Chrystia Freeland feels the heat over $10B Trans Mountain loan guarantee

MPs fired scathing remarks at Finance Minister Chrystia Freeland on Thursday over the federal government’s decision to put $10 billion in taxpayer dollars on the line to finance the Trans Mountain pipeline expansion project.

On April 29, the government approved a $10-billion loan guarantee to help find unnamed third-party financiers for the project, which means if Trans Mountain defaults on its payments, taxpayers will pick up the tab.

When the estimated cost of TMX rose by 70 per cent in February, Freeland assured Canadians the project would receive no more public dollars. While it's true the government isn’t directly handing out any cash, it is still asking taxpayers to take on the risk, Tom Sanzillo, director of financial analysis with the Institute for Energy Economic and Financial Analysis (IEEFA), told Canada’s National Observer.

MPs took the opportunity to grill Canada’s finance minister in question period on Thursday.

“(The Liberals) say it's a loan guarantee, but we’re not fooled: it's nothing more than a subsidy in disguise,” Bloc Québécois MP Alain Therrien stated in the House. “They’re trying to hide the fact that they’re financing their beautiful, gold-plated pipeline with more and more of our money.

“When will the government stop taking our money to finance Trans Mountain? At some point, there has to be a damn limit.”

In response, Freeland called the project “a responsible investment in the public interest,” adding it “has created over 12,700 well-paying jobs for the middle class.” The federal government intends to sell the pipeline when it is further along and “less risky,” she said.

The issue was broached again by NDP MPs Laurel Collins and Charlie Angus, who called the project a “financial boondoggle” and a “carbon bomb,” respectively.

Earlier this year, Canada’s financial watchdog confirmed the government should expect to lose money on TMX, but despite this, the Liberals are “putting even more public dollars on the line,” Collins said.

In response to Collins’ statement and others, Freeland repeatedly said it's important to get a fair price for Canada’s resources on international markets.

A Finance Canada news release says the loan guarantee does not reflect any new public spending and noted the corporation receiving the guarantee will pay an unspecified fee to the government. The current cost estimate — $21.4 billion — and expected completion date of September 2023 — will not be affected, it reads.

New fossil fuel infrastructure like TMX risks pushing the planet “dangerously past the 1.5 C line,” Angus told the House, referring to worldwide efforts to limit global warming. “That's why the International Energy Agency says there simply can't be any more fossil fuel projects.”

He was not surprised the government approved the loan guarantee.

“I don't think they thought it would have cost them as much as it has, but they're not backing down now,” Angus told Canada’s National Observer in an interview. “Their focus is oil production, not the climate crisis.

“This is backstopped by the Canadian people,” he said. “And there is no business case for TMX. This is about the public building the infrastructure, taking the risk, to help out massively profitable companies [that] have no intention of doing their part to decarbonize or to even clean up their own mess.”

He said the project cannot continue in any capacity unless the government can prove it is not “vastly increasing oil production.”

The loan guarantee announcement is “deeply disappointing,” particularly because it coincides with “climate-fuelled flooding ravaging multiple parts of the country,” Green MP Mike Morrice said in an interview with Canada’s National Observer. People in parts of the Northwest Territories, Manitoba, Alberta and Ontario have had to evacuate their homes in recent days.

“It's hard to keep track of all the tens of billions we've thrown at this expansion project, one that we know is both economically and ecologically a failure,” said Morrice. A reported $17.3 billion has been spent on TMX as of Sept. 30, according to the IEEFA. This includes the $4.7 billion it cost to acquire the project in 2018.

If the purchase price and construction costs of the project — totalling $26.1 billion — were invested in renewables, every major wind and solar project in Canada from the last two years could have been fully funded five times over, according to the IEEFA report.

Knowing this, and that scientists, Indigenous leaders, young people and civil society want the federal government to make climate-aligned choices, the path forward is clear, said Morrice.

“Immediately stop work on the pipeline expansion, and redirect those same tools, machinery and workers from the Crown corporation to support community-based climate adaptation and resiliency projects.”

Natasha Bulowski / Local Journalism Initiative / Canada’s National Observer