26 May 2010

Don’t mention the war

It could be an episode of Fawlty Towers.

Then again mentioning Germans and industrial development in Newfoundland and Labrador is more likely to conjure up images of the numerous colossal failures of the Valdmanis/Smallwood industrialization program from the 1950s.

The Germans are coming to central Newfoundland.

As natural resources minister Kathy Dunderdale told the House of Assembly on Tuesday:

I am happy to say that we have had an Expression of Interest from Germany last week, principals in, looking at what we have to offer in Central Newfoundland. We are very hopeful about that prospect, Mr. Speaker.

Well, maybe.

Outside the House, though, Dunderdale was somewhat less enthusiastic.  As the Telegram reported:

Outside the House, Dunderdale told reporters the company was a reputable pulp and paper company.

But she cautioned people in the province — especially those in central Newfoundland — not to get their hopes up.

Dunderdale said even though the company has seen the former mill and gotten some information about operating a pulp and paper operation in this province, it’s too early to tell if the company will submit a proposal to set up shop in the province.

That’s pretty much the state of things in central Newfoundland these days where the provincial government keeps insisting its expropriation of Abitibi assets was not a disaster yet has a hard time proving otherwise.

There are Germans coming but no one should count on them.

Such a bizarre concept:  perfidious Germans.

It’s like the shifting definition of “assets”.  In December 2008, the assets were the hydroelectric generating stations and the transmission lines.  The rights to the land and the timber leases all reverted back to the provincial government anyway once Abitibi stopped making paper.

Fast forward two years and the assets now include all the land.  As Danny Williams put it on Tuesday:

By way of example, and this is a very simple example, the land that we recovered, the land alone that we recovered for the people of Newfoundland and Labrador - forget the water rights, forget the timber rights - is three times the size of Prince Edward Island.

Of course, as Williams knows, the water rights and the timber rights  - as well as the mineral rights he didn’t mention – are what make the lands themselves valuable.  Their size is irrelevant.  The fact he is now citing them as assets to offset liabilities for environmental damages is likely to turn up being used by Abitibi’s smart lawyers to further demolish whatever defence Williams and his apparently not-quite-so-swift lawyers try to fend off Abitibi’s claims against the provincial government over the expropriation.

This danger – that his words will colour the legal action -  is something Williams is acutely aware of, of course, since just before he identified the land as an asset he cautioned New Democrat leader Lorraine Michael that “anything that I may say in answer to that question would only help the Abitibi case in the NAFTA dispute.”

So he carried on and gave them something just as juicy to use against him. 

This is the essence of this entire matter:  a hasty decision followed by bungling, then excuses and then unsubstantiated claims.  Laced through it all is the lecturing and condescension from the premier and his ministers.  none of that really comes off, of course, since the entire gaggle of them have shown they have a very tenuous grasp on most of the facts of these matters themselves.

Here one need look no farther than the hydroelectric assets which people have been led to believe have some means of generating cash for the provincial government or, more particularly, its energy company. 

Turns out that, as Dunderdale told a legislature budget committee recently, there isn’t enough demand on the island to warrant generating power from these hydro sites.  Meanwhile, on the island east of Sunnyside (on the Isthmus of Avalon), there is demand.  Unfortunately, the existing transmission lines are at capacity.  NALCOR has no plans to add more transmission capacity unless the Lower Churchill goes ahead.  As a result, the central Newfoundland hydro assets won;t be shunting power to Long harbour and the Vale Inco smelter. That is going to be powered by, among other things, the Holyrood thermal generating plant and its oil-fired generators.

So much for closing Holyrood as a public policy goal.

So much too for fears the hydro assets would benefit the whole province rather than keeping them tied to central Newfoundland.  Some people thought that the cash from the hydro power would be a nice nest egg for economic development. They were concerned about the benefits flowing outside the region.

Once upon a time, back before the rest of us learned of the mill expropriation fiasco, the provincial government refused to tie the hydro assets to local economic development funding in central Newfoundland. As industry minister Shawn Skinner put it:

“However, as with any investment, the collective impact on the province as a whole must be measured as these resources are provincially owned."

Well, now that everyone knows there really isn’t any use for the hydro facilities – and hence they have no revenue-generating ability at the moment – the provincial government is going back to its old line that the hydro assets will be used to lure potential new industries to the region.  As Dunderdale said in the House on Tuesday:

Mr. Speaker, we are not writing off Central Newfoundland. We may not have an industrial customer at the moment looking for that power, but that day will come, Mr. Speaker. When that day does come, we will have the assets to do something with, to drive economic development in that part of the Province, Mr. Speaker, once again.

Assets are not assets. 

Non-assets are, in fact, assets.

There are Germans, unnamed but apparently respectable, but they can’t be counted on to deliver the goods.

And we predicted everything but couldn’t predict disaster, which of course it isn’t because the current situation is the one we foresaw after examining all the potential outcomes, but we didn’t really foresee it at all. The whole thing is unfolding as we knew it would but in completely unpredicted ways. 

basilJust imagine the mess if we hadn’t done what we’d done to produce the mess in the first place.

And for God’s sake, don’t mention the war.

In next week’s episode, more hilarity ensues.