Blog | March 07, 2012

By Gordon Gibson, Special to the Vancouver SunThere are really two conversations going on about the proposed huge Enbridge pipeline that would carry $40 million worth of oil every day from Alberta to Pacific tidewater at Kitimat and thence to the world.The first is very public, raucous and emotional. It has to do with safety and oil spills and tanker traffic and native rights and fish and economic benefits. The attacks are driven for many, especially outsiders, by opposition to Canada’s oilsands. The second conversation is quiet, muted, hardly begun, whispered in government offices, but it could change fiscal federalism as we know it in this country.The public conversation is bifurcated into two streams, safety and aboriginal. The safety questions have to be answered by Enbridge, to convince the environmental assessment review panel now holding hearings and ultimately the public that the project is safe enough and that any risk is small and worth taking given the immense potential benefits to the country.Those benefits are indeed large. A study by Calgary research firm Wright Mansell suggests an added value of $270 billion over 30 years. You can see the room for a lot of jobs, health care and pensions in that number.The other public stream has to do with native land claims. These cannot be resolved by Enbridge. No proponent, no matter how large, has the resources to tackle this one. The Indians of northern B.C. have court-ordered rights which disgracefully have hardly been addressed until now. The issues go way beyond money, into recognition by the Crown and relationships and dignity. Governments have refused to be involved substantively so far. Unless they become engaged, the Northern Gateway pipeline will likely not be built. As University of Calgary political scientist Tom Flanagan has pointed out, while the tribes do not have a veto, they do have the legal ability to tie the project into knots for many years. This must be addressed by governments.The quiet and private conversations have to do with distribution of the new economic rewards. Put simply, the risk/reward ratio is out of joint. Alberta and points east get the large lion’s share of the rewards and B.C. gets the terrestrial and marine risks. Unmodified, this won’t sell in political terms.Let us first examine that $270-billion GDP benefit. Only 17 per cent goes to B.C. in exchange for just about 100 per cent of the risk. Total government tax revenues will go up by $81 billion. (See health care, above.) Alas, only eight per cent of that goes to the B.C. government. Doesn’t compute.Enbridge has made an offer to the aboriginals along the route (10 per cent of the action) but that is a drop in the barrel. Any large re-allocation of benefits has to be arranged by the federal and Alberta governments.So, on what basis? In a proper federation we can’t have one province blocking or tollgating the exports of another, notwithstanding that Quebec has been allowed to do this to Newfoundland electricity for decades. But the feds and Alberta might allocate some of their incremental revenues to B.C., or agree to some kind of transit levy to compensate for notional risk, or pay for some major B.C. transportation infrastructure for general development.The most attractive idea involves northern natives. As a result of court rulings and history, their compensatory expectations are large. As noted above, money won’t solve all of their issues, but a lot of it would certainly help. We are talking billions in development funds. This money should come from Ottawa (Indians are a federal responsibility) and perhaps from Alberta too. In equity, it should also adhere to the benefit of Indians in the rest of the province, especially since another (Kinder Morgan expansion) pipeline is being planned for a southern route to Vancouver.Given the novelty and immensity of these risk/reward and native tasks, an Ottawa serious about this project would get at it right away.Gordon Gibson, a former B.C. Liberal Party leader, is a public policy commentator.

This article was published in the Vancouver Sun on March 7, 2012. Read the full article on the Vancouver Sun website.