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.

Double-dipping and wait times

Doctors are to blame for double-dipping but not for the long wait times in B.C.

image: Global news

Rosalia Guthrie of Salmon Arm found out the hard way about double-dipping. After waiting for 16 months, her surgeon’s secretary gave her the number of another clinic. To her surprise, she discovered that the other clinic was run by the same surgeon –and that she would have to pay.

Guthrie paid $500 to get in the door of the private clinic and another $3,850 for a written report. She didn’t have to pay for the actual surgery. That was covered by health care and only one-tenth of what she paid. The surgeon was paid $410.67 for the surgery done in a public hospital at UBC.

The surgeon did a number of things wrong. Double-dipping is illegal. That’s where doctors bill both the patient and the province for different aspects of the same treatment. And doctors are forbidden from charging patients for reports while advising patients on publicly-insured treatment. Also, the B.C. College of Physicians and Surgeons dictates that before referring patients to clinics, doctors must disclose if they have a financial interest. The surgeon did have a share in the clinic where Guthrie was treated and that wasn’t disclosed.

Doctors are not to blame for long wait times. That blame for that lies squarely at the feet of the government of British Columbia. The BC Liberals have failed to provide access to operating rooms for surgeons says Judy Darcy, the NDP spokesperson for health:

There are operating rooms that sit idle, MRIs that sit idle for many hours of the day. We need to invest in innovation to use our capacity to the maximum.”

If hospitals can’t provide operating room times for doctors, the province should build public clinics I argued earlier. There is no shortage of doctors; there is a shortage of operating rooms for them to work. In a survey done by the Royal College of Physicians and Surgeons, 208 fully trained specialists -16 per cent of those surveyed- were under-employed because “. . .there aren’t enough ORs.”

Some doctors contend that, while they may be doing something illegal, they are relieving patient suffering. Patients may lose their jobs while waiting or they may become addicted to pain-killing opioids.

Private clinics are expensive. Doctors can’t run them without charging patients. Dr. Ross Outerbridge, The founder of the Kamloops Surgical Centre, explains: “We factored in all the cost and a reasonable profit margin and that is what we charge the private patients.” But the whole realm of private clinics is unregulated. “I know that at other clinics, they overcharge,” says Dr. Outerbridge. ” I don’t personally agree with that – but it is very difficult, because nothing is being done about it.”

The BC Liberals have balanced the provincial budget by underfunding health care. British Columbia has the largest number of private clinics in Canada. While we are paying fewer taxes, we are likely paying more for health care when the cost of private clinics is factored in.

Yes, taxes would be higher but public clinics would be better than the illegal, unregulated, Wild West of bootleg medicine sold on the side of public medical practice.

 

 

The ruin of BC Hydro by the BC Liberals

It wasn’t an easy birth. The private companies opposed it. It took the vision of one man to bring BC Hydro into existence in1961. Before that, a patchwork of power companies supplied the province. The largest, BC Electric, served the lower mainland. Premier W.A.C. Bennett had a dream. He wanted a single provincial power grid but the power commission of the day was dragging their feet explains Norman Farrell in The Tyee, (September 12, 2016.)

Our dam power

Our dam power

“But Bennett, premier since 1952 and an MLA since 1941, was unhappy with the power commission. He wanted faster expansion of the electrical grid — and he wanted greater control.”

Bennett faced problems in the creation of BC Hydro. His vision included the Two Rivers Policy –the damming of the Peace and Columbia rivers –something BC Electric wasn’t interested in doing. Worse still, BC Electric was antagonistic: proclaiming that they would not buy power from the Peace River dam even if it was built.

Damming the Columbia River presented a different problem. Kaiser Aluminum wanted to build a dam on the river, not for generation of public power but for the production of aluminum. Outrageously, they wanted to control water flow so that power could be generated in the U.S. by the Kaiser’s parent company.

Bennett was not going to see Canadian water go to the U.S. for hydro power, so he negotiated a deal with U.S. Kaiser to receive 20 per cent of the power generated downstream plus taxes and water license fees. The Government of Canada, headed by PM Diefenbaker, quashed the deal citing federal jurisdiction.

By now, Bennett had enough. In 1961, with the support of the NDP forerunner (the CCF), he seized control of the private BC Electric and formed the public crown corporation BC Hydro. Bennett understood the obvious: governments can borrow money cheaper than private developers. Now he could proceed with a plan that would span generations; something that private developers, who require quick returns, would never do.

Things were falling in place at the federal level, too. Liberal PM Lester B. Pearson replaced Diefenbaker as prime minister. Pearson negotiated a deal with the U.S. that effectively restored the former Kaiser one. With the money raised from the Columbia deal, Bennett built the Peace River hydro dam eight years later.

The ruin of BC Hydro came when the Campbell government decided to re-privatize power generation. Ideology drove Campbell into thinking that privately operated generators could do a better job. To push his ideology, he had to subsidize private suppliers in order to get generators built.

Campbell’s gift to private operators was to lock in prices that BC Hydro would have to pay. Last year, BC Hydro bought power from private sources at nine cents per kilowatt hour and sold it at three cents.

It doesn’t take a marketing genius to figure that selling a product at one-third what you pay for it is not good business. Worse, the BC Liberals are pushing for more hydro production at Site C on the Peace River –power that will be hard to sell in a market with flat prices.

NDP critic Adrian Dix said BC Hydro’s errors are a disaster for domestic customers and taxpayers.

“Both the government and BC Hydro misread the market years ago and are pushing ahead hoping no one notices,” Dix said. “The company failed to admit previous errors in demand forecasting and continues similar projections without explanation.”