The Claws are Out on Canada's Eastern Front

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Appeared in the Saint John Telegraph-Journal and the New Brunswick Telegraph-Journal
Recently, New Brunswick Premier Bernard Lord and Nova Scotia Premier John Hamm had a nasty little spat with dueling columns in the Globe and Mail.

New Brunswick has asked the National Energy Board (NEB) to order that a pipeline be built through New Brunswick and into Quebec. “We are asking for access to this Canadian resource (offshore natural gas) at fair market prices, on terms and conditions similar to those being proposed for American export markets,” Lord wrote in support of his province’s application.

Apparently, this makes Lord a great patriot. “Above all,” he wrote, “I am a Canadian and a New Brunswicker. The needs of Canadians in general and New Brunswickers in particular are my priority. Our intervention on this matter before the NEB is a test of our priorities as a country. A positive NEB ruling to our application that says ‘Canada too’ would meet that test.”

Premier Hamm responded angrily. He accused Lord of undermining national unity, attempting to steal thousands of jobs from Nova Scotia, and being incredibly foolish. Hamm claimed New Brunswick’s demand would slow the pace of offshore development, reduce the spin-off benefits going to both Nova Scotia and New Brunswick and undermine security of supply for both in the future.

“In her book The March of Folly: From Troy to Vietnam,” Hamm wrote, “Pulitzer Prize-winning historian Barbara Tuchman … defined folly as ‘the pursuit by governments of policies contrary to their own interests.’ There is no folly greater than the New Brunswick government proposing protectionist policies that would harm its own province.”

In fact, Lord’s claims are disingenuous to the point of absurdity. He wrote, “New Brunswick is not seeking special access or unfair access to Scotian natural gas. We are not seeking subsidized access to this natural gas, nor any form of special treatment.”

Yet, Lord is asking for “special treatment” and “subsidized access.” A pipeline through New Brunswick is uneconomical and will not be built unless New Brunswick is successful in “special” pleading.

New Brunswick’s demands would cost hundreds of millions of dollars. Money is not free. It will come out of the offshore’s bottom line, reducing profits and investment. Both will cost Nova Scotia and the federal government millions in lost tax revenue. That’s a taxpayer subsidy for building a pipeline through New Brunswick.

Calgary-based EnCana Corp. says it will delay the $1.1-billion Deep Panuke project off Nova Scotia if New Brunswick wins its case. Other companies will also put new investments on ice. The only way to get the thing moving again would be to provide companies special tax and other subsidies, and that’s on top of the lost tax revenue related to reduced profits.

It’s difficult to understand why New Brunswick is making a fuss. Half of its population can already hook up to gas, yet only about 400 have.

To be fair, Newfoundland and Nova Scotia are doing their own special pleading. Both want oil and gas revenues excluded from the equalization formula, so they can collect offshore revenues and still get equalization cheques, even if petrochemical revenues make them two of the richest provinces in Canada.

The change demanded by Nova Scotian and Newfoundland would harm New Brunswick and other have-not provinces. The current formula provides equalization payments to bring have-not provinces up to the national standard in a number of areas of revenue, including natural resource revenue. Cut resource revenues out of the formula, and you cut equalization payments to resource-poor, have-not provinces.

Many wars have been fought over natural resources. The Atlantic Provinces want to use taxpayer bucks rather than bullets to fight this battle.

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