Trudeau’s $1.6 billion investment in the ‘vote’ patch

Pipeline Sloth2


Oh look.  Free money for the oil patch from the government.  It must be Christmas.  Except that stuff is available year-round.  And the federal gift of $1.6 billion to the oil industry is typical cunning politics driven by bad economics that means a lump of coal for the rest of us.

Coal, of course, is not just a stingy gift these days.  It’s evil.  It gives off sky-igniting CO2 when burned.  Like natural gas.  And… what’s this?  Oil?

Oh yes.  The federal government is subsidizing an industry it says must die.  As Trudeau blurted out in early 2017 “We can’t shut down the oilsands tomorrow.  We need to phase them out.”  So why give the industry CPR now?  Does CPR stand for Cash for Political Reasons?  Up to a point.  But don’t underestimate the Liberals’ confusion about the real consequences of their pseudo-largesse.

In his year-end interview with CTV’s Evan Solomon, Andrew Coyne noted in Tuesday’s National Post, the PM brushed aside the possibility of restarting the Energy East pipeline: “There is no support for a pipeline through Quebec.”  To which Coyne retorted “You thought pipelines were a federal matter?  You thought Trudeau’s professed willingness to push Trans Mountain through over B.C.’s objections had confirmed that?  Think again.  This is Quebec, after all.”

Yes, urbane, sophisticated, pleasing Quebec, whose market-friendly premier François Legault recently sneered that there is “no social acceptability” in La Belle Province for “dirty energy” from dirty Alberta.  But the thing is, and Trudeau must know it in the loose sense that he knows anything, Quebecers need oil to cook, heat and especially to move around, and revenue from Alberta to fuel equalization.

You might also think he’d know the gas Quebecers put in their growing fleet of SUVs must be delivered somehow.  Say, through 12,521 kilometres of transmission and distribution pipelines in the province, according to Natural Resources Canada.  (I Googled.)  But it’s not the sort of thing Trudeau knows.

To him goods and services just appear by magic, generally of the government sort.  Which is why he also knows, setting aside philosophical quibbles that you can’t know an untrue thing, that you can grow the economy by subsidizing everybody at everybody else’s expense.

A person who understood economics would ask how on Earth a government could expect to subsidize a vital economic sector they’d spent years pounding into the ground.  As Alberta resident Lorne Gunter recently wrote, “Our province is losing around $40 billion a year in oil and gas investment, not to mention the spinoffs like housing starts, retail sales and vehicle purchases that come with a booming energy sector.  And we are losing that money because we have no pipelines to take our oil and bitumen to ports and because the ‘green’ taxes and regulations of the federal Liberals and provincial NDP are scaring away investors.”

You’re going to fix that with $1.6 billion?  There seems to be a problem of scale here.  When oil and gas takes a beating, it’s a multi-billion beating.  Where do they think they’re going to get enough money to nurse it back to health?  From the auto sector they gave billions to under Harper so it would burst into profit except it left instead?  From Bombardier?

Sure, you can subsidize something small (“$1.1 million for the Northumberland Community Futures Development Corporation (CFDC) to expand its N1M program”, for instance, a real FedDev Ontario gift on Dec. 18).  But oil is too big to make a difference without finding tens of billions somewhere.  Unless you cling to the old John Kenneth Galbraith fantasy, popular when big glasses were too, that companies are greedy and sluggish while government is kind, nimble and spritely.

Listening to Natural Resources Minister Amarjeet Sohi drone on Tuesday about the handout I did start wondering where my platform shoes had gone.  See, this $1.6 billion is for things like commercial financing, clean growth investment and the dreaded strategic innovation funding.  Say, one is tempted to ask, aren’t there banks offering commercial financing, oil companies chasing “clean growth” investment in less carboniferous fuels, and an astonishing level of innovation in the equipment the modern hydrocarbon industry uses?  But he apparently still buys the idea that with government money firms become smart instead of stupid.

The government is even offering export financing, which takes some kind of unselfaware gall since the big problem with exporting oil is that the feds have failed to allow construction even of pipelines they approved.  Oh, and there’s job training, since it never occurs to a business that it would be good if their staff knew how all the big expensive fancy equipment worked until a politician said so while waving a cheque.

It’s easy to brush all this feeble reasoning aside as window-dressing on a political handout.  Surely this $1.6 billion wasn’t an investment in the oil patch but in the vote patch.  Unfortunately, politicians who don’t know economics think by happy coincidence handing out money benefits the economy and their election prospects.  So it’s win-win.

Except the rest of us get lumps of coal we can’t even burn.

Photo Credit: Jeff Burney, Loonie Politics

More from John Robson.    Follow John on Twitter at @thejohnrobson

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