Opposition parties call for ‘full transparency’ following new Trans Mountain commitment

Opposition parties are calling for “full transparency” from the federal government about its financial commitments to the Trans Mountain expansion project, following revelations of a $20-billion refinancing loan offered to the beleaguered company.

As first reported by Canada’s National Observer, one of the last things Chrystia Freeland did as finance minister before her abrupt resignation on Dec. 16 was authorize a $20-billion loan to Trans Mountain, officially described as repayment of higher cost debt and working capital support. 

NDP environment critic Laurel Collins said she wants to see far more transparency from the company and government. 

“This has been an issue from the beginning. It's been an issue with Export Development Canada, with the Liberal government, and it's not just that they have broken their promise to end fossil fuel subsidies, it's that they tried to hide it,” Collins said. “They quietly signed off on another $20 billion, hoping Canadians wouldn't notice, and then, throughout this whole process, it feels like there's layers and layers of lax transparency.”

The latest $20-billion loan — issued through Export Development Canada, a Crown corporation — increased Canada’s direct commitment to the project, but the government is not revealing the current total. Eugene Kung, staff lawyer with West Coast Environmental Law, who has been tracking the pipeline’s finances, said at one point, the total government commitment rose to about $50 billion, using figures listed on Export Development Canada’s website. However, if the government loan is used to pay back banks, as was expected, the figure “will be brought down by about $10 to $20 billion.”

A spokesperson for the department said bank loans to Trans Mountain have now been repaid, which cancels out federal commitments to backstop them. In other words, the total disclosed federal commitment of $50 billion is not accurate, according to the spokesperson. But Finance Canada won’t say what its total financial commitment is now, despite multiple requests for comment. 

Finance Canada has defended the most recent $20-billion loan, saying the government wants to pay down debt incurred since 2022, now that the pipeline is complete and in operation. By replacing bank loans with government loans, Trans Mountain’s interest payments will be lowered by $3.5 billion over six years, the official said. 

Energy and Natural Resources Minister Jonathan Wilkinson told Canada’s National Observer, in the current moment with Canadians staring down a possible trade war with the United States, the Trans Mountain project was “the right thing to do,” from both an energy security and economic point of view. 

“From a diversification perspective, I think it's hard for anybody to argue at this point that it wasn't a good thing to have some diversity,” he said.

On the economic side, “the estimates are that it's $10 billion a year that actually is accruing to Alberta, and through Alberta to other parts of the country, that otherwise would not have been captured,” Wilkinson said. “That's $10 billion a year for every year that that pipeline operates. Anybody who says that it's not a good economic proposition for Canada doesn't know what they're talking about.”

Export Development Canada disclosed $19 billion worth of federal loan guarantees to the pipeline project between April 2022 and May 2024. Those are now repaid, according to the Finance Canada official. But major questions remain, like if the federal government was on the hook for $19 billion, why does the latest loan to repay the banks reach $20 billion?

That’s not the only outstanding question. Canada’s National Observer also asked Finance Canada:  How much of the new loan is for repaying debt versus working capital support? Is Canada charging any interest on its latest loan to Trans Mountain, or is this a below-market rate which would constitute a fossil fuel subsidy? Exactly how much public money has the federal government put into Trans Mountain?

And perhaps, most important, why did the government break its promise to not put any more public money directly on the line? 

Finance Canada did not provide any answers. A week after the questions were posed, Finance Canada acknowledged a follow-up request for information, but says it can not commit to any timeline for answers.

“This is an appalling betrayal of the public trust," said Green Party Leader Elizabeth May in a statement. "The Liberals explicitly promised that no more public funds would go to TMX. 

“Instead, they are forcing Canadians to foot the bill for a failing project that threatens our climate, our environment, and our economy."

When Freeland’s office coordinated bank loans for the project in 2022, the stated reason was to avoid using taxpayer dollars to finance the project after costs skyrocketed. Trans Mountain was expected to repay the banks out of its own revenue, but that didn’t happen. The banks were paid back with public funds, which may not increase the overall cost of the project, but does more directly put taxpayer dollars at risk. 

Because Finance Canada has repeatedly refused to disclose basic information about the project, Canada’s National Observer cannot verify the precise level of risk taxpayers are facing. But some closer observers say the public may never see the latest loan paid back. 

Richard Brooks, climate finance director with advocacy group Stand.earth, said because Trans Mountain is carrying tens of billions of dollars worth of debt, it’s difficult to imagine a company stepping forward to purchase it — especially as an energy transition off fossil fuels unfolds. For that reason, Brooks says he expects the federal government to write off the debt the company owes Canada.

“Because this government has said they want to sell the pipeline, or at least a portion of the pipeline, to Indigenous communities, it makes that sale much easier on those communities because they themselves would not be saddled with that level of debt the project currently has,” Brooks said. 

Since the federal government purchased Trans Mountain from Kinder Morgan in 2018, there has been an “incredible” lack of transparency, Brooks said. With the latest $20-billion loan inked under “the cover of confusion” when Freeland resigned her cabinet post, it’s “unconscionable” that the government didn’t disclose the loan at the time, he said. 

“I think the reasons for that are pretty clear,” he added. “There's a lack of transparency because it is one of the biggest boondoggles in the history of Canada.”

Canada’s National Observer has asked Finance Canada if it can confirm that debt Trans Mountain owes Canada will not be written off. The department has not answered. 

Wilkinson said Wednesday he believes Canadians will get their money back. 

“At the end of the day, when people say you could've invested in something else, they actually forget the fact that the federal government is going to sell that pipeline,” he said. “So, if there was money invested for a period of time, that money is coming back, and we remain very confident that we're actually going to get the money back that we spent on it.”

According to the Parliamentary Budget Officer report on Trans Mountain published in November, there are a handful of factors in the sale, like market conditions, the number of potential buyers, whether certain groups will be prioritized, and more, that make it difficult to determine if the federal government will record a profit or loss. 

[Top: Photo via Trans Mountain / Facebook ]