07 November 2006

Why GRAP explanations are crappy

Trevor Taylor's explanations of the GRAP - Government, Rogers, Allstream, Persona - fibreoptic deal don't add up.

Here's why:

1. There is no reason to spend public money on a private sector deal like this one.

- According to Persona chief operating officer Paul Hatcher, the project was already underway, at a cost of $82 million with Persona contributing $30 million of its own money.

- The announcement on November 2 was for a $52 million project.

- The private sector companies could easily finance the project themselves - obviously - and deliver benefits to consumers by improving their own competitive position.

2. The GRAP will not deliver province-wide 911 service.

- If the provincial government wanted to develop a secure, government-operated emergency communications system, then it could do that separately from this project.

- There is no mention of emergency service in the initial government news release. The news release focuses on competition, all of which the private can obviously and should obviously bear by itself.

- For the province's ownership stake, it will have access to its own fibreoptics system. But, to ensure redundant access to allow secure 911 operation, the provincial government should purchase service from all providers, including Aliant.

3. The province doesn't need to compete with the private sector where service exists already.

- Under this GRAP deal, the provincial government will become a business partner with private-companies competing directly with Aliant - an established service provider.

- The provincial ownership stake will generate cash but this cash amounts to a hidden tax on telecommunications in addition to any other taxes it levies on businesses like this.
4. The Premier's relationship with the proponents is too close for comfort.

- Some media outlets are reporting that Dean MacDonald (Persona) and Ken Marshall (Rogers) were employees of Cable Atlantic.

- In fact, they were business partners with the Premier, as detailed in Henley v. Cable Atlantic:

Danny Williams: 93%
Dean MacDonald: 4.5%
Ken Marshall: 0.6%

- Under provincial conflict of interest legislation, the Premier would be obliged to remove himself from any process in which he has a conflict of interest.

- In this instance, there is a perceived or potential conflict of interest so, prudently, he should have removed himself from any process involving these players; that just covers his own backside.

- The provincial government has acknowledged a concern about conflict of interest. According to Trevor Taylor, this proposal took longer than it otherwise might have because of concern about a perceived conflict of interest.

We'd agree. A perceived conflict of interest should have caused greater concern - and a greater degree of openness - about this deal.

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