Trans Mountain CEO Ian Anderson announced Friday that the cost of building the pipeline expansion has soared from an initial estimate of $7.4 billion to $12.6 billion.
In a conference call with reporters, Anderson said increased material and labour costs are to blame for the cost overruns, along with years-long legal troubles and renewed Indigenous consultation efforts that also added to the final total.
Despite the sizeable increase from the initial 2017 cost estimate, Anderson said the project will be profitable because much of its capacity has already been sold to major oil producers like Suncor and Cenvous on 20-year contracts. He said the project will generate $1.5 billion a year in cash flow when it’s fully operational.
While the project is owned by the federal government, Anderson said he’s running the company as it were a private entity and the cost overruns would be incurred by any proponent building the expansion.
Anderson said recent legal victories at the Supreme Court of Canada and the Federal Court of Appeal have given the project greater legal certainty.
“I believe there’s a path and that path is getting clearer each day,” he said. “I’m confident the project itself remains very, very strongly economically viable.
“There isn’t anyone who could picture the journey we’ve been on to get this project started and what it will take to get it constructed.”
That $12.6 billion construction cost figure includes $1.1 billion already spent on construction by the previous owner of the project, Kinder Morgan, before Ottawa bought the project amid legal uncertainty.
The construction cost is in addition to the more than $4 billion the federal government spent to purchase the existing pipeline and the expansion plans, and another $600 million Ottawa set aside for contingencies (called a reserve fund for “cost impacts”). Those sums bring the total cost of taxpayers’ investment in Trans Mountain to more than $16 billion.
The August 2018 Federal Court of Appeal ruling that quashed cabinet’s approval of the project was source of cost overruns.
As a result of that ruling, the government had to make a number of accommodations to Indigenous communities along the route and meet additional environmental standards — changes that added roughly $3 billion to the construction price tag.
“The project that we’re all working on building today is not the project we originally envisioned and introduced in 2012,” Anderson said.
Anderson said the project has more support from Indigenous communities than it did when it was first proposed. Fifty-eight Indigenous communities along the project’s route have signed impact benefit agreements with the Crown corporation that cover financial incentives, job training, bursaries, pensions for Indigenous elders and funds for community infrastructure upgrades.
The company also is running fibre optic cable along the pipeline’s route to detect spills or other safety issues — which means its also bringing internet connections to communities that don’t already have access.
Beyond Indigenous-related costs, Anderson said a new labour agreement with trade unions cost the project an additional $100 million a year, steel-related costs have increased $120 million, robust security along the route will cost an additional $190 million and state-of-the art spill-response technology will set the project back another $70 million.
The company estimates the expansion’s in-service date to be December of 2022.
During the federal election, the Liberals pledged to invest corporate tax revenue from the pipeline into cleaner sources of energy and projects that pull carbon out of the atmosphere.
The federal government purchased the existing Trans Mountain pipeline for $4.5 billion in May of 2018, after the original proponent, Kinder Morgan, pulled out because of increased political and environmental opposition to the project.
The expansion would twin the existing pipeline, which runs more than 1,000 kilometres between Edmonton and Burnaby, B.C. It would triple the amount of bitumen flowing through the pipeline to nearly 900,000 barrels a day.
The project is also set to expand the terminal in B.C. and, as a result, tanker traffic is expected to increase by nearly seven-fold a month.
According to the federal government, the pipeline and terminal would produce 400,000 tonnes of greenhouse gas emissions a year, create 15,000 jobs during construction and generate about $47 billion in revenue for different levels of government over the first 20 years of its operation.
RBC warns house price correction could be deepest in decades | CTV News – CTV News Toronto
A housing correction, which has already led to four consecutive months of price declines in the previously overheated Greater Toronto Area market, could end up becoming “one of the deepest of the past half a century,” a new report from RBC warns.
New data released by the Toronto Regional Real Estate Board (TRREB) last week revealed that the average benchmark price for a home in the GTA fell six per cent month-over-month in July to $1,074,754.
Sales were also down a staggering 47 per cent from July, 2021.
In a report published on Aug. 4, RBC Senior Economist Robert Hogue said recent data from real estate boards underlines that higher interest rates are beginning to take a “huge toll” on the market.
Hogue said that with further hikes to come, prices will likely continue to slide in the coming months.
That prediction, it should be noted, goes against a report from Royal LePage last month which painted a rosier forecast for sellers in which values would more or less holding for the rest of the year following some declines in the second quarter.
“Our expectations for further hikes by the Bank of Canada—another 75 basis points to go in the overnight rate by the fall— will keep chilling the market in the months ahead,” Hogue said. “We expect the downturn to intensify and spread further as buyers take a wait-and-see approach while ascertaining the impact of higher lending rates. Canada’s least affordable markets Vancouver and Toronto, and their surrounding regions, are most at risk in light of their excessively stretched affordability and outsized price gains during the pandemic.”
The Bank of Canada has hiked the overnight lending rate by 225 basis points since March and has warned that further hikes will be necessary given that inflation remains at a near 40-year high.
In his report, Hogue pointed out that the housing correction “now runs far and wide across Canada” but he said that it is particularly pronounced in the costlier markets of Toronto and Vancouver.
In fact, Hogue said that housing resale activity in Toronto is at its slowest pace in 13 years, outside of the early days of the COVID-19 pandemic.
The stockpile of available homes is also up 58 per cent from a year ago, he noted.
“With more options to choose from and higher interest rates shrinking their purchasing budgets, buyers are able to extract meaningful price concessions from sellers,” he said, pointing out that the average price of a home in the GTA is down 13 per cent from March. “We expect buyers to remain on the defensive in the months ahead as they deal with rising interest rates and poor affordability.”
While Hogue did say that condos in the City of Toronto are likely to remain “relatively more resilient” he said that prices elsewhere will continue to fall for the time being, especially in the 905 belt “where property values soared during the pandemic.”
The July data from TRREB suggested that the average price of a home in the GTA was still up one per cent from July, 2021.
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Canada Revenue Agency plans email blitz to get Canadians to cash outstanding cheques worth $1.4-billion – The Globe and Mail
The Canada Revenue Agency (CRA) is planning a massive e-mail notification campaign to reach Canadians across the country who have uncashed cheques worth a net $1.4-billion.
The e-mail notifications will target recipients of the Canada child benefit and related provincial and territorial programs, as well as recipients of the GST/HST credits and the Alberta Energy Tax Refund.
The CRA said it plans to send approximately 25,000 e-mails in August, another 25,000 in November and a further 25,000 e-mails by May, 2023.
However, even without receiving an e-mail notification, the agency said a taxpayer can check if they have a cheque by logging into My Account, a secure portal on its website to check if they have an uncashed cheque over a period of six months. It added that representatives can also view uncashed cheques of their clients.
Each year, the CRA said it issues millions of payments to Canadian taxpayers in the form of refund benefits. These payments are issued by either direct deposit or by cheque.
“Over time, payments can remain uncashed for various reasons, such as the taxpayer misplacing the cheque or even a change of address which did not allow for delivery,” the agency said in a statement.
The CRA said since the e-mail notification initiative was first launched in February, 2020, about two million uncashed cheques valued at $802-million were redeemed by May 31, 2022.
The average amount per uncashed cheque is $158 with some of them dating as far back as 1998, the agency said.
As of May, 2022, there were an estimated 8.9 million uncashed cheques with the CRA. In May, 2019, about five million Canadians had an estimated 7.6 million uncashed cheques.
“As government cheques never expire or stale date, the CRA cannot void the original cheque and re-issue a new one unless requested by the taxpayer,” the statement read. “These upcoming e-notifications are to encourage taxpayers to cash any cheques they have in their possession.”
The agency said taxpayers can register for the direct deposit option on its website to receive payments directly into their bank accounts.
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