The federal government has provided few details so far since its announcement Tuesday morning about buying the , fueling questions about how it will recoup the billions it plans to spend.
Finance Minister Bill Morneau said Ottawa will cover up to $12 billion for an expansion that would triple the 65-year-old pipeline鈥檚 capacity to bring oilsands crude from Alberta to B.C. It follows B.C. Premier John Horgan鈥檚 continued efforts to halt the project to protect the coastline, and Kinder Morgan鈥檚 signal that it may abandon the project in the face of such opposition.
UBC political science professor Kathryn Harrison called the Trudeau government鈥檚 decision confusing.
鈥淚 was taken aback. It was such a huge investment in the fossil fuel industry, but also for the federal government to be putting that many billions of dollars into a project that the private sector is walking away from 鈥� it seems quite risky,鈥� Harrison said.
鈥淭his seems to be happening on a scale that鈥檚 unprecedented.鈥�
Morneau would only say finishing the project was in 鈥渢he national interest鈥� and that his government will recover costs by finding a buyer for the pipeline in the future.
A finance ministry spokesperson later said in an email to Black Press Media that the purchase would be financed by a loan and that the $4.5 billion would be recorded as an asset, not a debt, and not add to Ottawa鈥檚 current $18.1-billion deficit.
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Kenneth Green, the Fraser Institute鈥檚 senior director of natural resource studies, said he thinks the $12-billion cap on spending is meaningless.
Should it go over-budget, Green said, the feds won鈥檛 just be able to stop paying.
鈥淵ou can鈥檛 stop in the middle. It鈥檚 not going to do you much good if you get halfway there,鈥� he said. 鈥淭hey鈥檒l either print more money or they鈥檒l have the Canadian Pension Plan fund it.鈥�
While a deal this massive is rare, Ottawa has bailed out companies before.
Last year, Prime Minister Justin Trudeau promised $372.5 million in interest-free loans to Bombardier, when the company鈥檚 top executives were revealed to still have received hefty bonuses.
In 2009, Ottawa spent $13.7 billion USD bailing out General Motors and Chrysler. Several billion of those dollars has yet to be paid back.
鈥淚 don鈥檛 think anyone鈥檚 going to buy [the pipeline] till it鈥檚 actually done,鈥� Green said. 鈥淎nd then it鈥檒l be a buyer鈥檚 market. Will you get your $12 billion back? I doubt it.鈥�
Harrison doesn鈥檛 rate the chances of finding a buyer too highly either.
鈥淚t is telling that Kinder Morgan hasn鈥檛 found one,鈥� she said. 鈥淭he big experienced pipeline operators don鈥檛 seem to be stepping up鈥� and that seems to say a lot.鈥�
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Kris Sims, B.C. director of the Canadian Taxpayers Federation, was initially in favour of the Trans Mountain expansion, but said her support is wearing thin now with the $12-billion bill being handed to taxpayers.
Sims said Ottawa capitulated too easily, getting to work on a solution the moment Kinder Morgan announced its May 31 deadline to decide whether it could continue with the project.
鈥淭he federal government jumped up and down and said, 鈥楲et us know if you need any tax dollars,鈥欌�� said Sims. 鈥淔rom a negotiating standpoint, it鈥檚 a very weak place to start.鈥�
Sims worried Canadians could be on the hook for more than just building the pipeline.
鈥淚f a company, or a community, were to sue in the case where they would have otherwise sued Kinder Morgan?鈥�
Morneau鈥檚 commitment still doesn鈥檛 guarantee the expansion will be built.
Multiple court cases are still pending against it, including from the B.C. government. Filed last month, it asks if B.C. has the authority to limit the amount of bitumen transported through the province.
A claim in the federal Court of Appeal alleges there hasn鈥檛 been adequate consultation with First Nations. This includes the Squamish First Nation, which is likely to appeal this week鈥檚 B.C. Supreme Court decision to dismiss its challenge of the environmental assessment process for the pipeline.
Arrests also continue at the Trans Mountain terminal in Burnaby, with of criminal contempt.
鈥淛ust because they鈥檙e throwing taxpayers鈥� money at it now, how is this going to stop the B.C. government from taking this to court?鈥� Sims asked. 鈥淗ow is this going to appease the protesters who are threatening to block this?鈥�
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