In his last television interview before his death on Sunday from cancer, former Newfoundland and Labrador premier Frank Moores said he doubted the value of buying the Upper Churchill.
Moores said at the time it seemed like a good idea. He said that with all the difficulties of dealing with the Quebec government and trying to develop other hydro projects, the province could have done something better with the initial purchase price of $168 million.
Moores was evidently basing his second-thoughts on the fact that the purchase price represented 25% of the province's budget expenditure for the year. At the time, the province couldn't afford it.
Too bad someone didn't probe this a bit more with Moores, especially given all the mythology that has built up around the Upper Churchill.
Some of that mythology is spread by the buy-outs major proponent, John Crosbie. Crosbie's memoir, No holds barred, doesn't really provide much factual evidence to back his financial case for taking over the Upper Churchill. Some of it is couched in terms like "I have been told that..." Quebec gets something like $800 million whole the province gets a pittance. In another spot, Crosbie doesn't explain how a project that was going to cost the province money when it was a private sector project would suddenly be a winner if it was nationalized.
My favourite part, though, is the bit where Crosbie uses a drop in Equalization because of new revenues as a loss for the province and hence a reason for taking it over. It's the same bullshit argument he foisted recently during the Williams offshore fracas.
[Note: Number 1: the province doesn't lose any money in the scenario. Number 2: the feds fixed the problem in 1982 and might well have done it earlier had they been asked. As a result of a decision by the Trudeau government, the province actually has its Upper Churchill revenues hidden from Equalization. It's worth about $50 million annually to the province.]
BUT back to the point, and here is Crosbie's big but, it was an argument he rejected as utter nonsense in only the most crass and rude terms only someone like Crosbie could muster in 1990 when the provincial government tried to rework the Atlantic Accord (1985).
Maybe it is time for a public inquiry into purchase of the Upper Churchill by Crosbie. Put the old boy in the dock of public opinion with someone putting some hard questions to him.
At the very least, a solid historical analysis - no one has studied the Upper Churchill in detail - might finally put to rest some of the hot air emanating from people like John Crosbie. We'd all be able to see what happened and then maybe learn what mistakes to avoid the next time.
Crosbie's old boss doubted the value of spending 25% of a poor province's budget on a giant cash pit. At least Crosbie, described it as a cash pit in his memoir but as a justification for spending all that cash and saddling the province with all the debt from the construction. Of course, it wouldn't be the only time Crosbie ever changed his tune on a policy or an idea to suit his purpose at the time.
For those who want to do the math, Hydro's debt load of about $1.4 billion is counted against us by the banks and the provincial government when working out our current debt load. Go check the budget. It might be a relatively small portion of the debt today, which runs around $12.0 billion, but look at the figures for a decade ago. Hydro debt was $1.3 billion, part of a total debt in the budget of $6.8 billion and an accrual debt load of about $8.0 billion.
We are still paying for it today and listening to Crosbie justify the cutbacks and the layoffs from what may well have been his biggest public policy blunder.