The Trans Mountain pipeline expansion (TMX) project keeps costing more and more money. Back in 2018, the Liberal government bailed out the oil barons by nationalizing the 65-year-old Trans Mountain pipeline, as well as the proposed expansion project, TMX. As Fightback explained at the time, what the government actually nationalized was the losses the TMX would incur. The initial $4.5 billion was only a down payment on future losses, and now we know exactly how much will have to be paid by the working class in austerity measures so that the oil barons can make more profits.
A recent report by West Coast Environmental Law revealed that the Trans Mountain pipeline and Trans Mountain Corp. (TMC), the Crown company responsible for managing the TMX, will be unable to pay back the massive government loans they have received. Despite claims to the contrary, the Trans Mountain pipeline expansion has never been financially viable, and has been a massive environmental and political liability. It was for these reasons the oil barons abandoned the expansion in the first place. The only revenue TMC generates are the tolls it charges oil companies for using the old Trans Mountain pipeline to pump oil to B.C. However, the fine print of the federal government’s bailout contracts stipulate that toll rates charged to oil companies shipping through the pipeline are limited to only one-third of Trans Mountain pipeline’s ownership and maintenance. The tolls TMC charges are not high enough to cover the operational costs, pay back their debt, and definitely not enough to draw a profit. It must be said this is another form of subsidy the federal government provides the oil barons.
Robyn Allan, the writer of the West Coast Environmental Law report, was quoted as saying, “If Trans Mountain was actually fulfilling the promise of commercial viability, [it] would be actively engaged in renegotiating those contracts or trying to do so. That’s if they actually wanted it to be viable … If they’re not, it means we’ve been lied to.”
Chrystia Freeland, Canada’s finance minister, has claimed multiple times that there would be no more public money used to finance the TMX. It now seems quite obvious that Canadian workers have been lied to. Allan herself put it best when she said the government was “withholding information from the public, using a confusing corporate structure and accounting wizardry,” all in order to fool workers into believing that the pipeline expansion project was viable.
This has been hidden from the public eye, intentionally, it would seem. The Federal Government, through the Canada Development Investment Corporation (CDEV), created a shell company, TMP Finance, to act as a middleman to hide the full amount of losses incurred by TMX. CDEV borrows all the money needed for construction and disburses it to TMC through TMP Finance. However, when TMP Finance doles out funds to TMC, it gives some to them as equity so those payments do not carry interest. Yet TMP Finance still has to repay the full debt to CDEV, plus interest. Since TMP Finance’s debts are not on TMC’s balance sheets, this creates the illusion that the TMX is incurring less debt than it is. Also, when Trans Mountain Corp. receives money from TMP finance, they record it as revenue, while TMP finance records it as debt, allowing TMC to appear more financially successful than they really are. This is confusing by design. The complex network of organizations and cash flows helps to obscure the real cost of TMX.
Trudeau’s government has been adamant that it intends to sell the pipeline, and that a number of Indigenous groups are interested in purchasing the pipeline. This idea has never risen past the point of pure speculation, and why any group would want to buy a pipeline that is hemorrhaging money has never been explained.
Seventeen billion dollars is a huge price tag for the Canadian working class to bear, particularly when there are so many things that Canadian workers need but have been told time and time again are too expensive to afford. For example, a universal pharmacare project in Canada would require $3.2 billion to launch. To ensure access to clean water on all reserves would cost roughly $6.4 billion. Seventeen billion dollars could have funded every single solar and wind energy project in Canada five times over. The question at the end of the day is who gets to make profits from these projects, and who pays for them. The Liberal government is set on having the workers pay and letting the oil barons make the profits. As Marx remarked in The Communist Manifesto more than 170 years ago, “The executive of the modern State is but a committee for managing the common affairs of the whole bourgeoisie.”
The justification for purchasing the pipeline was that it was in the national interest of Canada to do so, framed to workers as a way to secure and increase the number of good-paying jobs in Alberta. But the TMX has yet to provide a real net increase in jobs. The 2015 oil crisis forced oil companies to “trim the fat”. The oil companies now employ less workers, and force the workers that are left to work longer and harder for less money. The oil companies also brought in further automation to keep their labour costs low. Ultimately, the only people who are benefiting from the TMX are the owners of energy companies, the men and women in business suits in downtown Calgary.
The pipeline should have never been purchased. What was nationalized was not the TMX but the losses it would incur, and now the working class is forced to pay the price, all $17 billion of it. Instead of bailouts, what is needed is democratic workers’ control of the energy sector. The oil giants should be nationalized with no compensation; the oil barons have already been compensated enough. Through democratic planning and a socialized energy system workers can ensure that: good-paying jobs are maintained, oil and gas workers are re-trained to work in more environmentally friendly energy fields, Indigenous land rights are respected, and we can begin to transition to a society where the value of the labour that workers create doesn’t go into the pockets of the oil barons, but instead is used to benefit the whole of society. The nationalization of the energy sector as part of a socialist planned economy is truly the only way forward for society.