The Legacy of Faulty Assumptions: Hebron Revisited #nlpoli

Hebron is the last of the four, big, offshore discoveries from the 1980s.

It’s due to come into production in 2017 based on a development agreement reached initially in 2007 with the provincial government and finalised in 2008.  There’s a potential problem with current production schedule.  The topsides fabrication is delayed in Korea but we won’t know until the middle of 2015 whether or not there will be further delays that would impact the planned date for first oil in 2017.

Hebron plays a big role in the imagination of the people currently running the province.  Their reaction to the provincial government’s financial problems is based, in part, on the expectation that Hebron will bring huge amounts of new cash into provincial coffers.

But with oil prices down,  people are starting to consider that those assumptions about an imminent return to insanely fat oil royalties might be a bit off base.  With that in mind, let’s revisit the Hebron development agreement and see what turns up.

The Legacy #nlpoli

There is a lengthy list of political stories in contention to be the top political story of 2014.

Start the year with #darnknl, the failure of Newfoundland and Labrador’s Hydro generation to supply the capital city and surrounding communities with electricity last January.

It led to Kathy Dunderdale’s resignation as Conservative leader and Premier, which in turn led to the appointment of yet another interim Premier. That was followed by the Conservative leadership, the brief and ultimately ruined political career of Frank Coleman, and finally the second Conservative leadership contest that ended with the selection of Premier Paul Davis.

The year ended with a political crisis as Paul Davis, launched a political war with the federal government over a promise supposedly broken. And then there has been the string of by-election victories by the Liberals and losses by the Conservatives.

Or the financial mess,  triggered by the 40% drop in oil prices.  It promises to produce one of the worst deficits on record this year – unless the Conservatives have been bullshitting, like they have done so many times before – or a very harsh budget next year.

Either of these stories alone could be the top political story of 2014.  But the big political story of 2014 is the element that links them all together in one.

Great Unposted Predictions #nlpoli

Sometimes you find the strangest things among the draft posts.

Here’s a sample from a January 2012 draft post that never saw the light of day that offered a forecast for the political times ahead:

 

The Top 10 SRBP Posts of 2014 #nlpoli

People love to read posts that contain nothing more than lists. 

You know this is true because every self-appointed guru of the Internet will give you a list of simple things to do online that will make you an instant success and somewhere on the list is the advice to always produce lists.

Who are we to argue with such collective wisdom?

In any event, and in keeping with a long tradition of lists around these parts,  here is the list of the top 10 SRBP posts for 2014.

Churn dropped sharply in 2014 #nlpoli

Orders-in-council show that cabinet made a total of 20 appointments in 2014 at the ranks of assistant deputy minister and deputy minister or the equivalents.

Compare that to 51 senior executive changes made by cabinet in 2013.  That was a new record,  surpassing the records set previously in 2011 and 2012.

-srbp-

Better more, and better #nlpoli

The provincial government has a very serious financial problem. 

The forecast deficit for the current year is the second highest on record at $916 million. 

No one knows how big the deficit will be next year,  but with oil prices forecast to stay in their current range for the next couple of years,  odds are very good that the provincial government will turn in a record deficit next year.

That is saying something.  The forecast in 2004,  the first year the Conservatives took office, was for a deficit of $840 million.  Finance minister Loyola Sullivan called it “the largest deficit in our province’s history.”  He was a wee bit off.  The actual accrual deficit in 2003 was $958 million.

All they need for Christmas is new talking points #nlpoli

Keith Hutchings - the provincial cabinet minister leading talks with the federal government on European trade  - issued a statement on December 9, 2014.that began with a simple statement.

“In June, 2013,” Hutchings began,

“our governments agreed that, in exchange for the [provincial government] agreeing to lift minimum processing requirements (MPRs) for the European Union (EU), the Federal Government and the provinc[ial government] would establish a fund that would provide for total expenditure of $400 million based on a 70/30 federal/provincial cost share.”

The money was for “industry development and renewal [in the fishing industry] as well as worker displacement”  according to Hutchings.

But when Hutchings spoke with the Telegram’s James McLeod six months later, things weren’t quite so cut and dried.

PEI buying Quebec electricity #nlpoli

Prince Edward Island is in the market to buy 100 megawatts of electricity from Hydro-Quebec, according to media reports on Thursday.

-srbp-

Moose Party to enter race in Avalon #nlpoli

Munn E Moose announced today that he will carry the Moose Party banner in the next federal election in the riding of Avalon.

"Harper has no CLASS”  said Moose.  “It's time to take ACTION."

Moose, who is also the leader and only known member of the party said that the previous lack of success for the party is no obstacle.  "This election, we won't be FENCED IN."

Asked if voters in Avalon would support someone who family roots are not in this province,  Moose protested that his family has been here for more than a century.

“I was born in the woods right over there,”  said Moose, "which is more than you can said about any of the townies trying to run out here.”

Asked about his plans for the election, Moose said that he was looking forward to a feed of CHES during the campaign. 

-srbp-

The Lunatic Fringe #nlpoli

If the provincial Conservatives have done nothing else with their European trade charade,  they have breathed new energy into the political lunatic fringe that opposed the trade deal before they even heard of it.

Worry more about next year #nlpoli

Provincial revenue from oil will be $791 million less than forecast in the spring budget, according to the provincial budget update.

A few other expenses are less than forecast and some revenues are up.  All told,  the provincial deficit is now forecast to be almost $1.0 billion.  That compares to the $572 million shortfall predicted last April.

The provincial government’s financial problems aren’t caused by falling oil prices.

Our Gift to Nova Scotia #nlpoli

As of March 31, 2014,  Memorial University had an annual deficit of about $330 million.

In 2013-2014,  the annual cost of subsidising tuition for out-of-province students at Memorial was $112 million.

The provincial government operation subsidy to the university has doubled since 2004.

Those are a few of snippets from the Auditor General’s 2014 report.

-srbp-

Province increased CETA demands after crucial agreement #nlpoli

Almost a year after reaching an understanding with the federal government on a joint federal-provincial fisheries fund related to the European trade talks, the provincial government tried to alter the deal radically.

Documents released by the provincial government in 2013 and 2014 show that the federal and provincial governments agreed in June 2013 to  fund a cost-shared (70% federal and 30% provincial) “transition program” of up to $400 million that would address “industry development and renewal as well as worker displacement.” 

But in May 2014,  provincial fisheries minister Keith Hutchings changed the provincial demands.

Opportunity knocks #nlpoli

CBC’s David Cochrane took a break from his parental leave Thursday evening to let the world know that On Point is dead as of next June.

Predictably, a bunch of people expressed their great regret but this is far from the end of the world.  Cochrane hinted elements of the show will survive.

Frankly, the best thing to do with the show is kill it now and start revamping in January. Put political reporting and longer form interviews back into the weekly evening broadcast.  That would go a long way to bring back the news into what too often seems like one gigantic weather forecast with periodic interruptions. Make no mistake.  Snodden’s forecasts are great but there is also such a thing as too much.

Bill 28: missing in action #nlpoli

It’s an unknown amendment to the Hydro Corporation Act.

Natural resources minister Derrick Dalley gave official notice he’d be introducing the bill at the start of the current sitting of the House of Assembly and then…  nothing.

So where is it?

What is it?

-srbp-

Time Lag #nlpoli

On Wednesday,  Premier Paul Davis announced that Ken Marshall had been appointed chair of the board of Nalcor and an unspecified number of Nalcor’s subsidiaries.

Danny Williams’ old business buddy has been on the Nalcor board since 2004 and he’s been the acting chair of the board at Nalcor since earlier this year.

Note the date:  10 December 2014.

Now check out the order in council issued on 04 November 2014:

Recurring Behaviour #nlpoli

Exactly one year ago,  the provincial government was in a controversy over its part in the European free trade deal.  The Conservatives were  heralding the great deal, including a $400 million fisheries development fund.

The opposition Liberals asked for details.  The provincial Conservatives and then-Premier Kathy Dunderdale wouldn’t release any information.  On December 5, 2013,  Premier Kathy Dunderdale relented and released 80 pages of letters and e-mails between federal and provincial officials about the talks. 

A year later,  the provincial Conservatives are still in a political quagmire over the deal. This time the problem is that there isn’t any deal. Premier Paul Davis said on Monday that the whole thing was just a matter of crossing a few tees and dotting some eyes.  On Tuesday, ,  Davis and a gaggle of his cabinet ministers said the negotiations on the fund were going no where.  He needed to take it to the Prime Minister and so Davis and Stephen Harper would meet on Wednesday.

That was fine except that the Prime Minister’s Office said there’d been no meeting scheduled. Harper was scheduled to be in Montreal for Jean Belliveau’s funeral.

Decisive Moments in Politics #nlpoli

The NDP are down five points,  the Liberals are up two and the Conservatives are up three, according to the latest Corporate Research Associates poll.

Voters are abandoning the New Democrats who are down by one third from 15 points to 10.  The Liberals and the Conservatives picked up those disaffected former New Democrats, with the Conservatives actually doing better than the Liberals.

Small problem:  that’s not what happened.

What’ve you actually got here is one of the finest possible examples of how the way CRA presents its own numbers can mislead people who want to figure out what is happening with public opinion.

Let’s talk about pol-i-cy. #nlpoli

Some people are making issue lately out of the fact that – supposedly  - the Liberals have not released any policies.  The Liberals will be government soon and no one knows what they plan to do.

There are two types of people talking like that.  One are partisans, mostly Conservative, but with a few New Democrats.  The Conservative interest in this idea is pretty obvious.  They want to shift the pressure of their team and onto the Liberals.  They want to change the channel.  But more than that, they want to expose the Liberals for the frauds they are. 

Hebron delayed at least 12 months #nlpoli

CBC news reported on Thursday that the topsides module for the Hebron project won’t be delivered on time. 

Rather than arriving in 2015 for mating with the concrete base,  the entire structure for the living, drilling, and support spaces won’t arrive until sometime in the middle of 2016.

The original project timelines called for the topsides to arrive in early 2015 for mating to the concrete base.  That would allow time to float the structure to the site,  fix it in place, and start drilling the production lines into the field.  The original plan called for first oil in early to mid- 2017.

The one year delay in topsides fabrication will likely mean a one year delay in first oil.  it’s hard to imagine how it could be any different.

-srbp-

Muskrat Falls more than $8.3 billion: Nalcor #nlpoli

Prompted by Wednesday’s post on Muskrat Falls costs,  a couple of readers drew your humble e-scribbler’s attention to a tidy little briefing note posted on the Nalcor website. 

It’s not really obvious – some might say it is buried - but if you going looking you can find it and a lot of other useful information.  That’s a shame, really because this little two-pager was far more informative than anything that’s actually come out of the mouths of the Nalcor brass or provincial cabinet ministers.

As it turns out, Ross Wiseman did a bit more than bugger up his fractions.  And your humble e-scribbler was off by a bit in trying to unravel Ross’ version of things, too.

Just do the math: Wiseman confirms Muskrat Falls cost at $7.3 billion #nlpoli

Twitter sometimes produces some gems.

Like on Tuesday when Tom Baird,  a mathematics professor at Memorial pointed out that the province’s finance minister had a wee bit of a problem with basic math.

“Just do the math,”  Ross Wiseman told Liberal leader Dwight Ball during Question Period on Monday.  “ Based on the current projected cost of that project of $6.9 billion, our investment over time, over the life of that project, the construction of that project, will be about $2.3 billion…”.   And that $2.3 billion, according to Wiseman was the 25% investment the provincial government had always said it would put into the Muskrat Falls project.

A chilling non-answer #nlpoli

The fact that Premier Paul Davis refused to give a simple answer to a simple question should send a chill up your spine.

MR. J. BENNETT: Mr. Speaker, at least thirty-five children have died while receiving service from this Province since 2009.

I ask the Premier: Has he been briefed on these deaths? If so, will he provide a report to the House of Assembly?

PREMIER DAVIS: Mr. Speaker, any time a person loses a loved one, I cannot think of anything that would be more difficult, challenging, and have a greater impact on a family. If it be a family who has a child who has a relationship with a government department, is either under a program or receiving services – because many of those children that the member opposite is referring to were not in the care of the government, were not in the care of Child, Youth and Family Services, but may have been receiving some supportive services from government or have had other relationships with government.

Any time those types of incidents happen –

MR. J. BENNETT: Have you been briefed?

PREMIER DAVIS: I am sorry, I say to the member opposite; this is very important, so just please bear with me.

These are very, very important to us as a government. I know how important it is to the minister, I know how important it is to the staff, and we take every step possible to ensure the safety of all children in Newfoundland and Labrador.

[via Hansard]

-srbp-

Rational. Disciplined. Principled. #nlpoli

Back at the start of the current Conservative administration in 2003, they were very sharply aware of the problem with using one-time revenues for day-to-day spending.

They were so concerned about using that one-time money that they tried to get the federal government to do the impossible, namely give the provincial government here a permanent handout equal to oil revenues, in addition to the oil revenues that the provincial government collected.

Then they tried to get the federal government to exclude those one-time revenues from the Equalization formula so the provincial government could get the oil money and the hand-out at the same time. That didn’t work either.

The one thing the Conservatives didn’t do – for all their rhetoric about independence – was to act like a responsible, independent government.  They didn’t manage public finances for the long haul.