Public Affairs Update Header
February 10, 2015
In This Issue
The Public Affairs Update is your weekly insight, perspective and analysis on politics in British Columbia and Canada.  This newsletter is brought to you by the largest and most broadly-based business organization in the province, the BC Chamber of Commerce – the Voice of Business in B.C.

Focus on balanced budget, as MLA’s return to work

The B.C. Legislature is set to resume next week. The Throne Speech will be delivered February 10th, and the Budget on February 17th. The B.C. Government is touting a third straight balanced budget, but faces tough questions about rising debt and British Columbians’ service needs.

Finance Minister Hon. Mike de Jong says he expects B.C. to post a budget surplus this year in excess of $444 million. This is in part due to spending controls, strong retail numbers and housing starts, trade growth in Asia-Pacific markets, and B.C.’s modest reliance on oil and gas revenues compared with other provinces. The surplus opens the door for increases in program spending. The Province may restore the clawback of social assistance and disability-assistance cheques to single-parent families.

With credit rating agencies watching, however, and the possibility of a credit downgrade, Minister de Jong is downplaying increases in spending, saying debt reduction will be the top priority. Being seen to be managing debt prudently will be especially important now that B.C. has decided to proceed with the $8.8-billion Site C mega-project, at a time when credit rating agencies like Moody’s are questioning the Province’s ability to reverse its accumulation of debt in what it considers softened economic conditions.

On the legislative front, the government is expected to take a business-like approach rather than a more visionary, transformational one. That includes changes to the Societies Act, the Financial Institutions Act and potential changes to municipal electoral finance rules.

In the background, Premier Clark hopes to see good news on the LNG front. With LNG tax and environmental legislation now in place, the Premier hopes to secure positive final investment decisions from project proponents in the coming year.

This will be an important session for the opposition New Democrats. They will have an opportunity for new leader John Horgan and his party to establish themselves as a credible alternative with a clear vision for who they are, what they believe and how they would govern – something they’ve struggled to do since Mr. Horgan has become leader.

Minister of Energy and Mines Hon. Bill Bennett vows to restore B.C.’s utilities regulator in four years
Minister of Energy and Mines Hon. Bill Bennett promised that the Government of B.C. will re-empower B.C.’s utilities regulator, the B.C. Utilities Commission (BCUC), to set the province’s electricity rates. Minister Bennett says the change won’t happen, however, for another four years, in 2017.

The commitment follows an independent examination of the agency, which is responsible for regulating natural gas and electricity utility rates, along with basic automobile insurance pricing. The report says the Commission needs to be strengthened with better resources and must be left to do its job independently. It provides 35 recommendations for achieving this.

“The Commission needs to be strengthened, and be seen to be strengthened,” the report says. “To be effective, the BCUC needs to have credibility, public confidence, and independence within the exercise of its mandate as set by government.”

The report comes after the provincial government exempted BC Hydro’s $9- billion Site C dam and a five-year, 28 per cent increase in electricity rates from the BCUC’s scrutiny. Minister Bennett promises less interference in the future, but stopped short of reconsidering past decisions, like Site C’s previous exemption.

The Opposition New Democrats want BCUC independence to happen right away. “They will respect the commission after the next election, why not now?” said NDP BC Hydro Critic Adrian Dix.

Letter to the Editor: Local economy overlooked in international trade spatWritten by: Prince Rupert and District Chamber of Commerce President, John Farrell 

The Alaskan government is looking to upgrade the Alaska ferry terminal, which is part of the Alaska highway system, that is leased from the Prince Rupert Port Authority. This terminal upgrade project is funded by the state government and thus subject to current Buy America policies that require all U.S. and state government projects to source their supplies, such as steel, from U.S. companies, even though this facility is located in Canada.

The federal government asked the Alaskan governor to seek an exemption to the Buy America policy, but decided to proceed with the project without an exemption. The federal government responded by invoking the Foreign Extraterritorial Measure Act, which would make it illegal for the winning bidder if they implement Buy America policies.

Last week, Prince Rupert and District Chamber of Commerce sent a letter to regional newspapers on both sides of the border and to their local MP and MLA, “calling for a resolution to this international dispute.”

Letter to the Editor:  Local economy overlooked in international trade

An open letter to our Alaskan neighbours,

The recent trade war over who makes the steel for the renovation of the Alaska Marine Highway ferry terminal in Prince Rupert is a tale of two economies: the national economy and our local economy.

With Canadian politicians of all stripes opposing the investment in our community because of their distaste for “Buy American” restrictions, we fear that relationships that have been built up with our Alaskan neighbours over many decades may be jeopardized. We would like to make clear that not all Canadians share the view voiced by our federal and provincial leaders over the last few weeks.

In brief, here’s how the dispute has evolved over the last few months. Since the State of Alaska and the U.S. federal government are paying for the renovations, the project is subject to “Buy American” provisions. There are a few materials that would be caught under this legal umbrella- the main one being steel, which needs to be sourced from U.S. fabricators. Our international trade minister, Ed Fast, called the provision “an affront to Canadian sovereignty,” and signed an order under an obscure law, the Foreign Extraterritorial Measures Act, to demand that “Buy American” be waived for this project. The Alaskan state government responded by cancelling the tender call.

Here’s the rub. While this sabre-rattling may look good from a political perspective but it’s positively backwards from the economic standpoint of main street BC. The· Prince Rupert

& District Chamber of Commerce welcomed this investment from day one, and while we

may think the spirit of the “Buy American” law runs contrary to the nature of the free market, we were willing to look past that and look forward to a $15-million investment in our local economy. No Canadian steel? No problem. Our local economy would have undoubtedly benefited from the project: local contractors could have submitted bids for work that needed to be done, local workers could have taken part of the project, and our retail and hospitality sector would have seen a bump in revenue. Indeed, the ultimate decision by the Alaskan government to defer the project is a blow to the local economy.

We would like to make clear that we treasure the relationships that have been forged with our neighbours to the North. The people of Northwest B.C. have done business with the people of Alaska for many years, and, in a sense, the ferry terminal in Prince Rupert was a symbol of that strong relationship. Reading the recent editorial in the Juneau Empire, which called for the Prince Rupert terminal to be closed for economic reasons, we fear this relationship has already been damaged. We hope we are wrong, because this relationship seeks to find common cause among people on either side of the border, and to find opportunities to work together in pursuits of reciprocal benefit.

It’s a relationship that sees Prince Rupert send delegates annually to the Southeast Alaska Conference, which incidentally we are hosting this fall. It’s a relationship that sends representatives from the City of Prince Rupert (and the Chamber of Commerce) to Ketchikan each Fourth of July to march in the Independence Day parade. Is there better proof of friendship than the sight of streets lined with crowds waving red maple leafs against a backdrop of red, white, and blue?

Please do not mistake the negative rhetoric around this important project as an attitude shared by your friends directly to the South. We value our relationship with you because we know, in part, how much it benefits our regional economy. We would have hoped that this view was more widely held, making it easier for Alaskan ferries to continue plying our waters.

John Farrell
Prince Rupert & District Chamber of Commerce
In closing, the BC Chamber of Commerce offer our congratulations to the Prince Rupert and District Chamber of Commerce for its resolute defense of its local economy. We encourage all chambers to follow this example, as a demonstration that we can serve our members well through our integrated 3 tier network.