Brace for BC investment climate change as an eco-sovereigntist chill is set to hit
A chill from Victoria is blowing across the BC investment climate. As I discussed on This Week in Money on Roundhouse radio with host Jim Goddard, a change in the weather may well be in store for BC investors.
Last week, BC Greens leader Andrew Weaver gave NDP leader John Horgan a four-year power guarantee. In exchange, the NDP agreed to a list of policy demands which included doing everything possible to stop the Kinder Morgan Canada (KML) Trans Mountain pipeline expansion, along with a list of other initiatives.
In front of the legislature, Mr. Weaver issued a clear warning to resource investors that a change in the investing atmosphere was on the way for British Columbia. If in power, the Green - NDP political coalition would be taking an eco-sovereigntist approach to stop the Trans Mountain pipeline expansion, advocating essentially that the coastal waters off British Columbia belong to the province and First Nations and not all of Canada. The us versus the-rest-of-Canada approach being pushed by the Greens and NDP puts the entire Canadian climate change strategy at risk by isolating Alberta. The oil producing province under NDP Premier Rachel Notley is playing a critical role in Canada's efforts to reduce greenhouse gas emissions.
Shutting down the Trans Mountain expansion would increase the risk that Alberta opts out of the national climate action plan which would sink Canada's Paris Agreement initiative. However, the Federal government would likely do everything in its power to avoid an Alberta opt-out scenario, setting the stage for a possible constitutional showdown, drama unseen since the days of Quebec separatist Premier Rene Levesque.
Meanwhile, the coalition's pact includes a number of actions designed to slowdown if not shutdown resource development and job creation in the province. There are no fewer than 5 policy promises that will provide headwinds for job creation:
1. Raise the carbon tax without committing to revenue neutrality
2. Kill the Trans Mountain pipeline expansion
3. Raise the minimum wage to $15
4. Bring in more job-place rules
5. Increase environmental regulations on forestry and mining.
While one can argue the pros and cons of each initiative, the fact of the matter is that should they all be implemented, there will be a cost which will likely be felt in terms of fewer jobs being created. The resource sector in particular looks primed to take a significant hit under an NDP-led political coalition with the Greens. Indeed, the temperature chill may drop to lows not seen since the Dave Barrett NDP government which led to a freeze in mining investment in the 1970s.
Perhaps the NDP will moderate should they assume power. The Green - NDP tie up in the legislature would only have a one seat majority as of today. The slim margin alone should eventually knock some realism into their radicalism aspirations (which includes additional tax hikes not included in the Green - NDP manifesto). A wiser approach for the NDP would be to focus first on addressing housing affordability by eliminating the BC Liberals' zero-interest mortgages which would save the tax payer money. Once they get that done, they should take it from there, one cautious step at a time.
As for the Greens, they have showed us their true colours. For that, we should probably be grateful.
Click below to listen to the interview on our player (starts at 8:15 mark) or via This Week in Money on Youtube.
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