31 October 2005

Le maudit CBC

In a break from watching the two-part CBC special on the 1995 referendum, I decided to check out the program's website.

It's pretty thin in many respects.

Then I came across the bit titled "Tobin takes charge". Scary thought that it is.

But try this little quote on for size:

"From Halifax to Victoria, a huge campaign is organized: thousands of Canadians send postcards to Quebecers with messages of friendship, pleading with them not to give up their country." [Emphasis added]

Was this written by someone whose memory stopped on 31 March 1949?

I trust the rest of the program does not suffer from a similar lack of adequate research.

Up the dose, Sheila

When it looked like the Gomery Commission was going to skewer the Martin Liberals, Sheila Copps and her associates danced with glee on the grave that had yet to be dug.

Now that it looks like Gomery won't follow the course Sheila et al. would have preferred, she is seeking to sink the thing with rumour, speculation and innuendo.

The Sun, of course, is that bastion of journalism that tried to paint a bull's eye on people like Rick Mercer by outing their morale-boosting trip to Canadian soldiers in Afghanistan.

Sheila, of course, is the bitter Liberal leadership candidate who got creamed by Paul Martin in the leadership run and then capped it off by self-immolating with a bad tactical decision during a nomination fight in her own riding.

The former deputy prime minister during the near-debacle referendum a decade ago and the one who came up with the Print Millions of Flags to Save Canada nonsense is now attacking Paul Martin with a degree of hatred that would make Brian Pallister look like a wuss.

Somehow Sheila seems to think that a well-respected judge with no known partisan affiliations and a process that included Brian Mulroney's former chief of staff as one of the inquiry's lead counsel will now do something other than tell the truth.

Give it a rest, Sheila.

Or up the dose on the meds.

Looks like Rick Mercer made a good call, albeit for other reasons.

SQFT egale square head

In the Canadian Forces, Secteur du Quebec de la Force Terrestre, the Army's Quebec region is known by its acronym SQFT, sometimes pronounced square foot.

Here, in French, is a brief story on results of as recent CROP survey of Francophone recruits being trained at the Canadian Forces Base, Valcartier .

It reveals a group of recruits prone to disobedience, who are less tolerant of immigrants and less supportive of sexual equality than their Anglophone counterparts.

Seems that in Quebec, SQFT actually stands for square head.

30 October 2005

The Constitutional Fish - the decision

On Friday, October 28, 2005 Rick Bouzan and George Nichol were found guilty of breaching federal fisheries regulations during the 2004 recreational fishery.

The decision by Provincial Court Judge Harold Porter was covered by news media, although both the Telegram and Independent versions didn't accurately reflect the decision. Both included comments by the lawyer for Bouzan and Nichol and comments by the defendants that the decision was based, in part, on the fact that Newfoundland and Labrador was a colony at the time of Confederation.

Here is a summary of the decision rendered by the court, taken from the written decision. An online version will be available from the Canadian Legal Information Institute, CanLII.

The decision can be broken into two parts. First there is the offense itself, which was a breach of federal fisheries regulations requiring that fish caught had to be taken on being landed. The purpose of the regulation, while not mentioned in the decision, appears to be aimed at preventing highgrading. This is the practice of catching many more fish than allowed (in this case 15) and the keeping only the best ones.

Both the prosecution and the defence filed an agreed statement of facts. Here it is in part:

"As the Officers were coming alongside [the defendants' boat] they told both gentlemen not to bother tagging any more fish. Officer Walsh who was at the front of the patrol boat observed Mr. Nicholls tag approximately 3 to 4 codfish while the other man, Mr. Bouzan, had not tagged any fish as he had just found his tags and had them placed on the seat of the boat next to him.

Once alongside Officers Walsh and Ward told the men they would be conducting an inspection of their vessel. Officer Walsh obtained both men's Department of Fisheries and Oceans 3Ps recreational cod licenses and began filling out an inspection form.
Officer Ward next asked the men to hand over their catch so that he could inspect it.

The men handed over a fish pan full of cod with one redfish in it as well to Officer Ward who then inspected the catch aboard the patrol vessel. Twelve cod fish were found tagged with tag # 012259 belonging to Mr. Nicholl and 17 cod fish were not tagged. No cod were tagged from Mr. Bouzan's license which was tag # 010857. Fifteen of the cod had been gutted prior to tagging and appeared to the officers to have been caught for some time.


Officer Ward asked the men when they had come out fishing and both men said they had been out "most of the day." No fish entrails were present aboard the vessel or floating in the water next to the boat. The men said they were just going to stop fishing and head to port. Both officers told both men they could return to port and that they would follow them in.


After arriving at a wharf in Little Bay East, Newfoundland both officers separated the tagged cod from the untagged ones and then headed over to where both men landed and returned the tagged cod and their fish pan to them. At that time both officers identified themselves to both men with their badges and identification cards.


Officer Walsh told both men that an investigation had been initiated. At approximately 1510 hours both men were read the standard caution by Officer Walsh and rights to council [sic] were extended. Both men said they understood all parts and did not want to contact duty council [sic] at that time.

Officer Walsh told both men that they may be charged with failing to tag cod immediately after catching the cod. Officer Walsh told both men that their untagged cod was seized and that their unused cod tags would be seized as part of the investigation. Both men supplied Officer Walsh with their tags at that time. All fifteen of Mr. Bouzan's recreational cod tags were seized and three unused tags were seized from Mr. Nichol's license.


After caution Mr. Bouzan said, "I didn't read my license. It's my own fault, I should have read the fine print." Mr. Bouzan said this after the officers told both men that all cod caught must be tagged immediately after catching the cod while recreational cod fishing. Both men were told by the Officers that they would be in touch with them at a later date. Both officers then left the area and continued their patrol.

The seized fish were stored at the DFO Warehouse in Marystown and the unused tags were stored at the DFO Office in Marystown.
It was a condition of both mens''’ license that any cod caught must "‘be tagged immediately after it is caught in the following manner: A non- used tag, issued with this license and valid for the NAFO division being fished, must be affixed through the gill and mouth of each Atlantic Cod. The tag must be properly sealed such that the tag cannot be re-opened or removed."’ Each license had 15 tags issued with it."”

That's pretty straightforward and, on that basis, the men were found guilty. The court was asked to consider a constitutional challenge to the jurisdiction of the Government of Canada over fisheries within three miles of the low water mark around Newfoundland and Labrador. The first question posed was as follows:

"Does the government of Canada have the jurisdiction to regulate the catching of groundfish, including cod, within three miles of the coast of Newfoundland and Labrador going from headland to headland?"

On this matter, Judge Porter concluded based on case law before and after 1949 as well as the Terms of Union that the Government of Canada has exclusive jurisdiction over fisheries matters in and around Newfoundland and Labrador. The court was asked to consider a second question, namely:

"If the government of Canada has the jurisdiction to regulate the catching of groundfish, including cod, within three miles of the coast of Newfoundland and Labrador going from headland to headland, does that jurisdiction include the right to regulate the catching of groundfish, including cod, for personal consumption?"

Judge Porter found that the federal jurisdiction over fisheries matters and that this jurisdiction includes fisheries within three miles of Canadian land as well as offshore islands. He rejects the notion of a three mile limit as having any grounds since the provincial government exercises jurisdiction for bird and land animal conservation over islands which are more than three miles from shore.

As well, he found that established case law held that a provincial government has jurisdiction over matters within its legislative competence within its boundaries. Since the Terms of Union do not include fisheries matters within the jurisdiction of the Province of Newfoundland and Labrador, the issue of where the provincial boundary exists isn't relevant in this matter. As to the issue of using fish for personal consumption, it is worthwhile to quote the decision in its entirety:

[73] The third part of the second question narrows the focus to not just fishing for cod, but to fishing for cod "“for personal consumption"”. In this regard, say the Defendants, they are in the same situation as the Powleys were. The Powleys were Metis in Ontario who said that they had a right to take moose, withoulicensece, for personal consumption: see Powley [2003] 2S.C.R. 207.

[74] Contrary to the Metis in Ontario, there are no indigenous aboriginal communities on the island of Newfoundland: see Drew [2003] N.J. 177. Even if there were, there is no suggestion that the Defendants claim membership in such a community.

[75] As a matter of Crown honour, say the defendants, the federal government must have a referendum among the residents of this Province before they can find the jurisdiction to regulate the taking of fish for personal consumption.

[76] This position is untenable: there was a referendum prior to Newfoundland entering Confederation. On entry into Confederation, Newfoundland assumed the same position as if Confederation had been achieved in 1867. As earlier discussed, this included recognition of exclusive jurisdiction over the fishery in the Federal Crown. There is no reason to distinguish between fishing for trade, barter, or personal consumption.

At no point in the decision did Judge Porter make any reference to the notion that Newfoundland and Labrador was a colony at the time of Confederation. Since I wasn't in court, I cannot say for certain he made no mention of this issue in his remarks.

But let's be clear: there is nothing about this issue at all in the written decision.

Judge Porter's decision is based on both the agreed upon statement of facts presented by both parties in court with respect to the offence. On the constitutional issues, Porter relied on case law, the Terms of Union and a variety of statutes and proclamations dating back to the 18th century.

Nichol and Bouzan were fined $100 each for having untagged cod in the possession. in news reports, Bouzan has indicated the case has cost the two defendents $11, 000 so far. They intend to appeal the conviction.

It will be interesting to see what happens when and if the matter gets to the Supreme Court of Newfoundland and Labrador, Court of Appeal. I'd wager the thing will never get to thSuprememe Court of Canada.

The whole thing is black letter law.

Sunday morning, 8:00 AM, Quality Time


I once suggested a variation on this Bloom County panel as a billboard ad. The client didn't take it, but hey not every idea passes client-muster.

After all these years, I still find it both funny and fitting at the same time.

Piece and quiet, a cup of hot coffee and something decent to read.

29 October 2005

Saturday Night, 10:00 PM, Same ole Spindy

It's actually a great thing to be able to get the local hotbed of investigative reporting on Saturday night while most people wait until sometime Sunday to find out how far short of its own billing the Independent has fallen again this week.

A cuppa Tim's finest, some peace with the door locked and the Spindy.

The best thing about the Spindy - every single week, without fail - is Paul Daly's spectacular photography. It remains the only positive reason to read Brian Dobbin's rag. Check out the page one shot of Constable Stephen Knight. You just can't get that composition and clarity anywhere else in the province. Heck, I don't think you find Daly-quality shooting in most other papers in the country. (Photo: Paul Daly/The Independent - from last week)

On the front page there's a really puffy, flattering profile of PetroNewf boss Ed Martin. In a week where both Martin and his boss the Premier talked a bit about this whole idea of taking the Crown hydro corp and sticking it in the oil patch, the Spindy didn't see fit to dive into some detail. Poke and probe a bit. Maybe take a critical look. Nope. More butt-kissing fluff of the kind we got when Danny re-appointed his ole buddy Dean MacDonald to run the board over on the Crosstown Arterial.

Try and find anything substantive on the Abitibi subsidies and you are excrementally devoid of good fortune. The story that seems to mark a real turning point in the Premier's popularity and political life garners a tiny mention in managing editor Ryan Cleary's column. On the front page, there's instead a focus on a mill in New Brunswick with some references - unenlightening ones at that - to Stephenville. Cleary was in Stephenville for the announcement, too.

Cleary does bitch about other media outlets taking a couple of Spindy stories and covering them as well, without giving the Spindy any reference. That happens all the time, as Ryan well knows, especially when the stories he mentions have been covered and will be covered in any event by everyone else, anyway. The Spindy didn't break anything here of substance so he really can't complain. What he should do is thank his lucky stars other media outlets don't point to the number of times the old Spinner has cranked out stories based on a sole source that turned out to be completely lacking in any substance or foundation.

My fave front-pager this week is the result of an Access to Information Act request that netted a whole bunch of e-mails the Prime Minister got about the offshore oil deal. Wow. Like we needed the Spindy to tell us - for the umpteenth time - about Danny's Greatest Triumph.

There's a page two story on the Bouzan conviction that, like its Telegram counterpart demonstrates that the two reporters didn't actually sit in court for the decision or if they did, they missed the pretty straightforward reasoning of Judge Harold Porter. (More on that tomorrow, since I actually have a copy of the decision.)

There's a decent story on page 3 about the Royal Canadian Legion and the closure of 15 branches in the past year. There's also a little piece about the lack of information Canadian officials have on oil spills outside the 200 mile economic zone. Hint: The Spindy hates DFO for a whole bunch of reasons, so don't ever expect to see a balanced story on the federal fish department.

The Spindy decided this week to do yet another attendance poll of federal members of parliament from this province. Loyola Hearn and Norm Doyle top the list. But hey. If they spend so much time in Ottawa, why exactly do they claim really high amounts of travel from the taxpayers? For those who missed it, the most recent figures are here for Messers Hearn and Doyle. High attendance and high travel bills seem to contradict each other, but then again if the Spindy actually poked at these two former Peckford cabinet ministers, they wouldn't be able to rely on them for anti-DFO quotes every week or so.

Incidentally, given the rules under which those claims are filed, you and I can't get access to the receipts for the claims as we can for any other senior official of government. Heck, we can't even get the kind of detail available from the fed's Proactive Disclosure. It's worth taking a look at those sections of departmental websites sometimes to just how little actually does get spent for things like travel every quarter of the year.

Fight your way through to the editorial page and find that Brian Dobbin is back, this week spilling ink about the lack of capital in the province. He takes a smack at the fact Canadian investment money seems to sit in Toronto and then launches into a little story about his travels to places like Hong Kong and the United Kingdom looking for investors.

Don't expect any insights here; Dobbin neglects to point out that having a thriving and diverse private sector would actually give investment capital, as would creating jobs and wealth such that ordinary people could invest in strong local, free enterprise.

Problem with that approach is that it would lead to Dobbin doing two things he would never do: a. criticise the PetroNewf decision of his new patron on the Ireland thing and b. lead to questions about how much government capital it takes to actually run a local bastion of capitalism. I am thinking Gander and Brian's hatred of the CBC, in case one example isn't coming readily to your mind.

Oh. But wait, Brian doesn't buy shares in anything himself since he feels that the value is often hyped as opposed to being substantive. Hmmm. An interesting attitude. Not one I'd agree with in every case, but it is curious. I'd love to hear brian explian to his uncle, Craig, that shares in the second-largest helicopter company in the world are built on a mound of crap.

Well, the Tim's was good as usual. The Spindy was not, as usual, except for Paul's photography and Stephanie Porter's reporting. Take away the stuff they lift from the Toronto Star and some New Brunswick papers and the paper thins out quite a bit after the op-ed page.

What a way to spend Saturday night.

I need to check the guide.

Maybe there's a Golden Girls rerun on.

Calvin and Hobbes

History is the fiction we invent to persuade ourselves that events are knowable and that life has order and direction. That's why events are always reinterpreted when values change. We need new versions of history to allow for our current prejudices.

- Calvin, to Hobbes

This strip is apparently the most successful cartoon one since Peanuts. I got hooked on it at some point and was mighty sad when it ceased publication.

Calvin is the stereotypical boy, but with an adult's sense of the world. His tiger, Hobbes, was apparently named for the English philosopher who told us that in the state of nature life was poor, nasty, brutish and short.

I have used Calvin sometimes in my posts and people might find the references a bit obscure or odd. So as I post this on Friday night - dated ahead for sticklers - I thought I'd share a little cartoon and one of my favourite Calvinisms.

28 October 2005

A blow for plain English

When I can get my hands on an electronic copy I'll post it here.

If I get a link, I'll post that.

But anyone who wants to read what is undoubtedly a straightforward legal decision written in plain English, check out Judge Harold Porter's decision today in the case of R v. Bouzan. Click here for an earlier posting that gives some detail of the actual constiutional provisions, that is actual as opposed to the goof-ball interpretation Bouzan and da byes were foisting.

Rick Bouzan is the executive director of something called the Newfoundland and Labrador Wildlife federation. He's a close associate of Jim Morgan and among the crowd of them there's twice as many groups that they represent all clogging call-in shows in favour of the Damn-Fool Fishery (copyright pending).

Anyway, Bouzan and a fishing companion were caught with untagged cod in their boat during last year's recreational fishing season. They tried to turn the whole matter into a constitutional issue by claiming that since they were only 500 metres offshore, the feds didn't have jurisdiction. Provincial boundaries extend out three miles.

Seems their legal help (no, it wasn't Lewis Tully) didn't actually read far enough through the constitution. As any lawyer worth 20 bucks and a pint at the Duke will tell you, the fishery is entirely in federal jurisdiction. The provincial boundaries don't enter into it.

(Left) Lewis Tully, nightschool-trained lawyer and erstwhile Ghostbuster.

Da byes were slapped with a fine of $100 each for violating the appropriate regulations and emerged from court promising to take their fight all the way to the Supreme Court of Canada.

We can only hold our breath waiting for the peals of laughter from the learned justices as yet another dingbat constitutional case comes their way.

In the Land of Irony


At the risk of not using the word "irony" correctly, I note this post on Jack Harris' resignation as leader of the provincial New Democratic Party. At least, I am confident that in this instance, this word doesn't apply.

It is passing strange that someone who enthusiastically supports [but in a completely non-partisan way] a federal political party that repeatedly demonstrates its inability to connect with Canadian public opinion beyond a small portion presumes to criticize the NDP for the same thing on a local level.

Jack's departure does indeed mark the passing from public life of someone who has served longer in the current session of the House of Assembly than most others. The exceptions would be Tom "Backupable" Rideout and Jim Hodder, both of who were first elected in the 1970s. They had a break in their service; Jack's been sitting continuously in the legislature since the early 1990s.

The provincial New Democrats have enjoyed some measure of success over the past 20 years, managing to keep two members in the House for a significant chunk of that time. They just haven't managed to widen their appeal beyond a couple of seats. I'll leave it to a full-time political scientist to delve into the reasons for that inability to climb beyond the NDP's current status.

A more interesting thing to ponder is going to be Jack's replacement. The Liberals are having a hard time getting anyone to declare an interest in their head-honcho job. We probably won't hear a name or two until the spring. In the NDP case, aside from somebody like Wayne Lucas, there doesn't seem to be anyone who might want to lead the Orange Machine provincially.

Maybe Jack's departure, which doesn't include resigning his seat, will end speculation Danny was about to appoint his former law partner to the provincial court bench.

Disincentives

Something about this just seemed appropriate today. Go check the rest out at Demotivation, Inc..

The hard and the easy: Abitibi and government subsidies


In dealing with Abitibi Consolidated, the Williams administration faced a Hobbesian choice. Had it followed through with Premier Danny Williams' pledge from July, mills in Grand Falls-Windsor and Stephenville would now be shutting down with the loss of more than 700 jobs and the loss of over $500 million in newsprint sales from the local economy.

(Left) Premier Danny Williams. Photo: PictureDesk Int'l/Greg Locke

With the choice it made, the Williams administration is committed to subsidizing a particular company at a rate which exceeds or almost exceeds the government revenue generated by the company.

Forest Industry Context

The decision to subsidize Abitibi Consolidated must be seen in the context of the forest products industry. As noted in The Economy 2005, the newsprint industry has been facing a combined problem of significant declines in demand and excess production capacity in high-cost locations that have combined to reduce prices.

Provincial exports of newsprint declined by 6.3% in 2004 compared to 2003. The largest market for local newsprint is the United States market, however, North American demand for newsprint has declined 16% since 1999 with prices declining as well.

Since 1994, newsprint prices have declined by more than US$100 per metric tonne. While there have been periodic increases and decreases, the price trend since 1994 has been downward.

The forests of Newfoundland cannot support the demand for fibre from the four machines currently operating in the province without being supplemented by a variety of costly alternatives. Labrador offers ample supplies of raw material, however the costs of shipping the wood to mills located on the island remain as prohibitive as they were when the Labrador Linerboard mill opened in the 1970s.

The Williams-Abitibi deal: a net loss to the Treasury

For an administration elected to end resource giveaways, the Williams subsidy to Abitibi becomes even more striking as an aberration when one considers the impacts on the provincial treasury.

Underestimating the size of the subsidy: While the government's news release stated the agreed subsidy for Abitibi Consolidated was $10 million annually, Premier Williams comments in interviews shows that the annual amount of subsidy will be between $10 and $12 million annually according to a formula based on the Stephenville mills profitability and the cost of power. The Premier's estimate of the total cost of the subsidy is $175 million, although simple math would show the maximum to be $180 million.

The actual cost may well be higher than the government indicates. Prices for power are likely to increase over the life of the agreement and the subsidy appears to be tied to the Stephenville mill's profitability. Given the long-term trends in the newsprint industry and the particular issues at Stephenville, it appears more likely than not that $10 million represents a minimum annual subsidy as opposed to an average or a maximum.

Spending $1.50 to put a 50 cent cucumber on the market: Based on Budget 2005, the 215,000 members of the provincial workers each generated $7660 in direct tax revenue for the provincial government, for a total of $16.47 billion.1 Therefore, the 282 Abitibi employees in Stephenville produce approximately $2.16 million in tax revenue. The company operation itself pays $7.0 million in taxes annually, according to Premier Williams, for a total of $9.16 million flowing to the provincial government from the Stephenville mill.

If we take $12 million as the likely annual subsidy, the provincial government will actually lose almost $3.0 million from this agreement. If the actual figure is $10 million, then the losses are lower but they are still losses. Only if the cost of electricity decreases across the board in the province or the Stephenville mill becomes suddenly profitable will the provincial government actually see any return on its annual investment, let alone a sizeable one.

The only way to make this agreement a significantly profitable venture, based on available information, is to accept the provincial government's contention that the Stephenville mill actually produces an economic impact of 900 jobs.

This job multiplier effect offered by the provincial government seems high in comparison to similar manufacturing businesses in other provinces and states, where a multiplier effect of less than 2.0 appears to be typical.

At that multiplier rate - 282 jobs yielding 564 total jobs - the province would net $1.1 million in revenue if the subsidy were held at $10 million. At the higher government subsidy figure of $12.0 million, the loss to the provincial treasury is on the order of $700,000 per year.

Your oil money at work

While there is no doubt the Williams administration faced a very difficult range of options in responding to the announced closure of the Stephenville mill, it should always be borne in mind that it is the nature of government to make choices between sometimes very difficult and unpalatable options.

The choice Premier Williams made was to transfer provincial revenue from offshore oil - a non-renewable resource - to a private sector company to secure several hundred jobs. At the same time, the transfer will produce, at the very best, a negligible net cash return to the provincial treasury.

It does secure the jobs for the short-term and admittedly this reflects a political choice as to what this administration values. However, it should be noted that the medium- to long-term prospect of keeping the existing level of newsprint production on the island, and in particular at Stephenville, remains unsecured. It may prove impossible to sustain four newsprint machines - three at Abitibi's operations and the one at Corner Brook. Abitibi may close the Stephenville mill within the next five to 10 years in any event given its own financial position and developments in world markets. It will almost certainly close the Number Seven machine at Grand Falls-Windsor to reduce costs at that mill and to free up a cheap source of fibre to meet the other problem at that mill.

By taking oil money to prop up other industries, Premier Williams is taking a leaf directly from the Brian Peckford play book. Peckford promised repeatedly in the early 1980s that oil money would allow for a restructuring of the fishery. He went so far as to promise that oil cash would let the province buy sports equipment and build new recreation facilities in rural areas of the province.

It is interesting to note that in this instance, the Premier's agreement with Abitibi does not include any mention of the simple, and obvious, approach to fixing Stephenville's power problem, as proposed by Abitibi some months ago. Abitibi proposed construction of two new hydroelectric plants on Abitibi's Exploits watershed that would generate 60 megawatts of power dedicated to the Stephenville mill.

Government rejected the idea initially, claiming that Abitibi was seeking control of a plant that Newfoundland and Labrador Hydro would build and pay for. This claim ignored several key points. First, there was the persistent rumour that Abitibi actually proposed a lease-back arrangement by which it would purchase a significant or controlling interest in the mills. Second, even if that deal had never been offered, as natural resources minister Ed Byrne stated, government does not appear to have considered the possibility of investing oil money into a long-lasting, tangible asset - the generating facilities.

In the meantime, government has committed to studying ways of offering Stephenville long-term, low-cost power. But a commitment to study does not equal a commitment to act. What it has committed to is spending money from a non-renewable resource without gaining very much that is tangible and genuinely secure over the long haul.

Mill workers in Stephenville can be assured of jobs for some undefined period, as some will undoubtedly point out, but that will come only if the workers grant significant further concessions to Abitibi on their collective agreement.

It may well be that what these concessions will buy is a temporary reprieve.

Or, as one wag put, what we may see here is not merely an end to resource give- aways but the start of a policy that pays a company to take our raw materials for their profit, in exchange for a few hundred jobs in rural Newfoundland and Labrador.

Hobbes may well be smiling.

27 October 2005

Connie expense accounts

In a post Rarely Graced by Logic, Liam O'Brien claims a number of things that should strike a reader of the post here on Dave Dingwall's expenses as a little bizarre.

First of all, O'Brien claims the post stated that Dingwall had been exonerated by two audit reports on his expenses at the Royal Canadian Mint.

What it actually pointed out was the huge gap between what Connie partisans had claimed to be factual and what the facts were. The post was less a straight-up defence of Dingwall as a critique of bad political communications by Connies like Brian Pallister.

Maybe that wasn't clear.

Maybe it struck too close to home.

Second, O'Brien issued a few challenges in between following a now shop-worn tactic of attacking the person when he can't refute an argument.

One challenge was to point out any case I had where I suspected a Conservative member of parliament might have submitted dubious expense claims or, as in the cases - plural - I'll toss him, of where the size of the claims raises some fairly obvious questions.

Oddly enough, this case was covered in what I suspect is O'Brien's favourite newspaper, the pink white and green Spindy back in May.

Here's the link to my original post.

"Why then did Mr. Doyle rack up $172, 904 in travel expenses?

And why did Loyola Hearn cost taxpayers $164, 159 for travel?"

These two Conservative members of parliament live in ridings that are easily accessible by air and car and yet their travel claims look like they were heading from Ottawa to Alert and back again. Every weekend.

Even after we allow that Hearn lives in Renews, about two hours south of the riding he represents, his mileage shouldn't be pushing his travel claims into the low six digits. Since he and benchmate Norm Doyle both know when they need to travel back and forth to the riding, surely they could book some seats far enough in advance to get a discount.

or stay in cheaper hotels.

or stop gnoshing at Hy's.

To bring those figures up to date, here is the report for 2004-05.

Norm Doyle's travel, as covered by the House of Commons - i.e. you and me - was $157, 768. Bear in mind that for some of that period, Norman was on the campaign trail and off the public payroll. Otherwise, his total travel would likely look just like it did the year before when he was obviously doing alot of stormin' around.

Hearn's travel clocked in at $103, 608. Consider that Hearn was off the payroll for a little while in there. Consider too that his riding is now a heckuva lot smaller than it used to be. He can bicycle from one end to the other in a few hours or better still take the bus to all but a few corners of it. (Pssst. That's a facetious comment about the bike and the bus)

But ya still have to wonder what he was doing to rack up that kind of travel costs.

Before anyone tries to wave a wand and turn that into nothing, look at some other expenses.

Jim Abbott, from Kootenay-Interlake, British Columbia came in between the two of these guys. But he's actually farther away from Ottawa than either of our two Connie friends and he represents a largely rural riding.

Alexa MacDougall, the Dipper from Halifax only spent about $71, 500 to visit her riding once in a while.

And what of Pallister, the Connie from the Prairies? He only spent about $73, 500 getting back and forth to a lovely riding in Saskatchewan.

So why the heck are Mr. Hearn and Mr. Doyle so much more expensive?

Using Brian as the Benchmark, Hearn is 41% higher than Brian while Doyle is a whopping 114% above the Connie Guardian of Expense Account virtue.

Dingwall's expenses - updated

While Connies like this local one, this big Mainland one, and this one, have been attacking former Royal Canadian Mint boss David Dingwall over his expense account claims, two reports released today add up to yet another failure of the Connies to garner any sort of credibility.

(Left) Former Royal Canadian Mint chief executive officer David Dingwall. Photo: Canadian Press

Turns out what they claimed was wrong - substantively wrong.

The big loser here (after Steve Harper) is a guy named Brian Pallister, much loved over at Reflexive Grit Loathing, who was part of the Dingwall attack pack and whose claims have been shown to be, in a word, false. Take a gander at this little piece of video the Connies were passing around earlier in October but which now looks kind of dumb in light of today's revelations.

Updated - Pallister's argument is now that he wants to complain about the rules not about the specific claims made by Dingwall. This is the kind of moving target approach that just doesn't garner cred either. Every time one of your arguments is shot down by facts, you just claim you never argued that in the first place and then pick up on something.

As CBC reports, "Among the [PriceWaterhouseCoopers] audit's findings:

- The $5,800 allegedly spent on one meal was for a two-day seminar involving 24 mint personnel.

- The money allegedly spent on chewing gum was covered under the allowable $20/day incidental expenses.

- There was no evidence of the alleged $13,000 for one day of travel but two claims for $13, 693.83 for a four-day conference in Phoenix and mint-related meetings in New Brunswick, the UK, Switzerland and Germany.

The audit did find that $2,570.66 was determined to be reimbursable to the mint. In addition, $4,198.35 was deemed recoverable due to a clerical payroll error and car insurance prepayments issued by the mint." [emphasis added]

As reported by the Globe and Mail, a second review, carried out by Peter Dey of Osler, Hoskin & Harcourt LLP, "found that the governance process followed by the Mint with respect to the approval and reimbursement of its CEO's expenses was sufficient to ensure that the Corporation's funds were 'expended in a manner consistent with the Mint's policy.' "

Apparently, there's also no evidence that Dingwall dinged the Mint for a pack of chewing gum.

Conservative leader Stephen Harper is quoted as slamming Dingwall for not using "political judgment" in his travel claims and criticizing the reports since the rules were supposedly made by Dingwall.

Wow.

It really isn't clear what "political judgment" Dingwall is supposed to have lacked since the expenses turn out to be legitimate and were totally misrepresented by Harper and his party. It also isn't clear how Dingwall made up his own rules since the claims policy is set by the board of directors, of which Dingwall used to be just one member.

Perhaps the biggest failing of the Connie attack on Dingwall is that the totals are way off. As the Mint board of directors noted in early October, more than 70% of the figure of almost $750,000 Dingwall critics had claimed were "expenses" was actually salaries.

Then there is the matter of Dingwall's ability to actually spend some cash doing what he got paid to do: bring in new business for the Mint. This contract with Thailand is one example.

I am no fan of David Dingwall, but when someone is attacked and personally vilified without any cause other than rank partisanship, the facts of the matter must be presented.

Incidentally, this sort of political attack may go a long way to explaining why the Conservatives have a hard time making any headway with public support. It is much like the Grewal affair.

Claims are made.

A media feeding frenzy ensues.

Then the bubble bursts, in this case the chewing gum bubble.

The facts emerge at which point everyone realizes that the Conservatives are making unsubstantiated claims.

Credibility takes a huge nosedive.

The Conservatives blame everyone else except themselves and their leader.

26 October 2005

ACI gets government subsidies for Stephenville

The Government of Newfoundland and Labrador today released some details of an agreement with Abitibi Consolidated [ACI] that will see the mill continue in operation for 15 years.

Under the framework agreement, ACI will commit to maintaining the Stephenville mill at current operating levels (194, 000 metrics tonnes of newsprint per year) for a total of 15 years. The company will also install a new boiler at Stephenville by the end of 2006, at an estimated cost of up to $13 million.

The provincial government will $10 million in subsidies to ACI for Stephenville, either directly or through Newfoundland and Labrador Hydro. The subsidies will total $150 million.

ACI's original proposal, as released by the provincial government in July, was for a 30 year subsidy agreement of between $7.0 ands $14.0 million per year, with an estimated total of between $210 and $420 million. The framework agreement represents an intermediate figure between the extremes for half the term of the original proposal. If the new agreement were extended to the full term of the original proposal, the cost would be $300 million, the estimated high cost option for constructing new hydro generating capacity for Stephenville.

The new framework agreement also commits both ACI and the provincial government to work on a long-term solution to the Stephenville mills power cost problem. That likely means that ACI and the province's hydro corporation will negotiate construction of new power generation facilities on ACI's watershed holdings to feed the Stephenville mill.

Missing from the announcement is any reference to ACI's Number Seven machine at Grand Falls-Windsor which was slated to close. Expect to see the machine shut down with ACI's associated fibre holdings being transferred to address the fibre supply problem at Stephenville.

This agreement is one possible version of a solution suggested in the Bond Papers in July. At that time, we identified the problem as power rates, an issue created under the Grimes administration.

As we put it at the time: "[a]ll things considered, it is possible the provincial government is not as angry at Abitibi as it might seem. Abitibi may be pushing back at a government which was already playing hard ball at the negotiating table. Read between the lines of government's news release, add in a few other considerations and you get the sense the provincial government will be putting some new cash into Abitibi through reduced power rates."

Today's announcement is exactly that: The provincial government will provide ACI with power subsidies amounting to $150 million over the life of the current agreement.

The announcement also contradicts the Premier's suggestion in September that ACI's divestiture of its PanAsia holdings would allow the company to reinvest in Newfoundland and Labrador. As ACI stated at the time and repeated today, its divestiture will provide $600 million which will be used solely to reduce its current corporate debt load. The divestiture is part of a long term corporate plan to reduce debt and improve its financial position. The investment of $13 million for a new boiler represents a marginal amount and can easily be categorized as routine replacement of equipment. It's a normal capital expenditure or capex as opposed to a dramatic change in the Stephenville operation.

Stephenville Limbo

Abitibi Consolidated [ACI] announced today that its mill at Stephenville has been idled as opposed to permanently closed. The CBC story linked above also links to the ACI release, carried by Canada Newswire.

The changed status is a result of an offer from the provincial government that ACI regards as holding the potential to change the financial position of the Stephenville mill.

In substance, though, Stephenville is still closed indefinitely and will only be reopened when and if a successful agreement can be reached.

Workers at the mill are now in limbo, at least until some final decision can be made on government's recent offer.

There was no mention today of the status of the Number Seven machine at Grand Falls which was already scheduled to be phased out.

25 October 2005

Further Ferdin Fooferah and some local connections

A simple google search for Pam Ferdin reveals some really interesting links to accounts of her terrorist activities.

Take this link, for example, to a Los Angeles blog that notes municipal employees in LA will be getting security protection at city expense, thanks to threats from Ferdin's Animal Defence League. Seems a someone set off a smoke grenade in the apartment building of one city animal control director.

One union official had her car firebombed by the nutjobs Ferdin leads. Follow the links back to Ferdin's site, as the link suggests, track the account of the protest and you can see some of the extreme language used by Ferdin and company to describe people they have targeted.

Just remember that Ferdin's husband, Jerry Vlasak views violence and non-violence as merely tactics to achieve the greater end.

Then there's this link to a protest against a research facility to be built at Cambridge University. Note the list of speakers include Vlasak and Ferdin, the latter being described as the head of a primate protection outfit. That would be in addition to heading ADL and at least as of August 2004 of running another group that several years earlier had been involved in beatings of biomedical researchers.

The happy couple started their life of protest at least as early as 1996-97, in this turkey protest in which Vlasak was jailed for mischief and Ferdin was identified as the protest organizer. Ferdin is identified as a trauma nurse - which makes sense if Vlasak is a trauma doctor, but prior to this her work was with a New York company that handled animal control on contract from the Big Apple.

Flip around the web a bit and you can come across Animal Scam, a site dedicated to countering animal rights groups.

This is where the whole story gets rather interesting, at least from a local angle and our ongoing hate-affair with veteran money vacuum Paul Watson.

Despite the fall-out from Peter Gullage's piece on Paul Watson and Jerry Vlasak last winter, it seems Vlasak is still on the board of the Sea Shepherd society. This link rather neatly describes Ferdin and Vlasak's status in the United Kingdom. Her Majesty views them as a threat to public order and likely with cause.

Watson also sits on the Sierra Club board. He tried to take over the Sierra Club board during internal elections but apparently failed. in the meantime he is still there. The Sierra Club of Canada is part of the international Sierra Club organization.

These guys are also linked to People for the Ethical Treatment of Animals, or PETA as it is commonly known. Does anyone at memorial remember some guy named Alka Chanda? This guy used to teach at MUN and is now a researcher at PETA.

PETA has the standard anti- seal hunt website, complete with video and the complete lie that "baby" seals are killed.

Check out the Rebecca Aldworth shown on the ice at the end of the International Fund for Animal Welfare video that PETA uses and you will find this. Apparently she grew up in a community of 340 people somewhere in Newfoundland and is now working with the Humane Society of the United States as Director of Canadian Wildlife Issues. She's someone Paul Watson has described as "the world's most active" anti-sealing protestor.

Rebecca also subscribes to Watson's idea that stopping the seal hunt would actually help with cod recovery. Try this link on for size.

Of course in her former life, as president of the student's union at Concordia, Becky found violence of the type she helped provoke last winter on the ice floes to be just a bit too unpalatable.

I guess Beck changed her mind about violence as she got older.

And realized the money to be made from it.

Of course, the nut factory once known as Sir George Williams U has always been a dodgy place.

She seems to have fit right in, once skating topless on the Rideau Canal to protest against fur as clothing.

Personally, I'd like to know what part of Newfoundland she's from.

Save animals! Kill humans!

Peter Gullage did a great story earlier this year pointing to the links between Paul Watson and a radical animal rights activist, Jerry Vlasak.

Thanks to the Penn and Teller vid, we can link Watson and the Sea Shepherd society to yet another violent individual.

The guy's name is Rod Coronado. He appears in the Penn and Teller thing, mentioning that he remains a member of Paul Watson's outfit.

A simple google search and you turn up this link to a profile of the Sea Shepherd group.

"Several nations including Japan have pressured the United States to declare Sea Shepherd a terrorist organization. Controversial animal rights activist Rod Coronado, who has had numerous legal problems stemming from his activism, got his start in activism with Sea Shepherd, where he participated in one of Sea Shepherd's best-known and most controversial actions, the scuttling of two ships from Iceland's whaling fleet while in port in 1986."

Coronado served 57 months in prison for fire-bombing research offices at Michigan State University. He is currently under indictment for other activities in Oregon.

Charming.

And just to close the loop:

Jerry Vlasak is married to Pam Ferdin, the former child actress.

A home for former child stars

Isn't it really strange how out-of-work actors and second- and third-tier "celebrities like Anna Nicole get involved in the animal rights movement?

Maybe they are well intentioned. Maybe, just maybe some of them are looking to expand their audience and hence marketability.

Next spring, they'll be back, in force, speaking out against the cruelties of the seal hunt.

Take a look at this video by Penn & Teller, part of their Showcase program, Bullsh*t!.

Does the Pamelyn Ferdin taking part in the Los Angeles animal control protest look familiar to you?

Turns out she was a child star in 1960s and 1970s.

Yep, she's the cute little girl from one of the worst episodes of the original Star Trek. That's her (left) being comforted by Canada's own Bill Shatner.

The former actress is apparently committed to total animal liberation, which means no pets and no animals in research among other things.

Scrum = bad news

Premier Danny Williams and natural resources minister Ed Byrne held a scrum in the Confederation Building this morning to call on Abitibi Consolidated [ACI] to decide what the company plans to do about the government's latest offer on Stephenville and Grand Falls-Windsor.

Two things:

1. ACI has made no public comment on anything since talks broke off almost a month ago. The recent re-start of talks has gone by without any comment from the company but lots of "hope" and "optimism" from government. This smells like a case of monkey-tossing.

2. ACI announced on 20 October 2005 that it would hold a news conference tomorrow to...release third quarter results for the company just as it has done for each quarter for the past year or more. And just as the company has done faithfully, that will almost inevitably include a further statement on the company's plans to shut down Stephenville and one machine at Grand Falls-Windsor.

Taken all together, that makes today's comments by the Premier a case of calling for the sun to rise. He knows full well there is an announcement coming.

Here's the part he didn't say: Stephenville will close and Grand Falls-Windsor will lose one of its two machines. The Premier has known it for some time, at least back as far as the time ACI announced the closures.

How do I know? If anything else were going to happen, there would be a giant news conference involving the company and the provincial government.

In a case like this, a scrum means there's bad news coming.

24 October 2005

If it's Ontario, it must be true

Yeah, like the Liberal Party isn't getting ready for an election across the country.

The Hill Times catches up.

Paul Martin - from the Press Gallery


"Hey Stevie! Boooga booga!
The writ drops in November."

At the annual Ottawa Press Gallery dinner, Prime Minister Paul Martin mugs for the camera. [via Rick Mercer]

Some of Martin's speech made the radio and it was damned funny. Don't take my word for it. Go check Rick's site.

Ditto for Stevie Harper, who does a wicked Brian Mulroney impression. Then again, Peter MacKay, DDS, did the same schtick in 2003.

While you're over there, check out Rick's posting on his recent trip to Afghanistan. There are some great photos and some pretty funny accounts of events there.

Flag poll

There wasn't much surprise in the results of a poll on the provincial flag, commissioned by the Premier's Office and given by the office to The Independent.

Almost half wanted to keep things just as they are with barely a quarter of respondents supporting the pink, white and green.

The poll was like done by Ryan Research, although, oddly, the story doesn't identify who did the research for the Premier.

What was surprising? That the Premier, who is adamantly fighting any effort to gain public access to eight polls he commissioned from Ryan Research, released this one without any formal request.

No surprise that he released it to the Spindy, since the paper is basically acting as the Premier's unofficial mouthpiece.

Spending the future

" [The change in the province's financial outlook] That's very dramatic...Some people are going to stand back and say 'Oh yeah, that's just because your very lucky. That's because the oil prices have gone up.' Well, no. That's part of it. But we had a tough budget, a prudent budget. We've managed the province, fiscally, very tightly."

Premier Danny Williams
Quoted in "Cash boon may fund province's infrastructure"
by Rob Antle, The Telegram, 22 October 2005, p. A3

Premier Danny Williams is absolutely correct.

The provincial government's financial state is a direct result of oil and gas revenues. High oil prices have produced a boost beyond what the Real Atlantic Accord, the offshore royalty regimes and development at Voisey's Bay would have produced anyway.

Unfortunately, the premier's positive comments may have two unwelcome results. First it may make it seem as though the province can afford to increase spending in a number of ways. Second, his comments divert attention away from the fundamental failure of the Williams administration, two years into its mandate, to produce integrated plans to address the province's financial windfalls in a way that will yield the greatest long term benefit.

Let us deal first with the overall financial situation.

The Premier stated that the "consolidated deficit [this year] could be down in the range $100 [million], $200 [million] range" from the $492 million accrual deficit forecast in March. The Premier proposed to spend at least some of this money on infrastructure, especially in rural Newfoundland and Labrador.

Let us be clear: the $492 million shortfall forecast in March 2005, indeed all the accrual deficits forecast by the provincial government, include significant components that are made up of several unfunded liabilities.

The Premier's comments come from adding into his calculations the huge amount of money coming from the offshore. This year it is reputedly in the range of $400 million beyond what was projected. The provincial government's own figures, used by economist Wade Locke, showed that the province's offshore revenues would be $600 million this year. This was based on oil at about US$15 per barrel lower than current market prices.

His comments about the improved financial situation are also based on growth in the province's economy (gross domestic product or GDP), as well as changes to the structure of the debt that themselves reflect long term efforts by successive administrations since 1989.

On the face of it, the debt to gross-domestic-product [GDP] ratio seems greatly improved. In 1991, for example, the province's total debt was 65% of the provincial GDP. Its accrual debt was approaching 100% of GDP.

In Fiscal Year 2004, by contrast, the total debt was 44% and its accrual debt was about 50% of GDP. This change was entirely due to growth in the provincial economy. Little if any debt was retired in the intervening 13 years; in fact the provincial government and its agencies owed more money in 2004 than in 1991.

One substantive positive change, however was the reduction of debt held in foreign currencies. In 1991, almost half the province's direct debt was held in expensive foreign currencies and much of the debt was held at high interest rates. This greatly increased the amount needed to service the debt, that is, to make the interest payments. By FY 2004, less than 22% of the debt was in foreign currencies and government continued to roll over its high interest debt in lower-rate loans. Such is the improvement that in 2004, the province was paying slightly less to service its debt than it was a decade earlier yet the total debt (not accrual) was actually $2.0 billion more and debt servicing accounted for 13% of total government expenditures compared to 15% in 1994. Looked at another way, in constant dollars, the provincial government is actually spending less on servicing its debt than it was in the early 1990s despite owing almost 40% more.

An increased debt load with what are admittedly transient increases in both the economy and provincial revenues do not make for a windfall. Nor does it support dramatic increases in program spending or capital works.

Consider as well that in his remarks to the Telegram editorial board, Premier Williams spoke of spending the supposed windfall on public infrastructure around the province, especially in rural Newfoundland and Labrador. In 2004, infrastructure cash was supposed to come from a new transfer payment from the Government of Canada designed to offset Equalization losses.

That deal, when it was finally signed, actually did not effectively double offshore revenues, as the Premier had originally sought. Instead, it added a single lump sum payment of $2.0 billion. That money sits collecting interest at a rate of about $5.0 million per month, with no publicly announced plans on what the government plans to do with either the $2.0 billion or any of the $60 million in interest coming from it.

Against this backdrop, one must look at the Premier's comments with some degree of concern. The provincial government still has no coherent plan for tackling the long-term financial issues identified by PriceWaterhouseCoopers. There is no commitment to paying off debt.

The "revitalization" of rural Newfoundland and Labrador, embodied in the Williams administration's Rural Secretariat is merely a slightly revamped version of the ruralist approach of the previous Grimes and Tobin governments. This was simply a collection of short-sighted efforts to avoid dealing with the substantive changes coming to much of Newfoundland Labrador as a result of changes in demographics and in the economy.

One of the last acts of the Wells administration, in December 1995, was to approve release of a discussion paper on a Strategic Social Plan [SSP] for Newfoundland and Labrador. While the incoming Tobin administration scrapped the planned release and ordered copies destroyed, some have survived. The introductory essay describes the looming changes in simple and compelling detail.

Beyond the outmigration resulting from the collapse of the cod fishery and the then-anticipated economic growth from oil and Voisey's Bay (see the conclusions of the 2002 provincial report linked above), rural Newfoundland and Labrador would change dramatically from what it had been. A chronically low birth rate would produce an internal migration from small coastal communities to larger centres. Changes in the fishery would reduce the number of workers there and, if allowed to take its natural course, the fishing industry would dramatically lower the number of people employed while increasing the earnings of those involved. Overall, the workforce would be smaller than the non-working population - the so-called dependent population - for the first time in many decades.

Newfoundland and Labrador is not alone in this respect. Quebec is in much the same situation, as the recent Quebec Lucide manifesto reveals.

At home, we have a curious mixture of action from the provincial government. On the one hand, the provincial government's raw materials sharing plan for the crab industry reflected yet another attempt to forestall changes that demographics and economics would otherwise produce in Newfoundland and Labrador. This echoed the actions of both Brian Tobin and Roger Grimes.

At the same time, Premier Williams comments to the Telegram echo the Strategic Economic Plan [SEP] and the real Strategic Social Plan of the Wells administration. His description of regional hubs and a focus on local strengths as a means of diversifying local economies around the province are lifted almost word for word from the SEP and comments by Clyde Wells.

What appears to be missing from the Williams administration is a clear-eyed vision of the province's challenges and of its solutions. Both the Wells SEP and SSP had such a vision, derived not from the Premier's Office or Clyde Wells' own predilections but from intensive discussion among the province's own people. That the development vision survives today as core economic development policies from the Williams' administration is testament to its fundamental strength.

Before the Premier starts spending any of the windfalls he has coming this year and over the next five years or so, he might want to actually produce an integrated economic and social plan. The many promises of plans contained in the last Throne Speech, indeed all the promises of plan that have been made since October 2003, do not add up to very much of anything at all.

The clock is indeed ticking and before we spend the future of the province and its people, the Premier and his administration might be well advised to climb up and tree, see what the future may bring and set the province on the course.

A little straight talk often times goes a long further than singing one's praises to earn both proper recognition for the good job done already and continued support for the journey ahead.


23 October 2005

Reprint: Outside the box - Time

Here's a reprint of a column originally published in The Independent, January 2004.

It seems appropriate to reprint it now, especially considering that the Premier's comments on his second anniversary in office refer to how much they are still working on.

At the time the column appeared, the view inside the administration was that they would do things at their own pace.

That's certainly been true, but the fundamental point of the column - about the need to get moving quickly - seems to be more relevant with each passing date.

Time
by Ed Hollett

A new government has a very small amount of time in which to lay the groundwork for its term of office. It has about six months to show things are different and about a year to start showing signs of results. In fact, they really have about 100 days to make a mark, and when it comes to things like re-organizing the departments and getting political and public service staff changes made, they have even less than that.

The reasons are pretty simple: The outside world wants to figure out what government they really elected. For the government itself, they need to sort out the basics so they can cope with the onslaught of demands that come with the force of a three inch fire hose. Put another way, the new government has a short time to take control of the public agenda. That'’s the only way they can filter the workload down to a manageable level, let alone do the things they want to do. Without control of the political agenda, they become followers rather than leaders.

The Williams government is remarkable because it looks like a party that is at the end of its life in power rather than the beginning. It doesn'’t have control of the political agenda. Even something as simple as the long-awaited appointment of Doug House was announced and interpreted by CBC television rather than the Premier'’s Office. Add that to the obvious confusion in the Premier'’s messages, his testiness in answering media questions, and the lack of any meaningful signs of a change, let alone "“The Plan"”. The Stunnel, the Premier'’s hobbyhorse, is the sort of ludicrous mega-project that seems more worthy of Brian Peckford in his last days than a newly- elected Premier with the well-deserved reputation of being a level-headed leader.

We don'’t have to go back too far in time to see a government that didn'’t have control of the political agenda. The Tobin government, described by one of Tobin'’s closest advisors as having "“no idea what we are doing"”, lost control of the agenda from the start. Tobin plummeted in the polls his first year in office, and for the rest of his sojourn, the province was treated to an endless string of half-assed decisions, many of them made up by the Premier in the back seat of his chauffeur-driven car.

The best example of a government that didn'’t control the agenda is the Grimes administration. For a whole bunch of reasons, Roger Grimes never seemed to find his mark, let alone make it. The most glaring display of Grimes'’ weakness was in contract negotiations with public sector unions. The unions defined the problem and the solution: more people and more money. Government never even got into the discussion. Grimes was beaten in a fair fight, but cost was never considered.

What was really lost over the past seven years, though wasn'’t control. It was opportunity. A raft of things begun in the early 90s, from economic development to government reform, came to a screeching halt in 1996. The Williams party got wide support last October in large part because they were promoting a vision that cuts across party lines.

The Premier and the cabinet he leads are as good as any cabinet we have had. They are intelligent, capable and well-intentioned. People want to see their vision put to practice. They want Danny to succeed.

If the new government thinks the water is flowing through the hose at high speed now, get ready. The unions will likely launch their public campaign in the days and weeks ahead. The last time they faced a government that was disjointed and disorganized, the unions cleaned up.

A new government has a very short period in which to make its mark.

The clock is ticking.

21 October 2005

PetroNewf corporate logo

A nice picture of a one year old Newfoundland dog, the only creature it is politically correcte to refer to as a Newf.

I think it's an appropriate symbol of our new oil ands gas company.

If nothing else, it's just a nice picture.

Hydro not bled white or dry or anything else - amended

Premier Danny Williams loves hyperbole.

That is exaggeration, usually for effect, but typically for its own sake.

You've heard it before: "The debt and deficit was the worst in the history of mankind on the planet. I performed a miracle [almost a verbatim quote] and magically reduced it in less than a year to a manageable size. David had nothing on me. I slay giants in my spare time."

That sort of stuff.

Looks funny when you write it down. It's amazing the number of people though that will listen to that stuff and bob their heads up and down in agreement that surely this Messiah is the true one. [Unlike all the other ones we've bobbed our heads for. The last hyperbole freak was Tobin, before that it was Peckford and before that Smallwood, the Superfreak of hyperbole freaks.]

Anyway, in an interview with David Cochrane on CBC Radio this morning, Premier Danny Williams proudly announced that government is going to stop taking dividends from Newfoundland and Labrador Hydro PetroNewf to balance the provincial books.

This is good. It's a simple announcement.

The reason? Well, for one thing the oil money flowing so heavily means that the province doesn't need the Hydro cash desperately like it did say 12 years ago. For another thing, the Premier wants to leave all of PetroNewf's money with PetroNewf so it can do things like buy an equity stake in the offshore.

He said something to the effect that PetroNewf was being bled dry and its debt run up by government taking out cash which, of course, sent the patented Spin-o-meter into the redline.

Ok. There are two separate issues here.

One is the debt increase at PetroNewf. That was caused by PetroNewf building a bunch of new hydro generation projects.

The second was the issue of taking dividends - drawing from PetroNewf's annual net profit - to balance the books.

Here's what that looks like.

According to its 2004 annual statement, PetroNewf has in the bank doing nothing about $350 million labeled "retained earnings". Another for it is accumulated net profit - the money left after all the bills are paid. It is down slightly from the early 1990s when the retained earnings were over $500 million.

The thing is that back in the days when it was Hydro, PetroNewf made money just about every year. The government started taking a dividend in the midst of the truly worst financial crisis since the collapse of Responsible Government when they needed it. Until Tobin arrived, that money was always the current years earnings which meant that the little nest egg of retained earnings was never harmed.

Brian Tobin and later Roger Grimes started dipping deeper into the pot. If you check the 2001 PetroNewf annual financial statement, the retained earnings are where they were a decade earlier - over $500 million. There has been a decline in this surplus cash on hand since then, but even after the Grimes draw-downs, and paying off Brian Tobin's $57 million Lower Churchill slush fund, PetroNewf has hardly been bled even to a shade of cream, let alone white.

With that bit of prime ministerial exaggeration out of the way, maybe we can take a look see what it would cost to purchase an equity stake in the offshore.

The future of Hebron and gas development offshore Newfoundland and Labrador

Having worked at NOIA for a short period, I decided to take a second look at the conference next week focusing on future offshore developments. It's sold out, so don't bother trying to get tickets.

No doubt people have been buying up luncheon tickets to hear PetroNewf chief executive officer Ed Martin explain how a Crown corporation with absolutely no experience in oil and gas is somehow going to muscle its way into the oil and gas business.

The real value of this conference is the working sessions [see agenda] and anyone with tickets is going to get a real earful of solid information.

The morning sessions focus on heavy oil and the Hebron project. It promises to be a heavily technical discussion.

The provincial government and the companies are still trying to figure out a benefits deal, so the project is not ready for sanction, that is, it isn't ready to go to the offshore board for approval. Premier Williams appears to be trying to saddle Hebron with a host of "local benefits" that aren't needed to bring the field on stream, which will drive up the cost of development and in the process might well reduce the revenue stream to the provincial government - much like the Peckford-era Hibernia deal.

At some point - maybe in four years time when Danny Williams is out of office - the companies can cut a deal with the provincial government and the project will finally start. Major international companies like Chevron make long-range plans, and as the Kazakhstan projects demonstrate, they are quite prepared to work diligently over a long period of time for the right moment to develop the right oil field. Having spent 20 years waiting to bring Hebron on stream, the consortium can hardly be deterred by the prospect of waiting for a few more years just like INCO waited for Brian Tobin to get bored.

In the meantime, Martin and Williams will try and build PetroNewf into something that will either compete with local private enterprise or, more likely, just muscle local companies into a subordinate position in the oil patch.

(Left) TengizChevroil logo

For anyone who thinks that Hebron is a big play for Chevron and the other partners, think of this. Since the late 1990s, Chevron has been heavily involved in developing oil reserves in the former Soviet Union. In 2001, they opened a new pipeline to take gas from the Caspian Sea to market. The Tengiz field, for example contains an estimated six to nine billion barrels of oil.

Compare that to the 700 hundred million in Hebron, most of which is heavy oil that is costly to produce especially in the harsh North Atlantic environment.

The afternoon sessions on potential gas development promise to be more interesting, especially in light of the Premier's comments to The Telegram about not wanting to see gas stuffed into a "God damn boat" and floated down the coast, presumably to markets where people could actually buy the gas.

The Premier's comments are odd, since there is a very small potential market, if any at all, for natural gas within the province.

In 1998 and 2001, NOIA conducted a two-part study into potential gas development. You can find Phase One report, or scoping study, here and the Phase Two report, which examined critical issues, here.

The market analysis carried out in 2001 by ICT Consulting predicted continued strong growth in American natural gas markets and that has held true. Likewise, the assessment that there is a limited local market for these products has also remained true.

(Right) One of the Premier's despised "God damn" but locally-owned compressed natural gas ships could earn the province millions in added revenue through the private sector.

Technological changes, including exploration of new shipping technologies with local business ties, open up new ways of exploiting the estimated eight trillion cubic feet of natural gas offshore Newfoundland and Labrador.

Given that these studies are about five to eight years old, it might be timely to have another look at the potential to develop gas reserves. Changes in price, for example may make it more attractive to begin development of something less than the total available reserves, with production commencing around 2010 or slightly afterward. The one thing that isn't likely to change is the small local demand for natural gas.

20 October 2005

Lucid Lucien


While the story got some coverage, Lucien Bouchard's news conference the other day didn't get quite enough.

So here is a link to the English version of the manifesto he released on behalf of a group of Quebec intellectuals on the challenges faced by Quebec in the coming decades and some possible solutions.

The French name of the document, pour un Quebec lucide, seems much more compelling than the English version: For a clear-eyed vision of Quebec.

I'd agree with Paul Wells on the most striking statement in the document, albeit for different reasons. Irrespective of Wells' point, I just thought the comment equally applicable to Newfoundland and Labrador in the past 18 months; just change the provincial origin of the "consensus".

I'll give you the Wellsian translation of the original French:

"The first condition of liberty is the ability to question the status quo without being hauled before the inquisition tribunal of the Quebec consensus."

On that note, stand by for some further comment on this manifesto in the days ahead.

Orrin Hatch - honorary hoser

Check out this post, in which United States Senator Orrin Hatch (Republican, Utah) claims that Canada will surpass Saudi Arabia as the world's largest oil storehouse.

Then check the text of Hatch's speech, from his senatorial website and find out exactly what he actually said:

"We should take note that our major oil companies, including Chevron and ExxonMobil, are beginning to state publicly that we may be reaching peak oil. And with the economic growth in India and Asia and other regions, it looks like weÂ’ll have high oil prices into the foreseeable future.

This is a new scenario for the world, and it forces us to shift our focus to our unconventional resources. Shell Oil Company has, for years, been preparing for such a shift. Its successful activities in Alberta with oil sands and their investment in new technologies to produce oil from oil shale are a testimony to ShellÂ’s recognition that unconventional oil is in our future.

Those who doubt that unconventional fuels are economically viable probably are suffering from a neck ailment that keeps them from looking north.

The 800-pound gorilla is sitting just above Montana, and let'’s face it, it'’s hard to miss.

Alberta is now second only to Saudi Arabia in proven oil reserves and ninth in the world in annual oil production. This is owing mostly to their successful development of oil sands. In Alberta, you have dozens of major oil companies, using a variety of technologies and recovery methods, going after very different types of oil sands resources, and in almost every case doing so for less than $20 a barrel, including during their very tough winters. It is a gigantic success story, and it began with Alberta'’s government deciding to promote the development of this resource and not giving up.

Anyone watching what is happening up north will recognize that, before long, Canada will inevitably overtake Saudi Arabia as the world'’s oil giant. And Alberta clearly has its sights on increased annual production to match its growing reserve. Already at about a million barrels a day, Alberta'’s production is expected to double in the next five or six years."

Notice that the gentlemen Senator did not mention offshore eastern Canada in the speech.

Maybe he has just been lobbied hard about Alberta. Maybe Hatch just knows about Alberta because his own state also has large oil sands reserves.

It is still interesting to see Canada noticed in this way by an influential senator.

The Williams oil and gas corporation - institutionalising dependence

When Danny Williams released his Blue Book, it appeared to contain a contradiction. Thanks to Rob Antle's story in yesterday's Telegram, the contradiction is now more apparent.

The first chapter of the Blue Book copied almost word for word the Wells' administration Strategic Economic Plan (SEP). The SEP aimed to correct two fundamental weaknesses in the Newfoundland and Labrador economy, namely excessive dependence on a handful of major resource industries on the one hand and a shortage of local, accessible capital to support economic activity. Since Confederation, the latter weakness had been addressed by federal transfer payments which had resulted in another form of dependence.

In some respects, these twin dependencies were historic issues. The pre-Confederation economy depended on the fishery, forestry and mining with the former being prominent. Local manufacturing was dependent as well, although before 1949, it relied on protectionist tariffs to keep Canadian manufactured goods out. Such was its level of dependence that within three months of Confederation, most of those manufacturing enterprises collapsed in the face of more robust and efficient business elsewhere.

The SEP identified entrepreneurship - the growth and development of the private sector - as the mechanism by which the Newfoundland and Labrador economy could be strengthened and the twin dependencies eliminated.

By contrast, the second chapter of William's Blue Book dusted off industrial development policies from the 1970s and 1980s with its focus on oil and gas as the means of generating cash for the provincial government. The Peckford administration viewed oil and gas as the sole means of financial salvation for both the Newfoundland government and for its society.

Peckford passed legislation to create the Petroleum Corporation of Newfoundland and Labrador, with its legislated 40% share of each offshore development. Coupled with that, the legislation mandated that companies involved in the local offshore would be local companies. Through these legislated requirements the province would develop an oil industry that would ensure, in the words of both Peckford then and Williams now, that maximum benefits would flow locally from local resources.

The fundamental contradiction between these two approaches is that while the SEP is based on private sector entrepreneurship and increasing international trade for local products, the Peckford and now Williams approach is focused on state ownership of industry and on local markets.

A genuine contradiction would exist if the Blue Book embraced the philosophies underpinning the Wells and Peckford approaches. It does not. Rather, Williams appears to be focused on control as an end in and of itself. For example, take this phrase dealing with prospective hydro development: "I'’d like to see us own the lion'’s share of the Lower Churchill...". The provincial government already owns the "lion's share" and can claim rents from electricity as a matter of owning it.

What Williams is talking about here is owning and controlling the company which generates the electricity.

Consider as well, the rest of that section of Antle's story: natural gas should be brought ashore in Newfoundland and Labrador by pipeline so that "we have control of the pipeline so that it'’s not being compressed or liquefied and going in a God damn boat and going on down the coast somewhere."

In the absence of any demand for natural gas within the province or any demonstrable advantage to converting the province to gas, an entrepreneurial approach would support selling it to someone who wants it. Better to ship it to the United States in whatever way produces the best price than to spend money bringing it to a place that has no use for it. Revenue from that sale can support public services like health care. Privately owned local companies can own the ships that move the gas to market. Expertise in gas production and shipping, potentially using new technology, can give the local private sector a competitive advantage such that it can gain even more business around the globe than can be obtained purely within Newfoundland and Labrador.

A government dedicated to developing the private sector would create a climate in which local companies can exploit local resources thereby generating wealth. Government's share of that wealth through economic rents and other taxation would give sufficient revenue to deliver government programs and services.

In the Williams approach, the state - the provincial government - is merely a corporate entity with all the tools necessary to achieve local, i.e. provincial government, control.

The struggle for the Williams government is the struggle for control. He acknowledges that his supposed opponents are larger than government: "if you go up against Hydro Quebec, if you go up against Inco, if you go up against ExxonMobil, they'’re a lot bigger than our government is. That'’s the grim reality of all of this." His next comments identify the solution - build the hydro corporation such that it can "take on" the biggest out there.

The result of the Williams approach is difficult to predict. Certainly, in the short run, he may achieve considerable political success. He may be able to turn the energy corporation into a Mother Hen that will wrest a portion of economic developments for itself and then distribute these among local companies. The resulting jobs may carry with them votes.

In the medium- to long- term, though, the Williams approach cannot address the chronic, historic problems in the local economy. Over the past 25 years, Western economies have disposed of state-owned enterprises since they are notoriously unable to produce wealth as effectively and efficiently as the private sector. The ones that survive, such as Quebec's hydro corporation may be models for the Premier, but they are models from the past. They are models which are limited to very specific and primarily local activities. In short, they are expensive and ultimately wasteful of what in Newfoundland and Labrador are scarce cash resources.

The Williams Mother Hen approach - if that indeed is what emerges - will simply promote
dependence of local companies on state subsidies, either directly or indirectly.

The Premier's plan may not succeed simply because the hydro corporation is actually not the entity Premier Williams describes. Newfoundland and Labrador Hydro remains a government department in all but name and is almost the antithesis of a private sector corporation in which the board of directors would have the authority to run the company and set its own lines of business.

On the face of it this is obvious: the impetus to change hydro to an energy corporation did not come from its own board, complete with a business plan. It is entirely the plan of this particular administration. The board will not resist. The Premier alone holds the de facto power to appoint or remove directors and he has shown repeatedly his willingness to replace dissenters with his own personal retinue.

As such, the new energy corporation will likely be quickly recognized as an anomaly in the developed world and surely one which violates the Organization of Economic Co-operation and Development's guidelines for the governance of state-owned enterprises. Even if one leaves aside for the moment the nagging and very serious question of how the new energy corporation will find the cash to support the Premier's ambitions, one can readily see how companies such as Chevron may be very reluctant to enter into any arrangements that would see its long awaited return on investment siphoned off into a provincially owned company with no experience in oil and gas and no capital at risk. These companies are not Fishery Products International.

International companies may well become increasingly reluctant to invest in this province as the Williams' approach becomes better understood. International capital seeks stability and predictability as well as a fair and transparent regulatory regime. In the case of the offshore, it appears from the Premier's interview yesterday and his previous comments on the offshore board that he intends to change the rules as he sees fit, when he sees fit.

Premier Williams may succeed in creating some measure of the control that he finds satisfying personally. On another level, however, all he may succeed in doing is ensuring the chronic problems in the Newfoundland and Labrador economy continue into the future, at best unaltered and at worst supported by the very mechanisms of control which he is seeking.

In reforming the hydro corporation, he may well be using the elements of plans laid by previous administrations to cement in place the very circumstance they sought to change.