B.C. Liberals' waste of energy

COMMENT: "Building a big supply of costly and subsidized energy projects means taxpayers pay higher taxes, governments waste resources, consumers shell out more and the economy suffers." Is this "a silly idea," as the Canadian Taxpayers Foundation claims it is? Is Premier Campbell "serious about unplugging his province from the cross-border power grid.?"

Maureen Bader and John Williamson
Financial Post
Thursday, August 30, 2007

Self-sufficiency is an old-fashioned, discredited idea usually championed by advocates of protectionist governments meddling in economic affairs. It is failed public policy because it relies on high tariff barriers to stifle trade and layers of bureaucratic planning. Yet the British Columbia Liberal government insists the path to a clean environment is for the province to become self-sufficient in its energy needs.

This could be daring policy if Premier Gordon Campbell were proposing to build several nuclear reactors. Instead, the provincial government is increasing taxes on some traditional sources of energy, and channeling subsidies and tax breaks to other "worthy" companies. The Premier intends to achieve energy independence by 2016.

It is a silly idea because other provinces can help ensure B.C.'s energy needs at a lower cost. Already, the Liberal government has increased taxes with a new hydro levy, increased subsidies to fund alternative technologies and increased financial incentives for energy-efficient purchases. Of course, all this is paid for with tax dollars.

What British Columbians need is energy security -- the ability to buy energy whenever we need it, from reliable sources, at a reasonable cost. Canada's high standard of living is linked to economic growth and free trade, not to subsidies and central planning. Building a big supply of costly and subsidized energy projects means taxpayers pay higher taxes, governments waste resources, consumers shell out more and the economy suffers.

Furthermore, the Premier's energy self-sufficiency plan will actually harm B.C.'s energy security if he is indeed serious about unplugging his province from the cross-border power grid.

Energy self-sufficiency makes no sense for B.C. or any other jurisdiction. B.C.'s electricity grid is already integrated with Alberta and the western United States. So, it very easy for provincial distributors to buy and sell electricity -- that is, to engage in cross-border trade. In fact, B.C. Hydro's trading arm Powerex made $1.4-billion last year trading electricity. That money, in part, goes back to government to fund social programs, such as health and education.

Self-sufficiency means the province will do it all itself, which is a costly economic proposal. Imagine if every province adopted this policy, or extended self-sufficiency to other economic activities such as food or clothing production. Many goods would no longer be available and prices would invariable rise, leaving consumers worse off. Voters know from experience that trade promotes economic growth. B.C.'s economy is booming now in part because of increased exports and reduced government interference in the economy. And Premier Campbell knows this: His government's new trade agreement with Alberta, called the Trade, Investment, and Labour Mobility Agreement (TILMA), is expected to add almost $5-billion to GDP and create almost 80,000 new jobs.

So why has Premier Campbell become an energy protectionist? The likely culprit is a misguided attempt to "do something" about global warming. Taxpayers only need to look at Ottawa's policies to see why this won't work. According to the auditor-general's office, the former federal Liberal government spent more than $6-billion on climate change programs, produced few tangible results and saw carbon dioxide emissions increase by nearly 33% above Kyoto Protocol targets.

Meaningful greenhouse gas reductions will come with economic efficiency, which will drive technological advancements --not by taxing energy and providing government handouts to businesses. Premier Campbell is instead proposing Canada, or at least one important part of it, become poorer to reduce emissions.

B.C.'s misguided energy self-sufficiency policy will mean higher costs for energy, higher taxes to pay for subsidies to business, and, if fully enacted, less energy security in the future. Energy security should be the province's goal, just as it is with trade. This can be achieved through promoting trade and increasing the economic wealth of the citizens of B.C., not by picking favoured business at taxpayers' expense. So-called energy self-sufficiency will not provide the province with a secure, reliable supply of affordable energy.

We must not let an irrational fear of a lack of made-at-home energy allow any government to get back into the business of subsidizing businesses in a poorly conceived attempt to pick winners.

Maureen Bader is B.C. director of the Canadian Taxpayers Federation and John Williamson is the federal director.

© National Post 2007