, to constrain greenhouse gas emissions.

Buying the pipeline has given critics a broader target. His political opponents in Ottawa are all against it.

NDP Leader Jagmeet Singh, who once waffled, is now wholly against the pipeline. He called the deal an “investment in the past.”

Conservative Leader Andrew Scheer insisted that Mr. Trudeau should have done something to assert federal jurisdiction or speed up court references instead of buying the pipeline – but his Conservatives have never been able to explain just what magical power Ottawa could use to quickly pre-empt, once and for all, all the legal claims B.C. might potentially raise.

It is true that Mr. Trudeau had left himself few options. He quashed another proposed pipeline to the Pacific, Northern Gateway (although it was probably doomed anyway), and set up a stiffer review process that was cited by promoter Trans Canada when it cancelled its proposed Energy East pipeline to New Brunswick. Trans Mountain was his last chance for a pipeline to tidewater.

And it was a big chance. If the government can do what it hopes to – start construction in earnest this summer, and quickly sell all or part of the pipeline to private investors – it could end as a triumph.

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If construction is delayed, if costs rise, if outstanding legal challenges become concrete obstacles, if private investors won’t buy in, the Liberals’ critics are lining up to call it a stupid waste.

This was Mr. Trudeau’s only way out of a corner – a last chance at a pipeline, a needed move to soothe investor nerves, and settle an interprovincial dispute – but he still had to take a big, risky leap to get out.

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