The Northwest economy has traditionally been based on natural resource extraction, which has generated tremendous amounts of wealth for the province. However, the region has a long history of boom and bust, and infrastructure is aging. There are several major industrial projects proposed in the Northwest, and more recently LNG Canada and Coastal Gaslink made a positive Financial Investment Decision to proceed with their respective projects. As development proceeds, the region will not be able to meet the infrastructure and service needs of industry and community. In contrast, other regions with significant resource developments have shared in provincial revenues which have given them the capacity to meet their needs.
Background
The Northwest BC Resource Benefits Alliance (RBA) was formed in 2014 and is an association of all 21 local governments in northwest BC[1]. The RBA was formed to negotiate a new funding agreement with the Provincial Government to ensure Northwest BC can manage the service and infrastructure deficits resulting from the economic development in the region.
Over the past 10 years, more than $13 billion has been spent on major capital projects in the region, not including the mega LNG Canada project. The provincial government has earned at least $500 million in revenue associated with these projects and LNG Canada’s project will generate an estimated $24 billion of direct investment in BC in the next 7 years. The project is also expected to generate about $23 billion in public revenue over 40 years.
Often, very little local revenue is generated by major capital projects because the developments are largely outside of municipalities or outside the boundaries of communities that are adversely affected by such large impacts. Also, large projects drain resources required to review and plan for proposed projects, whether they proceed or not. Northwest BC has a significantly lower level of property assessment per capita than the rest of the province. The result is that many local governments in the Northwest do not have the capacity to fund their share of federal and provincial infrastructure funding programs. Infrastructure maintenance, upgrading, and replacement are often deferred, which means that aging sewer, water, roads, buildings, and other infrastructure used beyond its normal life.
If the physical and social infrastructure of our communities could be improved, we can support existing businesses and new resource development to build sustainable communities, not just work camps. This will allow communities to attract and retain workers and their families so we can grow our service and tourism sectors. Northwest BC needs financial help from the province to build the necessary infrastructure to support resource development and social infrastructure to ensure Northwest communities are places where workers and their families live.
The incremental revenue from new major project activity in the Northwest that goes to the provincial government is more than sufficient to allow the provincial government to support the Northwest in creating sustainable communities, while still making an enormous contribution to BC government general revenue.
The members of the RBA have formed and signed a Memorandum of Understanding (MOA) that their municipalities work together to pursue resource benefit negotiations and the funding be distributed between the Municipalities as they deem necessary. [2] The purpose of this MOA is to seek a fair revenue sharing solution for the region that is proportionate to the level of activity, provides the capacity to prepare for future development and leaves the region, when the boom retreats, with a legacy for the future. At this stage, there is no set amount the RBA is requesting from the Provincial Government, but they are trying to justify how little the northwest communities are receiving back from projects.
Other regions of the province have had longstanding arrangements. These have taken various forms, ranging from the Fair Share arrangement in the Northeast[3] to the Columbia Basin Trust[4], to the various other trusts that have been created to promote economic development and share benefits. Northeast BC and Columbia Basin have both had regional funding arrangements with the provincial government for decades, which has helped these regions overcome the economic impacts of development activities. Additional revenue generated through their agreements has enabled them to successfully access cost-shared federal infrastructure funding that is twice what the Northwest has received on a per capita basis.
It is the RBA’s goal that when a funding agreement is reached with the province, it would help achieve the objective of creating sustainable communities that will be able to support economic activity in Northwest BC in the future and facilitate the region to plan and actively participate in ongoing federal and provincial infrastructure programs. The RBA intends to negotiate as a single entity for the entire region and be responsible to its members for how the contributions are distributed. $77.7 million was provided to RBA members in 2019 and a further $38 million in 2020 by the Provincial Government as they recognized there was a need for community infrastructure projects.[5]
THE CHAMBER RECOMMENDS
That the Provincial Government:
- Continue to engage and negotiate with the Resource Benefit Alliance on a new funding agreement that will benefit the Northwest as a whole;
- Share a portion of revenue from major resource development within the Northwest with the region’s municipalities.
- Allow Resource Benefit Alliance members to distribute the funding according to their respective municipal requirements.
[1] https://www.nwresourcebenefits.ca/about-us/
[2] https://www.nwresourcebenefits.ca/wp-content/uploads/2019/11/NWBC-RBA-MOU-Consolidated-Aug2019.pdf
[3] https://archive.news.gov.bc.ca/releases/news_releases_2017-2021/2018MAH0039-000701.htm
[4] https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/96053_01
[5] https://drive.google.com/file/d/1Vw_l9tBKySJPXCSL-PcoZ_mTvdtncTY8/view?usp=sharing