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Comment: The forgotten costs of the Site C dam project

The press has been full of the debate about the Site C dam lately.

The press has been full of the debate about the Site C dam lately. Its great cost, its lack of markets, its consequences for the environment (at least a dozen serious, irreversible impacts, more than enough to have doomed any other project), the costs to ratepayers and job-seekers, have all commanded media attention, and properly so. Two issues have received much less attention, however.

One is the impact on the whole structure of provincial finances. Over its term in office, our previous government produced spurious “balanced” budgets by looting ICBC and B.C. Hydro. In the case of B.C. Hydro, it ran the debt up from $6 billion to $20 billion by suppressing rates and forcing Hydro to pay dividends on imaginary profits, forcing Hydro to borrow. But now the piper must be paid.

Regardless of what the NDP decides about Site C, power rates in B.C. are going to have to go way up, just to service this enormous debt. Think of it this way: $6 billion represents all the unpaid debt from before the nationalization of B.C. Electric, and from the building of the Columbia River dams, the Bennett Dam, and thousands of kilometres of transmission and distribution lines. The rest is what the B.C. government did to fool people into thinking they were good financial stewards, with a string of balanced budgets.

So far, $2 billion has been spent on Site C, and as much as another $1.8 billion would be needed to stop the project and remediate the site. Those are classic sunk costs, irretrievable, and all borrowed. Finishing the project would take another $8 billion to $10 billion. Add that to the existing $20 billion, and you can see what a monstrous burden is being proposed for B.C. households and B.C. industry. We won’t need the power for decades, and can flog it only at wholesale prices, about one-third of the cost.

The real cost might lie elsewhere, though. Adding this much debt will almost surely lead to a credit downgrade. Each unnecessary notch will cost a family of five about $110 a year — if not forever, at least until some future excursion into austerity pleases the capital markets.

And the inescapable rise of electricity prices will put grave, probably intolerable, pressure on a forest industry already slammed by low newsprint prices and unconscionable U.S. tariffs. B.C., and specific resource-dependent communities far from the metropolitan southwest corner, stand to lose many more permanent, long-paying jobs than the temporary construction jobs entailed by Site C.

We also stand to lose the trust of First Nations who believed that Section 35 of the Constitution Act of 1982 meant what it said in terms of treaty rights. A most interesting test of those rights is going to court next spring. The Blueberry River First Nation alleges, backed by a lot of evidence, that the cumulative effects of development in their traditional territory constitute a breaking of the promises in Treaty 8, and that Site C would impose an intolerable final straw.

The case is unlike the several applications for judicial review of the decisions of the federal and provincial governments, all of which were swept aside on procedural grounds. This one, like Tsilhqot’in, goes to the heart of the matter.

It will probably rise all the way to the Supreme Court of Canada, result in a bill for damages and — critically, from the point of view of the B.C. government — result in strong new rules fettering provincial management of lands and resources. This most fundamental of provincial powers will change in ways that seriously complicate governments’ freedom to manage lands claimed or owned by First Nations.

From the point of view of a development-oriented provincial government, this would be a stunning own goal.

Harry Swain chaired the federal-provincial review panel on Site C in 2013-14. He is a former deputy minister of Indian and Northern Affairs Canada.

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