The provincial government is dropping $11.3 million to string fibre optic cables from Goose Bay to western Labrador.
The federal government will plunk in $3.0 million with $9.7 million from Bell Aliant.
Of the provincial total, Nalcor Energy will cover $8.3 million.
Just do the math, though. The provincial government has 47% of this project. Both the federal and provincial government shares combined cover a majority interest in the project.
If that doesn’t hit you funny, it might be striking you a bit odd that an energy company is suddenly getting involved in telecommunications. Here’s the quote the people who put the news conference together made up for the Nalcor representative:
“This is one of the many benefits that Labrador will see from the Lower Churchill Project,” said Gilbert Bennett, Nalcor’s Vice-President, Lower Churchill Project. “Nalcor is investing in this project to ensure that critical infrastructure required to build and operate the Muskrat Falls development is in place in Labrador.”
“This is one of the many benefits that Labrador will see from the Lower Churchill Project,” said Gilbert Bennett, Nalcor’s Vice-President, Lower Churchill Project. “Nalcor is investing in this project to ensure that critical infrastructure required to build and operate the Muskrat Falls development is in place in Labrador.”
Not that Nalcor is bullshitting the public or anything, but of course, they are bullshitting. Nalcor has been on a heavy marketing campaign for Muskrat Falls for several months now in all sorts of ways. If they gave money to put new public toilets in a town somewhere, the news release would credit the whole thing to Muskrat Falls.
So yeah, on the crudest level, this is just another version of Nalcor’s publicity efforts for Muskrat Falls.
On another level, this is part of a trend the provincial Conservatives have been pushing since 2003. A key part of the whole effort has been to allow Nalcor – a state-owned, politically directed agency – to use public money to assume an increasingly larger role in the provincial economy.
Weird as it might sound for a Conservative government, that’s part of what is going on here. You can understand it better if you look at what the party does as opposed to importing labels or ideologies from other places. Progressive Conservative is just a label. In practice, the political parties in Newfoundland and Labrador aren’t ideologically based at all. That’s why people can jokingly refer to the Danny Williams Tories as the first NDP government the province ever had and not really be making a silly joke at all.
This sort of project is why the province’s ruling Conservatives inserted clauses in the energy corporation legislation in 2007 that allowed an energy company to do anything the cabinet wants it to do. It was a pretty dramatic change from the old law that governed the provincial hydro corporation.
In fact, this clause was so far away from one one would expect for an energy corporation that most people likely blew it off as being just a meaningless oddity. The whole thing stands out, though, because the clause survived through some pretty significant revisions from the first version of the energy corporation laws in 2006 to the ones that currently govern the corporation dating from 2007.
Cabinet obviously meant for the new corporation to take on anything at all. They didn’t need a way of funnelling provincial government money to the private sector. They already have dozens of ways to do that. They also didn’t need to do this for Muskrat Falls. They’ve been running Churchill Falls, for example, since the 1970s with good old copper telephone lines.
Muskrat Falls wouldn’t be the only new industrial venture that could use fibre optic communications. There are some new mining businesses likely to start in Labrador soon that could claim a far bigger interest in these cables than Nalcor.
And for what it’s worth, Muskrat Falls might not even happen.
What’s going on here is a continuation of the policy laid down by the Conservatives early in their mandate. They want to assume greater and greater control over the provincial economy. Today,it’s fibre optic cables. Tomorrow, it might well be another administration of any partisan stripe getting Nalcor into fish processing or marketing.
As your humble e-scribbler put it in 2006:
Williams' new Hydro corporation returns to an older model based on government subsidy and government dependence. Beyond the attractiveness to some businesses of relying on whatever contracts they can secure from the new Hydro corporation, the political and financial muscle of the state-owned company will likely make it considerably more attractive an investment than a private sector venture, since it will always carry with it a government guarantee of its operations and expenditures. The end result will almost inevitably be a weakening of the local private sector.
Weakening the private sector is one result.
Another is ensuring that local taxpayers pay the full financial cost and then some. Under the Electrical Power Control Act and the public utilities board legislation, the utilities board must set provincial electricity rates to ensure the financial viability of the provincial energy corporation. The company can never lose.
It’s that same combination of powers, incidentally, that Nalcor is using to finance the Muskrat Falls project. Local taxpayers will be forced – by law – to pay whatever rates Nalcor needs to ensure it recovers its costs, makes a profit and maintains its credit rating.
It was an undisclosed risk in 2006, but then again, that’s what the Lower Churchill is all about. It’s what a 2009 Emera deal was all about. Heck, it’s what the provincial Conservatives have been all about since 2003.
No wonder they dropped it out there a couple of days before Christmas.
- srbp -