Premier Christy Clark today announced the establishment of a new British Columbia Prosperity Fund to ensure communities, First Nations and all British Columbians benefit from the development of a new liquefied natural gas (LNG) industry.
"The safe recovery and export of our abundant supply of natural gas presents an opportunity for prosperity unlike anything we have ever seen before," said Premier Christy Clark. "British Columbians can secure tens of thousands of new jobs for decades to come by developing this clean energy resource, and protect this new wealth for the benefit of all of us today, as well as our children and their families, tomorrow."
Billions-of-dollars in new revenue will be dedicated to the B.C. Prosperity Fund. A key priority will be to eliminate the provincial debt over time, reduce the cost burden on B.C. families through further tax reductions, and make long-term investments in the services that people depend on, such as health care, education, employment and vital infrastructure.
"Our LNG industry is quickly developing. Large industry players are investing millions of dollars now to prepare for the opportunity ahead," said Energy, Mines and Natural Gas Minister Rich Coleman. "We owe it to British Columbians to create the greatest economic return possible, so we can ensure this opportunity delivers benefits to our citizens for generations."
LNG development is poised to trigger approximately $1 trillion in cumulative GDP within British Columbia over the next 30 years and that means more than $100 billion will flow directly to the Prosperity Fund.
Provincewide, LNG is expected to create on average 39,000 annual direct, indirect and induced full-time jobs during a nine-year construction period. As well, there could be as many as 75,000 full-time jobs required once all LNG plants are in full operation.
LNG is a globally established industry and British Columbia is not the only jurisdiction looking to take advantage of the energy demands in Asia. As a result, the Province and industry are working without delay to capitalize on the growing demand for British Columbia's resources overseas.
Through ongoing discussions with industry proponents, communities and First Nations, government is focused on developing the world's cleanest LNG industry. Negotiations between government, BC Hydro and industry are progressing in an effort to determine the power-supply arrangements for each facility.
The British Columbia Prosperity Fund is the latest step by government to secure benefits from B.C.'s abundant supply of natural resources.
Last week, a one-year update to government's LNG Strategy was released, detailing the progress made to develop since the introduction of the BC Jobs Plan.
Further details can be found on the ministry's website at: www.gov.bc.ca/ener
A factsheet follows.
Director of Communications
Ministry of Finance
Ministry of Energy, Mines and Natural Gas
British Columbia Prosperity Fund
The economic impact of five new LNG plants in British Columbia before the end of the decade will be significant. Projected total revenues to government are estimated between $130 billion and $260 billion over the next 30 years. In order to maximize the benefits of these developments to future generations of British Columbians, the provincial government is establishing a new British Columbia Prosperity Fund.
The purpose of the fund
In order to ensure that British Columbians share the benefits of a resource that belongs to them, B.C. needs to set aside money for the benefit of current and future generations. It is in the public interest to save a large proportion of new LNG revenues through the B.C. Prosperity Fund.
Many commodity-based economies have established prosperity funds to preserve some of the wealth generated by resources - countries like Norway, Chile, and Australia - and provinces like Alberta and states like Alaska. Creating a Prosperity Fund will ensure British Columbia has the resources in the future to provide essential services like health care, education and social services.
How the Prosperity Fund will work
The Prosperity Fund will receive a portion of LNG revenues each year. The fund would also invest its revenues and retain the earnings. Withdrawals would be limited according to the purposes of the Fund. A key priority of the fund would be to eliminate the provincial debt.
How the revenues will be generated
New LNG revenues will be generated from royalties collected on natural gas used for LNG, and corporate income tax related to the LNG industry. It will also be generated from the new LNG tax which will be competitively positioned with taxes in other jurisdictions. Government also will receive additional revenues from personal income tax from new jobs, provincial sales tax and other taxes.
How the revenues from the fund might be used
Debt reduction: Today, provincial debt stands at $56 billion and costs $2.4 billion each year in interest payments. Reducing debt will reduce interest costs, free up money to support government services for future generations, and help preserve B.C.'s high credit rating.
Enhancements to government programs and services: A fund could provide for capital and operating improvements in health care, better education and jobs training, and additional supports for B.C. businesses and families to make life more affordable.
Tax reductions: B.C.'s taxes are currently very competitive. But there may be opportunities where investments could further help to reduce the tax burden on families in the future.
Information on the LNG prosperity fund will be published annually so that British Columbians know how much money is in the fund and how it is being spent.
Director of Communications
Ministry of Finance