Here’s how Ottawa’s $1.6B boost for Alberta oil compares to past aid packages, bailouts
The Alberta oil and gas sector is getting more than a billion dollars in new federal support.
A supply glut, lack of access to international markets and low oil prices from being held captive to the American market have battered the industry in recent years. Now, despite already purchasing the Trans Mountain pipeline for $4.5 billion earlier this year, the Liberals are handing over another $1.6 billion in the form of commercial financing options, clean growth investment and strategic innovation funding.
“These new supports are comprehensive in scope and focused in application,” said Natural Resources Minister Amarjeet Sohi at a press conference announcing the news in Edmonton on Tuesday.
The news comes after Alberta Premier Rachel Notley announced earlier this month the province will cut production of crude to try to reduce the glut, with the hope of getting some improvement in the offered price as a result.
WATCH BELOW: Minister Sohi on oil price differential
She has also demanded the federal government to provide cash to help the province buy rail cars it can use to transport its oil.
Nothing in the announcement by Sohi appears to directly address the issue of access to international markets, and the minister reiterated that the government remains committed to getting the Trans Mountain expansion built to address long-term problems.
The federal cash, instead, is more of a stop-gap.
And it’s far from the first time the federal government has stepped in when industries are hurting.
Here’s how the package going to Alberta’s energy sector compares to others provided to struggling industries in the recent past.
Steel and aluminum support
Amid the ongoing trade dispute with the U.S., which saw President Donald Trump impose tariffs of 25 and 10 per cent on steel and aluminum coming into the country, the Canadian government announced it would offer up $2 billion worth of support to domestic companies hit by those tariffs.
That came in addition to $16.6 billion of retaliatory tariffs imposed on American producers seeking to ship their goods into Canada.
As part of that $2-billion plan, $1.7 billion is being made available through loans and services to steel and aluminum businesses through both Export Development Canada and the Business Development Bank of Canada.
WATCH BELOW: Ottawa dedicates $867M to aid lumber industry amid softwood tariffs
Roughly $250 million is also coming from the federal Strategic Innovation Fund to support companies investing in new technologies.
A further $50 million over five years from Global Affairs Canada has been billed as helping companies diversify their exports.
Last year, softwood lumber producers also got just under $1 billion in financial support.
That money from the federal government came as in June 2017 after the Americans slapped import duties of up to 24 per cent on softwood from Canada.
The U.S. Department of Commerce claimed Canada had been unfairly subsidizing the industry.
That $867 million in supports included loans and loan guarantees to help companies invest in new technologies, explore new markets, and mitigate layoffs.
It also included retraining and transition support to employees who wanted to leave the industry.
The Montreal-based aeronautics company has received billions in provincial and federal subsidies over the years.
Most recently, the Trudeau Liberals handed over a loan of $372.5 million to Bombardier in February 2017 to help the company build its CSeries and Global 7000 aircraft, with the plan being that the loan will eventually be repaid through royalties on aircraft sold.
Those millions are being paid out over the course of four years.
Quebec also gave Bombardier $1 billion in June and November 2016 in two $500-million installments.
In exchange, the province got a 49.5 per cent stake in the CSeries program.
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Between April 1995 and February 2016, Bombardier had also received a total of $1.3 billion from Ottawa.
It had repaid about $590.5 million of that as of April 2016, according to Industry Canada.
As well, the Quebec pension fund Caisse de dépôt et placement du Québec (CDPQ) also invested $1.5 billion in November 2015.
That money gave the fund a roughly 30 per cent stake in BT Holdco, which is a holding company for Bombardier’s railway business.
Talk about industry bailouts, and the one given in the midst of the Great Recession is probably one of the first to jump to mind.
In 2008, the Canadian government handed over $13.7 billion to Chrysler Canada and General Motors Canada.
The lion’s share of that — $10.8 billion — went to General Motors in the form of loans, share purchases and subsidies.
The remaining $2.9 billion went to what is now known as “Old Chrysler,” or the defunct legal version of the company that became “New Chrysler,” or the current entity, during corporate restructuring paid for by those billions.
WATCH BELOW: Why did the government write off the Chrysler loan and should taxpayers be told?
Old Chrysler took $2.6 billion worth of loans and interest with it when it became defunct, and the new version of the company has refused to pay it back.
That forced the government to write the loan off earlier this year.
It also came on top of the government falling short in recouping the cost of its bailout by $3.5 billion.
That came after the former government sold off the shares purchased in exchange for the bailout in 2015 in order to balance the books ahead of the election.
In total, only about $5.4 billion of the bailout has been repaid.
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