Resource development develops new jobs but not more jobs says Professor Marvin Shaffer. New pipelines and LNG processing will not reduce unemployment despite the claims of politicians. “The economic impact analysis is the one that politicians and media latch onto –the ones with the big, though fundamentally misleading numbers.”
Those misleading numbers are impressive: labour income of $69.9 billion for Northern Gateway alone. But that assumes that the new jobs are filled by the unemployed. In reality, most of the jobs would be filled from people already employed in B.C., Canada, and globally. Considering that, the net labour income rise is only 0.06 per cent of the amount trumpeted.
These are not Professor Shaffer’s opinions. Rather, the figures come from a report commissioned by the builders of the proposed Northern Gateway pipeline, Enbridge, as presented to the National Energy Board for review.
The authors of the report, Wright Mansell, throw cold water on other so-called benefits. Politicians loudly proclaim increases of government revenues of $98 billion and GDP $311.5 billion. “Those are gross impacts,” warns Shaffer in a Canadian Centre for Policy Alternatives newsletter.
To get true picture, the benefits have to be weighed against the costs, including losses to businesses as a consequence of the pipeline or resource development; businesses such as railways which now carry a lot of oil.
The Wright Mansell report calculates the true net gains, namely gross benefits minus costs. The net benefits of Northern Gateway end up going to oil producers. The biggest winners are the producers themselves with $17.8 billion; and the governments of Alberta and the feds with $9.4 billion.
And even those net benefits depend on the vagaries of world markets for fossil fuels, exchange rates on the Canadian dollar, and interest rates on money borrowed to build the projects.
Other factors are not included in the report, says Professor Shaffer. “One suspects that the federal government would have to redirect a large share of its gain to Green House Gas offsets, marine safety and other measures for that case.”
Then, there is the matter of alternatives to the oil bottleneck out of Alberta; other ways to potentially increase the value of the resource such as refining the bitumen in Canada, and competing projects and strategies such as the existing Kinder Morgan pipeline and the Canada East project.
The massive windfall from LNG claimed by the B.C. government – a $100 billion Prosperity Fund – looks more like wind than windfall. No such fund can develop when Premier Clark promises tax cuts and increases to public services. None of this consistent with a Norway-styled “prosperity fund.”
To add insult to injury, not only does resource development fail to create jobs for the unemployed, fail to increase B.C.’s tax revenue, fail to produce a rainy-day fund, it is an environmental disaster waiting to happen.
I have to agree with Premier Clark’s ambitious plans to train unskilled workers but instead of training them for the black hole of resource extraction, prepare them for technologies of green renewable energy — not a dying fossil fuel industry.