Saturday, September 20, 2014

Vapourtax - UPDATED

Nineteen months and one general election have passed since Premier Clark announced "establishment of a new British Columbia Prosperity Fund." However, we still have no word on exactly how LNG is going to make BC cash rich and debt free. At least $278 million a month should be flowing into the provincial treasury for 30 years so we're already billions behind.

The following was published in May 2014.


A few tech companies are noted for vapourware, which are products announced with much fanfare that never materialize. In my view, BC Liberal assurances of more than $100 billion new money from 30 years of LNG production is nothing more than vapourtax. These were promises issued solely for marketing purposes, not to be realized but to be replaced with updated political scams.

Jim Quail is the Executive Director of the B.C. Public Interest Advocacy Centre in Vancouver. BCPIAC is a non-profit law office in the field of social justice law. Jim Quail's Blog has an important post about the difficulty of collecting tax revenues from liquid natural gas. I suggest you visit his site for the full article, BC’s Elusive LNG Tax.

We remember Premier Christy Clark's pre-election promise,
"Liquefied natural gas is the industry that will make British Columbia debt free. ...Development in natural gas can stimulate $1 trillion in new economic activity across the province — 100,000 new jobs, $100 billion in 30 years."
With that debt soon to rise beyond $70 Billion and future gas markets uncertain, the promises were extravagant. Credible observers say Clark's words, at best, represent wishful thinking. I believe they were fantasy and Clark knew it. My recent work demonstrates the Liberal government has had no eagerness to collect more than a tiny share of value from BC's resource production. Their inability, more than a year after Clark's announcement, to state an LNG taxation scheme demonstrates commitment to change is absent.

Quail raises a separate issue. If Liberals were willing to tax an expanded gas industry, how would they do it?
"Because figuring out how to extract significant provincial revenue out of LNG exports is a very difficult problem – and this is on top of the uncertain prospects for the LNG industry to happen at all, or on the kind of scale the Premier heralded on the campaign trail.

"There is no obvious point in the process for a provincial government to insert itself and extract a share of the money..."
Update, May 14, 2014:

Before the May 2013 election, BC Liberals talked of LNG paying off provincial debt (which approaches $70B or $130B, depending on whether BC Hydro contingencies are included or not), funding a $100B 'Prosperity Fund' and creating a secure economic future for the province. Pre-election puffery though seems to be just that. In reality, the first concrete move of the Clark government was to grant another $116M in subsidies to gas producers.

Last October, the Vancouver Sun reported words from the Minister of Gas,
"Coleman told reporters the province has been negotiating with global energy firms 'on a very confidential and detailed basis' to determine a taxation 'sweet spot' that will work for the industry and the province.

" 'We’re very close to that sweet spot and very close to having a situation where we can probably announce what it is,' Coleman said. 'We think that will come sometime in November.'
Eight months has passed, those behind-closed-doors negotiations may be complete, they may be continuing. The public is not entitled to that information, nor is the Vancouver Sun interested in examining this supposedly vital subject. Here's a Twitter exchange I had with the newspaper's [(correction) former] business editor,


Penner was defensive and he might have reason to be. Previously, I engaged him on what I believed to be the Sun's innaccurate and incomplete reporting on resource revenue issues. I might have suggested they were more interested in rewriting government talking points than doing independent examinations. In this week's exchange, I asked Penner to point to any analysis of gas revenues done by the newspaper in the past 15 month. He did not respond.

Note:

May 14, Derrick Penner advises through comment here that he is not and has not recently been the Vancouver Sun's Business Editor. I apologize for the error. Apparently my source was not trustworthy. I should have known better than to rely on a Postmedia website.

Screen capture from Vancouver Sun website, May 14, 2014



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20 comments:

  1. We are looking at almost two decades of criminal government where the BC Liberals are nothing more than the puppets of global multinational companies, who hop, skip and jump from orders from the puppet masters.

    The electorate in BC reside in a provincial hubris about politics reminiscent of Wiemar Germany in the late 20's and we all know how that ended.

    The immature behavior by BC's electorate is somewhat akin to country rubes at a traveling fair, who believe all what the pitchman is selling.

    In BC today, the slick willie pitchmen and pitch women are selling a golden tale of riches tomorrow, with absolutely no basis in fact, yet the believers want to believe, oh so desperately they want to believe.

    But it is not just the right wing types that are lost in political ennui, the left in this province are blinded by their own self importance and the great unwashed are merely uneducated or uninformed about the good word. One doesn't win elections if one doesn't run a campaign.

    Then there is the mainstream media and the ghost of talk radio past, who support the criminal activities of the present government because their owners are members of the criminal right. News in BC is deliberately being made bland so the pablum can be spoon fed to the believers and the non-believers, well turn off the TV or radio which means they turn off politics together.

    The 5th estate has become the grave of the unknown soldier, a largely faceless organization which job it is, is to keep the ruling Liberals in power, only the unknown soldier died for his county, the MSN sold out like a cheap whore and are nothing more than latter day Quislings.

    Lies, deceit and hubris will adorn BC's gravestone.

    ReplyDelete
    Replies
    1. Evil Eye, excellent and accurate synopsis. Norm should hire you!

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    2. Only if he works for the same price I get.

      Delete
  2. Just as those FastCats were supposed to start a new ferry building industry for BC, and those jobs within it. We all know how that ended up.

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    1. The Fast Cats seem to be nickle and dime stuff compared to the Liberals disastrous mega-construction campaign, designed to boost the profits of corporate friends.

      BC Rail:- Not only was this railway sold "on the cheap" to the BC Liberal bag-man who happened to be the CEO of CN Rail; the demise of BC Rail and its wee passenger service (which was rated at one time as one of 10 top rail journeys in the world) meant another political friend, David McLean, owner of the Rockey Mountaineer, would be able to operate his hugely expensive tourist trains on the BC Rail track with no interference from the regularity scheduled passenger service.

      BC Place:- That $500 or more million new retractable roof.

      The Canada Line:- This $2.4+ million R/T line was grossly so over budget that the scope of the project was greatly scaled back. Today, it is the only heavy-Rail metro, designed as a light metro and has a severely restricted capacity due to tiny 40m to 50 m station platforms. As it stands, the Canada line costs about 5 times more than a comparable but longer LRT line, with more than twice its capacity. The world view is that the Canada Line is a big white elephant. It would be cheaper to build stand alone Vancouver to Richmond LRT, that to extend the Canada Line.

      SFPR:- First conceived to be a truck route, morphed into a highway, which from its design, seems to have been planned on the back of an envelope. Costing far more that it should, did not address cross Fraser gridlock.

      The new Port Mann: Costing far more than twinning the newly refurbished, existing span, billions of dollars were funneled into this project, yet the the decrepit Patullo still stands, awaiting to be replaced.

      Instead of squandering under $1 billion on Fast Ferries, the BC Liberal have squandered many billions of dollars on questionable transit and highway construction.

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    2. Whenever I hear someone attempt to excuse any BC Liberal sin (and there have been many that far eclipse the FastCat example), I realize it’s a vacuous, tired argument and think, “Is that all you’ve got?”

      The FastCats might have been a mistake, but represented an honest attempt to benefit the province. And a considerable amount of the tax dollars stayed right here in BC, in the form of money spent by the trades involved in our local economy and the direct taxes returned to the government on their wages and the indirect taxes on the spin-off their purchases created. Maybe Anonymous @8:29 can tell us how the BC Liberals building ferries in Germany and Seabuses in Singapore aids the new ferry building industry in BC that he or she apparently desires?

      In addition to the examples of deliberate decisions to benefit BC Liberal friends and insiders provided in the posts above by Evil Eye, I would add IPPs, the Boss Power payoff, tree farm license changes for which the Auditor General could find no public interest, and reductions in royalties and taxes on our resources that benefit corporations but result in the budget shortfalls the government now uses to justify user fees and reductions in government programs to the detriment of the citizenry, as demonstrated so ably by Norm Farrell on this site.

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    3. Actually no Lew, the FastCats were to give relief to the Horseshoe Bay Naniamo run by creating the an aprox. 33 km Iona Island to Gabriola Island run, with a new 350 metre bridge from Gabriola Island to Mudge Island and a 175 metre bridge to Vancouver island near Duke Point. The thinking of the day was that fast cameraman ferries could achieve crossings in less than an hour and with three boats, could maintain a 45 minute service to Vancouver island, thus carry more car daily than a bigger more expensive C or Spirit class ferries.

      The twp bridges would see the end of the Gabriola Ferry service and the annual savings from not operating the ferry would pay for the bridges over a 25 year period.

      Gabriola residents protested and stopped the mid island very service dead in its tracks, bus as the FastCats were under construction they has to be redesigned to cater to the two established ferry routes, including very heavy bow doors which caused many problems.

      The engines and propulsion system were not designed for long haul, yet the added weight from the bow doors and other upgrades, meant the fuel tanks were made smaller; and on and on it went. As soon as the Iona Island to Gabriola island route was cancelled, the NDP government should have cancelled the ferries, but they did not the they have suffered the consequences since.

      Sometimes it is just better to say enough is enough and leave it at that.

      Delete
  3. And we were promised 400 million viewers for this item
    http://bc.ctvnews.ca/world-s-biggest-stars-descend-on-b-c-for-bollywood-film-awards-1.1225524

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  4. You need to correct one thing. I was only the acting business editor for 18 months. I am not the business editor now (nor last fall the last time you messaged me)..

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    Replies
    1. Only 18 months?? That's a year and a half Derrick!

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    2. You could still ask those questions, Derrick....

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  5. Vapour taxes are easy to promote as we have plenty of vapour heads running this province engaged in useless trade junkets whose sole purpose is to compare the amenities at the 5-star hotels they stay in at our expense. Shame on the uninformed people of this province who don't question what their so-called leaders and their MSM minions are saying - or not saying. In the 19th century, William James, the father of modern psychology, stated the following: "There's nothing so absurd that if you repeat it often enough people will believe it. " Still rings true today.

    ReplyDelete
  6. Maybe Penner is the wrong target at the Sun, being a staffer probably destined for buyout or layoff. The right guy would be Vancouver Sun Editor Harold Munro who claims on his Twitter profile (@haroldmunro) that he is "lover of constructive conversation and political junkie."

    Mr. Munro should explain to newspaper readers if and how we will collect the "Billions and Billions" that are suppposed to come from Premier Clark's trillion dollar LNG plan.

    ReplyDelete
  7. Exporting LNG uses lots of energy every step of the way.

    1. Fracking the natural gas from ground.
    2. Transporting natural gas to LNG plant.
    3. Liquefying natural gas to LNG.
    4. Transporting LNG 7,000 km across Pacific Ocean.
    5. Converting LNG back to natural gas.

    Does it make sense?

    ReplyDelete
    Replies
    1. And guess whose natural gas will be used for some of these processes. From Jim Quail's blog comments,
      "[gas] used to generate electricity to liquefy the rest, that gas use is presumably a cost of the liquefaction process which would be deductible from the taxable revenues. So on the contrary, it would probably reduce taxation.

      Delete
  8. G. Barry StewartMay 15, 2014 at 7:47 AM

    Does re-gasifying the LNG need to use energy… at least energy that costs money?

    All along, I've been thinking of the frost that builds up around the nozzle at a propane filling-station. If there's a slight leak, as some of the liquid propane re-gasifies, it takes energy from the air, causing condensation and freezing of water vapour.

    An enterprising industry at the receiving end of the LNG could use this cooling effect to run a refrigeration plant… all powered by BC energy that lies latent in the LNG. They may have paid extra for the LNG, compared to uncompressed gas… but there's extra value in there, waiting to be tapped.

    ReplyDelete
    Replies
    1. I'm just assuming that there would be a plant where LNG is converted back to natural gas, and that the plant would use some amount of energy.

      Delete
  9. OMG - cant stop laughing!!! Great tit-for-tat Norm!!
    Reminds me of the time I asked a few questions of a BC Liberal party big-wig who was outright lying to a group of people at a big media function and the guy stopped speaking English, ignored me and carried on in Hindi. I was then followed around by two guys in suits until I finally left. If only people knew how insidiously corrupt the BC Liberals are. Gordo bought the media and the incestuous relationship continues. Thanks for being on the right side,

    ReplyDelete
  10. To be BC or not BC that is the question.?

    http://www.truth-out.org/opinion/item/26313-machiavelli-and-oligarchic-democracy

    ReplyDelete
  11. Music to our ears.
    Bait and switch?-quick wins. quicker deletes?
    Keeping eye on wrong person?

    https://www.youtube.com/watch?v=3pq6V40uQYY&feature=youtu.be&t=2m21s

    ReplyDelete

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