Sometimes a comment is so profoundly revealing you just can’t let it slide by.
This one came from Milly Brown, the Premier’s communications director, in an exchange with Simon Lono on Twitter on Wednesday. And just so everyone knows up front, this is not from Milly’s personal account, if she has one. It’s a comment from Milly in her official capacity.
Leaving aside the exaggeration for effect (the hyperbole), what Milly is talking there are the times before 2003 when Progressive Conservative and Liberal administrations took dividends from Newfoundland and Labrador Hydro.
It’s hard to know what Milly thinks those evil people call Liberals did with the money, but you can be assured it went into keeping schools open, paving roads, building hospitals, and all those other wonderful things governments are supposed to do.
They took the money from Hydro because they needed it. Unless you are under the age of 20 years, you should remember a time before oil royalties. That’s when provincial government’s in Newfoundland and Labrador hardly had two cents to rub together in some years. They looked for money in all sorts of places. Brian Tobin’s crowd took a huge advance on payments made under Term 29 of the Terms of Union.
And in some years, the provincial government went to its big Crown corporation called Hydro and took dividends. The provincial government is the only shareholder of Hydro, in case you didn’t know. In any corporation – public or private – shareholders sometimes get dividends. It’s a share of the profits of the corporation they own. Taking dividends is one of the ways people benefit from owning a corporation and in the case of Newfoundland and Labrador Hydro, a dividend is probably one of the most obvious ways of benefitting.
Undoubtedly by now, some of you are starting to see the problems with Milly’s comment.
It gets worse.
Milly’s badly wrong about siphoning “every cent” as well. The company has had sizeable retained earnings in its financial statements for some time. Those are profits that didn’t go as dividends to the government, Hydro’s sole shareholder. In some years, it was upwards of $500 million if memory serves and that was long before oil hit. The company was never really hurting for cash.
What the Conservatives did in 2003 was stop taking dividends. They could do that because oil royalties, Equalization payments and the offsets from the 1985 Atlantic Accord meant that had cash coming in the door. By 2007 and 2008, there’s was so much cash, they couldn’t spend it all no matter how wildly Tom Marshall increased annual spending.
That’s the money Milly is referring to when she talks about putting money into what is now called Nalcor. For the record, her current boss and her former boss weren’t just satisfied with handing Nalcor the windfalls from non-renewable resources. They actually plan to borrow more money – to increase the public debt – in order to give Nalcor more and more cash. The current public debt is somewhere north of $18 billion, in fact, all due to the policy that Milly so enthusiastically endorses.
Lastly, let’s talk about the scorn Milly evidently has for dividends. That’s the perspective from corporate management. They want to keep all the cash they can, build the company up, collect huge salaries and not pay out any money they don’t have to.
The problem is that Milly doesn’t work for corporate management. She supposedly works for the shareholder. What Milly is displaying, though, is exactly the sort of perspective your humble e-scribbler noted in December 2012: the current administration views Muskrat falls from the perspective of Nalcor management and its interests, not the interests of ordinary people in the province on whose behalf the government owns Nalcor.
That’s pretty much the only way you can take the view Milly took in the tweet by saying that dividends are bad. Instead, shareholders should funnel billions and billions into the corporation and, as she notes, “take nothing out.”
Now Nalcor corporate supporters have all sorts of claims about how things like Muskrat Falls are in the public interest because they will keep electricity prices down. You can’t really accept those claims at face value, though, because the only people who have produced those claims are the folks at Nalcor and their supporters, for whom Milly works.
What you might want to look at again though are some other claims they’ve made. Tom Marshall, for example, has been saying for some time that Nalcor will generate all sorts of cash for the province. In 2013, he said the revenue would average about $450 million a year for 50 years, starting in 2017. More recently, Tom’s been claiming that Muskrat Falls or Nalcor or something will make billions each year for the province.
It’s interesting to note, though the actual words Tom used. Here’s what he said in December 2012:
[Muskrat Falls and Nalcor] will pay a dividend to the people of Newfoundland and Labrador of in excess of $20 billion, starting in 2017 for the life of the project.
Earlier this year, Tom told the House that
“In 2019, I expect the dividends that will come to the province from Muskrat Falls will be about half a billion dollars a year,” he said Monday.
“I expect that before the Upper Churchill comes back, I think those dividends are going to amount to $3 billion a year, each and every year.”
There’s that word again.
Dividends.
Now in April, Tom got a bit confuddled, admittedly, about the amount of money involved, but there’s no mistaking the fact that Tom expects Nalcor will continue to generate enormous dividends for its shareholder, the provincial government. Those are fundamentally the same sorts of dividends that the Premier’s communications director says are bad things.
Confused?
Of course, you aren’t.
However, the same can’t be said for the communications coming from the Premier’s Office. Just to make sure everyone is clear, this is not about Milly herself. Rather, what you should be noticing here is how all these people who work together say the same sorts of fundamentally mixed-up, confused, contradictory things. They don’t sound like they know what they are talking about.
Kathy did it a lot. Tom does it. Lots of people at the top of the current administration do it and they’ve been doing it for years. They all believe this stuff and they all apparently don’t see any problems with saying different things at different times about the same subjects.
While the current administration may be taking nothing out of Nalcor in the way of cash, the same can’t be said for what reporters, politicians, business leaders, and ordinary citizens take out of their encounters with the people running the province these days.
They are taking away a really bad impression. That’s likely why those everyday folks are satisfied the roads are getting paved, taxes aren’t going up and people aren’t getting laid off. They think Tom Marshall is most of the most popular Premiers in the country.
But when it comes to picking the party they’d vote for if an election were held tomorrow, those everyday folks most emphatically are not picking the people who’ve been running the province since 2003.
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