29 September 2006

Demographics, economics increase pressure on temperamental Williams and volatile policies

There are, however, some urgent domestic priorities -— the necessities of life, the outmigration of our youth, unity, mismanagement and economic diversification.

Danny Williams, Progressive Conservative leadership victory speech, April 7, 2001

That was then.

Recent data from Statistics Canada show an interesting trend now.

Table A (left), shows population figures for Newfoundland and Labrador from 2001 to the present in half year time periods. Note that there has been a general decline over the entire period but that the rate of decline increases after January 2005.

This likely reflects the series of economic setbacks in the fishery (FPI in particular), Stephenville, and the failure of Hebron on top of the outflow of individuals that otherwise occurs.

There is generally a flow into and out of the province each year. The figures presented in Table A reflect the net result of inflow and outflow.

Table B (above) shows the annual rate of population change for Newfoundland and Labrador from 1952 to the present.

Green represents growth and red represents a decline in population. The largest decline is in periods after the cod moratorium.

When Danny Williams took office, the rate of population decline was on par with declines in the mid-1980s.

The rate for the first half of 2006 is the same as that experienced in the mid-1990s and in 2002.

New Approach needed

One of the overriding implications of the outmigration trends is that Danny Williams pseudo-nationalist posturing will do medium- and long-term damage to Newfoundland and Labrador.

Not only is the overall population declining, but, as forecast since the early 1990s, the population remaining will become increasingly dominated by retirees and children. The shrinking productive portion of the population means that the economy must become more productive. It also means the provincial government must have increased revenues or - at the very least - more stable sources of income.

The longer the Williams administration holds up reform of the fishery, particularly Fishery Products International, the more difficult it will be for the fishing industry to make the changes needed. Government has offered no ideas on dealing with the substantive economic problems at the heart of the current crisis; its focus on marketing is just the one aspect of the overalll issue government can without any consequence. Marketing looks good and the government doesn't risk anything politically. Unfortunately, leadership that lacks the willingness to make hard decisions is the opposite of what is needed.

In the oil and gas industry, a combination of developments are demonstrating the seriousness of the Premier's miscalculation on Hebron. Development of that field would have come at exactly the right time - if a deal had been cut last spring. Despite the Premier's claims that "talks" are going on behind the scenes, the project is definitely dead and likely will be dead as long as Williams persists in his unstable, volatile mode.

A major discovery in the Gulf of Mexico by Chevron and opening of additional acreage in the Gulf also place more attractive properties in play that have far less political risk for investors, if nothing else, than dealing with the temperamental Williams administration.

Norwegian energy giant Statoil - owned 70% by the Norwegian Crown - is looking to invest CDN$1.0 billion in the Alberta tarsands, not the Newfoundland and Labrador offshore. Meanwhile, declining natural gas prices in North America make it unlikely that any interest will follow the local gas resources even if the Williams administration manages to issue a gas royalty regime by the end of the year as originally promised.

Bear in mind that Williams has sat on the regime for three years,largely ignoring it in the one-thing-after-another tedious and needless approach this government has adopted for major policy issues. As well, Williams posturing on oil and revenues suggest that Williams' gas regime would not be structured to provide competitive incentives to attract greater investment. To do otherwise would involve political risk and Williams has shown himself to fear any threat to his image.

Newfoundland and Labrador is not alone in facing dramatic demographic shifts. A group of Quebec academics and former politicians released a manifesto in 2005 that drew attention to several factors that will affect Quebec's economic and political future. One is demographic change.

While other provinces are already well on the way to addressing the impact of issues like population decline, the Williams administration seems unable to develop policies. Its approach across the board is to spout inappropriate ideas based on attitudes from the murky past.

A new approach is needed.

The only question for Newfoundlanders and Labradorians is whether the Williams administration can fundamentally change and start to deliver on its promised New Approach.

(h/t to the Dominions' finest statistician.)