B.C. pegs tax benefit from Northern Gateway at $6.7B

Heavy equipment can be seen working on the Kitimat Liquified Natural Gas project at Bish Cove, Douglas Channel, south of Kitimat, BC., on Wednesday, June 27, 2012. (Robin Rowland / THE CANADIAN PRESS)

VANCOUVER -- The $6.7 billion in tax revenues that British Columbia is expected to receive from the Northern Gateway pipeline is just not enough when compared to the project's risk, says the province's Minister of Environment.

In fact, Terry Lake said Monday said that he sees those projected tax estimates, which the province would receive for 30 years starting in 2016, as just a "starting point" of future discussions.

Already though, Alberta Premier Alison Redford has rebuffed any suggestion of increased compensation, saying a review by the National Energy Board and an extra $500 million pledged by Enbridge to improve safety weaken B.C.'s argument.

The dispute developed Monday after the B.C. government released technical analysis of the $5.5-billion, 1,177-kilometre twin pipeline that would transport oil west to Kitimat, B.C., from the Edmonton area, and condensate back.

"Analysis ... indicates only about eight per cent of incremental fiscal benefits comes to British Columbia," said Lake. "And yet, 100 per cent of the marine risk and 58 per cent of the land-based risk sits with British Columbia.

"I think British Columbians are fair and reasonable. What that number is remains to be seen. It obviously will be a subject of discussion."

Based on research by Wright Mansell Research Ltd., the B.C. government's technical analysis shows the project is expected to generate $81 billion in tax revenue to Ottawa and the provinces.

Of that, the federal government is expected to receive $36 billion, with $32 billion going to Alberta, and $6.7 billion going to B.C.

Saskatchewan is expected to top the remainder of the provinces in terms of tax benefit, receiving about $4 billion.

In terms of gross domestic product for the project, B.C. is expected to receive 17 per cent of the $270 million, states the analysis.

And while B.C. is expected to receive 25 per cent of the total employment benefit, estimated to be 558,000 person years, the majority of work will take place during the construction phase and the long-term gain is small, states the analysis.

Redford was not available for comment Monday, but Alberta's Intergovernmental Affairs Minister Cal Dallas said the issue of compensation would be a "difficult discussion.

"Clearly we need to move all kinds of product around the country through a variety of different infrastructure," he said. "That hasn't been the way we've done business."

According to the National Energy Board website, hearings into the Northern Gateway pipeline are scheduled to take place in Bella Bella, B.C. this week, before moving on to Smithers, B.C., and Calgary next week.

Premiers from across the country are also expected to meet in Halifax this week for the Council of the Federation.

Nova Scotia Premier Darrell Dexter, who is hosting the event, has already said a pan-Canadian energy plan will be one of the issues discussed.