There’s an excellent case to be made for revising North America’s approach to energy; sensible and flexible regulations to help new and expanded energy supplies reach now-pained consumers are overdue.
Also, actual corporate subsidies should be dumped in favour of neutral policies between existing energy sources and future methods to heat our homes. But some environmental organizations should be careful about getting uppity here; they also rake in subsidies — as they define the term — from government.
Enter the Pembina Institute, Friends of the Earth and the Sierra Club’s legal wing. Last month, those groups blasted the oil-and-gas sector and claimed the industry receives more than $1.4 billion annually in federal subsidies
That figure originates in an earlier Pembina report which defined subsidies (in part) as grants, preferential loans, tariffs and price controls among other ways to define corporate welfare. No problem there and a cut-off of corporate Canada from the taxpayer trolley of delights is a sensible suggestion. But the institute also lists tax credits and tax deductions as a business subsidy.
That’s unhelpful. Credits and deductions merely reduce a tax bill and that’s only a problem if one presumes money belongs first to government and then to citizens or shareholders. That’s a serf-like assumption. Besides, if tax credits are a subsidy, then Sierra, Pembina and Friends are “subsidized” given their status as tax deductible charities.
But beyond the debate over a proper corporate welfare definition, there’s another problem with the green critics. It’s not that they desire an end to corporate pork; they want cheques sent in a direction they consider beneficial — theirs: “Tax subsidies should be shifted towards initiatives such as renewables and conservation that will reduce emissions,” said Pembina’s Marlo Raynolds in the institute’s news release.
Then, there’s the issue of government subsidies directed toward favoured groups. According to their own financial statements, Sierra Club received $758,608 in 2004 and $574,431 in 2003 in what it labels government contracts. (It matters little that Sierra’s legally separate wing, the Legal Defence Fund, is who showed up at the anti-oil and gas press conference; Sierra benefits from the publicity.)
Pembina received more than $1.4 million in fees for service contracts of which governments constitute a chunk, though the institute’s annual report doesn’t list the breakdown. But some of it originates with government, as Pembina lists the following as partners and clients: Alberta Environment, Alberta Municipal Affairs, B.C. Hydro, B.C. Ministry of Energy and Mines, Department of Foreign Affairs and Trade, Environment Canada, the National Energy Board and Natural Resources Canada.
When such cash arrives via a government contract and not a grant, the response will be that just as Staples isn’t subsidized when it provides paper clips to a federal department, neither are Pembina or Sierra when they provide consulting services.
Fair enough, except that it’s one thing to receive taxpayer grants to plant trees; quite another to get in on the government consulting bandwagon to help push an agenda. It’s also why government consulting by advocacy groups has such a tortured history.
Such organizations lobby politicians with the very funds they receive from government; that allows for oversized influence. Such merry-go-round cosiness between government and advocacy groups distorts public policy choices much the same way corporate welfare distorts economic choices.
Like most lobby groups, activist environmentalists are useful even when some campaigns miss the mark; on royalties, Sierra et al have a valid general point. When Alberta’s auditor general Fred Dunn recently questioned whether it was smart of Alberta to cut cheques now worth $102 million annually for the Alberta Royalty Tax Credit, he echoed earlier, proper criticisms from environmentalists.
Not all tax credits are desirable and the playing field between investment and energy choices should be levelled. But the solution is not to replace an existing flawed approach with new undesirable policies.
If green advocacy groups want an end to government-distorted choices, they can help the process along by refusing government money. And if they object to corporate welfare, they should also refuse corporate cash from companies which they criticize as being trough-seekers.
That’s preferable to agendas pumped up with government cash or a new round of corporate welfare, but this time to “green” corporations.
Mark Milke is a Calgary writer and author of Tax Me I’m Canadian.