11 April 2007

How much is enough? Part Two

St. John's mayor Andy Wells backs Premier Danny Williams unequivocally on whatever policies Williams espouses.

No surprise there, since Williams gave Wells the best part-time job he'll ever have.

Of course, Wells can't explain the Williams policies any better than the Premier can himself.

To wit:
Wells says a seat at the owners' table of major offshore projects is the only way to get an inside view of the industry.

"It's important that we have a presence at the table when the big decisions are being made."
Under the Atlantic Accord (1985), the Government of Newfoundland and Labrador has all the rights of the resource owner to set royalties and to approve or disapprove of projects.

The Government of Newfoundland and Labrador already has a seat at the table when the big decisions get made.

In fact, as the provincial government has demonstrated at Hebron and Hibernia South, there isn't anyone else sitting at the table.

Nobody else is even in the room.

That's because, under the 1985 Atlantic Accord, the provincial government sets royalties for the offshore. If it doesn't get the deal it wants, there's no project.

Similarly, as in Hibernia South, the government can simply sit back and veto a project, despite having failed to exercise any diligence in collecting information before a decision was required.

What is Mr. Wells talking about? He evidently doesn't know and therefore no one else can figure it out either.
"You've got to fundamentally establish your right to a reasonable measure of control over the industry. I want to see a situation where we do have the information and we do have the presence and we do have the right - that's what this is fundamentally all about."
Mr. Wells really does need to read the 1985 Accord, perhaps for the first time. He certainly needs to listen to the briefings offered up to board members at the offshore regulatory board.

The Accord establishes that the provincial government already has extensive control over the offshore. Some might even call it unreasonable control given that the provincial government can apparently neglect its responsibilities for over a year on Hibernia South and then simply veto the project on the flimsiest of excuses.

As for information, Mr. Wells could easily consult with the Newfoundlanders and Labradorians at the offshore board. They already know far more than Mr. Wells or his advisors could know about any aspect of the industry.

What's Mr. Wells talking about? It isn't clear again that even he knows.
"I consider it fundamental that this issue of equity - the 4.9 per cent - be satisfactorily addressed. I don't understand the companies' reluctance with respect to this issue, particularly considering the premier's not asking for it for free."
If Mr. Wells does not understand the position taken by the oil companies perhaps he might take some time to enlighten himself on the matter. It has been well-covered in the news media and company officials are quite willing to make their position known.

Bond Papers has discussed it extensively. It centres on a simple matter of conflict of interest.

But, let us assume that the cost of the thing was an issue.

The so-called equity position was described by the premier as having a total net value to the provincial treasury of a mere $1.5 billion over the 20 year anticipated lifespan of the project. Put that against the estimated provincial revenues of $10 billion.

The premier also said that the tax concessions sought by the companies had a total cost to the treasury of $400 million. Total. Not annual. Total.

The premier said this amount negated the value of the rest of the deal.

Aside from the problems with math evident in the premier's comments - $400 million is less than $1.5 billion - it is difficult to imagine how that sum could obliterate all the benefits of having what Mr. Wells describes as a seat at the table where the big decisions are made, of having information and a "reasonable" level of control.

Leaving even all that aside, though, perhaps Mr. Wells could explain to us how much the Premier offered to pay and how he proposed to pay for it, given that the provincial treasury is stretched a bit thin.

What is Mr. Wells talking about here? Again, one suspects that even he doesn't know.

If - by some chance - he does, then perhaps Mr. Wells would be good enough to enlighten the rest of us.

Otherwise, all we have in this Telegram story is another example of Mr. Wells saying one thing now, when he said something different before.

When the provincial government moved taxpayers out of his jurisdiction to other parts of the province, Mr. Wells thought the idea silly. The prospect of fat federal job s being transferred to his jurisdiction last year had him signing a different tune.

In 1997, six months engineering work was a monumental loss to the province. Now, the loss of innumerable high-paid jobs and the larger value of continuity resulting from the Hebron and Hibernia South projects, is simply the short-term pain for some undefined long-term gain.

What we actually have here is most likely the pain - short- and long-term from Williams' decisions and the equally large pain of Wells' vague comments.