Good riddance to B.C. LNG

There were lots of things wrong with former Premier Christy Clark’s plan to produce liquefied natural gas but let me start with the good.

image: the Tyee

At least it was a plan that labour and business could agree to. It was a provincial strategy that had workers and industry pulling together in the same direction.

It was an ambitious plan but unrealistic from the start. Markets for were weak and no one wanted to develop the plants. Now one of the last players, Petronas, has pulled the plug.

I can only speculate why they bailed out only one week after the BC Liberals were defeated. Was there some deal with the Clark government to provide concessions such that the LNG plant would be built regardless of whether it was viable? It’s not inconceivable considering how much political capital Clark had invested in the project.

Or was it because of Canada’s so-called anti-business climate, including high taxes, environmental reviews, and Indigenous land claims? Instead of recriminations, let’s celebrate the passage of Petronas says economist Jim Stanford.

Stanford has a unique perspective of LNG projects in B.C. and Australia. He’s a professor at McMaster University in Hamilton, Ontario, and lives in Sydney, Australia.

“In fact,” says Stanford, “far from blaming government red tape for the collapse of this misguided project, we should be collectively grateful. Those rules likely saved us from wasting tens of billions of dollars on the biggest white elephant in Canadian history.”

Stanford’s analysis shoots down an impression I had. I wrote that Australia was a LNG success story and that Australia’s early entry into the market was why B.C.’s plants were doomed. I now realize that Australia’s experience was not as rosy as I thought.

When Asian gas prices started to surge in 2009, Australia decided to chase after those markets. Unlike Canada, Australian developers faced few environmental hurdles and Australia’s Indigenous people had little negotiating power.

What followed was a spectacular construction boom in which $200 billion Australian was spent on LNG plants.

The boom had a dramatic effect on Australia’s economy. Their dollar, now at par with Canada, spiked up to $1.30, resulting in what economists call the “Dutch disease.” When Australia’s currency rose dramatically, the price other countries paid for Australia’s products rose. As well, imports were cheaper. Exports fell, imports rose and Australian factories could no longer compete. Australia became deindustrialized including the shutdown of their auto industry.

With the drop in gas prices, Australia’s LNG online plants are marginal. Boom towns that sprung up during the construction years are becoming ghost towns. Housing prices have collapsed.

Gas plants are selling into markets at discounted prices. Unlike Canada, Australian plants don’t have to supply the country first and so, ironically, there is a shortage of gas in Australia and a glut of gas on world markets. Domestic prices have doubled because of diversion to export markets.

B.C. has no economic strategy. Only one per cent of our GDP comes from mining, oil and gas and most from finance and real estate.

Our new NDP government faces a challenge. In our polarized political climate, unifying strategies are rare. Just ask former Premier Clark.

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Supreme Court backs B.C. teachers

The government of B.C. has lost its battle with teachers and education will improve as a result. Education spending in B.C. is now the second lowest per student in Canada.

BC education spending is 2nd lowest (CCPA)

BC education spending is 2nd lowest (CCPA)

It was an irrational battle. When Premier Clark was education minister, she tore up the contract with teachers that allowed for bargaining rights related to class size and composition.  It’s galling to think that a member of the government’s government would brag about an bill of parliament that would break a legal contract but here’s what she said in Hansard (January 26, 2002) in support of the bill:

“I am so proud to speak in support of this bill, and I look forward to getting on with the job of building a top-notch education system for British Columbia (Vancouver Sun).”

How could a reduction in spending improve education, you might wonder. Other than a vague suggestion that “choice” was the answer, under-spending and quality education remain contradictions.  Faced with a loss in the Supreme Court, now she is now ready to bargain:

“We’re going to sit down and talk about two really important clauses in the contract, the contract stays in place, labour peace stays in place,” she told CKNW.

With a looming election in B.C., I can understand why her priority is labour peace. But if she’s really keen about resolving the issue quickly, bargaining would not be necessary says BCTF president Glen Hansman:

“Either we reopen bargaining with the restored language as the floor from which we are negotiating – or the government could take a more reasonable approach and say, ‘Let’s proceed with the language restored’ and put the funding in place so we could hire those people and get them into schools,” he told the Globe and Mail (November 10, 2016).

As well as being contrary, Clark is sometimes disingenuous. She extols the virtue of school boards while scapegoating them. She told parliament in 2002:

“And I should point out to the House that school boards, as you know, are locally elected by people in their communities. Their purpose is to reflect the needs of their local communities.”

Clark knows full well that school boards are the ones who must bear the brunt of underfunding. They may be elected by the people but they can be fired if they don’t do the government’s dirty work. The B.C. government has downloaded a whole array of costs, which the government controls but doesn’t provide funding for such as increased BC Hydro rates, MSP, Employment Insurance, WorkSafeBC, the carbon tax, and most recently the teaching of computer coding which will require more equipment –a doomed plan as I outlined in an earlier column.

Clark might argue otherwise, but we can afford to bring funding up to national levels. In terms of GDP, funding has actually dropped in B.C. despite claims that it is at “record levels.”

We can’t afford not to spend money on education. Real estate is worth more now to the provincial economy than the B.C. forestry, natural gas and mining industries combined but eventually we will have to rely on a well-educated work force. Why delay that inevitability?

Is spending on B.C. education really at “record levels?”

The BC Liberals claim in a fact sheet that spending on education is at record levels. A reality-check shows otherwise. Sure, spending is up if you consider only dollar amounts. When inflation is factored in, a different outcome emerges: there is no increase at all.

CCPA on Twitter

CCPA on Twitter

For example, from 2009 to 2013 B.C. education spending increased by 5.6 per cent which is almost exactly the rate of inflation. Across Canada, spending is actually increasing. It’s up by 12.3 per cent according to the Canadian Centre for  Policy Alternatives. Their assessment of the BC Liberals’ claim is blunt:

“As much as government may like to brag about the dollar amounts of funding, ignoring the basic inflation rate and other cost pressures obscures the meaning of those numbers.”

Spending is not at record levels and spending per student is dismal. Compared to the rest of Canada. B.C. is second last with PEI at the bottom. Alberta is second highest with Manitoba at the top.

However, Premier Clark can truthfully boast about record spending in one area. Funding for private schools has increased at more three times the rate of public schools over the past ten years, and is now projected to reach $358 million in the 2016/17 school year.

Premier Clark clearly likes private schools: she sends her son to St. George’s School in Vancouver at a cost of about $20,000 per year. In welcoming a new parliamentary secretary to the minister of education for private schools, she said: “I’m pleased to have him joining our excellent team of parliamentary secretaries, advocating for independent schools throughout B.C.”

She is mistaken in the belief that private schools are better. Student performance is affected by their parents’ socioeconomic status. In a study by Statistics Canada and reported by the CBC, the success of students is a result of resources at home.

“For example, compared with public school students, higher percentages of private school students lived in two-parent families with both biological parents; their total parental income was higher; and they tended to live in homes with more books and computers,” the report says.

Premier Clark makes it evident that she no intention in catching up with the rest of Canada on spending. In her mandate letter to Mike Bernier, Minister of Education, she instructs him not to increase spending:

“1. Balance your ministerial budget in order to control spending and ensure an overall balanced budget for the province of British Columbia.”

At first glance, the plan to close underutilized schools seems perfectly rational until you consider the details. They count computer labs, art and music rooms, as “empty” because they are shared by all students. By this warped calculation, a school with seventeen full classrooms and three “empty” rooms would be only 85 per cent full.

Despite all the perky talk about how great Clark’s government is doing, the real agenda of the BC Liberals is clear: keep spending on public schools low and ensure that private schools are available to the deserving rich.