09 February 2016

Decision-Based Evidence-Making #nlpoli

The government’s “renewal initiative” is supposed to be guided by something called “evidence-based decision-making.”

It’s right there, right after “affordable and sustainable public services” as one of five principles listed in the colourful little hand-out the government has been using as part of its “engagement” exercise.

How odd then that so far the Liberal administration has failed to apply the principle of supporting decisions with evidence.

Take Muskrat Falls as a prime example.  As often as people have suggested postponing, delaying, or cancelling the damn thing in order to cope with what the Premier has described as an unprecedented financial situation,  the Liberals are ploughing ahead with the project.  They want it worse than Danny Williams, Kathy Dunderdale, and Paul Davis combined, with Tom Marshall tossed on top for good measure.

Too far gone to stop now,  natural resources minister Siobhan Coady told reporters. “There’s been a lot of money invested,” Coady told them, when they asked her about former Premier Roger Grimes suggestion that they ditch the troubled project.  Environment minister Perry Trimper said the same thing on Monday, not surprisingly.

“Too far gone to stop” is not evidence of a decision taken based on evidence.

It’s a logical fallacy.

It’s faulty reasoning. 

It’s called the sunk-cost fallacy. When people fall victim to the sunk cost fallacy, they justify continuing a project because of how much money they have spent already.   If the evidence suggests that a current path leads nowhere, then it really doesn’t make sense to continue.  But people who fall into the trap of sunk-cost want to keep going.  It’s much like the gambler who keeps playing and keeps playing, no matter how much money they keep losing.  They believe they will have to win eventually or that the odds mean they are about to score big, neither of which is actually true.

The only reason to keep going down a path is if there is a reward at the end.  That is, you keep going because what’s at the end of the path is valuable or has a benefit that outweighs the cost.

In the case of Muskrat Falls, you’d keep going not because of the current cost but because you needed the electricity.  Sure enough, there it is:  We need the power, Coady says.

Now that is true.  Well, sort of true. We need electricity. And we will probably need more eventually.

At the moment, though, we actually have enough electricity on the island to meet existing needs. We could add a bit of wind-generated electricity and maybe some small hydro projects down the road a ways. 

The problem we have right now – the reason for the black-outs and power warnings - is that Nalcor neglected its generating and transmission infrastructure.  We have evidence to support that conclusion, as Des Sullivan noted last week through his alter ego Uncle Gnarley. The public utilities board and its independent consultants investigated and amassed tons of evidence.

That evidence, by the way, also disproved another decision taken by Dwight Ball, namely to keep all the Nalcor senior management.  No reason not to support them, Ball said before Christmas. Actually, the reason to fire the lot – the evidence – is massive solely based on darknl.  The evidence becomes undeniable when you add in Muskrat Falls.

Nalcor’s senior leadership has made all sorts of claims about Muskrat Falls. None of them has turned out to be backed by evidence.  Water management is the best example. No biggie said Ed Martin when Tom Adams raised it.  Biggie, said Ed Martin a few months later.  So big Nalcor cooked up a scheme to deal with it.  Might want to check with Hydro-Quebec and the courts said Adams and a bunch of experts.  Self-interested know-nothings said the folks at Nalcor and their supporters.  No problem there.

And then the lawsuit hit.  Still unresolved. If Hydro-Quebec wins, then Nalcor is screwed.  Nalcor says they won't be.  Believe that if you want.  Fool me once, says everyone else.  Fool me 15 times, call me a Newfoundland cabinet minister. 

Then there are cost over-runs.  Starting from 2010, Nalcor officials have said the last number they cited was the precise number, over-runs included.  And every time, the cost ran over the Nalcor estimate like a Metrobus on Long’s Hill without brakes and the accelerator stuck to the floor.

Nalcor has been so unbelievably bad at estimating how much Muskrat Falls will cost that the Liberals have set a bunch of accountants to work on fixing yet another estimate of the final bill for Muskrat Falls.  But, you know, there’s no reason not to support Ed Martin and his happy team of muskrats.

Speaking of cost, even if we needed electricity today,  Muskrat Falls would be worth continuing only if it was the lowest cost option. Here again, Coady and Ball have no evidence to support their insistence on finishing the Falls.  The massive drop in oil prices has meant since at least October 2010 that Muskrat Falls isn’t the cheapest way of making electricity to meet domestic needs.  Nalcor’s own officials know they can get electricity cheaper other ways, especially once they finish a line to the mainland. They have known it for years.

So it is that without any evidence that Muskrat Falls will do what it is supposed to do and without knowing what the costs are,  the current administration has exempted Muskrat Falls from review in its renewal initiative.  What they will do instead is add some unknown sort of oversight on top of the oversight already in place to over-see the project.

Pretty soon there will be more oversight than there is project.  We will have so many people doing oversight that none of them will be able to see over each other in order to see the project itself. None of this oversight has reduced the cost of the project.  None of the oversight has sped up the construction. 

In fact,  all the months and months of meetings by a group of government officials hasn’t done anything except produce months and months of minutes of meetings that document cost over-runs and further construction delays. And without the slightest hint of how bad the joke was, Coady told the Telegram recently that the failure by the oversight committee  to post four months of minutes of the oversight committee meetings to the Internet was an oversight.

In other words, with no evidence that “oversight” actually does anything at all, the new Liberal administration wants to add more people to look over the shoulders of people looking over the shoulders of people building a dam for which there is no evidence to support its construction.

That's fitting.

Evidence-based decision-making apparently means you overlook the evidence when making decisions.

As SRBP put in 2013,  "Muskrat Falls is not a complex interweaving of multiple business cases.  Muskrat Falls is an intricate web of rationalisations, of self-delusion, of internally contradictory babbling. It is both the product of and an emblem of the type of politics that has dominated Newfoundland and Labrador for the past decade. It survives in a symbiotic relationship inside the bubble alongside those who created it.

"One cannot live without the other.

"One may kill the other.

"How long before the bubble bursts?"

Evidently it hasn't burst yet for some people.