VANCOUVER — What came first was denial and defiance. It seemed inconceivable that a New Democratic Party (NDP) government could take the reins following a provincial election in British Columba (BC) in May 2013. But as political tides swell in favor of Adrian Dix — and a party that has formed the official opposition since being ousted in 2001 — the time has come to look at a changing of the guard in Victoria with a degree of introspection.
For many in the mining industry a near decade-long existence under NDP governments run by Mike Harcourt and Glen Clark turned the left-leaning party into a sort of curse word. A reminder that socialist policy and environmental activism mark the death knell for natural resource companies, which theoretically perform at peak efficiency under clear and concise free-market regimes driven to realize the vast economic potential in BC’s resource sector.
If the coalition-style BC Liberals were operating under such a platform it's possible the NDP would not be coasting into what is looking like in a clear-cut victory in 2013. But Christy Clark's incumbent party has appeared increasingly lost in its drive to appeal to either side of the political spectrum.
In a piece written for the Globe and Mail, election analyst Éric Grenier used Angus-Reid’s latest polling to determine that the NDP would win 48.7% of the popular vote if elections were held on Nov. 21, which would equate to roughly 62 seats in the Legislative Assembly. Grenier notes that Clark would require a19-point swing in the next six months to extend the Liberals 12-year hold on the B.C. government — an extremely rare occurrence in the political arena.
When taking a glance at the raw economic numbers during the NDP governments of the 1990s it looks fairly bleak. Over the decade that the NDP was in power BC’s gross domestic product (GDP) per capita grew 8.9%, while Canada’s jumped 25.3% in comparison. After the Liberals ousted the NDP BC’s per capita GDP rose 6.9% over the subsequent four years, compared to a 5.3% advance for Canada.
On the mining side exploration expenditures plummeted from 1992 through 2004. According to statistics from the National Mining Exploration Survey spending on exploration hit a record high of C$227 million in 1990 before dropping to C$25 million in 1999 — marking the lowest point since 1971. Coincidentally the industry hit a new high-water mark in 2011 when it spent C$463 million on mineral exploration.
But it remains important to differentiate between public policy and macro-economic machinations outside of governmental control. At the time spot gold prices had trended below the US$300 per oz. threshold, while copper prices were sitting under $1 per lbs. The infamous "Dot-com bubble" — which ran from 1997 to 2000 — also impacted mining investment, and the Bre-X Minerals scandal broke during the same period.
The question that follows is an obvious one: Who is Adrian Dix, and how will his policies and platforms influence natural resource development in the province?
Dix served as Glen Clark's Chief of Staff from 1996 to 1999. In 2005, Dix successfully won the Vancouver-Kingsway riding, and followed up by securing a victory in the NDP leadership race in 2011. He campaigned on a fairly typical party platform that involved increases in corporate tax rates, reduction in greenhouse gas emissions, minimum wage increases, and the restoration of the corporation capital tax on financial institutions.
So just how much of that agenda is likely to carry through to the general elections in May? It would be a strong wager that corporate tax rates will rise. BC is sitting on around C$1.4 billion in provincial deficit in 2012, and assuming the NDP wants to continue to spend money it will be coming out of corporate pockets.
For example, during the debate surrounding imported foreign labour at HD Mining International’s Murray River longwall underground coal mine project, the NDP has been vocal in criticizing the Liberals for not investing enough in skills training, which has resulted in a lack of available Canadian workers for mining projects. This is not a totally unreasonable assertion, though the capital for those training projects can only come from one place under NDP doctrine: taxation.
The two other elements of a NDP regime that have mining companies nervous involve the party’s tendency to side with environmentalists and unions. The first causes problems with permitting and project development, while the second can lead to labour-cost inflation via rising real wages.
It seems like another smart bet would be the NDP staying in-line with the union mantra and its support of collective bargaining initiatives. On the environmental side, however, things start to get unclear.
So far the NDP has been extremely critical of the Liberal policy involving mine permitting and project review, but not squarely on an environmental level. On Aug. 3, the NDP actually released a statement criticizing the Liberals for extending the turnaround in mine permitting and creating an unreasonably large backlog in project applications.
It almost seems feasible that the NDP might be ready to tap mining to fund what will likely be a large-scale spending spree if the party takes office — though that really only tells half of the story.
Reading the fine points it is evident that the NDP is going to be championing greater government involvement in natural resource development in BC. Dix has basically condemned Enbridge’s (ENB-T, ENB-N) Northern Gateway proposition, and the party is in favor of higher spending on environmental review processes through greater bureaucratic involvement.
In reality it is unlikely that Dix and the NDP will rule in a vastly different way than the outgoing BC Liberals, which have been moving squarely to the “centre” politically over the past four years. Mining companies witnessed the Liberals cave to environmental pressures during the recent Pacific Booker Minerals’ (BKM-V, PBM-X) ruling on its Morrison Lake copper-gold project, and that looks likely to continue under either party.
What does the NDP mean for BC? Higher taxes and more paper work. Radical change is off the table with unsustainable provincial debt levels and a global economic landscape marked by uncertainty and risk.
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