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Babes in the woods. Sitting ducks. Easy prey. Fish in a barrel.

All idioms that apply to those who dare to outbluff Big Oil, convinced that they are too shrewd to get burned and too gifted to get taken. The industry lives for such hapless victims.

Often they are big shots in government—premiers, ministers, and senior bureaucrats—the easy marks who are flattered just to be players in the industry’s high-stakes game and who fancy themselves as experts in all fields of high finance.

Rarely do they stand or quit when they should, ever happy to gamble with taxpayers’ money. Their exalted status, overweening ambition, and fawning minions all tell them they can’t lose.

So they just keep saying “hit me”. And the ones they hope to master are quick to oblige.

It is the conceit of power that makes losers of those who hold it as their supreme leverage. Especially in playing with sharks whose stock and trade is getting governments to fold without even knowing they have been had.

Dupes are dime a dozen, as the oil and gas industry knows so well. But the best ones are those who are so utterly compromised before they even sit down to negotiate, that the thing they fear the most is their dealer walking away from the table.

No one feared that more than Christy Clark.

Which explains how her government got so badly outfoxed in arriving at the Pacific NorthWest LNG project development agreement that is the subject of this column.

The Clark government hopes to rush that binding contract into law within the next several days, in the dead of summer, although it is not obliged to do so. Under the terms of the agreement, the enabling legislation need not be passed or put into force before “the end of the session of the Legislative Assembly in Fall, 2015, or such later date as may be agreed between the Parties…”

That is important to know, for it would allow all legislators until at least the end November, or even later if need be, to properly assess that deal. It begs to be expertly parsed and broadly exposed before it is imposed on our province.

That project development agreement with the Pacific NorthWest LNG Limited Partnership is an unprecedented boon to Big Oil.

More importantly, it is a bad deal for B.C. that should give us all pause to reflect on the devil that is everywhere in its details.

The fine print of that deal will commit our province to a course that is environmentally reckless, fiscally foolhardy, and socially irresponsible. I say that as someone who is generally supportive of the merits of LNG development, to the extent that it is invited without giving up more than we collectively stand to gain.

We should not accept this deal that would enshrine an unprecedented 25-year tax giveaway to state oil companies from Malaysia, China, India, and Brunei, and also to JAPEX.

We should not accept this deal that effectively obliges all B.C. taxpayers to underwrite those companies’ risks, as it also pads their profits.

We should not be content to let the government sell out British Columbia’s long-term capacity to appropriately manage, tax, and regulate our most valuable non-renewable resource, or to properly price and minimize the massive greenhouse gas emissions that will result from LNG exports.

Nor should we accept that the price for attracting any LNG project is a deal that amounts to a wholesale sellout of our provincial sovereignty.

Yet the Pacific NorthWest LNG project development agreement with Petronas and its partners would do all this and more. In its totality, it is a deal that played our government decision-makers for suckers.

Petronas was licking its chops from the moment that Clark started salivating over the untold jobs and revenue that might flow from LNG and then overplayed that potential to win another spin at governing.

It had her at “hello”.

It played Rich Coleman and Mike de Jong to a tee. All of them were dizzy with excitement at the prospect of hitting LNG pay dirt, keen to get any deal that promised to “show them the money.”

The gas minister’s bravado and the finance minister’s initial LNG tax only weakened their bargaining position.

Their simultaneous sucking and blowing effectively allowed Big Oil’s seasoned players to set their own price for investment. The governments amateurish entry into the game gave the industry the political leverage it needed to extract cost concessions before the hard bargaining even started.

The government caved at the first sign of industry resistance and promptly cut its LNG tax rate in half. It slashed that tax on net income after the recovery of costs for capital expenditures from seven percent to 3.5 percent until at least 2037.

The tax on net operating income was set at 1.5 percent. But even it does not have to be paid until an LNG company’s so-called net operating loss account and capital investment account are reduced to zero. And that’s not all. The limited tax “contributions” that those companies make will be accumulated in a tax pool that is used to reduce the 3.5 percent net income tax that is only payable when they recovered their initial capital investments.

Sweet deal.

And that was the government’s opening move, a ridiculously low revenue benefit for B.C. taxpayers.

It was won by the LNG industry with an ultimatum that the government could not politically refuse: cut the tax and allow us to pocket that cash, or we will take our money elsewhere.

The mindset that won that tax concession is one that is also shared by many in the mainstream media. Namely, that we should be grateful for getting anything from the industry’s benevolence in choosing to profit from our finite pools of natural gas.

It is a mindset that holds the need to be competitive as a reasonable rationale for rash action. Throw caution to the wind and do whatever is necessary to win the global contest for LNG investment. Or we will lose out to other less environmentally demanding jurisdictions that are so anxious to facilitate that investment with no end of inducements.

It is a mindset that puts all of the chips in the LNG investors’ hands; one that obliges all Canadians to sell their natural resources at any price dictated by global markets. As if extracting them as fast as humanly possible is our nation’s highest imperative.

It is the mindset that starts and ends with the unblinkered understanding that we are, after all, merely price takers. A small, resource-dependent, open trading economy that should feel most pressured to develop and sell off its fossil fuels when they are coincidentally needed the least and diminished in value by a world awash in dirty energy.

How many times have you read, heard, or been warned that “the window of opportunity for LNG is closing” and if we miss it now, we might lose it forever? Penny stocks also trade on such speculative hysteria.

And then there is the “jobs” gold-rush that also tolerates no room for skepticism.

It has always been thus in Canada. Jobs are always held out as our nation’s holy grail, even if the total number of permanent jobs that the LNG industry would create after building its plants and pipelines is quite minuscule in macro economic terms.

If the Clark government’s pixie dust dreams of constructing five LNG plants over the next nine years were to somehow come true, by its own projections, that would only create 23,800 permanent direct and indirect jobs for ongoing operations, after the construction work is completed.

Nothing to sneeze at, but not quite the jobs bonanza that most British Columbians probably assume.

Apart from the fantasy inherent in that jobs vision and the fallacies of projecting indirect jobs through economic modeling, even that magical number is dwarfed by our provincial economy.

Some 2.3 million people are currently employed in B.C.’s total labour force of almost 2.5 million people. The latest employment stats claim that 36,800 full-time jobs were added to our economy in June alone. Not many of them relate to LNG, either directly or indirectly.

In other words, there were 50 percent more jobs ostensibly created in B.C. last month alone than the total number of permanent jobs that might be directly and indirectly attributed to LNG if the miracle boom scenario ever materializes. An important point to balance our perspective.

Be that as it may, the giddy promises of jobs, jobs, jobs and a “debt-free B.C.” that Christy Clark hung on her hyperbolic vision for LNG dramatically weakened her government’s negotiating position in advancing either objective.

In the end, all Petronas had to do to win was to threaten to quit. That was all it took to force the province to show its weak hand to all of the LNG players and to also allow them to effectively write their own rules for success.

To the victor go the spoils. Which in this instance is a 25-year project development agreement that will reward Petronas and its partners with a phenomenal tax benefit and an environmental giveaway that will set a new baseline for all future LNG projects.

It should make us all think about the pitfalls of saying nothing and demanding even less from a law-making process that compromises our own long-term interests.

For, by our silence, we confer consent to both that sweetheart deal and the government’s shoddy means of pushing it into law, without any meaningful public debate or sensible understanding of its long-term implications.

The legislature should at least know what it is doing before entrenching in law a binding contract that will do far more than set in stone today’s abominably low LNG tax rates and the Natural Gas Tax Credit.

As of January 2017, the latter would provide a credit of three percent that the companies can claim to reduce their corporate income tax. Bear in mind, British Columbia’s corporate tax rates are already the lowest in Canada, following the new Alberta government’s decision to raise its corporate tax rate by two points.

The Petronas precedent will lock in that LNG tax credit for 25 years. It will do more than guarantee Petronas and its partners taxpayer-funded compensation for any costs imposed by a change in those tax rates and benefits, if they are greater than $25 million in any year or more than $50 million over five years.

It will do more than fully indemnify those Asian state oil monopolies with taxpayers’ money in the event of any so-called “discriminatory events”—changes in government policy specifically applicable to the LNG industry that impose new rules or tougher standards that entail higher costs relating to carbon taxes or greenhouse gas emissions and reporting.

It will do more than also guarantee Petronas and its partners a perpetual right to improve their deal if any subsequent LNG project strikes an even better bargain.

Indeed, the most serious consequence from that deal is not even all of those hard benefits it will gratuitously confer upon Petronas and its partners.

Rather, it is the precedent it will set for almost any large-scale investment in British Columbia. It is the loss of control and parliamentary supremacy that will effectively result from granting the oil and gas industry an iron clad benefit package that will transfer the costs of otherwise desirable policy changes to B.C. taxpayers.

Think about how that might play out in the long term and how it might have impacted existing policies if such an agreement had been in place with other industries years ago.

The forest industry would love to have its stumpage rates locked in for 25 years and underwritten by B.C. taxpayers. The mining industry would love to have its royalty regimes and tax credit regimes guaranteed for 25 years. Who would not want that level of certainty?

Governments have not offered that tax certainty to anyone—certainly not to individual taxpayers—because tax policy needs to remain flexible enough to raise the revenue required to pay for crucial public services.

This is Canada. No one—least of all state-owned oil enterprises—should get a special tax right, guaranteed for 25 years, that sets them apart in a privileged class. Yet they stand to be immune from any industry-specific tax hikes, for one simple reason: they were so wealthy to begin with, they could command permanent tax concessions as the price of their investment in Canada.

Only Big Oil can extract such a benefit because of the sheer size of its buying power. Are we getting a fair return on our resources? Will the rates that might seem suitable today seem appropriate two or three decades hence? Is anyone else in the world offering such lucrative tax concessions?

Alberta never gave its oil and gas industry such a tax advantage in developing its resources. On the contrary, Premier Rachel Notley just got elected in part on a promise to review Alberta’s oil industry royalty rates, just like premiers Ed Stelmach and Peter Lougheed did in previous years.

Who’s to say we would not want to adjust B.C.’s LNG taxes years from now, if the global price of LNG goes up? Why would we ever agree to a deal that effectively makes it impossible to impose new taxes on that industry, to drive new behaviours with market-specific pricing, or to capture a greater share of the wealth that any natural gas extraction activities might create in our country? It is hard to fathom.

The implications of the Petronas deal are even more serious for our environment.

The environment could well live without the added toll that will be inflicted by this new export industry and its associated increases in natural gas extraction activities, methane emissions, and shipping hazards. Our precious water resources, fish and wildlife habitats, and rapidly warming atmosphere would all be better off.

That realization should be our trump card in any LNG negotiations, even it leads some would-be investors to look for easier marks.

Developing LNG could be good for our economy. But in a world that should be looking for smarter alternatives to fossil fuels, the worst thing we could do is lock in existing cost and regulatory structures that will frustrate that end and that should be more onerous, not less.

Under no circumstances should we effectively consign away our ability to set LNG-specific carbon taxes or to impose new environmental regulations aimed at curbing greenhouse gas emissions that will skyrocket because of that industry. Taxpayers should not have to foot the bill for strengthening such industry-specific measures and subsidizing companies’ profits.

There was a time, not long ago, when the B.C. Liberal government said it opposed business subsidies. This deal enshrines the worst type of subsidy. It would entrench a guaranteed 25-year “tax expenditure” that exposes B.C. taxpayers to unknown future unfunded liabilities that may flow from future needs to strengthen environmental protection. What is the value of that expenditure? We will not know until it becomes our cross to bear.

We should retain a free hand to similarly adjust our own water protection, marine protection, and conservation policies, without having to pay industry for the costs of improving our regulatory regimes aimed at curtailing LNG’s environmental impacts.

All of that will be irrevocably compromised by the Petronas precedent, which in principle, is just wrong.

If such a sweetheart deal had been in place years ago in the forest industry, would we have been able to put in place the tougher industry-specific emissions regulations that shut down beehive burners, reduced pulp mill emissions, or clamped down on effluents? The same principle applies.

Or how about the natural gas industry? If it had enjoyed the same type of treatment the Clark government now wants to guarantee its nascent LNG industry, would we have dared put in place the climate action policies that outlawed routine flaring? Or mandated a requirement for the capture and storage of produced water from any coal gas extraction activities? Not a chance.

Environmental policies are always in flux and often they involve costs on the industries they are designed to regulate.

The last thing we should be doing is putting in place long-term guarantees that freeze the rules and costs for pollution and negative environmental impacts in perpetuity. Yet that will be a hard practical consequence of the Pacific NorthWest LNG project development agreement.

Fact is, the legislation now before the House mostly represents a fear of failure that drove its own unsatisfactory outcomes and that now stands to fail B.C.

The issues it speaks to and the consequences it will invite are complex, far-reaching, and potentially dangerous in precedent. Those issues and consequences cry out for a thorough expert analysis.

As noted, the agreement itself affords ample time to do that. Sadly, the government’s only aim is to avoid any serious scrutiny of its handiwork and to position the NDP as the No Development Party that is somehow opposed to LNG.

Such crap. I know that game well and played it myself. Doesn’t make it right.

Clark’s Liberals are admittedly good at playing that game for partisan advantage. They know, as all governments do, that summer sittings work well for ramming through lethal legislation with minimal political fuss and muss. Especially if the main aim is to force a recorded vote that can be later misconstrued to negatively define the opposition.

The NDP and the Green party’s Andrew Weaver are right to stick to their guns and to oppose this gift to Big Oil as the unnecessary and unacceptable handout it is.

They should be demanding that this precedent-setting LNG agreement be referred forthwith to a special committee of the legislature. It should then commission an independent, expert analysis that might guide the legislature in its detailed deliberations.

That analysis might assess the agreement in terms of the framework suggested by the International Monetary Fund for appraising different rent tax mechanisms and alternative fiscal regimes for extractive industries. You can read it yourself here.

That framework identifies several hard objectives for such long-term fiscal arrangements. And it suggests appropriate indicators for each objective that might be used in evaluating the benefits that governments should demand in agreeing to fiscal regimes like the Petronas precedent.

I highly doubt that the Clark government has done its due diligence in producing any such analysis of its first-ever such project development agreement. It likely has no clue how its deal stacks up in a comparative sense to other LNG fiscal arrangements negotiated by other governments around the world.

We should know that.

Heck, even Papua New Guinea got a major equity interest in negotiating its LNG project development agreement with ExxonMobil and other partners. Why didn’t B.C. want or get a firm share of the proceeds from this first LNG project? We should know that. So should the First Nations who will be most directly impacted by this $11-billion LNG project and its associated $5-billion, 900-kilometre pipeline that TransCanada plans to build.

As the NDP has pointed out, Australia’s Gorgon LNG agreement provides all sorts of benefits that the Clark government failed to secure with Petronas. It guarantees local jobs, enshrines a “buy local” policy, strengthens environmental protections, and offers no special tax breaks or rate guarantees.

What other fiscal models are out there operating today in the real world and how will B.C. fare by comparison if this LNG project ever comes to pass?

The point is, before the legislature votes on the Petronas precedent it should know exactly what other jurisdictions have offered and how this deal stacks up. If Clark, Coleman and de Jong are truly confident they secured a good deal for B.C., they should welcome that comparison, not deny it, as they surely will.

Unfortunately, none of that is going to happen. The B.C. Liberals will use their power to push through their law, betting on blind faith that they did not get screwed too badly.

They know that this is not the type of issue that many will take the time to care about, let alone try to do anything about. Yet that shouldn’t stop you.

If you have already taken the considerable time required to read this, you probably care. And so you should. Not just about this dangerous gamble in LNG, but about the entire issue and how it stands to affect our province.

For A Clear Look at B.C. LNG, I would urge you to check out David Hughes’s excellent paper, part of the Climate Justice Project, a research alliance led by the Canadian Centre for Policy Alternatives.

For a hard look at the Petronas precedent, just follow the government’s sleight of hand and the legislative debate that has now begun.

Do not be fooled that it is in British Columbians’ best interest. It is a political package, pure and simple, that represents a huge win for Big Oil, at B.C.’s ultimate expense.