Alberta’s Notley Exaggerating Kinder Morgan Benefits: CCPA
Alberta Premier Rachel Notley has been exaggerating the job and economic benefits of the Trans Mountain pipeline expansion in a bid to woo British Columbia’s support for the project, the Canadian Centre for Policy Alternatives’ Marc Lee charges in a recent analysis.
Notley is promising the province will see thousands of new jobs and a $1-billion-per-year injection into its GDP. But Lee says those, claims, based on reports from the Conference Board of Canada, are heavily inflated.
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“The assumptions made at every stage of this calculation are dubious,” Lee writes in a policy note, “leading to exaggerated numbers that are simply too good to be true.”
Notley floated the numbers during a recent swing through British Columbia, designed to address steep resistance to the pipeline’s expansion on the province’s lower mainland. They’re based on three Conference Board publications commissioned by the pipeline’s Texas-based proponent, Kinder Morgan. But the estimates they offer for jobs and GDP increases are wildly out of proportion even to the company’s own original estimates, Lee observes.
“Most of the economic benefits from the pipeline would come during the construction stage,” Lee writes. Citing Kinder Morgan’s own submission to the National Energy Board, he says the company estimates it will employ an averaged of 2,500 people over two years of construction. “The Conference Board estimates 12-13,500 jobs for the two years of intensive construction—five times Kinder Morgan’s own estimate.”
The Board may also be including 1,000 pipe manufacturing positions in Saskatchewan in its estimate of indirect jobs, Lee speculates. But he notes that “there is no guarantee this would be the case, as pipe could also be imported from Korea or elsewhere.”
The CCPA economist points to several other flaws in the Conference Board analysis—including its murky account of how it arrived at its conclusions.
Lee says the Conference Board relied on a coarse, input-output economic model that makes numerous counter-factual assumptions. These include that workers hired to build the pipeline “would be otherwise unemployed [whereas] in reality, the vast majority of those hired would simply be working elsewhere.”
Lee also challenges the assumption “that workers employed in B.C. would come from B.C.,” and so spend their income there. “In the pipeline construction industry,” he notes, “there are crews of specialized workers who move around to where the work is. It is possible that temporary workers from outside B.C. would fill positions.”
And like the deeply flawed use of gross domestic product (GDP) as a measure of economic advances, the input-output model does not distinguish between different kinds of economic activity. A dollar spent cleaning up an oil spill is counted as being as valuable as a dollar spent on child care.
Kinder Morgan’s own application said that expanding the pipeline might add 50 operational workers to the 100 already working on its existing line in the province. “Yet, the Conference Board estimates new employment for the pipeline expansion at a much higher 443 jobs (313 in B.C.), and then makes some heroic assumptions to inflate this to 7,600 jobs per year in B.C.”
Nor does the Conference Board account for any potential losses to British Columbia as a result of the pipeline’s operation. “A 2014 cost-benefit analysis from [Simon Fraser University’s] School of Public Policy,” Lee recalls, “found that in the event of a major spill on land or at sea. ‘the costs will exceed, or greatly exceed, the benefits for B.C. and Metro Vancouver.’”
The authors of that study more credibly concluded that “the lion’s share of the benefits flows to KM/TMP, the Alberta tar sands producers, and Alberta, whereas the citizens of B.C., and Metro Vancouver in particular, will bear the lion’s share of the risks and receive very small benefits.”