British Columbia

B.C. LNG prosperity fund to get $100M contribution, but not from LNG

A rainy day fund intended to be a product of B.C.'s expected LNG boom will get a $100 million boost. But the money isn't coming from LNG.

NDP finance critic says Liberals have created 'a Premier Christy Clark fantasy fund'

Premier Christy Clark (left) listens as B.C. Finance Minister Mike de Jong tables the 2014 provincial budget. Later in 2014, de Jong asserted that the prosperity fund would be a byproduct of LNG revenue. (The Canadian Press)

The B.C. government is set to make the first contribution to its long-awaited prosperity fund in Tuesday's budget, but the $100 million going into the fund is not linked to LNG revenues.

Back in 2014, Finance Minister Mike de Jong said, "The ability to establish a prosperity fund is tied directly to the establishment of an LNG industry."

But on Tuesday he will reverse course, and re-frame the rainy-day fund as a product of the province's diverse economy — not just one sector.

"The fact that we would take a small amount of the chequing account and transfer it into a small savings account to look ahead is a natural thing for us to do," he said.

'Fantasy fund'

This version of a prosperity fund is not what it seems, said B.C. NDP finance critic, Carole James.

"I don't think we're seeing a prosperity fund today. I think in fact what we're seeing is a Premier Christy Clark fantasy fund," said James.

The New Democrat Party was in favour of a prosperity fund that would provide a financial buffer for commodity market fluctuations, but not the B.C. Liberals' version, according to James.

But she says the money going into this LNG prosperity fund will come directly from taxpayers, noting $100 million is exactly how much the province has brought in by increasing MSP premiums.

"This is money coming directly from taxpayers, it's going into an imaginary fund and it's really for political purposes I think for the premier," she said.

"I found it unbelievable that the premier would start a prosperity fund with revenue that hasn't come in, from an industry that hasn't started yet in British Columbia."

Original LNG plans 'too ambitious'

Shahin Dashtgard, an associate professor of earth sciences at Simon Fraser University and an expert on the natural gas industry, says earlier promises were coloured by higher prices, which have since gone down.

"That has led the government to step back and maybe take a rethink on what's possible in terms of LNG resources and LNG wealth for the province," he told On The Coast guest host Michelle Eliot.

Dashtgard says B.C. still has several competitive advantages when it comes to LNG, particularly when it comes to proximity to Asian markets and low cost of extraction. The problem has been getting gas-producing plants.

Still, he says the government's original LNG promises were too ambitious.

"The initial comments made by Christy Clark and the Liberal government was for multiple LNG plants, and I think everyone who is in the industry or in the know would actually argue there was never going to be more than four plants that went ahead," he said.

Dashtgard thinks LNG will be a reliable economic contributor to the province's economy, but estimates it could be about four or five years before the prosperity fund sees any contributions from LNG.

To hear the interview with Shahin Dashtgard, click the audio labelled: Gov't to add $100m to LNG prosperity fund — but not from LNG revenue

To hear the interview with Carole James, click the audio labelled: B.C. LNG $100M prospertity fund is Christy Clark's 'fantasy fund' says NDP

With files from Richard Zussman