On the afternoon of Friday, Feb. 18, while all eyes were on the clearing of the “Freedom Convoy” in Ottawa, the federal government quietly announced that the cost of their Trans Mountain pipeline expansion project had ballooned to $21.4 billion. This is a 300 per cent increase from the original cost the Liberals paid to purchase the pipeline from Kinder Morgan. At the time of the pipeline’s nationalization in 2018, Fightback predicted this outcome (almost down to the dollar): “The $4.5-billion purchase is just the first down payment on an ongoing series of expenditures. That initial payment merely covers the cost of buying a 65-year-old pipeline that had a spill just last week. Now that the federal government has responsibility for building the new pipeline and covering risk assurances, the final cost is estimated to be between $15-20 billion”.
The government is quick to say there is no money for health care, living wages, or clean drinking water for Indigenous communities, but there appears to be a bottomless reserve for Trans Mountain. Not another dollar should go towards propping up this leaky, mismanaged pipeline that violates Indigenous rights and environmental needs. Trans Mountain never should have been purchased. The only way to ensure this doesn’t happen again is to place the whole of the energy sector under democratic workers’ control as part of a socialist plan of production.
A bailout by any other name
In 2018, Kinder Morgan faced massive public opposition to Trans Mountain in British Columbia due to the environmental risk it posed and their disregard of concerns from Indigenous communities. The 1,150-km pipeline (if it is ever finished) will triple the amount of diluted bitumen sent to the Burnaby terminal on the west coast, and increase tanker traffic by seven times. Pre-expansion, the Trans Mountain pipeline already had a record of 82 spills between 1961 and 2016. Tankers have to pass through a very narrow channel to reach the ocean, and any spillage would endanger tens of thousands of fisheries and tourism jobs. The pipeline is also plowing through Indigenous territory. First Nations communities along the route have opposed the pipeline due to the risk to water supplies on traditional lands, along with a number of other environmental risks. Throughout 2017-18, thousands of British Columbians came out to prevent the further construction of the pipeline through protests and blockades. The popular opposition forced a stop to the construction of Trans Mountain and Kinder Morgan threatened to abandon the pipeline completely. This in turn threatened the profits of Canadian oil corporations who rallied behind a call for the government to intervene.
Luckily for them, the Trudeau Liberals came in to save the day. Calling Trans Mountain a project of “national interest”, the federal government made an offer to buy the pipeline for $4.5 billion. This “nationalization” was celebrated by the capitalists, with Kinder Morgan’s CEO declaring it “a great day”. It certainly was a great pay day for executives who immediately received $575,000 in bonuses. Then-Finance Minister Bill Morneau clarified that this was to be a short-term purchase, wherein at the appropriate time the government would return ownership of the pipeline to the private sector. This effectively nationalized Kinder Morgan’s losses to be paid by Canadian taxpayers until the moment it became profitable, when it could be privatized again.
Fightback explained at that time:
“Let us make no mistake as to what kind of nationalization we are witnessing here. This is a corporate-bailout type of nationalization, very similar to how both the federal and Ontario governments bought the shares of General Motors and Chrysler in 2009 during the financial crisis. Both governments injected $13.7 billion into the two auto giants, and in the end they only managed to recoup $10.2 billion, thus costing Canadian workers $3.5 billion. We should expect to see a similar loss incurred by this bailout.”
It turns out that we were being conservative with our pessimism, and now losses are almost certain to be far in excess of $3.5 billion.
Capitalists lie about failing pipeline
The former minister of national resources and finance from the Harper government, Joe Oliver, praised the supposed potential benefits of Trans Mountain in the Financial Post:
“Building oil and gas pipelines to tidewater would: create jobs, including among Indigenous peoples; enhance economic growth; fund critical social programs; foster national unity; strengthen our energy security; help our allies; bolster our international reputation and, to top it off, make a meaningful contribution to the battle against climate change. The case is so overwhelmingly positive that it was guaranteed to foster opposition from the loony left, environmental extremists and members of the Liberal caucus and cabinet”.
Oliver seems to imagine the pipeline as a ”buy one, get a solution to all your problems” deal. He also seems to have conveniently forgotten the billions of dollars of profit to oil corporations who couldn’t care less about workers, the environment, and Indigenous people. These corporations do, however, pay people like Joe Oliver large amounts to lie about the positive impacts of things that give them profit.
Mark Little, chief executive of Suncor Energy, responded to the announcement: “We remain fully supportive of this world-class infrastructure project which is vital to Canada’s long-term economic success and energy security.” Similarly, Alex Pourbaix, CEO of Cenovus Energy, came to Trans Mountain’s defense: “While no one wants to see cost increases, they are often a fact of life with projects of this size and in this case were largely beyond Trans Mountain’s control.” Suncor and Cenovus are two of the wealthiest oil shipping companies in Canada, and both conveniently benefit from Trans Mountain’s low toll rates that are publicly subsidized by taxpayers.
In reality, Trans Mountain has been an investment with no foreseeable return. Parliamentary Budget Officer (PBO) Yves Giroux reported that it was “very unlikely” that the government will recoup the money spent. In fact, the PBO stated he was “not hopeful that there will be any profits to be made from that pipeline, at least for the federal government.” Upon the announcement of this recent cost surge, Deputy Prime Minister Chrystia Freeland stated, “I want to assure Canadians there will be no additional public funding for TMC (Trans Mountain Corp.)”. Instead, she said, the government will take out loans to secure the funds. And who will pay back these loans, with interest? Taxpayers! The Canadian Development and Investment Corporation reported that the federal government has already borrowed more than $14 billion for the pipeline. These loans will need to be paid back, with $700 million annually in interest. Trans Mountain is not only unprofitable, it is a drain on taxpayers.
It is no wonder that the Liberals released this news on a Friday afternoon, commonly known as “Take Out the Trash Day”. Journalists are less able to report on news released so late in the day and right before the weekend. The convoy also provided a good distraction. However, the entire Canadian working class will feel the impact of this news soon enough as they will be made to pay through future austerity.
Socialist plan for energy production
The Trans Mountain pipeline should never have been purchased. It was a bailout that nationalized the losses of a failing pipeline and placed the burden onto the shoulders of the working class. The labour movement and NDP must condemn any further public funding for this failing pipeline. However, the only way to ensure this does not happen again is to fight for a socialist plan of production for the energy sector. Nationalization under democratic workers’ control would allow society to rationally plan the energy sector to meet social needs.
Marxists are not anti-development. We are against capitalist development that violates labour, environmental, and Indigenous rights for the sake of profit. The Trans Mountain pipeline will export raw product to low-wage refineries in Asia. The oil bosses have themselves admitted that high-paying oil jobs are a thing of the past. Meanwhile, executives collect millions in bonuses. A socialist plan of production could ensure the wealth from the oil and gas sectors provides good union jobs with living wages for Indigenous and non-Indigenous workers. This wealth could be used to build infrastructure for all Indigenous communities to end the on-reserve water crisis and chronic poverty. While the pipeline threatens to pollute the land and water in Indigenous territory, the concerns of Indigenous communities have been consistently ignored. In contrast to the oil bosses, the working class has a shared interest with Indigenous people in protecting the environment. After all, it is the working class and oppressed that feel the worst impacts of climate change. Under democratic workers’ control, we could transition towards cleaner energy and mitigate environmental risk.
The fight for nationalization of the energy sector under democratic workers’ control is a revolutionary demand. It means fighting for a fundamental change in how society is organized. It is not an easy solution, but it is the only genuine alternative to the destruction of the planet, jobs, and Indigenous rights.
