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June 13, 2012 - No. 88

Billions of Dollars in Electricity Capital Projects Underway Across Canada

Capital Projects Must Serve the Public Interest,
Not Private Interests

Billions of Dollars in Electricity Capital Projects Underway Across Canada
Capital Projects Must Serve the Public Interest, Not Private Interests - Jim Nugent
BC Hydro and the Rule of Thieves

Canada's Annexation into United States of North American Monopolies
Ongoing Consultation With Monopolies on Security Perimeter
Food Safety Compromised by Cuts and Harmonized Regulations - Enver Villamizar
Government Tables Sweeping Food Safety Law in Senate
Canada's Duty Exemptions Harmonized with Those of U.S.


Billions of Dollars in Electricity Capital Projects Underway Across Canada

Capital Projects Must Serve the Public Interest,
Not Private Interests

In Canada's electrical power sector a massive capital project is underway involving increasing capacity, transitioning to new sources of energy and refurbishing aging infrastructure. The capital spending projects underway are being used as an opportunity by self-serving politicians to assist international monopolies and financial groups to seize control of the vast public assets built up in this sector and to capture the rich revenue streams from household and industrial electricity ratepayers. Profits of private owners are usually guaranteed in some way through power purchase agreements and other arrangements negotiated in secret. An entirely unnecessary additional layer of ownership is being laid over the system. Additional tribute in the form of enterprise ownership profit is being claimed by those inserting themselves into the system as owners.

The extent of the expansion and refurbishment of the electrical sector taking place across the country is summarized in a report released earlier this year by the Conference Board of Canada (CBOC). The report says that between 2011-2030, there will be $347.5 billion invested across Canada in the creation of new electrical infrastructure and the refurbishment of worn out infrastructure. This massive project, the report says, will require 4.2 million person/years of labour, with much of this labour concentrated in the first six years. It estimates that this investment in electricity infrastructure will account for 1.2 per cent of annual growth in national GDP over the 2011-2030 period, about half of the expected annual GDP growth.

Total spending on electrical system plant and equipment during the period is estimated to be $110 billion. Project purchases on this scale could contribute to strengthening Canada's manufacturing sector, particularly advanced technology manufacturing. Many Canadian companies have the capability and employ workers with the skills to produce all of the equipment required. Despite this, half of all the plant and equipment required by power projects will be imported according to the CBOC report.

Vast amounts of the society's resources will be dedicated to this massive project, wealth created by workers and workers' labour. All of it will be paid for by electricity users. However, private profit not public interest will be at the centre of these projects. According to CBOC's calculations, annual growth in corporate profits will average of $2.7 billion a year from 2011-2030 as a result of electricity projects, with government guarantees on much of this profit.

Electrical power is an essential service required for life and for the functioning of the economy. The public interest demands that it be provided on a cost-recovery basis to households and industry. The huge claims for ownership profit being placed on it will weaken the electricity supply system and weaken the economy now and for years to come. Workers have to confront the very narrow private interests of the rich minority being placed at the centre of the electrical sector and of the massive capital project underway. Workers have to work out their own agenda for the electricity generation, transmission and distribution system and for every sector of the economy, an agenda that puts the interest of the society at the centre of how the economy is organized.

Many questions have to be sorted out about committing so much of society's resources to such capital projects, including:

- how can capital projects contribute to building a self-reliant national economy at the highest level of technology instead of building the empires of international monopolies;

- how can workers' savings and pensions be utilized for strengthening the economy instead of the economy being weakened by paying billions in interest to financiers and enterprise profits to owners;

- how can reliable power be supplied at rates households can afford and at rates that strengthen other industries;

- how can resource and other capital projects contribute to humanizing the human and physical environment;

- how can energy and other projects contribute to ensuring the rights of First Nations peoples and the rights of all.

There is no other force in society but the working class that can or will work out a pro-social, human-centred direction for the economy, including the huge capital projects being set in motion. Workers have to work out a way forward for putting the interests of the workers and the society at the centre of the economy.

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BC Hydro and the Rule of Thieves

The Alberta-based monopoly AltaGas has a $1billion hydro-electric power project underway in North-West BC. This megaproject is an example of the kinds of privately-owned projects underway across the country. These projects are displacing public ownership and public interests in Canada's electricity generation, transmission and distribution sector.

AltaGas is building three run-of-the-river power plants on the lands of the Tahltan First Nation. One of these, the McLymont Creek plant, received environmental approvals to go ahead earlier this month. The McLymont plant is a $217 million project that will have an output of 70 megawatts. BC Hydro has already signed a secret long-term power purchase agreement with AltaGas guaranteeing AltaGas profits in the project. BC Hydro is also building a $400 million transmission line to bring the power produced by AltaGas and other private generation companies to consumers.

The AltaGas megaproject fits within the policy of the BC government and some other provincial governments of handing over development of all new power generation capacity to private sector investors. A variety of excuses are used for this such as job creation, green energy or First Nations economic development. But none of these objectives require private ownership and in fact can be better served by publicly-owned energy enterprises. It is also claimed that imposing more ownership profit claims on the system will somehow miraculously produce lower user fees for households and other industries, but of course electricity rates keep climbing as private ownership increases. The only objective served by privatizing the electricity sector is to enable the rich to extract even more profits from the sector in the form of claims for ownership profits.

A rough calculation using the example of the costs and outputs of the McLymont Creek project shows what great scores private electricity projects are for their owners and how they harm the public interest. These calculations do not include any sweeteners for AltaGas that BC Hydro may have built into the power purchase agreement, which are kept secret under the hoax of "commercial confidentiality."

BC Hydro's average rate of return on assets is 11.2 per cent a year.

BC Hydro's bond rate for debt financing is 3.65 per cent.

Since BC Hydro is a public enterprise, returns are handed over to the provincial government. At BC Hydro's average rate of return on assets, the McLymont Creek as a public enterprise would generate $15.4 million a year for the government ($23 million minus $7.6 million in bond interest).

If AltaGas operates the plant at its 70 megawatt capacity for a year at the going electricity price ($.06/kW hour), it would receive $39 million from BC Hydro.

After debt financing of $8.83 million a year (at AltaGas bond rate of 4.07 per cent), this would leave $31 million a year to AltaGas as return on its McLymont Creek asset.

Public ownership -- $15 million a year for the government, $7.60 million for bondholders.

Private ownership -- $31 million a year for private owners, $8.83 million for bondholders.

AltaGas would earn enough to pay off the bondholders holding the mortgage in less than 10 years and be able to collect $39 million a year free and clear for as long as the river runs.

This example shows that when viewed from the point of view of the public interest, provincial government policies for handing over development of new power generation to the private sector is completely irrational. The financial arrangements in almost all electric power projects underway and planned in the electricity sector across the country involve thievery similar to the McLymont Creek deal. The deals being floated in this sector are revealing the political system in Canada as a kleptocracy, a system based on the rule of thieves.

Central Council today announced that they have signed two Impact Benefit Agreements (IBAs), one for the McLymont Creek run-of-river hydroelectric project and the other for the Volcano Creek run-of-river hydroelectric project.

"The IBAs establish a formal partnership between AltaGas and the Tahltan Nation and enable us to continue to develop our projects in collaboration with the Tahltan community," said David Cornhill, Chairman and Chief Executive Officer of AltaGas.

"This is an exciting day for our people and our Nation that will shape the future of development in our territory. Today's signing of the IBAs launches a partnership between the Tahltan Nation and AltaGas. We look forward to strengthening our relationship with AltaGas as we work together in the development of these projects, ensuring our Nation, people and businesses receive financial benefits, including revenue sharing, jobs and contract opportunities, while also minimizing the environmental impacts and protecting our culture and way of life," said Annita McPhee, President of the Tahltan Central Council.

The projects are located near AltaGas' 195-MW Forrest Kerr project, currently under construction, approximately 1,000 km north of Vancouver, BC. AltaGas expects the Forrest Kerr project to come into service in 2014, followed by McLymont Creek in 2015 and Volcano Creek in 2016. Collectively the projects are known as the Northwest Projects.

The Northwest Projects are to be constructed solely within Tahltan Nation traditional territory and are expected to cost approximately $1 billion. Once completed, the projects will provide enough electricity for approximately 95,000 homes in British Columbia and will offset more than 780,000 tonnes of greenhouse gas equivalents annually. The projects will deliver electricity to the terminus point of the previously announced 287-kV Northwest Transmission Line (NTL), near Bob Quinn, BC, being constructed by BC Hydro.

The Tahltan Nation includes on and off-reserve Tahltans living in Telegraph Creek, Dease Lake and Iskut, and more than 3,000 people living across the country. Tahltan traditional territory encompasses 11 percent of British Columbia. More than 50 percent of all mineral exploration and mine development in the province takes place in Tahltan traditional territory. For more information about the Tahltan Central Council, visit www.tahltan.org.

AltaGas is an energy infrastructure business with a focus on natural gas, power and regulated utilities. AltaGas creates value by acquiring, growing and optimizing its energy infrastructure, including a focus on renewable energy sources. For more information visit: www.altagas.ca.

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Canada's Annexation into United States of North American Monopolies

Ongoing Consultation with Monopolies on
Security Perimeter

The Harper government has been holding ongoing consultations with representatives of some of the biggest North American monopolies on how best to serve their interests in establishing the North American Security Perimeter. Such consultations with the monopolies are a sharp contrast to the fact that Canadians have no say in whether to be annexed into the United States.

On May 14 joint consultations on "business travel between the United States and Canada" were held in Washington, DC. On May 24 a similar consultation was held in Toronto. The consultations were hosted jointly by Citizenship and Immigration Canada (CIC) and the U.S. Department of Homeland Security (DHS) and are being facilitated by the Washington-based Migration Policy Institute.

The main issue on the agenda for the consultations has been the demand of the monopolies for new arrangements to facilitate the movement of labour within North America to fulfil the needs of the monopolies for a highly skilled and "flexible" workforce.

Giving a clear sense of in whose interests changes to immigration regulations will be, those in attendance at the Toronto event were:

- BDO Canada (fifth largest accounting firm in the world)
- Canadian Bankers Association
- Canadian Council of Chief Executives
- Canadian Employee Relocation Council
- Canadian Manufacturers and Exporters
- Global Business Travel Association Canada
- Canadian Trucking Alliance
- Information Technology Association of Canada
- IBM Canada
- Maple Leaf Foods
- Microsoft Legal and Corporate Affairs Group
- Nexen Inc.
- Sun Life Financial

No unions, or organizations representing workers participated despite the fact that it is the movement of workers which is being discussed.

Speaking about the consultations, Canada's Minister of Public Safety Vic Toews stated: "This Government's top priority remains jobs, growth and long-term prosperity. These consultations will help improve cross-border trade and bring greater economic benefits to both Canada and the United States."

"Billions of dollars worth of goods and hundreds of thousands of people cross our shared border every day. We want to hear directly from businesses on both sides of the border about how cross-border business travel could improve. We especially want to hear fresh ideas," added Minister of Citizenship, Immigration and Multiculturalism Jason Kenney.

U.S. Secretary of Homeland Security Janet Napolitano stated: "DHS is committed to working with our Canadian partners to facilitate cross-border business, strengthening the economies of both our countries. Through these joint consultations, we will receive direct feedback from businesses on how we can improve travel and trade at the border."

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Food Safety Compromised by Cuts and
Harmonized Regulations

Major changes to Canada's food safety system are in the works. The Harper government is cutting the number of food inspectors at Canada's Food Inspection Agency (CFIA) and is also harmonizing regulations concerning food and drugs in the interest of Canadian, U.S. and European agriculture monopolies as part of negotiations towards a North American Security Perimeter and a Canada-Europe Free Trade Agreement (CETA). To cover up that these are nation-wrecking changes which threaten Canadians' food security, the changes are presented as measures which are claimed will assist small and medium-sized business.

The changes are in line with the demands of the biggest North American monopolies which are in control of the Regulatory Cooperation Council (RCC), established to lead the process of harmonizing regulations in various spheres between Canada and the United States. When the RCC issued its Action Plan as part of the Security Perimeter Negotiations, amongst other things it called for "common approaches to food safety" and to "minimize the need for routine food safety surveillance inspection activities in each other's country." It also called for streamlining "the certification requirements for meat and poultry, including where possible, the reduction or elimination of redundant certification, data elements and administrative procedures for shipments flowing between Canada and the U.S."

The Harper government is moving behind the backs of Canadians without any discussion on the significance of how changes to Canada's food safety regulations will affect the safety of Canada's food supply. Senate Bill S-11, the Safe Food for Canadians Act, received first reading June 7. The Harper government backgrounder spins the aim of the bill as: "Improved food safety oversight to better protect consumers, streamlined and strengthened legislative authorities, and enhanced international market opportunities for Canadian industry."

Regarding the bill's stated aim for "improved food safety oversight to better protect consumers," the government states the legislation contains new prohibitions against food commodity tampering, deceptive practices and hoaxes, strengthened food traceability, and improved import controls.

With respect to the bill's ostensible aim for "streamlined and strengthened legislative authorities" the legislation will "modernize and simplify" existing food safety legislation, by aligning inspection and enforcement powers across all food commodities, "enabling inspectors to be more efficient, and fostering even higher rates of compliance for industry. As a result, consumers will enjoy a safer food supply."

The claimed benefit of the bill of "enhanced international market opportunities for Canadian industry" will provide new ministerial "authority to certify food commodities for export," and will provide new review mechanisms which will make it easier for regulated companies to review decisions made by the Canada Food Inspection Agency. According to the government, the new mechanisms will be "faster and less costly than the judicial process."

In addition to Bill S-11, which would completely change Canada's food safety laws, the Harper government is also putting facts on the grounds through changes to regulations concerning food safety.

On March 3, in the Canada Gazette, the journal in which government regulations and new laws are announced, the Harper government issued wide-ranging amendments to Canada's Meat Inspection Regulations of 1990 in line with what is being demanded by the monopolies through the Regulatory Cooperation Council.

The regulations affect businesses involved in the slaughter of food animals, the processing, packaging, labelling, refrigeration, freezing and storage of meat products. The stated aim of the amendments is to make it easier for small and medium-sized businesses to meet federal food inspection requirements so that they can trade products inter-provincially and internationally. The aim is not to ensure that the highest level of safety standards for food is adopted by both the United States and Canada.

The stated aim will be achieved through amendments that will "streamline and simplify requirements for all existing federally registered establishments as well as future applicants to the federal system." The overview of the regulatory changes state that they will "replace prescriptive requirements and/or criteria with more outcome-based requirements." One of the other goals of the amendments is to "increase alignment with regulations and policies of Canada's major trading partners including the United Sates and the European Union."

Among other things the amendments make it easier to set up an establishment and meet federal food safety requirements. For example, one of the amendments revises room temperature requirements to process domestic poultry, changing it from a specified temperature (prescriptive) to a more "outcome-based provision" that requires the temperature be appropriate to ensure the preservation of a meat product. Who will decide what is appropriate and based on what criteria is not explained. Given the number of food inspectors is being cut at the same time as these changes are taking place, one can assume that more of what is considered "appropriate" will be left up to the companies to decide.

Another example of the lowering of food safety standards are the changes being made to regulations concerning the import of animal feed with beef components in relation to bovine spongiform encephalopathy (BSE -- aka mad cow disease). The amendments state: "Where ... BSE is referenced ... modify from 'free' to 'negligible' risk." This change would mean that feed with beef components would be permitted for sale in Canada if it comes from another country or part of Canada that is considered at "negligible risk" of having BSE rather than "free" from BSE, as previously required.

MP Claims Only Two Per Cent of Food Imported to Canada Inspected

In related news, on February 17, NDP MP Malcolm Allen revealed in an exchange in the Parliament that only two per cent of food imported to Canada is inspected. No doubt this will become worse with fewer inspectors. Even more astonishing was that Conservative MP David Anderson, Parliamentary Secretary to the Minister of Natural Resource and to the Minister of Agriculture and Agri-Food for the Canadian Wheat Board, refused to even recognize this as an issue and instead attacked the NDP MP:

Malcolm Allen: Madam Speaker, this past Wednesday, the agriculture committee learned that only 2% of food imported into Canada is actually inspected. Yet 100% of the products that we produce and send abroad are inspected. Canadians expected, in fact believed, that all imported food was inspected. The agriculture committee now knows that is not true.

What is the government going to do to ensure that imported food is inspected so that Canadian consumers will feel safe when they feed their families?

David Anderson: Madam Speaker, the member should know that the CFIA enforces the same rigorous food safety standards on imported food as it does for domestic food.

I can give him some examples of what we have done to improve our import system. He should know this if he is on the Agriculture Committee.

Our recent budget includes an additional $100 million over five years to enhance food safety. We have delivered $223 million to the food safety action plan. To improve controls on imported food, we eliminated the 72-hour notification of inspections of meat imports. We have established an import surveillance team to perform 480 border blitzes.

Madam Speaker, I could go on, but I know my time is running out.

Malcolm Allen: Madam Speaker, the parliamentary secretary should know that actually there are no CFIA inspectors at the border. CBSA is responsible to do that and it does not know how to do it. The $100 million was actually for exported food, not imported food.

The reality is we are not testing the products. In fact, we do not require that potable water be used on washed vegetables that are imported into this country.

We need to restore consumers' confidence in the system. Will the government commit today to ensuring that the CFIA budget is not cut in the next budget round?

David Anderson: Madam Speaker, something the NDP does not know how to do is to apologize. The member opposite should stand up and represent his caucus and apologize for the sleazy online campaign that they have been conducting.

(Hansard)

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Government Tables Sweeping
Food Safety Law in Senate

On June 7, the Harper government introduced Senate Bill S-11, An Act respecting food commodities, including their inspection, their safety, their labeling and advertising, their import, export and inter-provincial trade, the establishment of standards for them, the registration or licensing of persons who perform certain activities related to them, the establishment of standards governing establishments where those activities are performed and the registration of establishments where those activities are performed. The short title of the Act is the Safe Food for Canadians Act. The Summary provided by the government states: "This enactment modernizes the regulatory system for food commodities." There has been no explanation presented as to why the legislation was introduced in the Senate before the House of Commons.

The legislation is another omnibus bill which completely transforms Canada's legal framework for the regulation of all aspects of food safety including food production and sale within Canada and between Canada and other countries. Amongst other things the Act repeals the Fish Inspection Act, Meat Inspection Act and Canada Agricultural Products Act and centralizes the authority over food safety previously held in those Acts.

In presenting considerations for the change, the government claims change is needed, but refuses to explain why or what the problems exist with the current laws. It simply asserts that the current Acts were passed in the past and by implication outdated. People want food safety, so changes are needed, and because they are needed, the changes the Conservatives are bringing into being will make Canadians' food safer.

Here is a good example of this attempt to cover up the aims of the legislation: Under the heading "need for change" a Ministry of Agriculture and Agri-Food backgrounder states: "Food in Canada is currently regulated under a suite of different statutes: the Food and Drugs Act, Fish Inspection Act, Meat Inspection Act, Canada Agricultural Products Act, and the Consumer Packaging and Labelling Act. These Acts were created at various times over several decades, and have been updated at differing frequencies. While these food statutes have served Canadians well, the time has come to create new tools to manage today's risks to food safety, while ensuring that Canadian industry has continued opportunities in international trading markets." We are also informed that the new legislation will "align inspection and enforcement powers across all food commodities."

The government provides the following rationale for the Act, giving an indication that the demands of the agri-monopolies, mainly in the United States, and those in Canada that want a more integrated North American market, are guiding the changes: "By further aligning Canada's food safety system with those of our key trading partners, the Act will enhance international market opportunities for the Canadian food industry. A new authority in the Act would allow certification of any food commodity for export and increase global confidence in Canadian food. The Act will also strengthen controls over imported food commodities, introduce [ministerial] powers to register or license regulated parties, and prohibit the importation of unsafe foods."

The reference to "key trading partners" has become a euphemism for the United States under the Harper government so as to cover up that changes are being made to integrate Canada into the United States of the North American Monopolies, something which Canadians oppose.

How any of this will actually make food safer for Canadians is not at all discussed. Given that the Harper government is in the midst of cutting food inspectors across the country, it is not likely that the new Act is part of an overall plan to guarantee that Canadians' food is safe. Instead it appears that the aim guiding the legislation is to place the interests of the monopolies as the main goal of the regulation of food safety.

One of the significant aspects of the new legislation is that it gives power to the Minister of Agriculture and Agri-Food to annex Canada's food safety system into the U.S. system. It gives the Minister the power to accredit "persons, bodies, facilities or laboratories in Canada and elsewhere and the recognition of their activities or findings" concerning food safety, as well as to recognize "systems of inspection, certification, manufacturing, preparation, storage, packaging, labelling or testing," inside or outside of Canada for import into Canada. This means that the Minister will have the power to accredit all manner of U.S. food exporters or other facilities as "pre-cleared," and are thus to be trusted. It is similar to the way in which cargo screened by U.S. Homeland Security is to be accepted as "secure" for entry into Canada without our own screening system. In the case of food, the power to "pre-clear" would mean that U.S. exporters to Canada, for example, would be certified once in the U.S. according to regulations "harmonized" with those of the U.S. and then deemed safe. Future imports would then be fast-tracked at the border and would not require inspection. This would mean fewer inspection and checks of food safety than already exist even though only two per cent of food imported to Canada is inspected. Such an arrangement would save the big food monopolies exporting into Canada large amounts of money due to decreased inspections, and in some cases less prescriptive requirements for food safety. On the other hand, U.S. certification of Canadian commodities for export to the U.S. is likely the "prize" which certain monopolies based in Canada seek for pushing the alignment of Canada's food safety regulations with those of the United States. All of this is also likely to be a step towards Canada's Food Safety regime being integrated into the U.S. Food and Drug Administration (FDA). Both the FDA and Agriculture and Agri-Food Canada have been involved in the negotiations towards a North American Security Perimeter.

Bill S-11 also permits the Minister to "exempt, with or without conditions, any item to which this Act applies, or a person or activity in respect of a food commodity, from the application of this Act or the regulations or a provision of this Act or the regulations" with the caveat that the Minister must only do so if he or she "is of the opinion that no risk of injury to human health will result."

How any of this would improve safety for Canadians, again, is not at all addressed as it is clear this is not the overarching aim. This is the same Harper government which arbitrarily destroyed the Canadian Wheat Board, a farmer-controlled public monopoly which made a big contribution to ensuring that a steady supply of high quality wheat and other grains were exported from Canada. With its destruction, mainly U.S. agri-monopolies and their narrow private interests have been put in command of Canada's wheat industry. Clearly that was not about securing the food supply, just as this new legislation is surely not about ensuring food safety for Canadians.

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Canada's Duty Exemptions Harmonized
with Those of U.S.

On June 1, the Harper Government announced that personal exemption limits on the value of products Canadians can bring back into the country before paying duty or tax have been harmonized with the United States.

The changes mean that residents returning to Canada after being out of the country for at least 24 hours will be exempt from paying duties and taxes on up to $200 of goods purchased abroad. The exemption limit for those returning after at least 48 hours abroad is now $800.

Minister of State for Finance Ted Menzies made the announcement stating: "Our Government understands how important an efficient border is to Canadians and our economy. Every year, Canadians take some 30 million overnight trips outside of Canada. This measure will expedite customs clearance for returning Canadian consumers, making cross-border business and personal travel more convenient for Canadians. This change is long overdue."

The move to harmonize the exemption limits has been followed by disinformation in the media which specifically targets the costs of "supply-managed products" in Canada such as eggs, dairy and poultry. The disinformation claims that with the exemptions Canadians may decide to purchase more of these products in the U.S. Such disinformation serves private monopoly interests by sowing doubt in marketing boards, bodies which serve the public interest by assisting farmers to earn their livelihoods through the collective marketing of their produce.

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