19 January 2017

Actions and Words (2016) #nlpoli

The provincial cabinet has known since January - at least - that the powerhouse at Muskrat Falls is only 15% completed despite a huge payout to the contractor.

That's what Nalcor reported to the committee of provincial bureaucrats named by the Conservatives to get a report from Nalcor every now and again.  They can't do anything else except receive the reports and pass them on to cabinet.  They still do it under the Liberals.

The company hired by cabinet to conduct yetanother review of information supplied by Nalcor that government already had included a little table of progress on major components at Muskrat Falls.  The powerhouse is a major component.

But it isn't on EY's table, shown at right and released earlier this month.  It's lumped in with "spillway" and shows it is supposedly almost 40% complete.

There's a lot of difference between 15 and 40.

Take a look at the EY report from April with the December report from thebureaucrats, dated last December but only released 10 days after the EY thing. You'll notice the similarities in the two. You will also notice the number of times the bureaucrats' report mentions work that EY did for them last year before the consultants got the second review job. 

As it now appears, the government deliberately held back the bureaucrats' report long after it was due to be released.  It looks like they wanted to give the public the impression the EY review was actually accomplishing something valuable for the $1.0 million price tag that went with their interim report.  Getting the final version is now going to cost an extra 60% of the original bill.

But what are we getting for that?

Well, the public is getting nothing of value from EY.  This money is all for the benefit of the politicians.

Of Oversight:  Imaginary and Real

Officially, the politicians call the bureaucrats the oversight committee.  But the committee really can't oversee anything to do with Muskrat Falls because they have no power to step in and fix something when it goes wrong.

Imagine Muskrat Falls is a submarine in one of those old movies.  Something happens and the sub starts to sink.  There's always a dial with a needle and a  bunch of numbers to show how far under water the sub is. For dramatic effect, the director will cut to a scene of guys standing around watching the numbers whiz by as the ship sinks.

Watching the dial spin doesn't do anything to stop the sub from sinking. It's just there in the movie as a visual distraction.  Well in our little drama,  the oversight committee is basically those guys watching the dial spin.

The real oversight of Muskrat Falls happens the way it is laid out in the Energy Corporation Act. The cabinet  - that is really the Premier - appoints the chief executive at Nalcor. That's the entire oversight and accountability.  Premier to Nalcor boss.  You are done.  The chief executive reports to a board, also appointed by cabinet but really they aren't anywhere near as important as a matter of law or politics, as the Premier.

The Premier gets regular, detailed briefings on anything and everything in government. At any moment, he can get a report on whatever he wants to know about Muskrat Falls. If the Premier calls the chief executive at Nalcor at three in the morning to find out how much toilet paper a contractor is using,  people will be pulled out of bed to check on the number of rolls of White Swan they are going through, how many are on hand, how many rolls are on delivery, the unit price, and whatever other details the Premier wants.  Charts,  tables, photos.  You name it, the Premier will have it often before his head hits the pillow again.

And if the Premier doesn't like what he sees,  all he needs to do is tell the chief executive to fix it and things get fixed.  If things don't get fixed, the chief executive will be checking CareerBeacon in the morning.

Not complicated.

That's accountability and oversight all wrapped up into one.

Three things you can draw from that. 

First,  if Dwight Ball didn't back Ed Martin 110%,  they'd already be dragging Martin's body out the back door, figuratively, if not literally. Ed would already be history.  The fact Martin is still there means that Dwight Ball has nothing but confidence in Ed Martin. It also means Dwight is absolutely hell-bent on building Muskrat Falls no matter what it costs.

Second, the "oversight committee" is nothing more than a theatrical device to distract the punters.  The Conservatives created it and like everything else, including the names of departments, the Liberals have kept it.

Third, any talk by the Liberals of extra oversight is just a case of shoving more folks in the room to watch the dial spin.  And if anyone talks about "independent" oversight,  as the Liberals are doing, they are talking about folks watching a dial spin in another room, miles away from the sinking sub altogether.  They really won't be able to do anything to stop the ship from sinking.

The Role of Management Consultants in Public Policy

The EY committee fits the current Liberal plan because it makes everyone think the government is  doing something when it isn't. The "interim" EY report included a recommendation for improved "governance" and extra, independent oversight, because that's what the client wanted. There's a long-established practice in government of hiring consultants to deliver the answer you need to convince your boss or the public that your pet idea is worth doing.

There's sometimes no actual evidence for the preferred conclusion. That's not the point.  The purpose of the consultant is to situate the estimate - in other words -  to justify what the contracting agency wants to do.   If, by some chance, the external consultant finds a real problem,  any embarrassing ones can be disappeared by labeling the first report a "draft" or "interim" version and having the copies rounded up and destroyed. The offending bits will vanish once the final, sanitised version is approved.

The role of the consultant in this sort of government management game is to give a veneer of credibility to the decision the officials and/or politicians want. It also gives the politicians or bureaucrats some cover later on, if things go badly.  Not my idea, they can say, it's what the consultant said.  or,  geez,  guess the consultant missed that when they were going through.  Too bad.

If you need to see a really good example of this recently just look at all the consultants hired in 2012 to give "independent" reviews of Muskrat Falls.  Government hired them, gave them information from Nalcor, set the limits on what they could deliver, and told them all to show that Nalcor was right in whatever conclusion they needed on a given topic. 

Right there in plain view and all sorts of smart folks held up the "independent"  reviews as if they were anything but a gigantic set-up.  The reason the government folks had to go through the charade, by the way, is because Nalcor had not done the work in the first place.  They had never backed up the claim that Muskrat Falls was indeed the lowest-cost way of delivering electricity for local use or that there was no way to develop gas.

Irony of ironies,  the evidence that the EY "governance" recommendation is founded on wisps of air can be found in Nalcor's rebuttal to the EY report.  The Crown corporation challenged that recommendation on the grounds - admitted by EY - that the consultants hadn't met with anyone from the Nalcor board. How could they judge the governance was weak if they hadn't met with the governors?

The Role of Management Consultants in Muskrat Falls

Good point.  But it is also irrelevant.  The EY committee is just the latest in a series of distractions the politicians of one stripe or another have been using to distract the public. People are worried about Muskrat Falls. The politicians tell us to look at the spinning dial.  The politicians point.  Everyone looks.  We have set up people to watch it spin and report back to us every three months on what the dial reads. Everyone keeps looking waiting to see when the next bureaucrat will emerge with a number. Meanwhile, the politicians go back to doing something else while the folks at Nalcor keep making the dial spin higher and higher, unmolested.

It's a pretty cynical manipulation, to be sure, but it is a very effective one and that's why the politicians keep doing it. In the Liberal version,  they assure the people of the province that they will make sure that the number that appears every three months is absolutely accurate, verified by someone in another room far away from the project watching a copy of the dial as it spins.  The Liberals are so firmly committed to the second spinning dial watching team that they have hired experts to tell us that we need that second set of dial spin watchers.  The experts were supposed to give is a report for a set price.  That set price wasn't set, as it turned out, and now it will be 60% higher than we were told.  You can tell the Liberals are serious about the value of dial spinning, by the way, by how much money they will spend of our money to justify the second,  "independent" spinning dial watchers.

60% more than forecast.

They must be 60% more serious than they were in December.

In the meantime, if anyone asks about the bigger and bigger numbers that are appearing the dial, the Liberals say they are waiting for the report. Can't do anything until then, you know.

If pressed, the politicians can say they are very concerned about the project. They want to do things right so they must wait until they get an appointments committee in place. They hint that they might,  you know,  have to do something, eventually.  Later on.  But not yet.  Must.  Get. Report.

In pretty well every case one or both of those answers will get the politicians out of the uncomfortable conversation and back to whatever they want to be up to instead of telling people what they are doing.

What if the Liberals meant what they said?

But just think about it for a second.  Let's assume that any of what the politicians say is true.  Let us assume they are genuinely concerned about the numbers on the dial and how big they are getting.  Let us assume they might  possibly not find Ed Martin's assurances all that assuring.  And let us allow that they might just be waiting to get this appointments committee set up so they can appoint some people to the Nalcor Board and so on.

The earliest they might get the appointments committee set up is June. That assumes they already have some people to sit on it.  Then the pols have to decide they want to replace the Nalcor boss. Then they have to get a description of the sort of person they want to replace him. They have to look for candidates, interview them,  sort through them, and maybe, if they are lucky, hire one of them. 

How fast might they get that done? 



Finding a chief executive for a major energy corporation, even one willing to take on a political pig like Muskrat Falls could take upwards of 18 months in some instances.  We could be looking at somewhere between six and 18 months to replace a guy the Liberals have not actually said they are unhappy with in order to get someone to get a grip on a project they back, without question.  They are, however, very unhappy with the cost of the thing, by some accounts.

Very concerned and six months or maybe 18 months don't match up.   Six months on the 'When it happens" line matches up with the mark on the "Concern" line that says "No biggie."  If you run your finger along from the bit on the "Concern" scale marked "Very"  you see "Yesterday afternoon" on the "When" scale.

The Liberals reappointed the head of the university board of regents faster before the House opened, without the benefit of the special appointments committee. If the current administration is prepared to wait until Christmas to maybe, possibly replace Ed Martin, they are not really concerned about what is happening at Nalcor or Muskrat Falls.

Words are just words

Remember what Dwight Ball said about Ed Martin in December? There's no reason not to support him.  That pretty much said it all and his actions have lined up with that perfectly.

Actions always speak louder than words.  In this case, it's the inaction that screams at you.

Some people are still distracted by the words, though. 

Some folks are getting excited because finance minister Cathy Bennett had some seemingly strong words in her budget speech for the crowd at the provincial energy corporation.  Unfortunately even when you doll up a string of these supposedly harsh words by calling it "analysis"  you don't really get anything more intimidating than a schoolboyish reaction like "ooooh you are in trouble now."

Some of what Bennett said was just a simple statement of fact. The gang at Nalcor have not paid any dividends to the provincial government in years.  As a former chair of the Nalcor board of directors, though,  Bennett knows why.  The folks who appointed Bennett to the board decided to let Nalcorkeep all the cash the company subsidiaries made.  They also gifted Nalcor with equity stakes in offshore oil, covering the cost of buying them with public cash. The reason was because they wanted to give Nalcor lots of financial backing to develop the Lower Churchill.

Cathy Bennett said last Thursday that in addition to making Nalcor follow the same budget approach as the rest of government, she and her colleagues would be doing "everything possible to help get this project [Muskrat Falls] back on track." 

So far "everything possible" has meant doing nothing at all. Lots of words.  No action.  Everyone at Nalcor has a job. Even the folks who shagged up the Astaldi contract and misled the public over it are still fattening their pensions and cashing the biggest kind of paycheques. Draw the fairly obvious conclusion.

Look at it another way.

Ed Martin will outlast them all

In her budget speech,  Cathy Bennett added $1.3 billion more for Nalcor.  She said it was money pre-committed by the previous administration. That's true but if she and her boss had any concerns about what was happening at Nalcor,  she could hang onto the cash rather than announce it. Dwight Ball could exercise the power he has and stop the project dead until they get things sorted out. 

By spending the money on Nalcor and leaving Ed Martin and his team in place, Dwight Ball has ensured that whatever path Muskrat Falls is already on will continue, unchanged.  If the project is really 40% completed, then it really will be more than half-way done by the fall if they decide to hire a new chief executive.  And if it is more like 15% completed,  Ball will have allowed Martin to get even closer to the point where no one could really change anything.

But at that point, why would you replace Martin?  Seriously.  Unless Ed Martin wants to go,  you'd just keep him in place until the project is finished some time in 2021. Otherwise, you'd go through a very expensive hunt for a new chief executive for nothing. First, you'd have to find someone willing to take on a project they cannot do anything to change.  That's not the sort of opportunity that will attract an innovative, hard-charging boss.  No telling how long you'd have to look, either.  So odds are, you'd spend all that money only to wind up with... Ed  Martin.

There's a thought.

No matter how you look at it, though, Dwight Ball's inaction speaks far louder than Cathy Bennett's words.