30 December 2014

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.

The Leadership Legacy

tackyPolitical watchers this year found that Danny Williams left the Premier’s Office and the Conservative Party leadership.in 2010.  Williams left hastily.  For most Conservatives, his departure was an enormous shock.

But Williams never relinquished his control of the party.

In 2014,  we learned that Williams was still running things behind the scenes.  He and his supporters will either deny such a thing outright or dance around the issue. 

Their actions showed the extent of Williams’ continuing influence.

Shawn Skinner wouldn’t run for the party leadership without Williams’ permission.  As Skinner said at the time,  the backing of the “right people” was crucial to success.

Steve Kent, currently in line to be the next leader of the opposition, wouldn’t announce he was out of the race until Williams’ candidate formally declared.  Kent was less candid about the reason for his actions his actions but observers had no trouble understanding that Kent wouldn’t cross Danny Williams for anything. 

Williams picked Frank Coleman in February and, at that point, the race was over before it ever began.  Des Sullivan broke the story in February.  Williams’ only public comment was to attack Bill Barry, but that was enough to confirm Sullivan’s account.  Barry was, after all, the only one within the party that Williams couldn’t control or cower.   In the end,  Barry quit the race eventually saying that the whole thing was rigged in Coleman’s favour.

dunderfallDes Sullivan described Williams role as being part of a group.  A group certainly controlled the party, but there was no mistake that Williams was at its centre.  He chose Kathy Dunderdale as his replacement and then quickly helped organize the backroom deal that kept Dunderdale in place rather than run a leadership campaign.  Dunderdale was part of Williams’ entourage during his own leadership.

There was no surprise that Dunderdale kept another of Williams’ closest advisors as her right hand.  Nor was there any surprise that when she quit, Dunderdale handed control of the party and government to Tom Marshall.   Nor was it any surprise that Marshall, endorsed Coleman.  Marshall was, after all, a key member of the group centred on Danny Williams that Sullivan talked about in his February post.  Marshall was the premier in name only, though, as the Friday Night Massacre suggested.

The Fairy Tale Legacy

Williams’ powerful influence extended to the party’s election machinery as well.  He stepped into the by-election in Virginia Waters first by helping to court St. John’s city councilor Danny Breen as the candidate.  Later Williams became the de facto candidate as Breen’s campaign faltered.

Williams proved to be a polarising force.  While his presence rallied some Conservatives,  many others rejected him.  On voting day, they stayed home despite intense efforts by Williams and his supporters to drive them to the polls.

The result was a decisive loss for Williams. The shock was so severe that Williams himself could not acknowledge the loss. On election night an obviously emotional Williams called the loss “a tie.”  According to Williams, the Conservatives had come back from a fictitious deficit in the polls to nearly win.  There was no evidence to support the claim that the Conservatives had been 15 points behind the Liberals at one point.  But Williams used it anyway.

That was one of Williams’ trademark moves, by the way. He regularly attributed comments to people or presented versions of events that lacked any supporting evidence. One such account – of a confrontation with Stephen Harper – turned up in a fawning movie about Williams; career produced by the National Film Board.

As if to confirm the extent to which Williams’ personal style lingers inside the Conservative Party even when he isn’t around,  Paul Davis and his colleagues used exactly the same technique in their recent attack on the federal government.

In 2013,  the provincial government reached an agreement with the federal government on a cost-shared fund tied to the European trade deal.  In early 2014,  the provincial government tried to change the deal fundamentally.  The federal government wasn’t interested in altering the agreement.

The Conservatives have followed a characteristic pattern with the dispute.  They presented a meeting between the Prime Minister and Premier as the key to settling the dispute. When Davis emerged from the meeting with nothing more than he had when he started, he launched a series of personal attacks on federal politicians.  He called the Prime Minister untrustworthy.  Davis and his cabinet colleagues also identified the minister responsible for implementing the deal as the source of the current log-jam.  He wasn’t the guy they’d dealt with initially,  Davis and his colleagues argued.  They needed to talk to the first guy again, as if that would actually make a difference.

The style is familiar.  It followed the well-thumbed script of Williams’ encounters with characteristic of the way Williams dealt with the federal government and others.  Events themselves were highly personalised.  Rob Moore is an obstacle in the most recent case, just as John  Efford was supposedly an obstacle in the 2004 effort to secure a permanent federal hand-out like Equalization exclusively for Newfoundland and Labrador. 

At the heart of the confrontation was a political fraud, a falsehood repeated over and over.  In 2004, it was the false claim that the federal government was breaking the 1985 Atlantic Accord by taking away provincial oil royalties. In 2014,  the provincial government falsely claimed that the federal government had changed the terms of the 2013 agreement.  The truth – revealed in documents released by the provincial government, ironically – showed precisely which of the two had been trying to alter the original agreement.

The Energy Legacy

Danny Williams left the public eye in 2010 with the announcement of a deal to develop the Lower Churchill at Muskrat Falls.  That project continued to make news throughout 2014,  but Nalcor - the centrepiece of Williams’ energy policy  - made news in January when the electricity system on the island could not meet demand.

The cause was a failure by Nalcor to maintain the generating and transmission system.  Nalcor management tried a number of excuses to explain the problem but fundamentally, the cause was the creation of Nalcor itself.  In 2005,  the Conservatives hired Ed Martin as the nominal boss of the new energy corporation.  He took over – initially – as the head of the provincial hydro corporation.  The new legislation passed in 2007 to create the energy corporation and to continue the hydro corporation allowed for separate corporations.  Martin and the provincial government decided to run the new company as one big entity, with lots of subordinate companies with common chief executives and directors.

Thus, the board of Nalcor and the Board of the hydro corporation were the same, as was the chief executive Ed Martin.  Martin came out of the oil business and his focus – like that of Williams – for most of his tenure was developing the provincial government’s oil and gas interests.

The other obsession for Williams and Martin was the Lower Churchill.  They tried repeatedly to get the project underway but no one was interested in the power.   They could not even persuade Hydro-Quebec to own one third of the project, without redress for the 1969 power contract, despite what Kathy Dunderdale described as “five years” of secret efforts.

Hydro continued to function but – as darknl revealed – the company’s core mandate of providing electricity to the province at the lowest cost suffered.  Hydro did not complete needed repairs and delayed new capital construction, like increased capacity across the Isthmus of Avalon.  The Nalcor explanation was that the Lower Churchill project would take care of it all.  The problem was that as the Lower Churchill project morphed and Nalcor delayed it, Hydro missed critical decisions.

A report delivered to the province;s energy regulator by an independent consulted reviewed the causes of darknl and recommended fundamental changes to the way the provincial electrical system is run. One of their key recommendations is a significant re-organization of the hydro corporation’s senior executive as.  Liberty’s recommendation is effectively to restore Hydro’s independent management and direction and dismantle the structure implemented by Ed martin and the provincial government.

You can see another manifestation of Nalcor’s management problems in Muskrat Falls itself.  Newfoundland and Labrador Hydro had a policy mandate set in law to provide electricity to consumers at the lowest possible cost.  The company never completed an assessment of generating requirements that determined, let alone confirmed, that Muskrat Falls was indeed the cheapest source.

Instead, Nalcor pursued Muskrat Falls as a political goal,  proceeded without a “lowest cost” study and, ultimately organized a power purchase arrangement among the entities of Nalcor that burdens consumers with the entire cost of project plus profits for external companies.  It’s impossible to know what would have happened if the provincial government had not demolished Newfoundland and Labrador Hydro and merged it with Nalcor under a single set of directors.  Given the fundamental contradiction between Muskrat Falls and the corporations legislated policy mandate,  though, it is hard to imagine how the company could have reconciled Nalcor’s political project on the Lower Churchill with what is arguable the most expensive way to deliver electricity to the people of Newfoundland and Labrador.  Even Nalcor officials admitted they can get electricity more cheaply from other sources than their own project.

Nalcor represents a rejection of the provincial government’s energy policy that dated back to the creation of the hydro corporation in the 1960s and 1970s.  The policy placed the public interest in affordable electricity foremost in the hydro corporations’ actions. Through Nalcor,  the new energy policy set by Williams and the provincial Conservatives eliminated competition in the marketplace,  abused the province’s legal system,  and subordinated the public interest to Nalcor’s corporate interest.

It was  exactly what one might expect from a group of people whose previous experience was not in developing effective public policy but in managing a private corporation in a monopoly environment. In sound public policy, the public interest in paramount.  In a monopoly,  the public are nothing more than consumers of the monopoly’s output who must pay whatever the monopoly charges.

The Legacy of Financial Mismanagement

Nowhere is Danny Williams’ legacy more apparent than in the state of the provincial government’s finances.  The provincial government has faced four financial crises since the Conservatives took office in 2003.  Three of them have occurred since the government’s record surpluses in 2007 and 2008.

The crises are not the result of volatile oil prices.  They are a direct result of government’s decision – starting in 2006 – to spend every cent of government revenue.  The Conservatives under Williams and finance minister Tom Marshall rejected balanced budgets and  investment funds in favour of what one of their own colleagues described in 2009 as unsustainable spending.  Williams and Marshall, interestingly enough, admitted to the chronic overspending at the time, as did Kathy Dunderdale in her time and Tom Marshall in his time as Premier.

They knew the problem with their policy but they never changed it. Instead, they have offered excuses for their behaviour.  But even if we accept their excuses as legitimate explanations, no one can deny that a financial crises every two years is hardly a record of sound financial management.

The Shared Legacy

As much as we all fall into the habit of identifying particular government actions with particular people, the reality is that no politician can be the leader of a political party and Premier without support from other politicians.  Our system of cabinet government is built on the principle of collective responsibility.

In truth, that is what we have here: the major political news stories of 2014 represent more than the political legacy of Danny Williams.  They are the collective political legacy of the current group of politicians running the province.  The politicians do not distinguish between leaders since 2003 when speaking about their legacy.  The rest of us shouldn’t either.

The current group of politicians running the province share more than the name of their political party.  They share a common set of views and approaches.  It doesn’t matter whether they learned their views from Williams or came by their beliefs on their own. These politicians share a common world view,  a common style, and a common approach to politics and the public.

In a wider sense,  the major political news stories of 2014 also show the extent to which stories are interconnected.  The connections are not just among stories in a given year. They exist over time as well.  Decisions these politicians took in 2006 produced results in 2014, just as they did in each of the years in between.  The cumulative result of these interconnections - the legacy of each decision - promises to make 2015 another year of great change in local politics.