[LabComm] BC Taxpayers short-changed on millions in lost coal revenue for BC Rail, says James

[BC NDP NEWSWIRE]

BC Taxpayers short-changed on millions in lost coal revenue for BC Rail, says James

NDP Leader renews call for full public accounting of the privatization deal

VICTORIA - British Columbia's taxpayers were short-changed by millions of dollars in potential revenue from coal transportation when the Gordon Campbell government negotiated the sale of BC Rail to CN Rail, BC NDP Leader Carole James said today.

James said that despite the Campbell government's own forecasts for significant coal mining activity in the province's Northeast, projections based on coal export growth were deliberately left out of revenue calculations for the BC Rail line; that means hundreds of millions of dollars in the net present value of the BC Rail operation were essentially given away to CN for free.

"Not only did the Premier break his promise not to sell BC Rail, he got a bad deal for taxpayers, giving away millions of dollars in coal shipping revenues to CN for nothing," said James.

"The number of questions surrounding this deal is mounting at an alarming rate," she said. "That's why I am renewing my call for a full public accounting of the BC Rail deal. British Columbians deserve an answer to questions raised by the government's apparent mishandling of this privatization scheme."

The CN coal business unit has already shown a 25 per cent increase in revenue during the first quarter BC Rail revenues were shown. Conservative estimates peg potential annual revenues generated from coal at $45 million. When this revenue stream is included in the valuation of BC Rail, the net present value increases by hundreds of millions of dollars.

"Mr. Campbell claims to take a business-like approach to government, but it's beginning to appear that he sold BC Rail to CN at a severe discount," said James. "That's not good business, and it's not good government. British Columbians deserve better."

BC Liberal cabinet ministers were predicting significant growth in the coal industry as far back as April 2003 - long before negotiations with CN were completed. Yet, revenue growth projections - both from the mining sector and from independent economic forecasters - were deliberately excluded by the Campbell government when it negotiated the sale.

"It's revenue that will now flow to Chicago instead of being used to invest in health care and education for BC communities," said James. "Once again, we find that under the Campbell plan for BC's economy, the very communities that produce the province's wealth are being left out of the economic picture."

"Every time the public gets a glimpse of the truth behind the BC Rail sale it becomes more apparent that the Premier did not get the best deal for British Columbians," said James.

"This BC Rail deal has spawned police raids on the Legislature and the office of the Finance Minister, allegations and charges of criminal activity at the highest levels of the government. And now, it appears that the deal itself, even if it were untarnished by the alleged criminal activity, is an even worse deal for BC than anyone previously suspected. Mr. Campbell needs to open the books and come clean with British Columbians on the details of this deal. British Columbians deserve nothing less."

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BACKGROUNDER

COAL AND THE BC RAIL DEAL

WHAT THE LIBERALS SAY:

"I see a bright future for the coal industry in the province, and we want to work closely with those that are in the industry so that it can continue."
- Richard Neufeld, Hansard, April 2, 2003

"The partnership will be a major new source of economic development for our entire province."
- Gordon Campbell announces BC Rail Deal, Nov. 25 2003

"The partnership with CN is a great deal for British Columbians."
- Finance Minister Colin Hansen after charges were laid accusing highly placed Liberal officials using their influence and knowledge of the BC Rail deal for personal gain, December 22, 2004

THE FACT IS:

The Liberals knew about the coming revival and growth in BC's Northeastern coal industry. They should have known that BC Rail's profits would increase substantially as a result. And yet the Liberals did nothing to account for BC Rail's coming windfall while they were negotiating the sale of the increasingly valuable asset to CN. The BC Rail deal was not just a sale, it was a giveaway.

- As early as April of 2003 Minister Neufeld told the legislature that “I see a bright future for the coal industry in the province" citing interest from China and other Asian markets in BC energy resources. [Hansard April 2, 2003)

- By June 2003 Western Canadian Coal was publicly promoting an expansion of operations to meet the increasing export demands. [Vancouver Province June 25, 2003]

- Western Canadian Coal plans to ship upwards of 5 million tonnes of coal annually via the former BC Rail line by the year 2008, with as much as 1.5 million tonnes this year alone.

- And yet, when it came to calculating the worth of BC Rail before it was sold revenue from coal shipments was left off the ledger, an obvious omission that never raised the eyebrows of Transportation Minister Kevin Falcon.

- In fact, the government's own "fairness report" explicitly states "...we did not forecast any coal revenues for 2004 and beyond." [p. 94]

- Since the purchase of BC Rail, the CN coal business unit has already shown a 25% increase in revenue during the first quarter it booked revenue from the BC rail line - an increase of $7 million.

- Conservative estimates put potential annual revenues from transporting coal at $45 million.

- In December 2004 alone, 120 rail cars of coal were shipped from the Burnt River coal mine at Tumbler Ridge along the BC Rail line.

- That is a lot of coal and a lot of revenue for CN Rail that Gordon Campbell never got them to pay for.

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