22 May 2018

A cabinet, a caucus, and a legislature walk into a bar... #nlpoli

Don't feel bad.

Most people in Newfoundland and Labrador have no idea how our political system works.

Self-described experts.



Very often hopelessly lost when discussing even the most basic points about our political system.

The real problems start when the politicians and, as it turns out,  the public servants supporting the House, have no idea what they are talking about.

Like, say, the briefing note handed to the House of Assembly management committee last week that included these statements:

08 May 2018

First Wells ministry, 05 May 1989 #nlpoli

May 5, 1989 was a Friday. 

It only took the couple of weeks between the election on April 20 that year and May 5 for the government to change hands between political parties for only the second time since Confederation.  The House met before the end of the month was out and before that first session ended,  the province had a new budget.

Clyde Wells was the fifth Premier after Confederation.  He was preceded by Joe Smallwood,  Frank Moores, Brian Peckford, and Tom Rideout.  

In the first 40 years after confederation,  we had five Premiers.  Since 1999 - that is, in less than 20 years - we have had eight Premiers.  Dwight Ball is number 13 in the line, the majority of whom since 1999 have served for four years or less.  We might have a fourteenth, depending on how events turn out.

The habit after 2003 has been for a majority party elected in the fall to wait upwards of six months before opening the legislature.  The initial excuse was that there was a work to do in getting ready for the House.  In 2007 and 2011,  the government was re-elected and did the same thing.  

This is the official portrait of the cabinet sworn in May 1989 by Lieutenant Governor Jim McGrath.  The photo is courtesy of Rex Gibbons, who you can see standing on the extreme left. The photographer was Don Lane.

It was a relatively small cabinet at 15. The cabinets immediately before it had had upwards of 23 members. It was also a fairly well-educated cabinet: three of the people around the table had doctoral degrees (two in education and one in geology). There were a couple of lawyers, some teachers, business owners, and folks like Walter Carter who had spent all of his working life in elected public service.

Most of them carried on in cabinet for a while after or in the House and later still went back to their old careers or took on new adventures. Five of the members of that cabinet have passed away since.

The ministry consisted of:

Standing (left to right)
  • Rex Gibbons, Mines and Energy
  • Eric Gullage,  Municipal and Provincial Affairs
  • Walter Carter, Fisheries 
  • Chuck Furey, Development  (after 1992 - Industry, Trade, and Technology)
  • Dave Gilbert,  Works, Services, and Transportation
  • Jim Kelland,  Environment 
  • Paul Dicks,  Justice,  Attorney General
  • Chris Decker,  Health
  • Herb Kitchen,  Finance

Seated (left to right)
  • Graham Flight,  Forestry and Agriculture
  • Patt Cowan,  Employment and Labour Relations
  • Clyde Wells,  Premier,  Intergovernmental Affairs
  • His Honour, James McGrath,  Lieutenant Governor
  • Winston Baker,  President of the Executive Council,  President of Treasury Board
  • John Efford,  Social Services
  • Phil Warren,  Education

Corrected name of Furey's portfolio, 09 May 2018)

30 April 2018

Two solitudes - the pdf version #nlpoli

This is an article I wrote a couple of years ago for The Dorchester Review. (Volume 6, Number 1,  Spring/Summer 2016.  I posted about the piece when it came out but now you can buy buy the whole issue online,  subscribe, or download the pdf of "Two solitudes" at academia.edu)
"Newfoundland and Canada, separate countries for so long, exist as two solitudes within the bosom of a single country more than 65 years after Confederation. They do not understand each other very well. Canadians can be forgiven if they do not know much about Newfoundlanders beyond caricatures in popular media, let alone understand them. But Newfoundlanders do not know themselves. They must grapple daily with the gap between their own history as it was and the history as other Newfoundlanders tell it to them, wrongly, repeatedly."
For those who are interested,  I've got an article in the latest edition of The Dorchester Review on Newfoundland nationalism in an era of transformation. 


09 April 2018

Spin, bias, or just wrong? #nlpoli

If four media outlets all reported a story in precisely the same way despite some fairly obvious factual problems with their interpretation,  is it spin, bias, or just a mistake?

That's the logical question out of last week's post on the way local newsrooms had reported a recent political poll about premiers and popularity.

The answer is that it is more than a mistake.  It is less than spin.  There doesn't appear to be a deliberate misinterpretation.

Yet what happened is a form of bias, in the same sense that a research firm would look at bias as a source of error. 

The causes are not partisan.

They are systemic,  identifiable, and correctable.

But the story presented is incomplete and  therefore inaccurately describes what the poll results show.

02 April 2018

Conventional media bias #nlpoli

You know what "spin" is, right?

Spin is a biased interpretation of something to favour one side or the other.

You get spin when someone uses an interpretation of an event or information in order to modify the perception of an issue or event, particularly to either increase or decrease any negative impact on opinion.

Some people think it is only comes from public relations people.

Or maybe politicians.

But never the news media.

Spin happens in many places since you can find all sorts of people interpreting things in a way that favours their pet position or that harms an opponent.

Tek, for example the number of people - especially in politics - who have been running around the past few weeks saying that Dwight Ball is the third most popular premier in Canada. They are mostly Liberals and they have been furiously retweeting that idea.

But that's spin.  Pure and simple.

Except it didn't come from the Liberal Party.

Well, where did it come from then?

Well, there's a tale.

The information the idea is based on came from an Angus Reid poll.  The opinion research company asked a sample of Canadians in every province except Prince Edward Island what they thought about the local Premier.

In Newfoundland and Labrador,  42% gave Dwight Ball a favourable rating.  In a chart Angus Reid used to illustrate the story,  they showed the approval ratings from highest to lowest,  left to right.  

There's Dwight Ball,  third from the left, which is third from the top.

Third most popular.

Well,  no.

Angus Reid was careful to describe their results fairly and accurately.  After noting that only two Premiers actually had the support of a majority of those polled in their province,  Angus Reid said this about Dwight Ball and the rest of the Premiers who - take note - had a majority who *dis*-approved of their performance.
In a pack where the premiers with the best approval ratings aren’t exactly overwhelmingly endorsed by people in their respective provinces, the story for the rest of Canada’s premiers, even those with positive momentum, is hardly jubilant.
Just over two-in-five (42%) are pleased with the job Newfoundland and Labrador Premier Dwight Ball is doing. This represents a seven point increase for Ball, as his government announces plans for a new public health act in the forthcoming budget and implements a new policy to take on workplace harassment. This, in addition to the government’s inquiry into Nalcor Energy’s unpopular Muskrat Falls project, may be playing in Ball’s favour, as he rises for the second consecutive quarter.
Out of every five people surveyed by Angus Reid,  two approved of Dwight Ball's performance as Premier.

Only two.

Three did not. 

In fact, if you click on the link to get the full results from Angus Reid,  you find that 49% of respondents disapproved of Ball's performance and only 10% had no answer.

So where did this "third most popular" idea come from?

Conventional news media.

CBC ran a story that had as its headline "Dwight Ball 3rd most popular premier in Angus Reid poll."  The front end of the story focused on the change in Ball's approval over the past year, which is accurate,  but ended up with the "third-most-popular" claim. 

At the end of the story,  CBC tossed in a completely unrelated fact that in a Corporate Research Poll 41% of respondents said they would vote Liberal, as if the similarity of the two numbers was enough to connect two different questions (job approval versus party support).

In Newfoundland and Labrador, they are two very different questions, as CRA's polling has shown.  Support for Ball and the Liberals has not been tracking the same over time.  Ball's actually been behind his party in popular support for a chunk of the past year.  Didn't like the leader.  Would vote for the party.  Not an unusual response at all,  but the two things are not synchronised.  The leader and party questions are separate.  That's why it was a problem for CBC to muddle the two together.

Saltwire - that is, the Telegram and its family of papers - ran a headline that Ball had seen a jump in his approval, which is true,  and used the "third-most popular premier" as it's sub-head. The story quoted Angus Reid word-for-word on the bit about two-in-five respondents but you had to read down a way to get to that.  

NTV's story referred to Ball as the premier with the third-best rating.  Their report on the previous Angus Reid poll, in which Ball's position relative to other Premiers was identical,  notes merely that his position improved over time.  That poll-over-poll improvement is noted in all the stories and it is probably the most accurate way to describe the results.

VOCM also reported Ball was the "third most popular" Premier in the country. 

No one in either of the four newsrooms checked the full poll result. None of them even did the simple logical inference that if 42% approved of Ball,  then the rest didn't.  They certainly didn't notice that 42% was less than half.  

Instead, they just looked at the same chart they saw the last time from Angus Reid (below) and picked the "third-most popular" as their headline.

They also didn't notice the size of Dwight Ball's change is quite large and that it was large for the second time in a row.  look at Nova Scotia and New Brunswick and you will see similar big jumps in a relatively short span.  A 15 point jump in six months is pretty steep in a province where there's been no similar major shift in public opinion detected by any other polling firm.

Might be a problem with the poll.


Ball is third most popular.

Except Ball isn't popular.

Only two Premiers had a majority support and could be reasonably considered popular.

Seven Premiers all had more residents who didn't approve of their performance, which seems to be a bigger part of the overall story.  Angus Reid presented its information that way.

You could have reasonably focused on the fact Ball's rating had jumped again by a fairly hefty amount even if the back to back big jumps look dodgy.

But to say he is the third most popular is... well... wrong.

If you want to know how people are misinformed, there's a really fine case study.  No conspiracy.  No collusion.  Apparently, not even an organised effort by the government officials of the type we used to see in this province between 2003 and 2010 to control the flow of information, to influence media stories, and manipulate public opinion. 


Just a bunch of people who all got the story wrong in exactly the same way.

Some might would argue that spin has to be a deliberate choice but frankly, that's just spin. Truth is that spin is a form of bias.  There are all sorts of biases.  Something like a shared perspective among people doing the same sort of work in a small place can cause a wrong interpretation of events to reinforce itself.  After all, the folks in the local newsrooms all keep an eye on each other during the day. They talk among themselves.  Once the first story hit the air and the others heard the same general line, they would inevitably confirm their interpretation and get on to the next task.

Except, they all got it wrong.


*Revised 11:00 AM 02 Apr 18 to clarify sentences in the introduction

07 March 2018

No room for dissent? No time for silence. #nlpoli

The controversy about The Rooms' recent request for proposals is not about Muskrat Falls.

Maybe someone at The Rooms or within the provincial government thought that was the problem when Des Sullivan raised concerns about it.  After all, Des is well known as a critic of Muskrat Falls.  That might explain why Dean Brinton, The Rooms' chief executive,  issued a very short statement that apologized for using Muskrat Falls as an example when explaining the Crown corporation's policy about conflict of interest for advertising agencies responding to the proposal request.

Let us assume that Brinton made a really superficial mistake because otherwise  his response is insulting and condescending.  Any reasonable personal understood our ought to have understood that Sullivan was concerned about the implication that critics of the provincial government could not bid on government work.

Brinton didn't deal with that at all.

20 February 2018

TDIH: "Quebec paper reports Lower Churchill agreement" #nlpoli #cdnpoli

Two decades ago, there was talk of a deal to develop not one, not two, but three dams in Labrador.

The story broke in a Quebec newspaper,  Le soleil,  on February 19 and the next day the Telegram did a front pager written by business editor Chris Flanagan.

"The big bonus for Newfoundland from a deal to develop the Lower Churchill is not simply cheaper electricity and a transmission line from Quebec,"  Flanagan wrote, "but an opportunity to send natural gas-generated power the other way, says a Quebec journalist with high level sources in both provinces."

"The Newfoundland government has done studies examining the potential of bringing ashore natural gas from Hibernia and other sites on the Grand Banks, using it to produce electricity and selling it on the North American grid, said Michel Vastel, a veteran political correspondent and business writer with the Quebec newspaper, Le Soleil."

Vastel told The Telegram his sources were in both provinces and that the provincial government in Newfoundland and Labrador had studies supporting development of offshore natural gas. 

"In his 'briefings,' from high-level sources, Vastel said reports have estimated Newfoundland's average rate will increase 30 per cent over the next 20 years -- an increase that won't happen if the Lower Churchill goes ahead."

The idea had its critics.  "Stan Marshall, the president and CEO of Fortis Inc., which owns Newfoundland Power, has said a transmission line to St. John's makes no economic sense.

Here are some key details of the deal that never was:

  • "...Newfoundland will receive approximately 800 megawatts, Labrador 200 and Quebec 2,100 from the Lower Churchill. Construction of the project will create 12,000 person-years of employment and power is expected to be on the grid by 2007."
  • "The Lower Churchill hydroelectric project consists of Gull Island, with a generating capacity of 2,264 megawatts, Muskrat Falls, at 824 megawatts and Upper Lobstick, at 160 megawatts for a total of 3,238 megawatts. The cost of the project, including transmission lines, is estimated at $12 billion."
In the talks actually announced in early March 1998,  the two provinces set aside $20 million to study Muskrat Falls and focused instead on expanding Churchill Falls and building Gull Island.
20 years later we got one tiny dam and big transmission line for that.

The Telegram included a cost of the transmission line from Labrador:  "According to several news reports, the Churchill-to-St. John's transmission line -- including an underwater component across the Straits -- would cost about $2 billion, and is to be financed by Ottawa."

"The federal government's major benefit would come from reduction in greenhouse gas emissions that will go a long way to helping Canada reach emission targets established at the 1997 Convention on Climate Change in Kyoto, Japan."


03 January 2018

Politics and History: SRBP at 13. #nlpoli

The week before Christmas, I dropped by The Rooms for a quick check of some government documents in the provincial archive.

The last time I'd been there, a major public display covered the Newfoundland experience in the  First World War.  The provincial government is, at least on paper, still in the midst of its official celebration and commemoration of events a century ago. In practice though, the official celebration ended in the middle of 2016 and the Centennial of Beaumont Hamel. With the exception of a small, sparsely attended symposium at Memorial University, events to mark one of the most significant periods in Newfoundland and Labrador history are now over. What was so striking about The Rooms is the complete absence of any Great War commemorations beyond the travelling exhibit from the mainland about Vimy Ridge.

This fits with an emphasis on celebrating the slaughter in 1916 and that is all most people know of the Great War and Newfoundland.  It drives home the more troubling aspect of this historical blindness since the war had a far greater impact on Newfoundland in 1917 and 1918 than it had had in a single day on the Somme.  The story is far more relevent today than Beaumont Hamel ever could be.

In April, 1917 the Newfoundland Regiment fought at Monchy-le-Preux with as dramatic a result as the one of Beaumont Hamel the year before.  This battle as well as others through the spring and summer put a further strain on manpower, already severely tested in 1916. The result would be a conscription crisis that lasted almost a year and that was marked by both rural/urban and Protestant versus Roman Catholic divisions. Recruiting had been consistently most successful in St. John's, while in rural areas proportionately fewer men volunteered.

One popular view  held that the burden of the war had been born predominantly by Protestants from St. John's while those from the bays, particularly Roman Catholics, had shirked their national responsibility. Regardless of whether such views were right or wrong, they revealed the deep divisions within the country and a lack of understanding of one part for another that has echoes in the current day's debate about resettlement.

The recruiting problems mixed together with allegations of profiteering by Water Street merchants and an increasingly boisterous opposition to greet Prime Minister Edward Morris on his return from Imperial War Cabinet meeting in the spring of 1917. There should have been an election that fall but Morris had already  decided to introduce legislation in the House to postpone the election for a year due to the wartime contingency. He tried and eventually succeeded in forming a coalition government with the opposition Liberal and Unionist parties.

With Morris nominally serving as Prime Minister, opposition Leader W.F. Lloyd took on the role of deputy prime minister. In a secret agreement with Lloyd and union leader William Coaker, Morris agreed to resign by the end of the year with Lloyd as his replacement. In addition, the new administration created a Department of Militia to take over the administration of the war effort from the volunteer National Patriotic Association. In the event, the new department was no more successful than the NPA had been recruiting but at least some of the stink of corruption that attach to the NPA with allegations of wartime profiteering had gone.

On the Sunday nearest July 1, the country marked the first anniversary of the tragic day in 1916. This was one of the first four commemorations established throughout the Empire. As such, the event was worthy of commemoration in its own right and yet the day passed in 2017 without any mention in the official Centennial commemorations.

 No sooner had Morris announced a coalition, that he boarded a steamer and returned to England. He resigned in December 1917 and was created Baron Morris of Waterford early in 1918. Lloyd's coalition served through to the end of the war in the Paris peace talks in 1919 before he was replaced by Richard Squires. Morris was last of the long serving prime ministers of Newfoundland. His successors lasted short periods, some only a matter of a few days, in a fluid political climate of shifting coalitions and alliances.

Richard Squires only stands out because of the allegations of corruption in his first administration and because of his return to office in a second administration shortly before the collapse of responsible government. Through the entire period of the 1920s, the government struggled with mounting debt and difficulty in meeting its financial obligations while the politicians fought among themselves.


02 January 2018

Bridging to Nowhere... or not #nlpoli

Since December 2015,  Dwight Ball has been talking about the federal government as the source of cash he wants to tap into.

Specifically he has been talking a lot about how Newfoundland and Labrador is being screwed because it cannot collect Equalization.  Ball's whining about Equalization is part of his strategy to avoid making any real changes to the strategic trajectory set by the Conservatives in 2007.  Essentially it is about spending as much as you can for as long as you can. 

With that in mind, here are three choice quotes from Issues and Answers'  year-ender with Premier Dwight Ball. 

After Lynn Burry points out that the provincial government pays 83% of the cost of health care, up from the days when the province and federal government split the cost 50/50 the Premier said:

"I agree the Equalization program does not work for Newfoundland and Labrador."

Three things, mostly for Lynn Burry.

1.  Health care is entirely within provincial jurisdiction under the constitution.  The federal government isn't actually supposed to put *any* money into it.

2.   The federal government covered half the cost of everything in Newfoundland and Labrador at one point because the provincial government was so poor it couldn't pay for provincial services on its own.  That's why every Premier until Danny Williams came along wanted to get Newfoundland and Labrador off the dole. Williams and every Premier since him, including the current one,  has been trying to get back on it.

3.  Federal health care funding never came from Equalization.  It has always come under a separate funding arrangement.  At one point they called it the Canada Health Transfer and it went along with social services funding in the Canada Social Transfer. Now the federal funding is combined under one thing called the Canada Health and Social Transfer.

"What is it about Newfoundland and Labrador that you can define us as a 'have' province?"

The answer is simple and, in some ways it is astonishing that over the past 15 years provincial politicians can get away with talking utter nonsense about a really simple thing like Equalization.  Politicians from all parties trot out this foolishness  and reporters just lap it up or, in Lynn Burry's case,  fuel the idiocy with questions that are just set up with the same stuff.

Equalization takes money from the federal government's general revenue and gives it to provincial governments that don't make enough money on their own to come up to a common, national income standard.   The governments use that money to deliver services that are entirely provincial under the constitution.  That means the provinces are supposed to make enough money on their own to cover those costs. 

The transfer of federal cash is based on the recognition that all provinces are not equal in their ability to raise cash, so the federal government steps in to give some a hand.  That way Canadians are not short-changed if - and here's the kicker - the provincial government spends its money appropriately.

Four provinces make more than the standard income.  They are known colloquially as "have" provinces:  British Columbia,  Saskatchewan,  Alberta, and Newfoundland and Labrador.

"Have not" means you don't bring in enough cash on your own to make ends meet and so you get a hand-out.

If Dwight Ball really speaks to the Premier of Nova Scotia and moans that this province does not get Equalization,  he's lucky Stephen McNeil doesn't punch him in the bake and then kick him in the goolies just for good measure. Like most Premiers, McNeil would give some part of his anatomy to be raking in as much cash as Dwight Ball does every year.

Newfoundland and Labrador *is* a have province by any measure.  It takes in more money per person than any government in the country save Alberta.   The problem is that successive provincial governments have spent even more than that again.  There's no good reason for the overspending.  That's why the government is in the hole all the time.

"...Equalization is not the answer to our revenue or deficit problem."


If it is not the answer to our problem, why complain about not getting any of it?


11 December 2017

Don't blame me (-dia) #nlpoli

Now that Muskrat Falls is officially a boondoggle,  all sorts of people are rushing forward to criticise it.

Others are also rushing forward to ensure we all know that they were on the side of the angels back in the day and so, as Brian Jones pleads this weekend in the Telegram, we shouldn’t “blame the media for Muskrat Falls.”

For the past year and a half,  Brian tells us,  people whom he calls “trolls” have been writing and calling him to ask why the local media did not reveal all the details about Muskrat Falls as the thing was unfolding.

“I always point out a basic fact,”  Brian says,  that “ the Newfoundland media, not just The Telegram, have covered every aspect of Muskrat Falls since at least 2010.”

Wonderful if it was a fact, but no.

Not a fact.

06 December 2017

Plain English , Disclosure, and Bad Public Policy #nlpoli #cdnpoli

Right off the start, let's affirm that Nalcor was created by an administration that was, from the time it took office, notorious for its efforts to flout the law in order to keep information secret.

Polling information was the first sign of the problem bit wasn't the last example.  There was a demand for $10,000 for copies of speeches delivered in public by the Premier to what ultimately became a complete re-write of the law in 2012 to make legal what the government had already been doing to keep all sorts of secrets.

It's easy, therefore, to believe that the Energy Corporation Act,  passed in 2007,  follows the same pattern.  In many respects, you'd be right.  For example, we do not know why the government created the energy corporation in the first place.  In second reading on the bill,  then energy minister Kathy Dunderdale famously spoke only 101 words in her speech introducing it.  Not a word of her comments then or later ever explained why the government was setting up Nalcor,  what it was supposed to accomplish and how it would be organised.

The sections of the Energy Corporation Act that everyone is now upset about came along in early 2008.  They were introduced, as the story went at the time, to address concerns from the major oil companies who would be part of a deal announced later that year to develop Hebron.

The issue for this post, though, is about the chronic misrepresentation of what those sections say whenever people talk about the current controversy over embedded contractors.  Here's the way James McLeod summarised the issue from a decision - not yet public - from the province's privacy commissioner:

The Energy Corporation Act, which is the law which creates Nalcor and gives it all its powers and mandate, says the company should withhold information “relating to the business affairs or activities” of any other company that Nalcor works with. 
The OIPC [Office of the Information and Privacy Commissioner] ruled that billing rates of contractors would clearly apply, and that because broader information previously released by Nalcor could be used to calculate roughly how much individual contractors bill, individual company names tied to specific contractors should also be kept secret.
Section 5.4 of the Energy Corporation Act Act says that the chief executive office may withhold commercially sensitive information belonging to Nalcor and its subsidiaries and shall refuse to disclose commercially sensitive information for a third party. 

But you can't stop there because the section adds an important bit of information next:
where the chief executive officer of the corporation or the subsidiary to which the requested information relates, taking into account sound and fair business practises, reasonably believes...
falls into either of the two categories the section then describes, complete with characteristics.

In other words, there isn't mandatory, automatic, and broad secrecy for something that is vague.  The Act places the decision at the discretion of the chief executive officer AND gives that person some guidance as to what "commercially sensitive information" means.

In the embedded contractors case,  Nalcor boss Stan Marshall determined what would go out the door and what wouldn't, based on whatever advice he got from lawyers.  No one has apparently asked Stan to explain his reasoning and, for sure, no one at Nalcor these days is likely to volunteer a simple piece of factual information.  These folks, after all, still release pdfs of documents that are designed to frustrate copying and pasting for data analysis.

We can make a reasonable assumption, though, that because some of the contractors  - maybe the one-man shops - consider the information to be commercially sensitive for them,  Nalcor won't release it.  That's a legitimate protection of third parties. Nalcor just needs to explain that. 

As for the privacy commissioner, it's doubtful he buggered up the plain English of all this.  And from McLeod's story, it appears that the commissioner has picked up on the idea that two partial disclosures could lead to the disclosure Marshall decided against.  That's legitimate as well.

But before we think about changing this section of the Act,  everyone needs to get their facts straight, stop, and think hard.

Bad public policy usually comes from  a lack of consideration. That includes times when there hasn't been adequate debate in the House but it also comes, as in the recent Muskrat Falls inquiry, when the government makes a hasty decision based on something on Twitter or open line that itself was driven by a few noisy voices with a raft of agendas, interests, and knowledge. That doesn't mean we should not have an inquiry but it does mean government folks should have made a decision based on facts, information, and knowledge.

In the case of the MF inquiry,  three of the terms are actually already known and one of them - the PUB exemption - actually dates from 1998.  It looks for all the world like the folks who drew up the terms of reference didn't know the facts themselves or what they were really trying to find out.  They also left out crucial time periods (anything before 2012)  and crucial actors (all the politicians) in the debacle.  The PUB bit is actually just a sideshow.  The result will be a long, costly, and ultimately inconclusive commission that will miss most of the details needed to avoid a similar debacle in the future.  That's the opposite of what the government promised when it announced the terms of reference and the commissioner.

Words matter.  Disclosure is important.  Facts are crucial.

And in the embedded contractors story,  that last element is in short supply.  We could all make lots of mistakes as a result, just as we made lots of them in the past - like in Muskrat Falls - by ignoring facts that were,  as in the Energy Corporation Act,  in plain sight all along.


21 November 2017

Multiple Interlocking Rationalizations #nlpoli #cdnpoli

In announcing an inquiry into some aspects of Muskrat Falls on Monday, the Premier muddled up some numbers that suggest the confusion at the heart of Monday’s big news.  He said that the inquiry will explain how a project that was originally supposed to cost $5.0 billion at the wound up costing $13 billion or more.

Then he announced the terms of reference for an inquiry that focused on the pro forma exercise called “sanction” that happened when the project was supposed to cost $6.2 billion.  The $5.0 billion figure is from November 2010.  That’s when many of the crucial decisions took place but, as far as the terms of reference go, its outside the bounds of the inquiry.

Justice Richard LeBlanc also won’t look at the political decisions behind the project, the relationship between Nalcor and the Premier’s Office, the governance of the corporation, or any of the other major elements of what became Muskrat Falls. All of those aspects would explain the political foundation of the project the Premier mentioned in his news conference but none of them are covered by the inquiry terms.  Instead, the inquiry will focus on the internal management decisions at Nalcor after 2012.

The specific subjects of the inquiry are listed in Section 4, which contains four sub-sections labeled a through d. Let’s run through each of them.

Energy Demand and Sanction

Section 4 (a) directs the commissioner to inquire into “the consideration by Nalcor of options to address the electricity needs of Newfoundland and Labrador’s Island interconnected system customers that informed Nalcor’s decision to recommend that the government sanction the Muskrat Falls Project. 

One supporter of the project famously said there were “multiple, interlocking business cases” for it.  What Nalcor, the government and its supporters actually offered multiple, interchangeable rationalizations.

In November 2010,  the key argument for the project was breaking the stranglehold Quebec supposedly held on electricity development in Labrador.  The project would ship power to markets through Nova Scotia.  The mention of Muskrat as the least-cost source of electricity for the island is found in paragraph nine of what is essentially a 10-paragraph news release plus a list of highlights.
Right off the bat, Nalcor didn’t present the alternatives at the time of project sanction, which is the starting point for the inquiry.  That happened in 2010, although it didn’t really because there is no evidence Nalcor ever examined alternatives to Muskrat Falls. The only mention of alternatives has been to the isolated island scenario, which means Nalcor never evaluated all options anyway.

In 2006 Nalcor did evaluate alternatives to the whole Lower Churchill project but that was for a different concept:  the LCP was supposed to be about power for export only, with local needs as a secondary consideration.  That’s an important detail because another key aspect of the 2010 announcement was that this was the original LCP, but with the tiny dam built first.

There’s also no order in council in which the provincial government approved a proposal from Nalcor.  There’s only OC2012-130 that lets Nalcor use Crown land:

 Under the authority of section 7(2)(a) of the Lands Act, the Lieutenant Governor in Council is pleased to authorize the Minister of Environment and Conservation to issue a licence to occupy Crown land to Nalcor Energy for an area not to exceed 4.3 hectares within the fifteen metre shoreline reservation at Muskrat Falls, Newfoundland and Labrador, for the purpose of hydroelectric generation, subject to the terms and conditions normally applicable to the issuance of such licences.
It’s dated December 4, 2012, well before the infamous filibuster and the actual formal ceremony announcing “sanction.”

This section will also not touch on the decision to double electricity rates and the rationale for paying for the project, all of which was political and all of which was decided in 2010.

Key Points to Retain:

  •  Without an amendment, the inquiry can’t look at decisions taken prior to December 2012 since the terms specifically identify Nalcor’s proposal for sanction as the focus. That happened in December 2012.  
  •  here’s no indication Nalcor presented any project justifications in 2012.
  • There’s also no order-in-council in which cabinet “sanctioned” Muskrat Falls.  It isn’t clear, therefore, what the commissioner will be doing to meet the first term of the inquiry.
  • The inquiry won’t look at the political decision to force domestic users to pay 100% of the cost plus profit (doubling rates), which was taken in 2010, not 2012.

 Cost over-runs

Section 4 (b)  is about “why there are significant differences between the estimated costs of the Muskrat Falls Project at the time of sanction and the costs by Nalcor during project execution, to the time of the inquiry.”

Key Points to Retain
  •   This will be the guts of the inquiry.
  •    It will be technical. 
  •    None of it is political.

Hello, 1998

Section 4 (c)  is about “whether the determination that the Muskrat Falls Project should be exempt from oversight by the Board of Commissioners of Public Utilities was justified and reasonable and what was the effect of this exemption, if any, on the development, costs and operation of the Muskrat Falls Project.”

This one is weird, as if the person who wrote the term had no idea what end was up.  The decision to exempt the LCP from the public utilities board was taken in 1998 because the project was entirely for export.  The PUB was entirely about domestic rates.  In the original scheme there’d have been almost no cost to pass on to consumers.

In 2010, cabinet did not have to decide anything about exemption since it was done long before it took office.

So given the amount of time the Premier spent blaming the former Conservative government for the mess he and his colleagues have cleaned up (not really – ed.),  giving the inquiry the power to call Brian Tobin to the stand is just nutty.

Key Point to Recall

  •   The exemption order predates the Conservatives return to power in 2003.

Oversight Committee Mania

Section 4 (d) is about “whether the government was fully informed and was made aware of any risks or problems anticipated with the Muskrat Falls Project, so that the government had sufficient and accurate information upon which to appropriately decide to sanction the project and whether the government employed appropriate measures to oversee the project particularly as it relates to the matters set out in paragraphs (a) to (c), focusing on governance arrangements and decision-making processes associated with the project.”

The adequacy of governance structures is a political question  - or one about internal government operations - but this term is written to focus on what Nalcor told people in government at the time of sanction in 2012.  In effect the wording precludes any discussion of the long-standing relationships involved in decision-making by and about Nalcor and focuses on whether or not Nalcor told government enough.

Since it doesn’t look like the key decision for government was in 2012,  this one might wind up being a lot more fun than informative.  A clever lawyer – like Jerome!  - should have a field day with this bit. As well, since the term is written to focus on what Nalcor did,  the fact the government made a certain decision gives the politicians an automatic excuse, if they want to take it. 

That’s really part of the problem with the whole inquiry terms of reference.  It is structured on the assumption Nalcor brought this forward in the same way it pursued Cat Arm or one of the other projects.  Nothing could be further from the truth.  This one has been primarily about politics since 2003 and arguably as far back as 1998.  

With a faulty set of assumptions underpinning it, this circumscribed inquiry can’t possibly find any meaningful answers to how we got into this mess in the first place.

That last sentence is the big take-away.


SRBP has followed the Lower Churchill project more closely than anyone outside government.  There are both short posts and detailed ones covering the entire thing since 2003 up to 2017.  There’s a tab at the top linking to some of the posts and others are easily accessible by using the search function.

 Feel free to use it and if you want to pose a question on something you may have missed you can find me @edhollett on Twitter or at ed_hollett@hotmail.com