The Difference between Then and Now #nlpoli

A few months ago, SRBP wrote a two-part piece that described the change in the way politicians, bureaucrats, and the public looked at management and control of offshore oil and gas resources.

It’s worth looking at this again in light of a couple of recent developments.

In broadest terms,  the provincial government’s original objectives in the negotiations that led to the Atlantic Accord – the one signed in 1985 – were: 

• Provincial control and administration, 
• Revenue that would end dependence on federal hand-outs, and
• Local benefits.

Since 2003,  the provincial government has dropped provincial administration and control and local benefits from its list of expectations.  Revenue is the only concern left of the original ones and even that one has become simply money.  The notion that the revenue would disconnect the province from federal hand-outs has also gone by the boards.

The 2005 revenue transfer agreement between Ottawa and St. John’s – deliberately misnamed by the provincial government as the Atlantic Accord – was initially about a transfer similar to Equalization and equal to the amount of revenue the provincial government collected each year from the oil companies as royalties under the 1985 agreement.

The argument for the 2005 transfer was based on lies and misrepresentations.  For example, the provincial government sets the amount of revenue it collects from the offshore as if the resource was on land and within provincial jurisdiction. It gets all the money. Politicians and other people claimed that the provincial government only received as little as 15% of what it should get. 

That wasn’t true and, in the end, the 2005 arrangement did not change the Atlantic Accord at all.  Nor did it change the operations of the Equalization program.  The 2005 agreement simply transferred $2.6 billion to the provincial government from Ottawa.  The only connection to the 1985 agreement was that the federal and provincial government used oil royalties and Equalization as the means to calculate the amount.  

The Atlantic Accord: background to the 1985 agreement #nlpoli

The Atlantic Accord functions in Newfoundland and Labrador politics in two ways.  There is the agreement between the Government of Canada and the provincial government that established the joint management framework for the Newfoundland and Labrador offshore. At the same time, there is the political prop and the associated mythology that has, in largest measure, replaced the actual agreement in both the popular and political/bureaucratic understanding of it.

Provincial Concerns and Objectives

The Atlantic Accord ended a decade of often acrimonious dispute between the federal and provincial governments over offshore oil and gas resources.  The province had initially staked its claim to ownership of the resource in 1975, based on the premise that Newfoundland and Labrador brought the resources with them at the time of Confederation and had retained jurisdiction over them.

The Supreme Court of Canada ended the dispute in its decision on a reference from the Government of Canada.  The Court found that, for several reasons, the right to explore and exploit offshore resources and the legislative jurisdiction to do so lay with the federal government. The court decided that, in addition to other considerations, control of the offshore was a function of Canada’s international status.  Under the Terms of Union, this part of Newfoundland’s pre-Confederation legal status transferred to the federal government.

The Supreme Court of Newfoundland and Labrador Court of Appeal addressed a reference from the provincial government that also concluded the federal government had jurisdiction over the offshore.

From a decade of prosperity to $2 billion deficits: What happened?

By Roger Grimes

Reflecting upon becoming the eighth Premier of Newfoundland and Labrador 15 years ago this month, I found myself chatting with a few friends and associates about where the province found itself fiscally at that time, what happened during the next decade, and where we find ourselves today.

During my tenure as Premier, we were a persistent “have not” province with a deficit problem of roughly ten percent. We ran annual deficits of roughly $500 million on a total budget of $4.5 billion. Now, after a decade of unparalleled prosperity and “have” status within the Equalization system, we find ourselves with a twenty-five percent deficit problem comprised of a $2 billion deficit on an $8 billion total annual budget.

Peckford Book Signings #nlpoli

Because some people have asked, here is a list of upcoming book signing opportunities by Brian Peckford for his memoir Some day the sun will shine and have not will be no more.

Check the Flanker Press site for more information on the book, including how to order.

Tuesday, October 23, 2012

2PM - 5PM
Costco, St. John's

Wednesday, October 24, 2012

6PM - 9PM
Gander Co-op

Thursday, October 25, 2012

1PM - 4PM
The Book Worm, Gander

6PM - 9PM
Gander Co-op

Friday, October 26, 2012

1PM - 4PM
Shoppers Drug Mart, Lewisporte

6:30PM - 9PM
The Bookmark, Grand Falls-Windsor

Saturday, October 27, 2012

1PM - 3PM
Island Treasures, Corner Brook

4PM - 6PM
Coles, Corner Brook

-srbp-

The Power of Delusion #nlpoli

Kathy Dunderdale gave a speech to the hundreds of Conservatives who gathered in Gander last weekend for their annual convention.

The Telegram’s James McLeod transcribed most of it and posted it to his blog at the Telly website.

Dunderdale’s speech is amazing because, unlike her recent speeches, she didn’t rehearse every single word and gesture.  This one is all Kathy, speaking earnestly about what she believes.

Brian Peckford’s memoir now on sale #nlpoli

Updated:  Book signing dates below

The room at the Battery Hotel and Suites was packed with former politicians and public servants who were involved in some of the most important events in the province’s history over the past 35 years.

Noticeably absent from the launch of former Premier Brian Peckford’s memoir were members of the current Conservative caucus in the House of Assembly. 

Well, except for St. John’s South MHA Tom Osborne. 

Tom stood out. 

And that’s saying something.

Of Cukes and Unis

Truly, things are very strange when the guy who backed a second university for the province  - despite evidence at the time of declining enrolment – laces into critics who don’t like the much less ambitious version of “Grenfell autonomy” announced by the provincial government before Christmas.

For Former Williams administration employee Alex Marland, Premier Danny Williams attack on people inside the province must come as a complete shock. Anger isn’t always for reform, Alex. 

But the most bizarre part of the Premier’s speech in Corner Brook on Thursday was the comparison between Grenfell College and the Sprung greenhouse fiasco over two decades ago.

“With the situation of declining enrolment, we want to make sure we don’t launch this initiative and it fails and Grenfell becomes the Sprung (Greenhouse) of the west coast,” said Williams.

For those who don’t know, Sprung was the disastrous decision that spelled the end of Brian Peckford’s third administration.

Now Sprung didn’t fail because its proponents failed to support the government decision and prove the idea could work.

Sprung failed because it was doomed from the start.  Senior provincial government officials warned against the magnificent claims of the proponents, claims like growing more cucumbers in a hydroponic greenhouse in Newfoundland than could be grown with the near perpetual sunlight of a city near the Equator.

Unfortunately for the provincial treasury, that is for taxpayers, the politicians involved ignored the sound advice they got from people who warned of problems with the whole scheme and instead poured cash into the project.

In the Grenfell case, there is no sign any government officials voiced objections.  Others, like your humble e-scribbler and a bunch of people at Memorial University did point out that – among other things – the whole scheme the provincial government endorsed (the Premier included) was built on a model that needed Grenfell enrolment to double in 10 years.

One of those people – one Eddie Campbell – paid a price for speaking his mind.  That mess over finding a new president for the university led to a second major crisis for the university on top of the Grenfell one, both of which were driven entirely by politicians around the cabinet table.

And as for enrolment at Grenfell, it hasn’t been working its way to double in a decade.  Far from it.  Enrolment has been sliding steadily downward but not from lack of effort by the good people at Grenfell.  Rather, there just aren’t the students or prospective students to fill the seats.

They also endorsed the whole idea based on little more, apparently, than a rather lightweight assessment of the whole idea of Uni Two concept. That study was bought and paid for by the politicians, not by the proponents of the project.  And the study would also have figured out the enrolment problem since the signs were there at the time. 

The consultants would have figured that out if they had actually bothered to look at the issue.  Odd that they didn’t give it a thought, given that enrolment – students – is one of the big things that would drive a university’s success in the first place. 

All in all, it seems to have been a very odd first speech in the New Year for the Premier in his district.  It’s not odd that he chose the occasion to pick a fight with people or react negatively to anything less than an outpouring of unending support and devotion.  What’s odd is that the Premier linked his own decision with one of the singularly worst decisions taken by any administration in recent times, bar none.

This speech and all its implications might wind up having some not so pleasant consequences.

Meanwhile, for those who are interested in the Sprung fiasco, just scan down the right side and check out the series of posts linked there on Great Gambols with Public Money.  If that doesn’t work, just type that phrase into the search box up there on the top right.

-30-

Churchill Falls reversion fails for second time

The Newfoundland and Labrador government  is making quick changes to a 2008 law after lawyers for the Churchill Falls (Labrador) Corporation  - CF(L)Co – raised questions about the impact of the bill on the company’s 1961 lease and rights to all property related to Churchill Falls.

Lawyers for CF(L)Co raised the issue with the provincial government’s  NALCOR Energy company during talks on water management for the proposed Lower Churchill project. 

The changes were tabled Tuesday in an emergency sitting of the House of Assembly.

It appears that - reminiscent of the 1980 water rights reversion bill - the 2008 bill stripped CF(L)Co of its lease.

In the original 2008 bill - Energy Corporation of Newfoundland and Labrador Water Rights Act - the Lower Churchill River is described as including “all waters that originate within the Churchill River catchment area and all rivers that naturally flow within the catchment area or from diversions into the catchment area.”

Clause three of the then stated that

any property in and rights to the use and flow of water, previously conferred by a grant, lease, licence or other instrument or under a statute of the province, or vested in, acquired by or accruing to a person by whatever means relating to the Lower Churchill River are extinguished.  [Emphasis added]

By combining the two clauses, the new bill effectively cancelled the 1961 Churchill Falls lease.  The 2008 law also blocked rights holders from any legal action and stripped them of  any entitlement to compensation.  

The bill became law on June 4, 2008.  There is no indication when cabinet issued the license to the energy corporation, now known as NALCOR Energy.

The changes introduced in Tuesday’s emergency session make it plain that the 2008 water rights law applies only to the Lower Churchill and that, for absolute certainty,  the 2008 bill “ excludes the area described in Appendix A to The Churchill Falls (Labrador) Corporation Limited (Lease) Act, 1961, and all waters while they are in that area.”

Emergency sessions are rare

For its part, the Williams administration is downplaying the session and the hasty changes.  In a news release, Dunderdale said that the act was never intended to cover Churchill Falls.

But the very fact the session was called to deal with one set of amendments to one bill suggests the issues involved are far from routine and that the legal implications of the water rights bill would be significant if left unamended.

Emergency or special sessions occur very rarely and usually only deal with extraordinary issues like war or labour disputes that threaten public health and safety.

Ordinarily – and if the implications of the bill were considered inconsequential or inadvertent -   CF(L)Co and NALCOR could simply have made routine amendments in the regular fall sitting a condition of an overall deal on water rights management on the Churchill River. 

Interestingly, the provincial government also tried to downplay the water rights bill in 2008, even to the point of making apparently misleading statements in the legislature.

In June 2008,  natural resources minister Kathy Dunderdale told the House of Assembly that the bill was needed since government had decided against using the  Lower Churchill Development Corporation as the vehicle to develop the Gull Island and Muskrat Falls power projects. 

But the 2008 water rights bill didn’t repeal the 1978 Lower Churchill Development Act, nor did it remove the LCDC option for development of the Lower Churchill.  The 2008 bill merely extinguished previously existing rights, leases, grants and licenses. 

Deja vue

This marks the second time since 1975 that a Progressive Conservative administration in Newfoundland and Labrador has found itself in hot water over legislation related to Churchill Falls.

In 1980 Brian Peckford’s administration introduced the Upper Churchill Water Rights Reversion Act.  The bill expressly cancelled the 1961 lease.  A subsequent legal challenge by creditors led to a landmark decision by the Supreme Court of Canada that ruled the 1980 statute was illegal. 

One of the influential factors in that case was public comments by politicians that identified the real purpose of the bill as being to undo the 1969 Churchill Falls agreement.

If the 2008 water rights bill effectively expropriated the Churchill Falls complex, it would be the second such move by the Williams administration in 2008.  In December 2008, the Williams administration moved to seize assets of Abitibi, Enel and Fortis including hydro-electric generating facilities. 

Confusion reigns in hydro policy

Revelation of the 2008 water rights ploy is the fourth Lower Churchill-related blockbuster news in a week.

On Friday, natural resources minister Kathy Dunderdale revealed that the provincial government had been trying unsuccessfully for five years to interest Hydro Quebec in an ownership stake in the Lower Churchill project. 

Dunderdale told Open Line Show host Randy Simms and his audience that the provincial government proposed to “set the Upper Churchill [issue] to one side.”

This move came despite commitments by Premier Danny Williams that there would be no Quebec involvement in the Lower Churchill without redress for the appalling 1969 deal that sees Hydro Quebec buy electricity at better than 1/30th the cost for which it is sold to consumers.    Williams has repeatedly railed against the 1969 deal as an example of a resource give-away by previous provincial governments.

The offer of an ownership stake to Hydro Quebec also flies in the face of Williams’ 2006 commitment to develop the Lower Churchill without any outside help:

"It's an opportunity for us to get back some of what we've lost on the Upper Churchill, and the fact that we're going to do this alone is significant," Williams said in an interview.

The Dunderdale revelation came after Williams accused Hydro Quebec of doing everything possible to block the Lower Churchill project. 

Williams also said last week that  his government would no longer plan to string hydro lines from the Lower Churchill through a UNESCO World Heritage site.

-srbp-

Great Gambols with Public Money: Sprung Cukes 2

Another view of the Peckford Pickle Palace, this time with some questions which proved to be prophetic.

Don't forget that at the time, supporters of the regime du jour accused journalists and other who questioned the wisdom of such schemes as being pessimistic and too negative to be worthy of any consideration.

It seems everything is being recycled these days including the Fanboy arguments.

 

“Peckford pummelled over greenhouse funding plan”

The Financial Post,  November 2, 1987

by Philip Mathias

 

Newfoundlanders are puzzled by Premier Brian Peckford's decision to commit $11.4 million in government funds to a huge experimental greenhouse.

Greenhouse experts are equally mystified by Peckford's loyalty to what many feel is a far-fetched and overpriced scheme. Even in Newfoundland, one government specialist advised against the scheme.

The province's media and opposition parties are pounding Peckford, and cucumber jokes have multiplied. The $18.4-million Newfoundland Environponics Ltd. project is a 6.4-acre greenhouse being built outside St. John's. Plants will be grown hydroponically on racks - in other words, without soil, in a slow-moving nutrient solution.

The greenhouse, due to start up this month, is meant to make Newfoundland self-sufficient in cucumbers and tomatoes, which are now mostly imported.

The joint owners are the province and Philip Sprung, who also owns a Calgary company that manufactures marquees. Sprung is said to be putting $4 million of cash and loan guarantees into the St. John's project.

Sprung is a self-educated horticulturalist who says he has the key to revolutionary greenhouse technology. The big question is whether he is far ahead of conventional horticulture, or badly out of step with it.

Among Sprung's early ventures was a greenhouse in Calgary. It suffered, he says, from hydrocarbon vapours rising out of the soil, which had been underneath an old oil refinery.

Sprung offered to relocate the greenhouse in Quebec and then on Prince Edward Island. Both provinces declined his request for funds. The project was also given the thumbs down by the National Research Council and the Department of Regional Industrial Expansion. '

Sprung's next stop was Newfoundland. The province's agriculture branch wrote a critical report on the project.  Nonetheless, Sprung was welcomed by Peckford and his cabinet.

The provincial government has agreed to provide $3.5 million in equity (land and cash); a $7-million loan guarantee; and a $900,000 provincial sales tax rebate. The unit now being built in St. John's is Sprung's Calgary greenhouse transported holus-bolus to Newfoundland.

Peckford may soon face some tough questions:

• How does the premier justify the $18.4-million cost of the greenhouse? 

The most advanced greenhouses being built elsewhere, experts say, cost half what's being paid by Newfoundland.  The province could probably buy two proven, conventional greenhouses for the price of Sprung's one.

• Can the greenhouse achieve the phenomenal yields projected by Philip Sprung?

He has told the government it will produce seven million pounds of vegetables on 6.4 acres. This yield is 2 1/2 times the best commercial yields in Canada.

Sprung's secret is to pack his greenhouse with three times as many plants as a regular hydroponic model. A hot, humid, jungle-like environment is maintained constantly. Simple arithmetic says three times the plants equals three times the yield.

Horticultural experts say it's not that simple: Yields fall off sharply at high plant densities. Professor Andre Gosselin of Laval University says, ''Sprung's yields are biologically possible, but I doubt if he can get them.''

Professor Herman Tiessen of the University of Guelph adds that Sprung's projected yields are ''unrealistic.''  Sprung recently severed connections with a British ex-partner Soil-Less Cultivation Systems Ltd., which claims to be the technical and managerial brains behind the system.

Sprung is reported to be looking for a new manager. If one cannot be found who is versed in his unusual technique, yields may be lower than promised.

• -Can the greenhouse be economic at lower yields?

The cost of growing tomatoes at the highest yields obtained at research stations would be about $1.75 per lb., using Sprung's capital and labour inputs. The price of tomatoes in Newfoundland (less retail and wholesale markups) is $1.05-$1.45 per lb. In other words, the cost of Sprung's process seems to be far above probable selling prices.

Sprung claims his yields will be much higher than those achieved at research stations.

• Can Sprung maintain projected levels of employment?

The province has been promised the greenhouse will provide jobs for 150 people - more than three times the industry average for hydroponic greenhouses.  If yields turn out to be anything other than phenomenal, the economics would be improved by reducing employment levels to the industry norm (about 40 people for 6.4 acres).

That might raise questions about the wisdom of the Peckford government advancing $11.4 million for the project. Unemployment in Newfoundland is officially 18%, unofficially about 28%.

• If the greenhouse proves uneconomic, will the province pour even more cash into the project?

Peckford's critics and other commercial greenhouse operators in the Atlantic provinces fear it will.  Critics complain that Peckford has veered away in the Sprung case from regional development guidelines laid down by the 1986 Newfoundland Royal Commission on Employment and Unemployment.

-srbp-

Great Gambols with Public Money: Sprung Cukes

Ah, how quickly they forget, these pleasant but heavily indebted, taxpaying people of Newfoundland and the sorry experience of governments that gamble (or is it gambol?) with public money on all manner of ventures.

How quickly they forget just how they got to be the most indebted people in the entire country.

More than anything else, they got into hock up to their eyeballs from cheering government after government as it poured thei tax dollars into this hole and that, each of which was supposed to gush barrels of cash so that God's Other Chosen (But Seemingly Forgotten) People could at last have their Eden here on Earth.

How quickly do they forget?

Apparently 20 years ago is too long for some of the poor darlings.
From the Memory Hole, the first newspaper cutting about that gloriously foolish venture known as the Sprung Greenhouse.

Bear in mind though that at the time there were a great many supporters of the regime du jour who cried that any amount (in this case upwards of $22 million) was fitting.

"Spend a buck to make a buck" they cried. 

"Brian can gamble with my money any day" they shouted. 

"How can anyone be so negative all the time and oppose this idea?"

"Sure they'll create a few jobs and get it all back in taxes."

"We will be the world leader in cucumber production."

At the end, all the pod-houses did was induce an epidemic of insomnia among the good residents of Mount Pearl and add another $22 million to the public debt.

"Skepticism rains over hydroponic greenhouse"
The Toronto Star
Friday, May 22 1987

by Alan Story

ST. JOHN'S, Nfld. - In a province with a mere 380 farms and the poorest soil, a raging agricultural debate has been at the centre of politics - and over-the-back-fence conversations - here for the past two weeks.

The subject: hydroponic cucumbers.

With the active encouragement and financial assistance of the Peckford government, an Alberta firm is dismantling its 3.2-hectare, high-tech greenhouse in Calgary and shipping it east to St. John's to begin growing hydroponically produced cucumbers, tomatoes and other vegetables.

The $18.5 million joint venture between the Sprung Group of Companies and the Newfoundland government is being touted as a solution to several of Newfoundland's problems.

Among them:

• The lack of cheap, high-quality produce available locally. Neither the price nor taste of a tomato or a cantaloupe you buy at a St. John's supermarket matches what you can find at Toronto's Kensington Market.
• The lack of jobs. According to company president Phil Sprung of Calgary and the government, which will put up to $11.5 million into the project, 330 construction jobs and 150 permanent jobs will be created.

Even if all Newfoundlanders became vegetarians, the Sprung greenhouse would produce far more tomatoes and cukes than the local market could ever consume. Sprung's surplus would shipped to the mainland.

"For once, Newfoundland will be first in new technology and not just in unemployment rates," Peckford said on May 8 when he announced the deal. It's not only skeptical mainlanders who are questioning the wisdom of setting up a giant food factory based on technology that failed to perform properly in Calgary and on market studies the premier won't release.

Peckford's mad hunt for employment has brought him "full circle to the insanity that premier (Joey) Smallwood pursed when he tried to set up a chocolate factory, a rubber factory and orange juice factories in the middle '50s," declared Newfoundland New Democratic Party Leader Peter Fenwick.

Worried about the Sprung greenhouse's potential surplus entering markets in the Maritimes and even Ontario, James Keizer, president of the Greenhouse Growers' Association of Nova Scotia told Peckford that "if this greenhouse is built and operated as Sprung claims, it will fail within two years and take some Maritime growers who have built their business - one stick at a time over many years - with them." Letter-to-the-editor writers and editorial cartoonists have had a field day too.

Last week's Sunday Express, a new and brightly written St. John's weekly newspaper, featured a cartoon of a moronic-looking Peckford, clenching a stem of grass between his teeth and overseeing a Rube Goldberg-like operation known as "Peckford's Pickle Farm."

The main serious questions being raised are whether a major hydroponic greenhouse is technically feasible in Newfoundland - hardly Canada's banana belt - and whether it makes economic sense. Hydroponics - growth with water, instead of soil, as a medium - is recognized as a viable method of producing vegetables which is just starting to come into its own across the North America..

Sprung's somewhat secret hydroponic process involves planting seedlings in trays of water containing various nutrients, but no pesticides, and rapidly raising them to maturity under natural or artificial light in greehouses. Sprung makes big claims about the level of productivity. At his former Calgary greenhouses, he says 28,000 tomatoes and 22,000 cucumbers were produced daily. The cukes matured in less than a week.

But can his process work in often foggy and cloudy Newfoundland? Agricultural scientists have pointed that in St. John's, the number of degree days (a measure of natural heat available) is 1,600 while southern Alberta has 3,100 days. The extra heating required and the extensive use of artificial lights proposed for the St. John's greenhouse may significantly boost the costs of production, they warn.

Others following the great greenhouse debate aren't sure what to make of Sprung's claim that gas leaks from the soil at his Calgary site were the only reason why he had a major crop failure last year and why his tomato plants turned grey.

 The economics of the project are also in doubt. Some here are surprised that Peckford, who has tended to avoid getting sucked in by the industrial dream-peddlers who regularily come calling in Atlantic Canada, has become the project's biggest promoter.

Will all of the tomatoes and cucumber grown - more than twice Newfoundland's entire current level of consumption - actually be sold?

Why is the project so large after a recent provincial royal commission specifically warned against the dangers of getting tied into mega-projects?

What will be gained if other Maritime greenhouse producers are put out of business by the government-financed Sprung operation?

Before the Sprung story is over, Peckford may realize that tomatoes can be thrown as well as grown.

-srbp-

Scuttling his own political future

Senator Fabian Manning went a long way this week to ensuring he won’t be able to make a comeback in elected politics any time soon.

The guy who beat him – Scott Andrews – revealed that Manning had committed the federal government to spend a couple of million or thereabouts on a road in the eastern end of the riding Manning used to represent. 

Only problem was the money wasn’t anything close to approved when manning made the announcement in late 2007.  Not only that but it wasn’t approved until this week and hastily announced the day Andrews scored a big political smack right in Manning’s possible future.

Manning did some media interviews on the affair.  In the process, he managed to come off looking like a guy scrambling to come up with excuses for his obvious blunder.

In the story printed by the Telegram (not online), writer Dave Bartlett attributes the following to the junior senator:

The senator then explained what happened.

He said the original project was funded under the Rails for Roads agreement, but the provincial Liberal government of Clyde Wells scuttled that program in 1988.

Neat trick that would be.

The federal and provincial governments signed the Roads for Rails agreement (see page 11 of the link) in 1988.  In exchange for money to upgrade roads across the island portion of the province, the federal government was relieved of its constitutional obligation under the 1948 Terms of Union to operate a rail service across Newfoundland.

In 1998, Brian Peckford sat in the Premier’s Office.  Clyde Wells was Leader of the opposition and didn’t get to the Eighth Floor until May, 1989.

But even then, Manning’s accusation that Wells scuttled the roads deal is completely out to lunch.  From 1988 until the program ended in 2003, the roads deal paid for a host of projects all of which were pretty well mapped out at the start, the year before Wells took office.

Not only did Fabe make the blunder of announcing money he didn’t have, he then made it infinitely worse by coming up with a completely bogus excuse once he got caught.

And it’s not like Manning wouldn’t know the rights of things.  He sat in the House of Assembly from 1993 until his local Tory buddies flicked him out of caucus.  Every year , Manning would have heard announcements about roadwork paid for by the Roads for Rails agreement.

Heck, even Loyola Hearn knew that the roads deal didn’t die in 1988.  CBC quoted Hearn on the very same announcement Manning was chatting up in December 2007:

Hearn, Newfoundland and Labrador's federal cabinet representative, said it's the biggest program of its kind since the roads-for-rails agreement hammered out in the late 1980s, when the Newfoundland Railway was closed down.

All things considered, Manning would be nuts to even consider taking another run at elected politics.  Better off  to sit in the Antechamber to the Kingdom of Heaven than blow holes in your own political hull the size of that one on the CBS bypass road.

-srbp-

The 800 megawatt controversy

Former premier Brian Peckford tried to set the record straight today on a controversy over a deal in a the 1970s to bring 800 megawatts of power from hydroelectric power in Labrador to the province.

Peckford appeared in an interview [link to podcast] with CBC St. John's Morning Show host Jeff Gilhooley.

The deal is mentioned in a new biography of Frank Moores, premier from 1972 to 1979 in whose administration Brian Peckford served as energy minister.  The book by Janice Wells - author of the Gin and Tonic Gardener books - contends that Peckford scuttled the deal between Moores and Quebec Premier Rene Levesque.  The deal required that the province, which had nationalised the Churchill Falls Labrador Corporation, cease any legal efforts to contest the 1969 Churchill Falls contract in exchange for the power or revenues equal to that much energy.

Wells claims that Peckford was in tears with agitation and threatened to resign taking with him half the cabinet.  She reportedly includes a valuation of the deal by Memorial University economist Wade Locke that the 800 megawatts would have been worth $4.0 billion over time. Wells discussed the supposed deal in an interview with Gilhooley that aired on October 23 [link to podcast] and refers to the episode as a failure on Moores' part.

Since the book isn't generally available in bookstores yet, it is difficult to know what sources Wells relied on for her version of events or if she cites any specific references.  Peckford contends he did not speak with her beyond a single conversation.

There is confirmation of the episode and of the general interpretation offered by Peckford in his interview.  That confirmation comes from Jason Churchill's summary of hydroelectric development in Labrador that he completed for the Vic Young commission.  Churchill writes:

Meanwhile, there were numerous other attempts and near-breakthroughs during Moores’ premiership. In the late 1970s, Quebec Premier Rene Levesque made a special trip to St. John’s to attempt to entice Moores into accepting a deal to start hydroelectric development on the Lower Churchill River. Levesque’s proposal involved a trade-off; Quebec was willing to be generous, in terms of benefits, in exchange for Newfoundland and Labrador relinquishing any future rights to challenge the 1969 Churchill Falls Contract. Meetings appeared on the verge of success as the two Premiers were planning on making a joint announcement. There was, however, a rub. On this occasion Moores’ Minister of Mines and Energy, Brian Peckford, was only informed of the Premier’s plans just previous to the proposed announcement. Peckford
emphatically rejected the idea of giving up in perpetuity any rights to seek redress of the infamous 1969 Contract. His emphatic objections were sufficient to thwart the proposed deal.54

On another occasion, Peckford was engaged in positive negotiations with his Quebec provincial counterpart Guy Joron. Peckford described Joron as being “extremely understanding of [Newfoundland’s] situation”. With the tacit permission of Premier Levesque, Joron had appeared willing to contemplate changes to the 1969 contract as long as it was part of a broader project to develop the Churchill River Basin. However, this idea of linking changes in the Upper Churchill contract to develop the sites on the Lower Churchill River brought strong opposition from Hydro-Quebec officials who thwarted the efforts of the Quebec Cabinet Minister.55

The footnotes for these paragraphs reveal the sources. Note that Churchill interviewed senior public servant Vic Young for his account.  Wells states that a portion of the intense discussions took place in Young's office.

54 Interview Jason Churchill with Brian Peckford, 3 December, 2002. Interview Jason Churchill with Vic Young, 18 December, 2002.

55 Interview Jason Churchill with Brian Peckford, 3 December, 2002.

-srbp-

"Reality Check" reality check on Equalization and the Family Feud

The crew that put together's CBC's usually fine "Reality Check" can be forgiven if they missed a few points by a country mile in a summary of the Family Feud.

Forgiveness is easy since the issues involved are complex and  - at least on the provincial side since 2003 - there has never been a clear statement of what was going on.  Regular Bond Papers readers will be familiar with that.  For others, just flip back to the archives for 2005 and the story is laid out there.

Let's see if we can sort through some of the high points here.

With its fragile economy, Newfoundland and Labrador has always depended on money from the federal government. When they struck oil off the coast, the federal government concluded it would not have to continue shelling out as much money to the provincial treasury. N.L.'s oil would save Ottawa money.

Not really.

Newfoundland and Labrador is no different from most provinces in the country, at least as far as Equalization goes.  Since 1957 - when the current Equalization program started - the provincial government has received that particular form of federal transfer.  So have all the others, at various times, except Ontario.  Quebec remains one of the biggest recipients of Equalization cash, if not on a per capita basis than on a total basis. Economic "fragility" has nothing to do with receiving Equalization.

In the dispute over jurisdiction over the offshore, there was never much of a dispute as far as Equalization fundamentally works.

Had Brian Peckford's view prevailed in 1983/1984, Equalization would have worked just as it always has.  As soon as the province's own source revenues went beyond the national average, the Equalization transfers would have stopped.

Period.

That didn't work out.  Both the Supreme Court of Newfoundland (as it then was called) and in the Supreme Court of Canada, both courts found that jurisdiction over the offshore rested solely with the Government of Canada.  All the royalties went with it.

In the 1985 Atlantic Accord, the Brian Mulroney and Brian Peckford governments worked out a joint management deal.  Under that agreement - the one that is most important for Newfoundland and Labrador - the provincial government sets and collects royalties as if the oil and gas were on land.

And here's the big thing:  the provincial government keeps every single penny.  It always has and always will, as long as the 1985 Accord is in force.

As far as Equalization is concerned, both governments agreed that Equalization would work as it always had.  When a provincial government makes more money on its own than the national average, the Equalization cash stops.

But...they agreed that for a limited period of time, the provincial government would get a special transfer, based on Equalization that would offset the drop in Equalization that came as oil revenues grew.  Not only was the extra cash limited in time, it would also decline such that 12 years after the first oil, there'd be no extra payment.

If the province didn't qualify for Equalization at that point, then that's all there was.  If it still fell under the average, then it would get whatever Equalization it was entitled to under the program at the time.

The CBC reality check leaves a huge gap as far as that goes, making it seem as though the whole thing came down to an argument between Danny Williams and Paul Martin and then Danny and Stephen Harper.

Nothing could be further from the truth, to use an overworked phrase.

During negotiations on the Hibernia project, the provincial government realized the formula wouldn't work out as intended. Rather than leave the provincial government with some extra cash, the 1985 deal would actually function just like there was no offset clause. For every dollar of new cash in from oil, the Equalization system would drop Newfoundland's entitlement by 97 cents, net.

The first efforts to raise this issue - by Clyde Wells and energy minister Rex Gibbons in 1990 - were rebuffed by the Mulroney Conservatives.  They didn't pussy foot around. John Crosbie accused the provincial government of biting the hand that fed it and of wanting to eat its cake and "vomit it up" as well.

It wasn't until the Liberal victory in 1993 that the first efforts were made to address the problem.  Prime Jean Chretien and finance minister Paul Martin amended the Equalization formula to give the provincial government an option of shielding up to 30% of its oil revenue from Equalization calculations.  That option wasn't time limited and for the 12 years in which the 1985 deal allowed for offsets the provincial government could always have the chance to pick the option that gave the most cash.  It only picked the wrong option once.

The Equalization issue remained a cause celebre, especially for those who had been involved in the original negotiations.  It resurfaced in the a 2003 provincial government royal commission study which introduced the idea of a clawback into the vocabulary.  The presentation in the commission reported grossly distorted the reality and the history involved. Some charts that purported to show the financial issues bordered on fraud.

Danny Williams took up the issue in 2004 with the Martin administration and fought a pitched battle - largely in public - over the issue.  He gave a taste of his anti-Ottawa rhetoric in a 2001 speech to Nova Scotia Tories. Little in the way of formal correspondence appears to have been exchanged throughout the early part of 2004.  Up to the fall of 2004 - when detailed discussions started -  the provincial government offered three different versions of what it was looking for.  None matched the final agreement.

The CBC "Reality Check" describes the 2005 agreement this way:

The agreement was that the calculation of equalization payments to Newfoundland and Labrador would not include oil revenue. As the saying goes, oil revenues would not be clawed back. Martin agreed and then-opposition leader Harper also agreed.

Simply put, that's dead wrong.

The 2005 deal provided for another type of transfer to Newfoundland and Labrador from Ottawa on top of the 1985 offset payment.  The Equalization program was not changed in any way. Until the substantive changes to Equalization under Stephen Harper 100% of oil revenues was included to calculate Equalization entitlements.  That's exactly what Danny Williams stated as provincial government policy in January 2006, incidentally.  The Harper changes hid 50% of all non-renewable resource revenues from Equalization (oil and mining) and imposed a cap on total transfers.

As for the revenues being "clawed back", one of the key terms of the 2005 deal is that the whole thing operates based on the Equalization formula that is in place at any given time. Oil revenues are treated like gas taxes, income tax, sales tax, motor vehicle registration and any other type of provincial own-source revenue, just like they have been as long as Equalization has been around.

What the federal Conservatives proposed in 2004 and 2006 as a part of their campaign platform - not just in a letter to Danny Williams - was to let all provinces hide their revenues from oil, gas and other non-renewable resources from the Equalization calculations.  The offer didn't apply just to one province.  Had it been implemented, it would have applied to all. 

That was clear enough until the Harper government produced its budget 18 months ago. What was clear on budget day became a bit murky a few days later when Wade Locke of Memorial University of Newfoundland began to take a hard look at the numbers.

Again, that's pretty much dead wrong.

It became clear shortly after Harper took office in 2006 that the 100% exclusion idea from the 2004 and 2006 campaigns would be abandoned in favour of something else.  There was nothing murky about it at all. So plain was the problem that at least one local newspaper reported on a fracas at the Provincial Conservative convention in October 2006 supposedly involving the Premier's brother and the Conservative party's national president. That's when the Family Feud started.

As for the 2007 budget bills which amended both the 1985 and 2005 agreements between Ottawa and St. John's, there's a serious question as to whether the provincial government actually consented to the amendments as required under the 1985 Atlantic Accord.

The story about Equalization is a long one and the Family Feud - a.k.a the ABC campaign - has a complex history.  There's no shame in missing some points.  It's just so unusual that CBC's "Reality Check" was so widely off base.

-srbp-

Prawns as pawns? A nationalist never recognized the "national" interest.

CBC Radio's fisheries broadcast has been carrying some commentary over the past couple weeks repeating the commonly held view that the federal government traded various fish quotas for favourable trade arrangements on commodities from other parts of Canada.

The old argument, favoured by the local nationalists, is supposedly proof that Ottawa screws Newfoundland at every opportunity, that Confederation isn't working or that Newfoundland is just exploited by the evil crew in Ottawa for the gain of everyone else.

But is there any evidence to support the argument?

Not so, say a great many people. The subject was studied for federal fisheries a few years ago and not a single example could be found of any trade deal for, say wheat or cars, that featured a consideration for fish. In other words, there was no sign of a Hyundai for flounder arrangement or durham for turbot.

The story persists, nonetheless, repeated by a great many others.

It persists to the point that former premier Brian Peckford penned an opinion piece for the Sunday Telegram on 02 December. it doesn't seem to be online, so there's a typed version of it below. Peckford turned up on the fish cast on Monday afternoon with host John Furlong, followed by former federal cabinet representative John Crosbie.

Peckford repeated the basic story, claiming he had various documents to prove his claims. Crosbie dismissed the notion, with the exception of the one obvious case of the 5,000 tonnes of northern cod that formed part of an arrangement with France in order to get the St. Pierre boundary into an arbitration.

If Peckford has documents, it would be nice to see them. All he has presented in the article below are a series of letters he wrote in which he makes certain claims. There is no evidence, such as a specific example of one such deal. Rather, one sees merely a statement of the claim as if that alone was evidence of the existence of the fish trade-offs. it isn't.

What's more curious than merely the presentation of a claim as if it were fact is Peckford's characterization of the 1987 agreement with France:

"The Government of Canada offers this non-surplus fish without any commitment from France to stop overfishing in 3PS. ... You expect this Province to sacrifice alone for a national boundary question"

Peckford presents the boundary dispute as if it had little, if anything, to do with Newfoundland and Labrador. Peckford attempts to disconnect the issue of alleged French overfishing in 3PS, a fisheries management zone adjacent to St. Pierre, from the boundary question. Peckford's position, of course, is as disingenuous on this point today as it was at the time.

French fishing was based upon the argument that the waters in 3PS were French. Since the boundary was undefined, French fishermen had every right to fish to their heart's content. There was no legal means by which Canada could enforce its view on the French, any more than fishermen from Newfoundland and Labrador would have rejected any efforts by French fisheries officers to stop them from fishing waters they viewed as being Canadian.

The mechanism to stop the French "overfishing" Peckford referred to was the boundary arbitration. The price of that arbitration was, in part, 5000 tonnes of northern cod. Beyond that, resolving the boundary also paved the way for exploration and then development of oil and gas resources on the Grand Banks.

How odd that the archetypical Newfoundland nationalist - supposedly ever vigilant in defence of Newfoundland's interests - would argue against an agreement between Canada and France that worked in the interest of Newfoundland and Labrador directly.

Perhaps if Peckford has some evidence on that one, he'll present it as well. The debate stirred up on the fisheries broadcast will be useful if only to determine if there is any evidence at all to support the arguments Peckford and others have been making over the years. If, as it appears, the whole thing is nothing more than a myth, perhaps the fables can finally be labelled for what they are.

-srbp-

The Telegram, December 2, 2007, Page A7

A. Brian Peckford

Were fish stocks used as bargaining chips?; Communiqués from the 1980s show it was an ongoing concern for the province

Apparently there has been discussion in recent times as to whether historically the federal government used fish stocks off the province as a bargaining chip or whether they pursued such policies.

In a cursory review of documents I have in my possession, there seems to be some substance to this allegation.

Let me elaborate.

In October 1980, I wrote a letter to then prime minister Pierre Trudeau in which I highlighted three policies by the federal government that were harmful to the province. One was the matter of including part of Newfoundland in the Department if Fisheries and Oceans Gulf Region, another was a proposed new licensing system and a third was "... the directions being taken regarding the allocation of offshore fish stocks, principally northern cod, to foreign nations in return for trade concessions of dubious value." Also in that letter, I advised the prime minister that I had already written to two of his ministers, [Herb] Gray and [Mark] MacGuigan, about this last matter. In June 1982, in a paper issued by the government of Newfoundland and Labrador under the name of the then minister of Fisheries James Morgan entitled "The Fishery: A Business and a Way of Life," the following statement was made:

"The Government of Newfoundland has serious reservations regarding the entire 'commensurate benefits' policy as followed by the Department of Fisheries and Oceans. ... The bilateral fishing agreements should not be used to seek concessions of market access in return for allocations of stocks within our zone which are of commercial benefit to the Canadian fishing industry."

In May 1983, the government of Newfoundland, under my name, issued a document entitled "Restructuring the Fishery" which was a presentation to the federal government. On page 12 of that document, the following statement was made: "The Province takes the position that Canada should not trade access to fish in return for market access. By eliminating foreign allocations we would improve the market for our fish products."

In September 1984. in a Government of Newfoundland document entitled "Major Bilateral Issues, Canada-Newfoundland," the following statement was made on page 15: "Trade opportunities for fish products must not be pursued at the price of foreign allocations from fishery resources ..."

In 1987, I sent a written communication to the then minister of Transport and Newfoundland's representative in the federal cabinet, John Crosbie. This was at the time when the Canada/France boundary matter was being discussed between the two nations. In that communication, among other things, I said the following:

"The Government of Canada has offered non surplus 2J3KL cod to France.

"The Government of Canada offers this non-surplus fish without any commitment from France to stop overfishing in 3PS.

"You expect this Province to sacrifice alone for a national boundary question.

"You are part of a Government that continues to trade with France in other areas and refuses to use these other levers to help solve the boundary issue. ..."

In this last case, I do not know what else Canada had on the table in these talks, but this communication was sent using the best information the provincial government had at the time. I do not remember if any or all this communication was proven to be false.

I think it is fair to suggest, if not maintain, that based upon these documents, there is a case to be made that the federal government was trading fish off the province for questionable return, either in the form of so-called market access or involving other products or issues.

A. Brian Peckford was premier of Newfoundland from 1979-1989.

Shut up and go away: the editor's reaction

From Russell Wangersky comes a clean dissection of the provincial government's attack this past week on former premier Brian Peckford:

It was a knee-jerk communications strategy, and it was a bad one at that, if the idea was to try and counteract the statements.

It just turned on the bright lights and lit up the issue on the national stage.

There was no reason even to react, unless the message you’re actually trying to send is not that Peckford was out to lunch, but instead that, in the New Newfoundland and Labrador, no one should expect to be allowed to comment on the emperor’s new clothes.

Perhaps the message was supposed to be, “If you disagree, we don’t want your input. Keep your mouth shut, even if you’re members of our own party.”

And maybe reacting so harshly to Peckford’s comments was just the easiest way to pointedly deliver that message to all the rest of us.

-srbp-

Skinner-ma-rinky-dink opinions from two cabinet ministers not worth heeding

Brian Peckford irritates some cabinet ministers.

"I really think that we've really dropped the ball on the whole fishery issue in Newfoundland. I really, really do," he said in a recent interview.

"I think we have not, as a province, argued relentlessly and weekly pursued a fisheries strategy which would allow us to have ... an Atlantic Accord on the fishery.

"Because what we did on the Atlantic Accord was we put the jurisdiction away, even though we lost in court. We got it back through the back door."

Peckford's crime is voicing an opinion, according to finance minister Tom Marshall and Kevin O'Brien, the fellow heading up the oxymoronicaly-named department of government services. The two ministers called VOCM's morning talk show to express their disapproval of the fellow who, as both took pains to note, doesn't live here any more.

Said Marshall: "Well that's exactly, and, you know, to live out there [in British Columbia] and then come in here and tell us we're doing it all wrong is a bit much."

Oh deary.

A bit much for a fellow who served as premier through a very difficult decade to dare offer an observation not merely on the performance of one administration but of the lot of us and the crowds we've elected.

Go read Peckford's comments, linked above, and then read Marshall's observations, transcribed in their entirety below.

"We seem to have one mindset when it relates to the offshore and a ... less-than-stringent approach to all the other areas - even those that are under our jurisdiction."

Peckford is hardly telling tales from school. One need hardly look very hard to see this double-standard applied. No subsidies for the oil industry - supposedly - and a heaping of something called 'equity' for the provincial government. By contrast, the forest industry gets at least $30 million in subsidies of one kind or another and when a mill closes and another shuts down a machine, the whole affair warrants scarcely a whimper from the most combative premier since...well...Brian Peckford, compared to the unholy tirade unleashed on oil companies.

Over in the fishery, meanwhile, the current provincial government enthusiastically facilitates the destruction of the only vertically integrated, internationally competitive company in the lot. Somewhere in there, the bits and pieces are sold off to a consortium that includes Icelanders, another lot is sold back to the Brits and the Nova Scotians walk off with the marketing arm and brands it took years to build.

All of these are resources, as most scarcely need reminding and yet oil is treated as some sort of sacred possession by the current administration. The fishery and forestry? Not really quite as sacred.

For his part, Tom Marshall tried to argue against Peckford on other matters. Marshall failed, of course, since most of what he said was utter nonsense. Like the bit about offshore revenues, the stuff which apparently the provincial government wasn't as fixated on as Peckford suggested:

You know, I really don't know. I mean there was, there's been two stories here. One came out of the, one was in The Telegram, I think, on the weekend. It talked about, you know, the Atlantic Accord and how everything is flowed out of the Atlantic Accord. And the Atlantic Accord that was negotiated back then was certainly an important document. I mean it did, it did share the management. Even though the federal government was determined by the courts to have jurisdiction over offshore oil and gas, it said that Newfoundland would be, Newfoundland and Labrador would be the principal beneficiary. But it wasn't working. It wasn't working as it was. We weren't seeing the benefits because we were losing them under the equalization formula. Whatever we were getting on the oil and gas we were losing under the equalization formula. So what Premier Williams did in '05 in the Atlantic Accord in '05, I mean that was the key document that made the difference because what he accomplished was that for every dollar we were losing on the oil and gas we got an offset payment from the Department of Natural Resources in Ottawa. We got this offset payment that made us whole. And as a result of what Premier Williams did in '05, the Atlantic Accord '05, you know, this year we're showing 305 million, which is allowing us to forecast a surplus of 261 billion, I'm sorry, 261 million and to p ay down some debt and that's what's made the difference. I mean Premier Williams has made the real difference here because we weren't getting rich before under the first part of the Atlantic Accord, but that's not to say that it wasn't, you know, a great document.

Under the 1985 Atlantic Accord, Tom Marshall and his colleagues get to set provincial government revenues from the offshore and collect every nickel of them. They keep every nickel of them as well. $16 billion worth of nickels from Hebron alone, as Marshall's colleague has claimed, and not a single one of those nickels, nor the pennies either, has ever been taken by any other government.

Not a one.

Anyone who claims otherwise is telling fibs.

The 2005 deal delivered the princely sum of $2.0 billion in a cash advance. The deal expires when the province ceases to qualify for Equalization and, as regular readers of Bond Papers will know, the advance will not be drawn down completely when the deal expires.

The entire basis of the provincial government's current fumbling in the oil industry comes from powers contained not in the 2005 deal but in the 1985 Atlantic Accord. When the 2005 deal is a moldering memory, the 1985 agreement will continue to deliver, as it has delivered since it was signed.

All that Brian Peckford has done in a series of interviews with local media is offer his views - based on experience - on issues related to resource management. He has a right to speak his mind and only the most churlish of churls would question his inherent right in a democracy to speak.

But Peckford is no ordinary voice. His voice drips of the experience of hard knocks and whether or not one supported him at the time or agrees with him now, he has every right to speak his mind. he earned the right and he should be heeded. One must not slavishly accept his every syllable, as some - like Marshall and O'Brien - must do for their master, but there are other legitimate perspectives than the one currently typed out as talking points from the Eighth Floor's blackberries.

It would be a mistake, however, to think that Marshall and O'Brien are hurling missiles at Peckford merely for speaking out or merely at their master's behest. What Peckford has hit on, with respect to the fishery, for example, is a deep-seated problem within local politics. While politicians have known for some time what must be done in the fishery, it is very difficult to get them to act. There is no stomach in the current administration as there has been no stomach in many administrations for taking the necessary measures to turn the fishery into an economically and environmentally sustainable part of the local economy.

It hurts to have that pointed out, apparently.

Otherwise Marshall and O'Brien would not have received their blackberry marching orders and thus ordered, skinnered themselves on to the open line shows to offer a rinky dink attack on a fellow most Progressive Conservatives in the province should be venerating. [Perhaps they do and that bothers some of the current crowd, too. But that is another story.]

Every thinking person in the province would do well to consider Peckford's advice.

It is the voice of experience and, as we should all know by now, experience counts.

Talking points thumbed out of someone's blackberry - likely from a junket to Rio - don't.

-srbp-

RANDY SIMMS: We are going to go now and say a very good morning here to the Finance Minister and Chairmen, President of the Treasury Board, Tom Marshall. Good morning.

TOM MARSHALL: Good morning Randy.

RANDY SIMMS: How are you doing?

TOM MARSHALL: I'm not too bad. I'm here in Corner Brook and I was just reading The Western Star today and I say former Premier's, Brian Peckford's remarks.

RANDY SIMMS: And your hair stood on end.

TOM MARSHALL: Well, what's left of it did. The, you know, the comment I read, I mean it's mainly about the fishery and I'll leave my colleague, Tom Rideout, and those with more, know more about the fisheries that I certainly do to comment on that aspect of it, but my difficulty is with the comments that, where Peckford said it's a mistake for the province to focus its efforts on the blossoming offshore oil and gas industry at the expense of everything else. And he goes on to say that we, I don't know who he's referring to as we, seem to have a one mindset when it relates to the offshore and a less astringent approach to all the other areas, even those that are under our own jurisdiction. Now, Randy, you know, every time I've been on your show and your colleagues' shows, and I've been going around the province given these, you know, talking about the budget and the main point, you know, the one thing that we're doing as a government is clearly set out in the budget and it's set out in the speech from the throne, and that's a recognition that the non-renewable resources are going to be gone day, that they're finite. One day they're going to be gone and that we've got to take advantage of this window of opportunity to transition our economy into a more diversified economy that, you know, that relies on our renewable resources. The whole energy plan talks about, you know, taking advantage of the non- renewable energy resources we have now to make sure that we have renewable energy resources for the future. And for someone to come in and say that we're only focused on the offshore, clearly has no understanding of what this government has been doing and what the very essence of this government is.

RANDY SIMMS: But, really, there is an impression out there, Minister. You know, as I said to your colleague, Mr. O'Brien, earlier today, there is an impression out there, right or wrong, and it could be equally wrong as it is right, that this government does not focus, I'm going to call it, on the older more stayed industrial realities in the province. We seem to be caught up in the sexiness of oil and gas. Now, and that impression, I think, is out there in the market, isn't it?

TOM MARSHALL: Well, you know, if you're going to say that, I mean I don't know what, you know, what the media focuses on. You know, they don't focus on everything that government does, but I mean the whole reality of our budget and our speeches from the throne and the, you know, the thrust of what this government is doing is recognizing that, look, we've only got a window here and we have to diversify our economy because those non-renewable resources are going to be gone. So we've talked about, number one, we got to pay down the debt. Now previous governments left, you know, the people of this province today saddled with a massive debt of over, almost, just under $12 billion. So we have to take advantage of the surpluses that we have to try to address that while we can. We're also lowering taxes to try to make the province more competitive. I mean to attract investment, to attract people that are going to create jobs, you have to have a competitive tax structure and we did that in the last budget. We're also focusing on not only investments in our traditional industries like the forestry, and we pumped a lot of money into forestry, you know that, there's over $30 million went to aid the forestry industry in this province, investments in aquaculture on the south coast, but we're also focusing on the knowledge economy. We're making major investments now in research and development.

RANDY SIMMS: Ok, so why do you think with all of this going on and he being aware of this as, he being Brian Peckford , being as aware of this as anybody, why would Brian Peckford at this point in his life and the life of this province and government want to come out and be this critical?

TOM MARSHALL: That you'll, I have no idea. You'll have to ask him that.

RANDY SIMMS: Well speculate. Why do you think?

TOM MARSHALL: You know, I really don't know. I mean there was, there's been two stories here. One came out of the, one was in The Telegram, I think, on the weekend. It talked about, you know, the Atlantic Accord and how everything is flowed out of the Atlantic Accord. And the Atlantic Accord that was negotiated back then was certainly an important document. I mean it did, it did share the management. Even though the federal government was determined by the courts to have jurisdiction over offshore oil and gas, it said that Newfoundland would be, Newfoundland and Labrador would be the principal beneficiary. But it wasn't working. It wasn't working as it was. We weren't seeing the benefits because we were losing them under the equalization formula. Whatever we were getting on the oil and gas we were losing under the equalization formula. So what Premier Williams did in '05 in the Atlantic Accord in '05, I mean that was the key document that made the difference because what he accomplished was that for every dollar we were losing on the oil and gas we got an offset payment from the Department of Natural Resources in Ottawa. We got this offset payment that made us whole. And as a result of what Premier Williams did in '05, the Atlantic Accord '05, you know, this year we're showing 305 million, which is allowing us to forecast a surplus of 261 billion, I'm sorry, 261 million and to p ay down some debt and that's what's made the difference. I mean Premier Williams has made the real difference here because we weren't getting rich before under the first part of the Atlantic Accord, but that's not to say that it wasn't, you know, a great document.

RANDY SIMMS: What, it's the basis on which everything else flowed, but, you know, is it, I'm going to speculate a little bit here, is it possible that Brian Peckford is throwing a little criticism at the provincial government because of his recent appointment by the feds?

TOM MARSHALL: Look, it could be, but Newfoundland and Labrador is making tremendous headway under the Newfoundland government and to say we're only focused on oil and gas, well now that it's not going to be there forever and that's why we're doing the things that we're doing under the Premier's leadership.

RANDY SIMMS: But you. . .

TOM MARSHALL: And for him to say that we're focusing exclusively on oil and gas would be the same as saying that when he was office he focused exclusively on growing cucumbers, and we all know that's not true. But it's an asinine comment to make and he has to be held to account for it.

RANDY SIMMS: And so, obviously, you're critical of it. I guess all members of the government are critical of it because, like I said, I heard from your colleague, Kevin O'Brien, already this morning on this matter. You know, but again, as I say to you, and I think it's, you know, it might be an unfair comment, I accept, but, nonetheless, there's truth in the feeling, in the statement that there's a feeling in the community at large that this is a government preoccupied with oil and gas and not spending enough time and effort on traditional industries like fishery. I think that that's a feeling in the community. It might be totally unfair though, Minister, I accept that it might be an unfair feeling.

TOM MARSHALL: I strongly. . .

RANDY SIMMS: And I know you're going to argue that point.

TOM MARSHALL: I would strongly disagree with that.

RANDY SIMMS: Yeah, but I don't know whether Peckford, you know, who is Peckford sitting in Vancouver these days to tell us one way or the other what it is?

TOM MARSHALL: Well that's exactly, and, you know, to live out there and then come in here and tell us we're doing it all wrong is a bit much. And now in fairness to him, you know, I mean sometimes there's a quote in the paper and maybe that's not what he said, but based on what he said as quoted I talk umbrage of the comment and I think he's wrong. And, you know, not focusing on the fishery, I mean I come from a district where the fishery is not a major industry, as you know, and , you know, I can tell you that from the time that I spend at the Cabinet table, I mean fishery dominates the discussion at our Cabinet table and there's no doubt or question about that. The forestry is taking up a lot of our time.

RANDY SIMMS: Well, you know. . .

TOM MARSHALL: But also more importantly, which we're focusing new areas, we're trying to take advantage of, you know, research and development and things we did in aquaculture on the south coast, you know, things that we're doing here in Corner Brook with the Centre of Environmental Excellence, with the new position, I mean open up the paper and you see the new positions going here into Corner Brook in R & D under the, you know, Institute of Biodiversity and the Centre of Environmental Excellence. There's about five or six new positions here and these are jobs based on the knowledge economy, not based on the old natural resource economy.

RANDY SIMMS: Ok, let me ask you this while I got you. All right, I know that there's a financial report coming down, what, at the end of this week?

TOM MARSHALL: Well it, you know, the Premier will be back and the report, I'll discuss it with my Cabinet colleagues and then they'll, will determine whether it's going to, when we come out publicly and announce it. RANDY SIMMS: I understood that it was going to happen this week.

TOM MARSHALL: Well, you know, I've learned in government that when I'm told it's going to happen on a certain day I don't believe it until I'm out there actually saying, ok.

RANDY SIMMS: Ok, 261 million, you're low balling it, aren't you?

TOM MARSHALL: Well I certainly didn't low ball it. I, you know, I said, you know, you always hear the criticism of governments because they go out with these low numbers and then when the numbers actually come out they say, oh, look, we did so much better. I didn't want to do that. I want to try to be as accurate as we can. But it's extremely difficult, of course, because, you know, the oil prices jump all over the place and I mean who would have thought that oil prices have gone, would go to where they've gone today. You know, we rely on Pure Energy Corporation out of New York. They're very highly regarded and very respected and they told us the average would be, you know, when we were doing our budget, they told us the average price for the year would be about $58.60. Now we get quarterly updates for them. We also get two custom reports a year from them and, of course, their suggestions are going up, but at the time we did the budget that's what they told us. Also, production numbers we don't control and also who knew that that dollar was going to go the way it is because every time the dollar goes up a cent our revenues are negatively impacted. But it certainly doesn't offset the benefits because of the higher oil prices.

RANDY SIMMS: You, as Minister of Finance, do you want to see, and I know the central bank is looking at taking a run at the dollar to try and bring it down to a more reasonable level, which would mean a drop in interests rates, are you taking a look at that? Are you chairing them on and do you want to see that happen?

TOM MARSHALL: Well, you know, quite frankly, I mean monetary policy is left to the Bank of Canada and, you know, they don't consult with me. They're an independent organization that determines monetary policy.

RANDY SIMMS: I know, but on the outside looking in thinking that every, that every penny, that every buck is another, you know, few million.

TO M MARSHALL: Yeah, but it works the other way. . .

RANDY SIMMS: It works the other way for us as well, every penny up costs. . .

TOM MARSHALL: Yeah, but I mean I do have major concern for the manufacturing sector, you know, especially the forestry sector here in this province. I mean in Ontario they've lost, what, 150,000 jobs.

RANDY SIMMS: I guess that's where I'm trying to go, Minister. I'm trying to get inside your head here a little bit to say, you know, all of this issue about fisheries and about forestry and about all of these other concentrations, the reality of it is we need a lower dollar to do that and that's going to have to some degree, is it not, at the expense of oil and gas revenues?

TOM MARSHALL: Yes it, yes, you know, I mean I would certainly a dollar that is fixed or pegged in relation to the US dollar to try to keep our dollar lower than the US dollar because of the fact that we are an economy that relies heavily on our exports. But that's something that, you know, that the Cabinet would have to deal with all together. I'm expressing my own view here.

RANDY SIMMS: Sure, sure, absolutely, absolutely. Well, Minister, thank you for this, this morning.

TOM MARSHALL: Randy, thank you. Good talking to you.

RANDY SIMMS: Good to talk with you again, as always.

TOM MARSHALL: Thank you. Bye.

RANDY SIMMS: Take care. Bye, bye. Minister Tom Marshall; he's Minister of Finance, he's President of Treasury Board and he's not that happy with former Premier Brian Peckford over his comments on the weekend and in the paper today.

The politics of outrage runs aground

From today's Globe?

Nope.

Try February 23, 1983.

Following is a Michael Harris piece that originally appeared in the Globe and Mail in the aftermath of the first court case on offshore ownership (the one the nationalists like to forget).

The odd thing is that it doesn't take much adjustment to have this story apply equally well today. A feisty Premier, given to fighting anyone, anywhere, anytime in the best interests of Newfoundland and Labrador, and yet finding himself coming up short.

So to speak.

So for your reading enjoyment is this blast from the past, titled in the original as this post. Don't be confused by some of the references, by the way. Almost a quarter of a century ago, Jim Hodder was a Liberal member of the legislature. Hodder crossed the floor not long after this article appeared. He's like Tom Rideout, at least in that respect.

Leo Barry went on to lead the Liberal Party and was later appointed a justice of the Supreme Court. Brian Peckford is in British Columbia advising people out there about starting an oil and gas industry.

______________________________

"One cannot reasonably demand that discussions take place on the basis that it would constitute only additional obligations for one party and only benefits for the other."

- Rene Levesque to Brian Peckford on the
Upper Churchill Power question,
April 29, 1980.

There is a caveat to Rene Levesque's otherwise self-evident assessment of what constitutes meaningful negotiations - it is not applicable when dealing with Newfoundland.

For three years now, Premier Brian Peckford has practiced the politics of outrage on a range of arguably outrageous disputes in which Newfoundland has become embroiled.

In the two most celebrated quarrels - with Quebec over Labrador hydro-power and Ottawa over offshore resources - his strategy has been identical. Mr. Peckford has developed a quasi-moral position and then gone on to defend it with messianic zeal. ''Pre-conditions'' has become the buzz word when negotiating with Newfoundland. And if the notion of preconditions precluded meaningful negotiations, that was a problem for the other guy. Newfoundland would soldier on and eventually triumph because Newfoundland was in the right.

As political strategy, the approach has been a howling success - so far. Newfoundlanders unabashedly admire their battling Premier. So much so that the opposition Liberals were almost wiped out in last year's emotional provincial election. Securely wrapped in the provincial flag, Mr. Peckford rules his caucus with an iron hand and the House of Assembly with an iron tongue, much as Joey Smallwood did in his political prime.

But as a means of realizing Mr. Peckford's stated public policy goals, the feisty, inflexible approach has been an abject failure. The Upper Churchill Power Contract remains in full, ruinous force, depriving Newfoundland of $750-million a year to which the province feels entitled. And the vast oil resources off the province's southeast coast remain undeveloped.

Worse, politics as the art of being right has shifted both disputes to a forum where politicians are powerless to influence the outcome - the courts.

The stark reality of what that can mean was demonstrated last week when the Newfoundland Court of Appeal ruled that Ottawa owns resources on the continental shelf off Newfoundland. In a single stroke, the Newfoundland Petroleum Directorate became a legal fiction, the province's oil and gas regulations lost their force, and Mr. Peckford's bargaining position with Ottawa suffered a devastating blow. Ironically, Mr. Peckford must now appeal for his justice to the very court he has consistently described as the tribunal of central Canadians, the Supreme Court of Canada.

Predictably, the political opposition has argued that such epic blundering with the province's long-term future requires the supreme penalty - in the wake of last week's decision, Liberal MHA James Hodder has demanded Mr. Peckford's resignation. But the reaction of fellow Tories, particularly Newfoundland's former energy minister Leo Barry, is of far greater significance.

Mr. Barry has become the first Conservative to publicly criticize Brian Peckford since he became Premier in 1979. Two years ago, the Yale-trained lawyer and author of Newfoundland's oil and gas regulations resigned from the Peckford Cabinet over differences with the Premier on how offshore negotiations with Ottawa should be conducted. Now Mr. Barry is pointing out, ever so delicately, that the ownership question should never have been referred to the Newfoundland court in the first place and that the Newfoundland Government acted ''precipitously'' in so doing.

What makes Mr. Barry's comments all the more significant is the fact that he espouses the same goals as the Premier. Like Mr. Peckford, he too believes Newfoundland is entitled to ownership of offshore resources. But unlike the Premier, his formula for achieving ownership hinged on keeping negotiations with the federal side going and, if a deal couldn't be struck, waiting for a change of governments in Ottawa.

His reasoning was simple. Having already offered Newfoundland 100 per cent ownership of offshore resources in 1980, a Conservative government in Ottawa would have a hard time reneging on that offer if returned to power at some time in the future.

Against the backdrop of his defeat in the Newfoundland courts, and criticism from an prestigious member of his own caucus, Brian Peckford continues to talk tough. But his words are less important now than what happens in the Supreme Court of Canada in the coming weeks.

If the high court upholds the position taken by the provincial Supreme Court, as many legal observers believe it will, the Rowdyman of Newfoundland public life will have learned a harsh political lesson: dogma is no substitute for dialogue, and compromise no synonym for weakness.