Horgan considers ways to pass LNG Canada project without a vote

Oct 2, 2018: VICTORIA — Premier John Horgan says his government is mulling ways to implement all of the taxes and relief for the LNG Canada project without a vote in the legislature, a scenario that would avoid a showdown with the NDP’s power-sharing partners the B.C. Green party.

Horgan told Postmedia News on Wednesday that one tax break most observers thought would need legislation – repealing the previous Liberal government’s 3.5 per cent LNG income tax – can potentially just be avoided entirely.

When the Liberals passed the LNG income tax act in 2014, it contained an implementation clause that required a cabinet order before the law came into force. The Liberals didn’t pass such an order. That means the NDP government, which promised LNG Canada it would scrap the income tax, does not have to call for a vote in the legislature to repeal the law and could simply leave it dormant.

The tax law could just stay in place but not be implemented, he said. “That’s my view. But there will be discussion around that.”

“To repeal it would require a trip to the legislature,” Horgan added. “And we may or may not do that.”

Finance Minister Carole James, whose ministry oversees the tax measure, confirmed the analysis.

“In essence do you need to repeal this or just need to leave it?” said Horgan. “We’ll see how it goes. At this point the joint venture partners are comfortable that the tax regime we laid out in our framework is the one they will live under and we have given them no reason to think otherwise, nor will we.”

Relief from the tax is a condition of LNG Canada’s final investment decision on the $40-billion project. The tax would only apply on income, which wouldn’t begin until at least 2023/24 when LNG Canada is expected to finish construction of the terminal in Kitimat and commence shipments of LNG to Asian customers.

Horgan’s government promised LNG Canada in March approximately $5.3 billion in tax breaks, including exempting the project from planned increases to the carbon tax and exempting construction from the provincial sales tax.

The PST changes were made by cabinet order on Tuesday. The attorney general’s office is researching ways to avoid legislative changes on the carbon tax issue as well, said Horgan. It’s possible that too could be done by cabinet, he said.

Bypassing a vote on the LNG income tax could be politically beneficial for Horgan’s government. It would prevent a high-profile clash in the legislature between the minority NDP government and the Green party whose support keeps the NDP in power. It would also prevent the NDP from having to forge an awkward and uncertain partnership with its rivals, the opposition B.C. Liberals.

Green leader Andrew Weaver has said he won’t vote with the NDP to support the LNG sector because the pollution caused will make it more difficult for B.C. to meet its climate change goals.

Weaver said Wednesday he believes Horgan is just “speculating out loud” and whatever action the NDP takes will be done in consultation with the Green party through the confidence and supply secretariat the two parties use to manage issues.

“What we’d like to see is let’s have this discussion, let’s have the B.C. NDP show the public you have the support of the Liberals on this file,” said Weaver. “You aren’t going to get our support on that. Obviously we’d prefer to see it done by voting and prefer it’s done in a case where there’s no surprises and done in good faith.”

Horgan said his government does not need a project development agreement with LNG Canada like the previous Liberal government did with the now-cancelled Pacific Northwest LNG project. That agreement also required a vote in the legislature. Instead, the government has direct agreements with Royal Dutch Shell and its partners on issues like prioritizing the hiring of local workers, said Horgan.