Gallant government keeps distance from LNG tax deal in Saint John

Brian Gallant's Liberal government says a potential problem with the LNG tax deal in Saint John is an issue between the city and Irving Oil Ltd., even though Liberals criticized the Progressive Conservatives for not intervening in the arrangement 10 years ago.

"The property tax agreement is between the City of Saint John and the company and as such they would be in the best position to answer questions about the agreement," said spokesperson Leah Fitzgerald in an official government statement on the tax deal emailed to CBC News.

Gallant's cabinet ministers have been reluctant to comment directly on controversy swirling around the LNG tax deal for two weeks, turning down numerous requests for interviews.

On Wednesday, the provincial government tried to distance itself further from the matter but only muddled the issue. 

It wrongly claimed the tax deal was the result of a "Private Member's Bill brought forth by the City of Saint John" and suggested questions about whether Irving Oil might be operating outside terms of the deal established by the province, should be answered by Irving Oil, not the provincial government.

CBC News has been reporting on the 10-year-old property tax deal at Saint John`s LNG facility for the past two weeks. 

The deal freezes property taxes at the site at $500,000 until 2030, about 90 per cent below market rates.

The terms of that arrangement are outlined in provincial legislation and regulations which specify the tax deal is to apply to property "solely for the receiving and containment of liquefied natural gas."

However, recent developments at the site have raised questions about whether the tax deal has been breached.

Last year, Irving Oil constructed an oil pipeline on the site and in September began unloading crude oil tankers using the LNG wharf. In addition, plans are being studied to stop receiving LNG at the site entirely and begin manufacturing and exporting it instead.

Gallant government keeps its distance

Still the Gallant government says it has no role in sorting out whether the rules set out in provincial legislation are being adhered to or not.

"The agreement was made law via a Private Member’s Bill brought forth by the City of Saint John," says the government statement sent to CBC News. 

"As such, generally, this means that changes to the law would be considered at the request of the city and the property owner. As for the construction and operation of an oil pipeline on the site, we encourage you to contact the company for information and details."

The LNG tax deal was not created by a private member's bill, it was a government bill sponsored by then-minister of environment and local government Brenda Fowlie.

"I brought the bill forward and it was staff within the departments who wrote it," Fowlie said during debate on the legislation at the time.

The tax deal had been requested by Saint John but it lacked the authority to execute it without provincial legislation. That was done by the provincial government, which set its restricted terms.

Liberals criticized the tax deal, saying the province should not have let Irving Oil negotiate concessions directly from Saint John.

"We don't like this tax deal," said Saint John Liberal MLA Roly MacIntyre in June 2005.

"It doesn't make any sense at all — it should be the province [making a deal]. That's been our position from day one."

The party carried that message into the 2006 election when Liberal Leader Shawn Graham accused the Progressive Conservatives of not doing enough to protect Saint John taxpayers.

"This was an excellent project but it should not have been downloaded on the citizens of Saint John as Bernard Lord and his government allowed it to do," he said.

Brian Gallant was a Liberal candidate in that 2006 election, but his government is now reluctant to express any opinion on whether the terms of tax deal have been violated and what it will do if they have.

Last week, Energy Minister Donald Arseneault issued a statement saying the province would "re-examine" the property tax arrangement if the LNG facility is converted for export.

But his office said he was unavailable to be interviewed further on the issue between Tuesday and Friday.

On Monday, his office forwarded an interview request to Environment and Local Government Minister Brian Kenny, whose office said he would not speak either.

"It is too early for the government to comment at this point,"  said Kenny's office.