OTTAWA, Jan. 6, 2016 /CNW/ – The employment and fiscal benefits of the Trans Mountain Expansion Project (TMEP) to the Canadian economy extend well beyond the construction and operations of the pipeline, according to a new report by The Conference Board of Canada.
The report, Who Benefits? A Summary of the Economic Impacts that Result from the Trans Mountain Expansion Project, estimates three new impacts associated with the project that would generate 678,000 person-years of employment and $18.5 billion in revenues for federal and provincial governments over the first 20 years of operations. That works out to an average of almost $1 billion in economic activity and nearly 34,000 jobs annually for 20 years.
- The vast majority of the economic and fiscal impacts for Canada and its regions occur after the project is built.
- Most of the economic benefits of Trans Mountain Expansion Project are generated because producers would obtain world oil prices, the benefits of which would circulate through the economy into higher employment and tax revenues.
- Alberta obtains the largest share of employment and fiscal benefits; however, B.C. also experiences significant benefits including 24 per cent of the employment impacts and 12 per cent of the fiscal impacts.
“What’s more, these benefits can be added to those previously calculated by The Conference Board of Canada. In fact, the vast majority of the economic and fiscal impacts for Canada and its regions occur after the pipeline is built,” said Michael Burt, Director, Industrial Economic Trends, The Conference Board of Canada.
Two of the three impacts estimated in the report are associated with how producers would spend the additional after-tax cash flows resulting from the higher prices that oil producers would receive as a result of the TMEP. In previous work, the Conference Board estimated that oil producers will obtain an additional $49.8 billion in after-tax profits between 2019 and 2038 as a result of higher netbacks.
We expect these dollars would be distributed in two forms: higher dividend payments and increased investment. In terms of dividends, 63,400 person-years of employment or an average of 3,200 jobs per year will be supported by higher dividend payments made to Canadians.
Additional investment by oil and gas companies would be expected to translate into 588,000 person-years of employment, or an average of 29,400 jobs per year. Sixty-eight per cent of these jobs would be located in Alberta, while 13.7 per cent would occur in British Columbia.
The report also estimates the economic and fiscal impact of additional tanker traffic in Port Metro Vancouver. Trans Mountain estimates that 348 additional “Aframax” size tankers will visit Port Metro Vancouver each year, which would result in $2.5 billion in additional spending over the first 20 years of operations. In total, the additional tanker traffic would support 26,800 person years of employment, or 1,300 jobs per year on average, most of them in British Columbia.
The economic benefits of the TMEP from dividend payments, oil and gas investment and tanker traffic, can be added to the impacts previously estimated by the Conference Board—from the construction and operations of the pipeline, as well as higher netbacks.
When these impacts are added together, the TMEP is expected to support 802,000 person-years of employment and $46.7 billion in government revenues between 2012 and 2038.
On a regional basis, Alberta obtains 55 per cent of the employment impacts and 41.5 per cent of the fiscal impacts. British Columbia accounts for 24 per cent of the employment impacts and 12 per cent of the fiscal benefits.
The research was commissioned by Trans Mountain and builds on previous work conducted by The Conference Board of Canada to estimate additional economic and fiscal benefits associated with the Trans Mountain Expansion Project.