Canada's NDP

NDP

May 20th, 2022

Ottawa’s $10b Loan for TMX Sidelines Climate Action and Affordability

Last week, the government approved a $10-billion loan guarantee for the Trans Mountain pipeline expansion. This is in stark contrast to the Finance Minister’s comments in February, where she stated “There will be no additional public money invested in TMC (Trans Mountain Corp.) TMC will secure necessary funding to complete the project through third-party financing, either in the public debt markets or with financial institutions.”

As this is a loan guarantee, backed by the Canada Fund through Export Development Canada, the Finance Ministers previous statement on this matter rings hollow. While TMC is the borrower in this case, the government is the lender, and while taxpayers are only off the hook as long as TMC is able to make regular payments on the loan. If TMC defaults on a payment, since it is backed by government financing, taxpayers pick up that tab. So, in essence, the public takes all of the financial risk to build the infrastructure, while oil companies rake in the profit once it’s completed.

It’s not surprising that the government has taken this route. This comes a mere month after the government approved the massive $12 billion Bay du Nord project. And while they often like to talk about how they are concerned about the effects of climate change, we must only look at recent reports from the Intergovernmental Panel on Climate Change (IPCC) that show massive cuts in emissions are needed to limit global temperatures from warming to 1.5 degrees. The IPCC report lays bare that we have only a small window to reduce our carbon output, and with oil production being one of the leading causes of greenhouse gas emissions in Canada, pumping more government money to expand production is the opposite of what needs to be done.

Oil and gas companies are gouging consumers while raking in record profits, and the government is providing these companies with taxpayer dollars they don’t need. This year alone, Imperial Oil posted its highest quarterly profit in 30 years. Cenovus saw a sevenfold increase in profit in the first quarter of 2022 ($1.6 billion) compared to the same quarter last year ($220 million). Suncor earnings tripled in this period, from $821 million in Q1 2021 to $2.95 billion in Q1 2022. Canadians are already paying two dollars a liter or more to pad those already massive profits to the oil and gas industry. They don’t need to pay a second time through government subsidies and loan guarantees.

New Democrats have been actively pushing to eliminate those fossil fuel subsidies that go to help these incredibly profitable oil companies at taxpayer’s expense. This week, we tabled a motion that called for the cancelation of all fossil fuel subsidies by the end of this year. We were asking that the money used for those subsidies be invested by doubling the GST tax credit and increasing the Canada Child Benefit for all recipients by $500. Families are clearly struggling to make ends meet right now and providing some financial assistance for families and lower income Canadians. Middle-class and low-income Canadians would get between $500 and $1000 to help them pay their bills at a time when inflation has reached its highest level since 1991. It’s not a perfect solution, but it would at least help alleviate some of the financial pressure on those who are feeling the effects of rising prices the most, while also eliminating corporate welfare for an industry that has clearly demonstrated it doesn’t need it.

However, the Liberals and Conservatives once again joined forces to vote against a commonsense solution that would help Canadians struggling to pay bills. While we would never expect the Conservatives to side against the oil lobby, the Liberals approach to climate change has not matched their rhetoric. They’ve said they want to achieve net-zero emissions by 2050, but they do this while buying pipelines, and funding untested carbon capture technology. They’ve said they want to eliminate fossil fuel subsidies by 2023, but they vote against eliminating those subsidies, fund new oil and gas projects, and back loans for the oil industry. They’ve promised legislation for a Just Transition for years and have yet to table anything to transition oil and gas workers to a clean energy economy.

We need to work our way towards reducing our greenhouse gas emissions urgently. It will have net benefits to all of us, like reducing energy costs and creating a cleaner environment, but the political will must be there, not through words but action.