The smallest details tell the biggest story #nlpoli

Last week, provincial fisheries minister Vaughn Granter held a news conference at a local restaurant known for its seafood dishes to announce that from now on, that restaurant and even ordinary consumers could buy fish.directly from a fisherman without facing any legal problems.

That may sound a bit odd to some people but truth be told the provincial government has for decades banned direct sales to consumers.  Ostensibly it was based on concerns over public health but in truth it was just another way the government tried to control the hell out of the fish business.

Wonderful news.

But the really fascinating detail was buried away in Granter’s speaking notes.

The Other Damn-Fool Fisheries Policy #nlpoli #cdnpoli

About 30 years ago, Kathy Dunderdale started out her political career fighting against fisheries reform.

Last December,  she scolded fish plant workers in Marystown for turning out 18 weeks work that would have qualified them for employment insurance and kept their plant open.

She continued her fight against fisheries reform over the weekend in a series of interviews with national media about the federal government’s proposed changes to the employment insurance system.

Guaranteed Annual Income

The Globe and Mail version by Kevin Milligan.

From the 1992 Strategic Economic Plan, the Government of Newfoundland and Labrador’s idea for income support reform as a means of promoting fundamental economic and social transformation:

The unemployment insurance system was originally intended to provide temporary income to people seeking alternative employment who had lost their regular jobs in the work force. The system was not designed to provide basic income support, or as supplemental income for short-term, seasonal jobs. The present downturn in the economy has pointed to weaknesses in this system which must be addressed and corrected.

Strategy Statement. The Province will work with the Federal Government to ensure that the inevitable changes to the current income security system are designed so that basic income support is provided to every household, and that weaknesses in the present system are corrected to encourage the economic growth that is needed to reduce dependency on income security itself.

- srbp -

The Cutting EDGE

Introduced in 1995, the Economic Diversification and Growth Enterprises program – known as EDGE – is the most successful economic development program currently offered by the provincial government.

According to an article in the March 20 issue of the Telegram,

The province estimates that EDGE has created 1,500-1,600 jobs over the years. The government has forked out $17 million in rebates to employers under the program. Those rebates are linked to things like provincial income tax, payroll tax and corporate income tax.

Roughly 40 municipal governments also signed on to the EDGE scheme, providing their own tax relief to qualified companies.

Within the past five years alone, 30 companies have applied for support under the program and two thirds were accepted.

Compare that to the hand-out programs introduced under the current administration.  Of the $75 million budgeted over the past three years, the programs have only managed to give away $14 million;  of that amount $8.0 million went to a company that promised to increase its workforce but in the end cut jobs.

The provincial government is reviewing the EDGE program to see how it can be improved. Currently 69 companies hold EDGE status.  A further 54 held the status at one point but no longer qualify.

As the Telegram described the EDGE program:

To be eligible, a company must create and maintain 10 new permanent jobs in Newfoundland and Labrador and make a minimum capital investment of $300,000 or have incremental annual sales of $500,000.

Tax incentives are provided to EDGE-designated companies for a period of 10 or 15 years, followed by a five-year period of partial rebates.

Part of the program’s enduring success is the philosophy behind it. EDGE recognised the changed global economic circumstances and placed its greatest emphasis on encouraging the private sector to develop innovative, globally-competitive industries that could survive without extensive government cash support.

The background to the program is contained in a public consultation paper released in the summer of 1994.  The main sections of that document are reproduced below.  in light of the current government policy and the review of EDGE, it would be useful if more people in the province were aware of an economic development philosophy that continues to deliver strong results almost two decades after it first appeared.

Excerpts from: 

Attracting new business investment: a White Paper on proposed new legislation to promote economic diversification and growth enterprises in the province

(June 1994)

1.0  BACKGROUND

The Strategic Economic Plan for Newfoundland and Labrador, which was released in June of 1992, outlined the economic challenges facing the Province and charted new policy directions to guide economic development over the long term.

The Strategic Economic Plan noted in particular that the globalization of economic activity and the liberalization of world trade presents significant new export opportunities for manufactured goods and commercial services. Technological advances made in transportation and communications over the past decade, combined with the shift towards a more knowledge based world economy, have also reduced the relative importance placed on geographic location for many industries and firms, and this has created further opportunity for the development of new products and services. At the same time, however, these trends have brought increased international competition for economic activity, not only in the development of new products and services, but in respect of many of our existing industries as well.

These profound changes in global trade patterns, investment flows and technology constitute the driving force behind the fundamental economic restructuring that is now occurring in many countries. In an increasingly competitive and knowledge based world economy, it is clear that we can no longer rely on traditional approaches to attract new business investment and expand existing business enterprises. We will, out of necessity, have to become more outward looking in our approach to economic development and create an appropriate investment climate that supports international competitiveness.

It must also be recognized that the private sector is and will continue to be the engine of economic growth. This is a key principle embodied in the Strategic Economic Plan and reflects the reality that the private sector is the most effective vehicle through which lasting economic wealth and employment opportunities can be created for the people of this Province. It is the role of government in this context to create the economic climate in which private sector investment can occur and be successful.

2.0       GOAL

The goal of attracting new business investment as a means to create additional employment opportunity for the people of this Province is not a new concept. Indeed, various governmental incentive programs have met with measured degrees of success over time in this regard. However, the rapidly changing global marketplace and the province-wide impact on the economy resulting from the collapse of the groundfish fishery have heightened the need to significantly improve the attractiveness of the Province to the private sector as a place to invest and prosper. New business investment directed at economic diversification and general economic growth is not only an objective but an imperative at this juncture of the Province's history.

The Government of Newfoundland and Labrador intends to adopt bold and innovative measures to transform the Province into one of the most attractive locations - not only in Canada but in all of North America - for new business investment and to take aggressive new steps to market and promote the Province's strengths in this regard on a national and international basis.

The main elements of this new program will be reflected in legislation to be known as "An Act to Promote Economic Diversification and Growth Enterprises in the Province". This legislation will be presented to the House of Assembly for its consideration in the fall of 1994 and will provide an enhanced "business friendly" regime for new and expanding business enterprises in the Province.

3.0       SCOPE OF PROPOSED LEGISLATION

3.1      Eligibility

New business enterprises wishing to establish in the Province and existing businesses wishing to expand their enterprises will be eligible to receive a range of special business development incentives, provided that certain conditions are met. These will be in addition to any other incentives the enterprise may be eligible for under other assistance programs established to encourage business development in the Province.

To qualify for the special incentives, an enterprise must meet the following tests:

• The proposed new business activity must have the potential to bring substantial new or expanded business investment and employment to the Province.  Only those projects involving capital investments of at least $500,000 and having the potential to generate incremental annual sales of $1.0 million, as well as creating and maintaining at least 10 full time permanent jobs in the Province, may apply to Government for access to the special incentives.
• The proposed new business activity must be consistent with the objectives for economic development that are embodied in the Strategic Economic Plan.
• Reasonable assurances must be available to demonstrate that the proposed new business activity, in the absence of the special incentives, would not otherwise be pursued in the Province. This test is intended to ensure that incremental economic activity will be stimulated by the new incentives.
• The proposed new business activity must not be directly competitive with or have an adverse impact on the viability of other businesses already established in the Province.   This will ensure that existing business enterprises will not be placed at a competitive disadvantage relative to those companies and investors who are able to take advantage of the new incentives.
• The proposed new business activity must have the potential to generate substantial value-added economic benefit to the Province.

Both new businesses and existing businesses expanding their operations will be eligible for the special incentives. However, in the case of existing businesses, only those elements of a company's operation which are incremental to its existing scale of operation will be eligible for the incentives.

3.2      Review and Approval Process

Companies seeking the special incentives available through the new legislation will be required to provide documentation in the form of a comprehensive business plan to allow for a thorough assessment of its proposal. The specific requirements in this regard will be outlined fully in the legislation.

Particular attention will be given during the review process to the commercial viability of the proposed business activity over the long term. It is not the intent of the legislation to artificially support new industries or new business activity in the Province, but rather to attract and assist in the development of viable and sustainable economic enterprises and employment opportunities for the long term benefit of the people of this Province.

All applications received under the new legislation will be reviewed by a committee of Cabinet Ministers chaired by the Minister of Industry, Trade and Technology, with final decisions on eligibility to be made by Cabinet. Part of the process in making a determination as to whether or not the special incentives will be granted to a company will involve a public notice procedure whereby Government will invite interested parties to make submissions respecting all proposals received. This is intended to ensure that all proposals are available for public scrutiny in respect of their potential competitive impact on existing business enterprises and jobs. Appropriate steps will be taken to protect the proprietary and commercial interests of the company when this public notice procedure is invoked.

While all proposals made to Government under the new legislation will be thoroughly assessed to protect the general public interest, Government is committed to a timely review process such that potential investors are not unduly delayed in the implementation of their business plans. Once the committee of Cabinet Ministers is satisfied that it has all the information it considers necessary to properly evaluate a proposal, a decision will be rendered by Cabinet on acceptance or otherwise of a company's proposal within 60 days.

Successful companies will be expected to enter into a formal contract with Government in which the Province will guarantee the benefits provided in the new legislation and the company will bind itself to implement the business proposal as accepted by Government. Notification will subsequently be given to the House of Assembly of all such contracts entered into, and ongoing monitoring of their terms and conditions will be carried out by senior officials.

3.3      Incentives Available through the Legislation

3.3.1    Taxation Incentives

The private sector is presently faced with a relatively high burden of taxation which impedes new investment and the creation of new employment opportunities in the Province. While a number of significant changes to the existing business tax structure have been made by Government in a number of areas in recent years, the entire taxation regime requires further attention if it is to be used as a means of promoting the Province as a highly competitive location in which to do business. Accordingly, the following taxation incentives are proposed for those companies qualifying for assistance under the new legislation:

(i) A full tax free holiday for ten years in respect of provincial corporate income tax, the health and post-secondary education "payroll" tax, and retail sales tax.

(ii) Further relief in these specific tax areas for an additional five year period on a reduced scale, commencing in the first year at 80% of total taxes payable and declining by a factor of 20% each year thereafter.

Municipalities will also be given the necessary legislative authority to grant full property and business tax exemptions on the same basis as outlined in (i) and (ii) above with a majority vote of the respective municipal council. At present, municipalities do not have the legislative flexibility to offer tax relief to individual companies to the extent contemplated herein.

3.3.2    Productivity Incentive

All new and expanding business enterprises experience a significant "learning curve" during the formative years of their operation. Part of this process inevitably results in a productivity "loss" that is incurred by the company at all levels in the organization.

To offset part of this productivity "cost", the Province will provide financial assistance to new and expanding business enterprises in an amount of $2,000 for each full time job created in the Province during its initial five year operating period where the company employs a resident of the Province to permanently occupy the job from the time of its creation.

Appropriate provisions will be included in the legislation to protect the pubic interest in the event of failure by a company to fulfil the conditions upon which the productivity incentive has been granted.

3.3.3    Labour Relations Incentives

A new approach to labour-management relations is required to attract new investment and stimulate new business enterprises in the Province. Government remains fully committed to ensuring that adequate safeguards are in place to protect the legitimate interests of employees and unions. However, it is in the broader public interest to achieve this objective in a balanced manner that also assures those who wish to make new business investments and provide economic opportunity in the Province have a reasonable prospect of receiving an acceptable level of return on their investment without undue risk from uncertain labour relations conditions.

Pursuant to a commitment made in the Strategic Economic Plan, Government is presently developing a comprehensive consultation document which will address various concerns respecting the general labour relations regime in the Province. While the intent will be to develop consensus on changes necessary to make the general labour climate more favourable for all businesses, Government believes that extraordinary measures are required beyond this if new business   enterprises   are   to   be   stimulated   in   the   increasingly competitive global economy.

Government's proposal in this regard is to make available different Labour Relations Act provisions to new enterprises wishing to establish in the Province and to do so in a manner that will not affect the application of current labour legislation to existing businesses. As well, any existing business where a bargaining agent has been certified for the employees of that company prior to the time it wishes to expand and take advantage of the special incentives under the new legislation will not be eligible for the labour relations provisions of the legislation. Considerable difficulty from a number of perspectives would be encountered in applying two different labour relations regimes to a single business operation, as one firm could have two separate collective bargaining processes, labour contracts and wage rates applying to employees doing the same kind of work. Accordingly, the labour relations provisions of the new legislation will apply to new business start-ups only.

The main  features of the proposed  new labour relations provisions are as follows:

a.  All collective agreements entered into between a company and the bargaining agent for the employees will remain in force for a period of at least five years, unless the contract entered into between the Province and the company in respect of the business undertaking as a whole expires in a period of less than five years.

b.  In circumstances where a company and a bargaining agent engage in collective bargaining but are unable to reach a collective   agreement,   a   special   panel   consisting   of   a representative   appointed   by   each   of  the   parties   and   a chairperson appointed by the Minister of Employment and Labour Relations will establish a collective agreement by addressing those specific matters in dispute at the time the matter is referred to the panel.

c.  Where a company and a bargaining agent are unable to conclude a collective agreement and the matters in dispute are referred to a panel, the company will not be permitted to lock-out the employees and the employees will not be permitted to strike.

d.  A panel, in concluding a collective agreement, will take into account the following factors:

(i) the overall policy objective of the new legislation which is to create conditions favourable to the establishment of new businesses and the expansion of existing businesses in the Province (this factor will be given paramount consideration by the panel);

(ii) the effect of the agreement on the profitability of the business;

(iii) the terms and conditions of employment of employees in occupations in the same or similar businesses both within and outside the Province, with consideration to be given to geographic, industrial, economic, social and other variations that the panel considers relevant;

(iv) the need to establish terms and conditions of employment that are fair and reasonable in relation to the qualifications required, the work performed, the responsibility assumed and the nature of the service provided; and

(v)      the needs of the employer for qualified employees.

e.  An agreement concluded by a panel will be binding on all parties.

f.  The panel will be required to conclude an agreement no later than 90 days after disputes are referred to it for resolution.

g.  Every collective agreement entered into between a bargaining agent and a company, including an agreement concluded by a panel, will contain provisions:

(i) requiring the application of progressive work practices in the work place including the use of composite crews;

(ii) relating to wages and to wage increases of employees during the term of the agreement, but those increases will not be permitted to exceed the percentage rise in the consumer price index as reported by Statistics Canada for that area; and

(iii) respecting the final and binding resolution of disputes without work stoppage.
Notwithstanding the provisions outlined above, where a company and a bargaining agent both agree that it would not be in their collective interest to apply the labour relations provisions of the new legislation in its entirety or in part, then those provisions will not apply to the parties concerned. Similarly, in circumstances where a panel has concluded a collective agreement, the parties concerned may, where they mutually agree, vary any term or condition the panel has applied, provided that such agreement does not offend other applicable provisions of the new labour relations regime.

3.3.4    Access to Crown Land

Crown land that a company may require to implement its business plan as approved by Government will be leased to the company for a nominal sum of $1.00.

3.3.5    Appointment of a Facilitator

Upon the request of a company, Government may appoint a person, either from within or outside of Government, to assist the company in obtaining governmental permits, licenses, options for use of Crown assets, and any other authorizations that the company may be required to obtain in connection with its business. This will expedite the processing of all applications for regulatory approval of the business plan and thereby allow the business plan to be implemented in a timely manner. The responsibility for actual decision-making in these areas will, however, remain with the appropriate regulatory agency.

- srbp -

Strategic Social Plan (1995) - Forward

This Strategic Social Plan Consultation Paper initiates the final phase of an intensive Provincial planning process which began more than six years ago. When this Government took office in 1989, we made a commitment to the people of Newfoundland and Labrador to review all economic and social programs and mandates and to develop strategic plans to carry the Province through the turbulent changes of the 1990s into a stronger future in the 21st century.

In the fall of 1990, Government began the first phase of this planning process through a review of economy's strengths and weaknesses, examination of the activities and policies of economic departments and agencies, and the subsequent development of a public consultation paper to provide an opportunity for the people of the Province to have direct input into the vision, guiding principles, and actions that eventually became the Strategic Economic Plan (SEP).

When the SEP was released in June 1992, however, we stressed that it was only half of the planning cess. Economic issues cannot be examined or addressed in isolation from social issues and realities, and it was imperative to move on to the second phase of our strategic planning: the development of a Strategic Social Plan. A Social Planning Group (SPG) of senior officials was established, and on March 4, 1993, the Throne Speech in the House of Assembly reaffirmed Government's commitment to the development of a Strategic Social Plan as the essential and equal partner to the SEP.

During the past three years, the SPG faced many challenges in their task of researching global trends reviewing programs and policies. Unlike economic planning activity, strategic social planning models were virtually unknown, and the Group were for the most part breaking new ground. In addition, they were caught in a maelstrom of social change and reform at both the Provincial and Federal levels, and were obliged to constantly revise data and projections to keep pace with national social reforms and in funding.

Nevertheless, the work of the SPG progressed to the point where relatively stable data could be provided to Cabinet and a consultation paper could be developed. This document is not a final Strategic Social Plan but it is a clear statement of the direction in which Government intends to proceed in terms of providing essential services for the social well-being of our citizens in as effective and efficient as possible. We now invite comment and suggestions from the people of Newfoundland and through the extensive public consultation process which will precede the development of the Strategic Social Plan.

I encourage all citizens, and especially organizations concerned with various social issues, to examine this paper thoroughly and to give serious consideration to the social challenges that are outlined and to the strategies and actions that are proposed. I look forward to receiving the thoughtful views of people throughout the Province as we continue the process of planning our social order for generations to come.

[original signed by]

Clyde K. Wells

-srbp-

To come:  “Introduction and Background”

• Introduction
• Social profile
• Demographic Change and Challenge
• Living in a Different World
• Realities
• Principles
• Vision

Explanatory Note:  The 159 page Strategic Social Plan [SSP] consultation paper is being presented in a series of instalments.  A companion to the 1992 Strategic Economic Plan, it lays out both a clear statement of where the province was in 1995,  the challenges to be faced in the future and policies to deal with those challenges successfully.

Approved by cabinet for release in December 1995, the 1,000 copies of the consultation document were ordered destroyed by the Tobin administration in 1996.  Only a handful of copies survived.

The planned consultation never took place.  Instead, and while something subsequently emerged which was labelled a Strategic Social Plan, the new Tobin administration went down an entirely different road from the one envisaged in the 1995 consultation paper.

Some specific initiatives from the 1995 document did make it into action.  Others did not. Unfortunately, the fundamental approach – the integrated concept – that underpinned the strategy went out the window with the change of administration in January 1996. 

It never returned.

The current state of the provincial government – unsustainable levels of public spending in an increasingly fragile economy – are a direct result. 

In a province facing an uncertain future, where political leaders are devoid of ideas, let alone sustainable or new ones, the 1995 Strategic Social Plan remains relevant.

Budget hints from Marshall

Excerpts from a speech by finance minister Tom Marshall, in Corner Brook, as reported by the Western Star:

Although he said the rate the province has been spending is not sustainable, Marshall said spending on new programs and projects will highlight the next budget.

“We have to get control now,” said Marshall. “I’m not talking about cutbacks. There will be new initiatives and programs, but we have to temper our expectations and we have to keep things under control. We have to make sure the spending we do today is sustainable for the children of the future.”

…

“We have to get control now,” said Marshall. “I’m not talking about cutbacks. There will be new initiatives and programs, but we have to temper our expectations and we have to keep things under control. We have to make sure the spending we do today is sustainable for the children of the future.”

…

“Now we have to benefit from new industry, benefit from the knowledge economy, the innovation economy.”

Knowledge economy.

Innovation.

Hmm.

Those ideas sound awfully familiar.

-srbp-

Blooms and roses

News reports about a climb in the number of jobs across the country buried a key aspect of the story, as in this example from the Globe.

But there was a catch. Much of the private sector has yet to start hiring again. The job growth was due to 36,000 positions added in the public sector, while the private sector shed 17,100 jobs, in sectors such as transportation, professional services and accommodation. Private sector employment has dropped 3.9 per cent over the past year.

That was paragraph four, long after the stuff about huge gains and ones bigger than expected.

Now this is a rather interesting revelation in light of economic developments in Newfoundland and Labrador.

You see the boom on the northeast Avalon isn’t being fuelled by the offshore.  It’s coming entirely from massive increases in public sector hiring, public sector wage increases and a huge jump in public sector spending.

The most recent round of ‘stimulus’ spending for capital works is just more cash in on top of the gigantic increases in public spending over the past four years. That would be the “unsustainable” ones for those who missed the drama of the past few weeks.

Incidentally, the guy who revelled in boosting spending beyond the levels that the economy could support is back in charge of the cash box.  He proudly noted for listeners of one local call-in show that the province currently outspends Alberta on a per person basis just as it has done for most of the past decade and a half.

Yet for all that, the province just shed 4200 full-time jobs between August and September 2009 and there are 3100 fewer full-times jobs this September compared to last.

All this should lead people to be a bit cautious about predicting the end of the recession and the quick return to happier times. 

Here in this province, the current provincial economy is sustained by huge levels of public sector spending.  But that just isn’t going to work given the anticipated drop in oil production over the next four years.  Even if the global economy rebounds, crude oil prices aren’t likely to hit levels double and triple what they are today:  that’s the sort of prices the provincial government would need to keep up its current spending.

No one should be surprised, therefore, that the premier and his new health minister – the guy who used to be finance minister – just headed out to a by-election and pulled a fast one on the locals.

Come help us figure out cuts to the building cost, they said, so you can keep lab and x-ray services.  What they didn’t point out is that the savings needed are not the $200,000 in annual operating costs but the millions in construction costs.

In Lewisporte, for example, estimated costs for the new combination seniors home and acute care clinic skyrocketed from $22 million to $42 million before they even got to thinking about putting the first shovel in the ground.  In order to contain costs, government scrapped the acute care bit for a saving of $10 million.

But do the math. 

In order to restore the acute care centre and its anticipated cost of $10 million, the locals in Lewisporte will have to cut out one third of the beds – at least – in the new chronic care centre in order to get laboratory and x-ray service back.

So where are those old people supposed to go?

That’s a very good question.

Too bad the current administration doesn’t have an answer even though the problem and a viable solution have been available  - but ignored - for over a decade.

-srbp-

Coming soon: the book they tried to suppress

The Gospel according to Chip Diller

Newfoundland and Labrador is usually one of the last places to catch a trend.  Doesn't matter if you are talking fashion or, in the latest version, government economic and fiscal policy, it seems to take a while for things to catch on here.

Late on Friday afternoon newly minted finance minister Jerome Kennedy issued a news release trumpeting a credit rating by Standard and Poor's as proof of the provincial government's "fiscal prudence and sound policies". 

Well, maybe catch up is the better word.

There isn't a government left in the developed world that is still pushing the sound fundamentals media line now almost two months after the start of the current global economic crisis.  No government is claiming some sort of credit for being able to weather a storm that, in many minds, is far from over.

Well, no government except the one here.

If you want to understand why everyone else's tune has changed, take a look at the five year trending in crude oil prices. You can find an example in the WTI futures box on the right hand column.  Click on the "5Y" symbol. 

Four years to get up to US$147 a barrel and a mere four months to tumble below US$50.  The steepest declines have come in just the past two months.

The speed of the price collapse should be a clue to analysts that the assumptions used before July to predict that oil would remain at unprecedentedly high prices for the rest of time were faulty.  The security premium, supply concerns and overheated speculation drove prices to the peak last summer but in addition to all that the superheating of the global economy, fueled by loose American regulations pushed things beyond anything that would be considered normal and rational.

In other words, the price of oil has been artificially high for a very long time. Given that markets have a way of correcting themselves at some point, it was really only a matter of time before a correction - a downturn - took the heat out of things.  The only thing that couldn't be foreseen, and that's about the only thing, was how steep a correction was coming and how it might last, but come it would as surely as it has come at every juncture in the past.

Fewer and fewer analysts are holding to the old projections, some of them dating back several months. Some of the more influential sources, such as the International Energy Agency, are forecasting high prices.  However, many are revising their short term projections markedly downward.  Deutsche Bank, among others, is projecting crude at US$40 per barrel by April 2009.  One analyst  - Robin Batchelor - who in May 2008 predicted high oil prices well into the future is now likening the current climate to one 30 years ago:

"On the upside it always overshoots and the same is true on the downside. What I’m looking at is the commodity supply and demand equation; long term there are still supply issues but on the demand side we’re facing downdraft," he points out. "The last time we had a fall of that magnitude was in 1979/80/81."

While Batchelor for one has not abandoned his high price forecasts, he has certainly altered his view dramatically. The reason is simple.  While he and others once assumed ever increasing demand, the current correction may alter the demand side of the price equation that can't be seen right at the moment. If the current downturn lasts well into 2009, as most expect, the IEA, among others, will likely go back and rethink their projections just as they revised their assumptions three years ago when they thought US$50 a barrel was the peak.

Closer to home, though, the hope in the old assumptions remain strong close to home. This week, economist Wade Locke told Memorial University's student newspaper The Muse that:

“The longterm [sic] price forecast is still in the $80- to $90-range for oil and that will not affect Hebron, White Rose Extension, or Hibernia South. Even if [oil] prices were to stay around $60, these projects would likely proceed,” he said.

Locke's comments are a useful segue to an interesting aspect of the local view from the provincial government and its supporters.  Locke certainly falls into that category and the similarity between his comments and those of the finance minister are striking.  With that quote from The Muse in mind, take a look at this one from the release on the credit rating:

"Our economy remains strong and the current economic downturn should not affect development of new oilfields including White Rose Expansion, Hibernia South and Hebron," said Minister Kennedy.

The phrasing is similar, much like the similarity in early October between Locke's and the Premier's references within days of each other to the government being able to meet and exceed its current budget targets even if oil falls to $10 a barrel.

But what's more interesting in these two comments is that neither is completely true and in the wider context of Locke's comments on a bright future based on oil wealth, they constitute a fixation on oil as the source of economic salvation not seen in this province since "1979/80/81."

Let's deal with the projects first.

The White Rose expansion is a relatively modest project.  With its development costs already recovered, oil would almost have to hit prices lower than the historic 1992 price of  US$8  per barrel to make it economically dodgy.

The Hibernia South extension is also not a pricey project measured in terms of the original Hibernia project or Hebron.  However, there is no development application yet and a decision to proceed would certainly be affected by oil prices significantly lower than the current ones.

In all likelihood, the project will go ahead given that the oil companies have at their doorstep a provincial government willing to invest hundreds of millions of very scarce tax dollars in the expansion since that ultimately lowers their cost.  Given they will have recovered their initial costs by the time the new fields come online, their profit position would improve immensely in such a scenario while it would be the junior partner who would see a relatively lower return on investment. Low oil prices - especially below the foolish fixed price trigger of the current government's oil super-royalty regime  - won't affect them as much as it would the new kid in the oil patch.

Hebron is the most costly of three projects and the one most likely to be affected by a long period of low prices. Analysts seem to agree that the current price climate makes investment in high cost ventures like offshore heavy oil, deep water projects and oils sands less attractive.  Hebron's reported financial tipping point  - US$35 per barrel - is well below that of an oil sands project but stop and look at current prices.

There's a reason why the companies insisted on a clause in the Hebron agreement which gave the partners  - and the partners alone - the right to take up to a decade to sanction the project.  Current Hebron timelines are merely works in progress, subject to revision is the financial climate changes.

The upside for Hebron is that the companies managed to secure several significant concessions from the provincial government as hedges against a drop in oil prices. Those concessions make it more likely the project will proceed.

First, they secured the decade to sanction with no penalty for deciding against proceeding. They have time to decide and there is no real cost for delaying if the numbers don't add up.

Second, they won the royalty concession that dropped the pre-payout royalty to a fixed 1% as opposed to the escalating scale of the old royalty regime.  The energy minister herself heralded this as a major feature of the new deal.

Third, they were able to tie the super-royalty to a fixed price below which no extra cash was paid to the provincial treasury.  By the government's own estimate, oil prices averaging US$50 a barrel over the life of the project produced less than half the royalties of a high oil price.  Drop below that magic fixed trigger and the provincial share drops accordingly on top of the front-end royalty concession but from the company standpoint they can guarantee low possible costs across the board.

Fourthly, they secured significant fabrication concessions in the agreement.  Most of the topsides work will be done outside the province anyway based on what appears to be a huge miscalculation by the provincial government's negotiating team. 

On top of that, however, the management arrangement  - including the provincial government as junior partner  - would enable the companies to ship virtually all the topsides work and associated engineering outside the province in order to lower the costs and complete the project on time. If oil prices stayed low enough long enough and construction costs stayed high enough, it may well be worth the companies' while to pay the modest penalties for changes in the work commitments to get the deal done, even if they had to pay the penalties at all.  A renegotiated contract arrangement with the provincial government's energy company and the government that changed the work commitments would likely never be made public under the revisions to the energy corporation act passed last spring.

The companies may well get their projects, but the return to the provincial treasury and the overall impact on the local economy may turn out to be far smaller than originally promised.

The fundamental problem in all this is the fixation on oil projects which has led the provincial government and its supporters to tie government finances to the price of a barrel of oil.  Despite all assurances to the contrary, the next several years may be see provincial government fiscal problems as unprecedented as the surpluses of the past two or three years. Unlike those surpluses, however, the problems won't be figments of an accountant's bookkeeping methods.

Beyond that, prosperity for the province as a whole, in Locke's view, appears to be driven entirely by a couple of oil projects which, it must be noted, have a fixed life span.  Neither Locke nor Kennedy - who echoed Locke's definition of prosperity - have not realized the folly of resting everything on the a very slippery commodity.  

Oddly enough, it fell to Donna Stone, president of the St. John's Board of Trade to sound a very small warning bell against this very situation.  Board of trade presidents are not known to buck the government line so her words stand out.  As Stone told the Rotary Club of St. John's:

“This still gives us some cause for concern, however. Given the volatility of oil prices, the province should look at a long-term plan that will diversify our economy and make us less dependent on this ever-changing commodity,” Stone said.

Stone is absolutely right.  Almost 20 years ago, the provincial government realized exactly that and implemented a broadly-based strategic economic plan to hedge against such dependence.  That plan has been tossed aside in the  past four years.

The consequences may prove to be dire and no amount of assurance that all is well will save us from the them.

Just remember what happened to Chip Diller.

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The bits they didn't say

A youth conference discussing ways of keeping young people in the province.

A speech by the Premier, including the comment:

"It is by making sound choices in the coming years, both individually and as one team, that we will be able to remove the word 'outmigration' from our vocabularies in the same way that we removed the word 'have-not,' " Williams said during a speech.

That quote from a CBC news story includes comments from two participants, one of whom uses very familiar phrases:

"I don't think it needs to be Alberta wages," Snow said. "I'm not looking for Alberta. I love Newfoundland and Labrador and I love St. Anthony. I just want to stay — Newfoundland is home."

The old homing pigeon drive.

or these comments from the voice of the cabinet minister version:

Twenty year old St. Anthony native Kara Snow says Newfoundland and Labrador is a proud strong determined province and the people here have a lot of things to show that.

Jonathan Earle from Red Bay, Labrador says he thinks the Youth Retention and Attraction Strategy is a step in the right direction.

Proud. Strong. Determined.

Nothing like a political party slogan or, for that matter, a fellow attending the conference.

And Kara and Jonathan are, evidently just two young people attending this conference, they being typical of young people across Newfoundland and Labrador who are, quite naturally interested in these things on a go forward basis.

Typical they might be but they do have a couple of features that make them stand out, features left out of the news stories.

Like the fact that the conference or summit was by invitation only, meaning that those in attendance were selected by the provincial government and its hired consultant.  Not so much a gathering of people driven by their own interests as much as a carefully selected group.  Carefully selected according to some unknown criteria;  perhaps their ability to spout talking points or their enthusiasm for the official views.

Certainly it is not for new ideas since the original news release and the stuff just recently speaks of discovering what young people are prepared to give up.  Government is apparently less interested in creating an environment that promotes excellence and accomplishment and more one based on "an understanding of the trade-offs and choices young people are prepared to make."

The homing pigeon policy. 

We can solve outmigration, to go back to the Premier's speech, not by innovation and creativity but by figuring out how little people are prepared to settle for. Or in Kara's construction, people should expect to make less money since she does not want "Alberta", she wants something else, called Newfoundland and Labrador.

How edifying a notion.

How far the opposite of "have" could one get when by the very words they use the Premier and the people at his conference accept notions that limit everyone to accepting less than might be attained elsewhere.

This is fundamentally the opposite of the approach set by government, based on genuine consultation, in the years when most of these young people were toddlers, in diapers or not even thought of.  The 1992 strategic economic plan - Change and challenge - set as its vision "an enterprising, educated , distinctive and prosperous people working together to create a competitive economy based on innovation, creativity, productivity and quality." 

There was no need to ask young people what it would take to get them to stay here.  For the most part, people leave because elsewhere offers greater personal and financial opportunities.  The solution to ending outmigration lay in creating a province in which wealth - genuine "have" status - could be found at home.  Creating wealth - the synonym is "prosperity"  - came from unleashing talent and creativity, of daring against the best in the world. 

In 1992, staying in Newfoundland and Labrador did not have to mean compromise.  In 2008, compromising, settling, accepting less is the stated foundation of government strategy.  In 1992, compromise was rejected;  in 2008, it is embraced.

But then there is the other bit about Kara and Jonathan and likely a bunch of others at the session.  These are not just any young people but part of the group selected already by the provincial government to work with the consultants:

A Youth Advisory Panel will provide ongoing advice on the project’s research design and the development of materials such as dialogue workbooks.

This project seems less about research, of finding out what people want and more about confirming a pre-determined set of ideas, of guiding people along a path.

Certainly, if the familiar phrases used by the conference organizers and presented as ostensibly unvarnished opinion is any guide, the strategy is working.

It's always the stuff they don't tell you that is more revealing.

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Change and Challenge: Chapter Six - Enhancing our resource industries

The traditional primary resource industries do not offer significant potential for large-scale employment and growth at this time. Even to maintain our current position in export markets we must improve our competitiveness through increased training and the application of new technologies. Nevertheless, new economic benefits will grow from our present resource industries as we expand processing within the Province, thereby adding value to our products.

Fisheries

The fishing industry is a major contributor to the Newfoundland and Labrador economy. The industry accounted for 19% of the GDP in the goods-producing sector and 5.5% of total GDP in 1990. Total landings of 540,000 tonnes (all species) in 1990 provided products valued at approximately $650 million, though in 1991 landings dropped to 380,000 tonnes worth $570 million. The fishery provides about 10% of total provincial employment measured in person years.

Today, the Newfoundland fishery is experiencing a crisis arising from the collapse of the resource base which will have the effect of accelerating the process of structural adjustment. This is particularly true for groundfish operations in both the inshore and offshore sectors.

Policies and programs must be developed which will help guide the fishery through its current crisis and toward a more viable future. Key concerns are resource conservation and rebuilding, and federal/provincial policy co-ordination. A further challenge to government is to promote the development of an economically viable and competitive fishery while at the same time providing training and education, and encouraging the development of alternative economic opportunities for the people in the numerous communities which in the past have depended solely on the fishery.

Resource conservation and rebuilding of vitally important groundfish stocks will only be possible through effective control of harvesting by foreign vessels outside the 200-mile Canadian fisheries management zone. In 1991, for example, foreign fishing fleets took more than six times their allowable quotas, and overfished six critical groundfish stocks by about 90,000 tonnes. Such uncontrolled harvesting effort is directly contributing to a major decline in Canadian quotas and is largely responsible for both temporary and permanent closures of Newfoundland groundfish operations.

Canada/Newfoundland policy co-ordination, as envisaged by Newfoundland's joint management proposal, is critical to a well-planned fisheries revitalization and development strategy. Such an approach would provide for the co-ordination of fisheries responsibilities of both governments, facilitate provincial economic policy formation and implementation, create a fair and transparent fisheries management system, and prevent erosion of access to fisheries resources adjacent to the Province.

Strategy Statement. The Province will initiate a fisheries action program which will strengthen the fishery and the economy generally. A viable fishery is one which is stable and competitive in the absence of government subsidies, where a reduced fisheries workforce can earn an adequate income without excessive dependence on income support, and where the workforce can be professionalised to obtain high productivity levels.

This action program involves two broad elements: first, the revitalization of the fishery itself, and second, diversification within and outside the fishery. Fishery revitalization will include measures to rebuild and protect the resource base, to restore and preserve the environment as it relates to fishery resources, and to increase economic efficiency through improved operational flexibility, capacity control, technological innovation and better quality control. Education and training of industry participants will be an integral part of the entire fishery revitalization program. Diversification will focus on new opportunities in secondary processing, aquaculture, and the harvesting and processing of underutilized fishery resources.

Actions. The Province will

96. Aggressively pursue the implementation of a joint fisheries management board (modeled on the Canada/Newfoundland Offshore Petroleum Board) whereby a comprehensive development plan can be put into effect.

97. Increase efforts to develop a long-term strategy to deal with foreign overfishing through an international public awareness program.

98. Cost share, in conjunction with the Federal Government, a major research initiative on the life cycle and behaviour of the commercial fish stocks off our coasts in order to avoid resource crises such as the present one, and to provide the information needed to develop long-term policy and program decisions.

99. In cooperation with the Federal Government, implement a salmon river enhancement program to rebuild and protect the salmon stock and thus stimulate a major expansion of this economically important recreational fishery.

100. Accelerate education programs for people now engaged in the fishery. This will include two components: a community-based program aimed at people leaving the industry, which will include literacy training and basic education; and management and technical training for people staying in the fishery. For the latter, such training will be a prerequisite to receiving Government funding
under various development programs.

101. Assist the industry to achieve higher levels of technological innovation and improved management in both the harvesting and processing sectors.

102. Provide assistance to undertake more diversification of the fish processing industry, emphasising value-added processing and the utilization of by-products, and assist with cooperative marketing arrangements to enhance the success of smaller-scale value-added operations. Specific initiatives will include international promotion of joint venture opportunities, assistance for locally based manufacturing to produce items such as specialty containers to be used in
secondary processing, and consideration of an incubator facility to assist small, fledgling companies.

103. Establish a Seafood Promotion Council, consisting of private-sector and government representatives, to undertake a generic promotion campaign.

104. Escalate research, development and marketing efforts in support of a viable sealing industry. Emphasis will be placed on using the entire animal.

105. Increase efforts to develop and expand the aquaculture industry by

• initiating a mussel production incentive to boost production by a
  million pounds a year by 1994;
• accelerating the development of scallop hatchery technology with
  the objective of constructing such a hatchery;
• seeking additional research and development funding to investigate and develop the potential of species such as arctic char, cod, halibut and ocean pout;
• establishing a Ministerial Advisory Council on Aquaculture, composed of representatives of the industry, academic and research organizations, and government;
• establishing environmental guidelines to expand the use of freshwater lakes for aquaculture;
• streamlining the format for applications for new licenses within
  the aquaculture industry; and
• taking action to stem the discharge of raw sewage into waters
  which have potential for aquaculture development.

106. Amend regulations in order to improve the quality of fish at dockside, and provide for the mandatory gutting of cod, containerized storage of crab on vessels and the banning of prongs for handling fish.

107. Streamline and change the policies and programs of the Fisheries Loan Board to

• better co-ordinate efforts with federal activities;
• entertain proposals from non-traditional areas, such as
  aquaculture; and
• provide a special incentive program for vessel acquisition in
  Labrador.

108. Where possible, lease marine services centres to private-sector companies or community-based organizations to improve cost effectiveness and generate local commercial activity.

109. Undertake a wide variety of exploratory fishing to identify prospects for diversification. Cod and turbot adjacent to northern Labrador will be investigated, and increased landings will be used to supply fish to new, but resource-short plants in Makkovik and Nain. Where possible, local residents will crew the vessels used in these projects so that they can benefit from training and technology transfer.

Forestry

For centuries our forests have been a natural renewable resource from which people of this Province have derived income and other benefits. The rural economy is interwoven with the use of the forests for heating, home building, boat building, wharf construction, hunting, trapping and recreation. Three pulp and paper mills and hundreds of small sawmills have also provided a steady source of income for many people over the years. Currently, the forest industry involves both primary activities, including harvesting and forest management, and secondary processing of wood into such products as newsprint and lumber.

The industry accounted for about 10% of output in the goods-producing sector and 2.9% of total GDP in 1990. It also accounts for about one-third of the manufacturing in the Province. The forest industry provides 3,600 person years of employment annually, though much of this is seasonal or part-year. In recent years, however, there has been a trend toward fewer jobs but less seasonality. Employment in harvesting is declining because of mechanization, but is expanding in silviculture. In the newsprint mills, employment is expected to fall somewhat further until the industry has become more efficient, productive and competitive. The result, however, will be a stronger, more viable industry which will provide more stable incomes for the future.

The Province depends almost entirely on export markets for its newsprint, but all lumber production is consumed locally. Nevertheless, investments are now being made to produce lumber for European markets.

Over the past five years, two of the pulp and paper mills in the Province have been modernized to improve quality, increase efficiency and reduce pollution. Approximately $227 million has been invested in the Corner Brook mill and approximately $47 million in the Grand Falls mill. (The third mill, at Stephenville, was already a modern facility.) However, considerably more investment is needed at both locations to continue to improve upon the quality of product, mill efficiency and environmental compliance.

While the pulp and paper industry accounts for approximately 75% of the economic activity in forestry, sawmilling, commercial fuelwood, resource management and protection, and converted wood-products industries also occupy essential roles, particularly in maintaining the economic well-being of many rural communities. Many other elements, such as wildlife, watersheds, recreation and tourism, also depend on our forest lands.

The Department of Forestry and Agriculture is now in the second five years of its 20-year planning process. This Forestry Development Plan provides an assessment of the current state of the forests and sets forth a strategic action program. The following strategy and actions draw on this strategic action program.

Strategy Statement. The Province will manage its forests through integrated forest management and according to the principles of sustainable development, incorporating multiple use values such as protecting recreational areas, watersheds and wildlife habitat. Public consultation and participation will be sought for decisions on management of the forest ecosystem.

Actions. The Province will

110. Give priority to providing additional funding to implement an expanded long-term silviculture program, including programs financed through cost-shared agreements with the Federal Government and the forest industry.

111. Through the new Forestry Act, designate a suitable forest land base for timber production to maintain a viable forest industry in conjunction with other uses and benefits.

112. Enhance our capability to practise integrated forest management by forming stakeholder partnerships and committees, public consultation, staff training and collaboration with education and training institutions, such as the Centre for Forestry and Environmental Studies at the Fisher Campus of the Western Community College and the forestry program at Memorial University.

113. Maximize the use of the forest resource, and maintain and improve the competitive position of the forest products industry. More specifically the Province will ensure that

• sawmills with integrated operations producing lumber, chips and/or pulpwood receive preference in wood allocation;
• further arrangements will be made, wherever possible, with the pulp and paper industry to increase the supply of sawlogs to the sawmilling industry;
• harvesting of wood for domestic use will be regulated to ensure that it does not interfere with the commercial use of the resource;
• the sawmilling industry will be supported by providing training, technology transfer and continued financial support; and
• the forest products industry will be supported to improve its efficiency and to identify opportunities for diversification into higher value products.

114. Provide adequate financial resources to protect the forest resource from damage by insects, fires and diseases.

115. Provide additional funding for forest access roads to achieve maximum use of all available forest resources.

116. Expand the private woodlot management program by involving individuals, groups and communities which have the money and skills to invest in managing the resource.

117. Work with the private sector to establish a forest-based industry in Labrador. This will require conducting forest inventories and investing in roads and other infrastructure in the Happy Valley-Goose Bay and Cartwright areas.

Mining

The mining industry continues to be one of the leading resource-based industries in the provincial economy and is expected to continue in that role into the foreseeable future. The industry accounted for approximately 11% of our GDP in the goods-producing sector and 3.2% of total GDP in 1990.

A diverse range of mineral commodities is produced by the mining industry, though iron ore production dominates, accounting for more than 90% of the total value of mineral shipments during 1991. The Province has two iron ore producers, both of which are located in Labrador. These two producers employed more than 2,400 people in the Province in 1991.

The output of the Newfoundland and Labrador mining industry is shipped primarily to markets located outside Canada. The industry continues to suffer from the current global economic recession, however, and this has resulted in decreased demand and lower prices for mineral commodities and metals. This general trend, with some exceptions, is expected to continue throughout 1992.

New opportunities exist in gold and base-metal mining, in developing dimension stone and slate industries, for limestone, dolomite and marble production and in peat development. Further processing of mineral resources in the Province is also dearly desirable. As the potential for the development of industrial minerals increases - dimension stone in particular - opportunities for further processing will emerge and will be diligently pursued.

Generally, the high cost of infrastructure for new mining projects, the relatively high total tax burden on the mining industry, and the inadequate levels of funding for mineral exploration are major constraints to mineral development. Government, however, is assisting mineral exploration through a continuing program of geoscientific surveys. The data collected to date have been a major factor in attracting mineral exploration investment to the province and have led to the discovery of several deposits.

Strategy Statement. The Province will establish a better investment climate to attract exploration and development. It will also continue geoscientific surveys to stimulate mineral exploration through the identification of prospective areas, and to provide the geological data required for economic development generally.

Actions. The Province will

118. Establish a mining infrastructure fund to assist industry with the funding of hydro lines, access roads, shipping facilities and other infrastructure for new mining developments.

119. Establish an exploration assistance program to provide for cost sharing of drilling and other advanced exploration projects by local prospectors and Newfoundland junior exploration companies in order to develop local mining entrepreneurs.

120. Amend The Mineral Act and regulations to facilitate and encourage mineral exploration. In particular, assessment expenditure requirements in Labrador will be reduced and annual rentals on mineral licences will be eliminated.

121. Prepare, in consultation with the mining industry, a new Mining Act
which will establish rights and obligations concerning such issues as environmental liabilities for abandoned mines, mine closure plans, rehabilitation of mine sites and ultimate long-term liability of mine operators.

122. Expand the Geological Survey Program of the Department of Mines and Energy to promote development of specific mineral commodities, areas and deposits. Particular attention will be given to the emerging dimension stone industry in Newfoundland and Labrador.

123. Encourage and promote, where possible, further value-added processing of mineral resources and mineral-related manufacturing opportunities in the Province within existing operations, and in future mineral developments as they occur.

124. Expand cooperative initiatives with the Centre for Earth Resources Research (CERR) at Memorial University to make earth sciences expertise more available to the mineral industry.

125. Promote our mineral resources that are near to coastal shipping and therefore have an advantage when competing in international markets.

Agrifoods

Agriculture in one form or another has had a long history in our Province. The raising of livestock can be traced back to the Vikings who lived at L'anse aux Meadows, and root crops were planted to supplement the diets of the first permanent European settlers. From these early beginnings, an industry has grown which contributed approximately $62 million to the economy in 1991 at the farm gate. Even though agriculture production accounts for less than 1% of our total GDP, The Report of the Task Force on Agrifoods estimates that the value of the industry may be as high as $300 million when food processing, transportation and retailing are included.

Livestock and poultry accounted for 80% of farm cash receipts in 1991 ($50 million) and this percentage has been fairly consistent over the years. The major livestock and poultry commodities, measured by farm cash receipts, are dairy products, broilers, eggs and hogs. Other commodities include beef, sheep and fur.

Vegetables, potatoes, fruit and floriculture/greenhouse products represent about 16% of farm cash receipts ($10 million). Floriculture/ greenhouse production was the largest contributor, followed by strawberries and potatoes. The most important vegetables include turnips, cabbage, carrots and beet, though production of broccoli, cauliflower and lettuce is increasing.

This industry generates approximately 1,600 person-years of employment annually. It is important as a source of employment in some rural areas of the Province and as a food source for all residents. Although much of the food consumed in the Province is imported, local production reduces the Province's dependence on imports and helps to ensure that fresh and healthful products are available in all parts of the Province.

The recommendations of the Task Force on Agrifoods are an integral part of the Department's plans for agricultural development. Its Report identified a number of opportunities for expansion. Some of these include production of poultry (both chicken and turkey), dairy products, sheep, fur (including non-traditional species), fruit and vegetables, and secondary processing in all areas. The Report also stressed the need to protect an adequate land base for viable agriculture.

The future of agriculture production in Newfoundland and Labrador will rest largely on the industry's efficiency and competitiveness. Potential changes in the international trading environment through the General Agreement on Tariffs and Trade may have implications for supply-managed commodities (dairy products, eggs, poultry) if import protection levels are eroded. Consequently it is prudent for governments and industry to focus on development initiatives which promote efficiency and competitiveness.

Strategy Statement. The Province will implement an action program designed to achieve greater self-sufficiency in locally produced products and to increase the industry's efficiency and competitiveness.

Actions. The Province will

126. Establish a provincial meat inspection program so that livestock can be processed at various local, privately owned plants throughout the Province and marketed through retail stores.

127. Ensure a competitively priced supply of feed to livestock, poultry and fur producers by

• securing improvements to the Feed Freight Assistance Program (FFA);
• expanding research and trials using local feed sources, such as seal meat and fish offal;
• expanding assistance programs to increase local forage production and improve its quality;
• providing assistance to farms to adopt new technology to improve feed efficiencies; and
• rationalizing the number, improving the fertility and expanding the economic base of selected regional pastures.

128. Ensure an adequate land base for viable agriculture by

• purchasing additional agricultural land in the St. John's Urban Region and expanding the program to other areas of the Province; and
• extending agriculture zoning to areas of the Province besides the St. John's Urban Region and the Wooddale Region.

129. Expand funding of the Provincial School Milk Program.

130. Enhance agrifood management, marketing and promotional capabilities by

• expanding farm business management training;
• assisting the formation of organizations to promote cooperative marketing;
• assisting interested individuals and groups to carry out market and feasibility studies, especially to explore non-traditional markets and opportunities in the area of value-added secondary processing; and
• continuing to fund promotional efforts, such as the Food and
  Livestock Show and regional fairs.

131. Legislate an equitable and standard municipal tax structure for farms.

132. Increase the supply of capital to the agrifoods industry by raising farm loans ceilings and by instituting a loan guarantee program.

133. Expand production of root crops by assisting farmers with storage facilities, further land development and land improvement.

134. Re-deploy existing human and financial resources to support the above actions.

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Chapter Seven - Implementation

Change and Challenge: Chapter Five - New opportunities for growth

The Province's fisheries, forestry and mining industries cannot be expected to provide much, if any, net increase in employment during the years ahead. In fact, employment in these resource industries has been declining steadily over the last decade, as shown in Chart 5. In the forest industry, person years of employment declined from 5,300 in 1981 to 3,600 in 1991, and in the fishing industry employment declined from 21,700 to 19,200 during the same period. The decline in the mining industry was similar, falling from 5,600 in 1981 to 3,200 in 1991.

To provide the new jobs needed to reduce our high unemployment rate and to provide employment opportunities for our young people as they enter the labour market, new growth opportunities must be identified. While our economy is more diversified than is generally recognized, further diversification is no longer merely desirable - it is essential.

Advances in telecommunications, the globalization of trade, the environmental movement and the growth of knowledge-based industries have changed economic prospects internationally, nationally and locally, and Newfoundland and Labrador enjoys many potential competitive advantages which it can use to benefit from these changes. It has a strategic location dose to Europe which could allow it to act as a gateway to and from North America, a relatively unspoiled natural environment with magnificent scenery and untouched wilderness areas, and many well-educated and well-trained people, including a core of professional expertise in marine-related engineering and electronics.

The challenge is to recognize these new opportunities and for the private sector to take advantage of them, with Government's support. Traditionally we have thought of ourselves as producers of raw materials, but several companies in the Province have already become sophisticated traders of knowledge-based, value-added goods and services in local, national and international markets. It is through the creation of new wealth in new industries that the Province's problems of over-dependency and under-employment will ultimately be addressed.


In its strategic economic plan, the Province has identified three main areas of growth. These are:

• manufacturing and technical industries
• tourism and culture
• energy.

Manufacturing and technical industries will build on existing engineering and technical strengths, especially in marine-related activities. Tourism and cultural industries will grow by taking greater advantage of the province's natural environment, our unique culture, our quality of life and our human skills. Energy industries will grow through developing our significant growth potential in oil and gas, hydroelectricity, alternative energies (such as peat, wood biomass and cogeneration) and by a demand for greater energy efficiency. These three established industry groups offer significant potential for new wealth generation and increased employment during the next decade, and government's economic development thrust will be targeted on these industries.

Manufacturing and Technical Industries


In this strategic economic plan, manufacturing and technical industries include

• non-resource-based manufacturing
• innovative technologies
• information industries
• professional services
• environmental industries.

Non-resource based manufacturing (in Newfoundland and Labrador, virtually all manufacturing other than fish processing and pulp and paper making) declined after Confederation in 1949 because the elimination of customs duties made it impossible for many local firms to compete with cheaper "imports" from mainland Canada. But, more recently, and very gradually, non-resource-based manufacturing has become more important, so that now there are about 400 such firms operating in the Province, accounting for 4.1% of our GDP in 1990. This makes it more significant than some of our traditional resource industries.

Although Newfoundland and Labrador manufacturers produce mainly for the provincial market, some firms, selling such products as paint, footwear and ice cream, compete successfully in mainland Canada. There is also a small, but growing number of innovative technology companies (those using proprietary intellectual property and advanced scientific or technical know-how to provide new goods or services) that export sophisticated, knowledge-based electronic and telecommunications products to the global marketplace. This industry developed rapidly during the 1980s, so that by 1990 there were 55 such firms and organizations employing an estimated 1,200 people and with total annual revenues approaching $100 million.

Information industries are the fastest growing part of the economy, both nationally and internationally. Because of the way national statistics are collected, it is difficult to specify the actual number of firms and people employed in this industry in the Province, but it is estimated that Canada's information technology industry grew by 5% in 1991 despite the current recession, and had revenues of more than $16 billion.

Although it is not possible to identify the Province's share of this industry, we do know that Newfoundland and Labrador already has considerable strengths in the application of telecommunications technology. Altogether, it is estimated that more than 100 private- and public-sector organizations are now active in the province's information industry and employ dose to 2,600 people. To achieve more rapid growth, these private firms need better access to provincial government markets which are now served mainly by Newfoundland and Labrador Computer Services. This Crown agency has recently been given a direction to cooperate and collaborate on efforts to promote the commercial development of this industry.

The services sector now accounts for nearly 30% of global trade, and Canadian trade and consulting services have seen exponential growth, rising from $42 million in revenues in 1969 to $987 million in 1985. Although the Province's business service industry now has some 250 professional consulting firms employing more than 3,000 people with expertise in such services as business consulting, construction management and economic analysis, the export of this expertise to bring new money into the province has been small to date. This industry is relatively undeveloped and has much potential for growth.

Environmental firms are also enjoying rapid growth internationally as jurisdictions everywhere become more concerned about, and introduce new legislation to protect, the environment. During the past 10 years, approximately 25 Newfoundland-based companies have developed expertise in such activities as environmental consulting, oil spill clean-up, waste management, recycling, environmental assessment and information, geomatics and environmental technology development. This is still a small industry in Newfoundland and Labrador, but it has significant potential for growth.

The Government will place greater emphasis on these manufacturing and technical industries in the future, and will work with private firms to help them realize their, growth potential in both local and export markets. New initiatives will be introduced to encourage supplier development so that local products and services can gain better access to large private and public organizations that operate in the province, including government itself; and new programs will be introduced to help local firms gain access to, or become more competitive in, export markets.

To achieve these goals, the Department of Development will be re-focused and re-organized for the new challenges of the 1990s. The Tourism Branch will be incorporated into a new Department of Tourism and Culture (described in the following section) and responsibility for the development of resource industries will rest more with their respective departments. A new Department of Industry, Trade and Technology will be given a mandate to encourage and promote the growth of manufacturing and technical industries and will be affirmed as the provincial agency with the main responsibility for trade and industrial promotions, for attracting investment and for technology development. It will also provide a centralized business analysis service for other departments.

The new department will focus specifically on stimulating the growth of non-resource-based manufacturing, innovative technologies, information industries, professional services and environmental industries. The department will also be responsible for strengthening the Province's construction industry, which is a major employer, contributes significantly to GDP and affects the competitiveness of other sectors. It will also undertake initiatives to make Newfoundland and Labrador firms more competitive, both at home and abroad. These initiatives will include supplier development, technology transfer, trade development, business analysis, business policy, promotions and investment. The department will also take a targeted, proactive approach to attract outside firms to the province.

Consistent with a major theme of this strategic economic plan, the Department of Industry, Trade and Technology will focus attention on our marine environment. Special initiatives will be undertaken to assist marine-related industries, with particular emphasis on the development and commercialization of advanced marine technologies.

Strategy Statement. The Province mill stimulate growth in sectors of the economy where there are new opportunities, especially in non-resource-based manufacturing, innovative technologies, information industries, professional consulting services and environmental industries.


Actions. The Province will

51. Re-focus and re-organize the Department of Development into a new Department of Industry, Trade and Technology which will concentrate on stimulating the growth of the manufacturing and technical industries in local and export markets, improving the competitiveness of local firms, and actively targeting outside firms in the new growth industries to locate in the Province.

52. Establish a supplier development program which will provide the private sector with the knowledge and opportunity to capture a more significant portion of the public- and private-sector procurement markets, such as major capital projects and defense contracts.

The Province will organize supplier seminars and make supplier development a major part of the provincial industrial benefits policy.

53. Pay specific attention to the information technology industry; a standing-offer list of approved suppliers of products and services will be developed for use by all government departments and agencies.

54. Expand financial assistance programs to firms involved in manufacturing and technical industries. Assistance will be provided for research and development, commercialization of new technology, company development, export marketing and working capital financing.

55. Create within the Department of Industry, Trade and Technology the funding flexibility needed to attract public- and private-sector research organizations to establish in the Province.

56. Aggressively pursue multinational manufacturing and technical firms to locate here, particularly those firms which would fit established niches in marine industries and electronics applications.

57. Continue to work for the establishment of foreign trade zones as an economic development initiative.

58. Establish a Provincial Communications Agency, which will include representation from the public, private and educational sectors, for expanding data communications, for co-ordinating data networking initiatives within the Province, and for developing common standards for the industry. The Communications Division (currently located in the Department of Municipal and Provincial Affairs) will be transferred to the Department of Industry, Trade and Technology so that it can assume a leading role in this area.

59. Encourage the development of an education-related information industry to create products for the Province's education system and for export; develop enhanced instructional capacity in software design and development in our community colleges and university.

60. Support the private sector through the development and implementation of a program aimed at exporting the Province's business and professional consulting services. This program will match local companies with foreign contracts administered by such agencies as CIDA and the World Bank.

Tourism and Culture


The Province's unique history, environment, culture and lifestyle offer some of the greatest opportunities for economic growth in the 1990s and beyond. The combination of its scenic beauty, its long and colourful history, its pristine areas, its rich culture and the renowned talents of its people constitute a resource that is still underdeveloped and underestimated. These resources are not only renewable, but can continue to be expanded and enhanced.

Tourism and culture can also employ, both full time and part time, more people than any other resource or industry. Crafts production, for example, although a long-standing and growing contributor to the provincial economy, can become more business-like and professional and find new opportunities for growth. While our crafts have been successful in this province and in other parts of Canada, there are also significant opportunities in the international marketplace.

As business and daily living become more complex and globally competitive, alternative lifestyle and cultural values will increase in importance when businesses decide where to locate, to meet and to hold conventions, and when people plan vacations. With proper development and promotion of our traditional, indigenous qualities and advantages -especially our unique marine environment - Newfoundland and Labrador can create a niche as a major holiday destination and cultural region in North America.

All the necessary natural and human resource components to achieve these objectives have existed for a long time. What has been lacking is a concerted, co-ordinated strategic program to blend them into one major economic entity.

In the tourism and cultural industries of the future, our relative remoteness from highly industrialized areas, our sparse population in a large landmass, and our relaxed pace of life will be seen as major advantages.

We have much to offer, including

• the oldest and richest history in Canada, with two world heritage sites;
• a marine environment which offers opportunities for cruises, yachting, whale-watching, seabird sanctuaries, wind-surfing, sea-kayaking, ocean sports fishing and other marine-related activities;
• outstanding scenery and ecological diversity;
• world-class hunting and recreational fishing;
• excellent multi-season recreational facilities;
• the wilderness experience at affordable rates;
• a vibrant cultural community, with a rich folklore preserved through five centuries of continuous settlement;
• artists, musicians, actors, writers, sculptors, dancers, and craft artisans - both professional and amateur - in numbers that are disproportionate to our population, and many of whom have achieved national and international stature; and
• a quiet, peaceful, civilized life-style and a reputation for hospitality.

It has been proven in the past that Newfoundland and Labrador is a desirable destination for business and personal travel. We have to build on this reputation by improving facilities and services, and by developing the potential of adventure tourism, events-related visits, conventions, conferences, seminars and executive retreats, and emphasising the attractions for students, writers and researchers, naturalists, artists, artisans, performers and others engaged in both professional and amateur cultural activities.

The achievement of this objective will require a concerted, aggressive effort by both Government and the private sector. Tourism and culture are complex industries, involving the mandates of various government departments both provincially and federally, and further development will require active partnerships between industry associations and individuals, government agencies and departments, communities and municipalities.
At the present time, the essential components of a vibrant tourism and culture industry are spread through the departments of Development, Municipal and Provincial Affairs, Environment and Lands, and Enterprise Newfoundland and Labrador. Consolidation and co-ordination of government activities is necessary.

Strategy Statement. The Province mil implement programs to ensure that Newfoundland and Labrador is developed into an internationally known destination of choice in the vacation and business travel industry by promoting our natural advantages, expanding and improving facilities and services, and enhancing and promoting our cultural resources.



Actions. The Province will

61. Establish a new Department of Tourism and Culture. This new department will include the Tourism Branch of the Department of Development, the Cultural Affairs and Historic Resources divisions of the Department of Municipal and Provincial Affairs, the Parks and Wildlife divisions of the Department of Environment and Lands, and the Crafts Industry activities of Enterprise Newfoundland and Labrador.

62. Through the new Department, immediately initiate a consultation process with representatives of the tourism, cultural, environmental, and recreational sectors to develop and implement a comprehensive Tourism and Culture Economic Strategy. This joint task force would build on the extensive research and consultation of the Economic Recovery Commission, the O'Flaherty Report and other sources as required.

63. Give priority to the development of special year-round events of national and international interest within the Province, such as unique festivals, cultural activities, tournaments, historical observances and celebrations.

64. Assist the John Cabot (1997) 500th Anniversary Corporation to maximize the economic benefits to be realized from the international activities associated with the 500th Anniversary of John Cabot's landfall.

65. Initiate private-sector and other partnerships to develop further primary destination areas, especially those which offer multi-season potential.

66. Give priority to the development of winter recreation attractions, particularly further development of the Marble Mountain area as a major skiing destination area; and the development of cross country skiing, snowmobiling and dog-sledding events.

67. Expand the national and international conventions and meetings trade through promotional contact with societies, organizations and corporations, and encourage the development of facilities and services for business meetings and executive retreats; where possible, meetings and conventions should be coordinated with special events and observances. The success of these efforts will  likely create a demand for additional facilities to be provided by the private sector.

68. Recognize the western region of Newfoundland and Labrador as a specific cultural destination to maximize the economic benefits from its unique attractions, such as the two UNESCO World Heritage Sites (L'Anse aux Meadows and Gros Morne) located within a few hours' drive from each other, the 4,000-year-old Maritime Archaic Indian burial ground at Port au Choix, the Basque whaling station at Red Bay, the historic Grenfell Mission headquarters in St. Anthony, the Stephenville Festival of the Arts, French heritage festivals in the St. George's-Port au Port region, and other events and attractions of cultural importance.

69. Further develop the fine arts school at Sir Wilfred Grenfell College in Corner Brook as an Atlantic Fine Arts Centre of Learning, for the development of drama, music, folklore, visual arts, writing and associated disciplines.

70. Seek a Cooperation Agreement in Cultural Industries with the Federal Government.

71. Transfer administration and control of Arts and Culture Centres to appropriate regional or community organizations.

72. Implement programs to facilitate the development of adventure tourism. Research and other initiatives will be undertaken in the areas of marketing, training and upgrading standards of quality and performance. Legislation, regulations and policies will be reviewed to remove constraints which restrict further development of this activity.

73. Give priority to the revitalization of recreational fishing on the salmon rivers of the Province - an activity which can become one of the major contributors to the tourism industry if developed fully. Management of these rivers will ensure that maximum economic benefits accrue to the adjacent communities. The new Department of Tourism and Culture will play a leading role in the development of all recreational fisheries.

74. Eliminate unnecessary and unfair regulations which limit opportunities to develop and promote attractions and services; and improve regulations which enhance the quality of tourism and those which protect the public, the environment and the wilderness resource.

75. Participate in industry's implementation of an accommodations grading system and a human resource development program focused on improving the quality of our hospitality services. Emphasis will be placed on training, enforcing occupational standards and certification through licensing and assistance programs.

76. Ensure that funding assistance for new tourism activity will not be detrimental to present operations.


77. Extend the operating season of selected provincial parks and historic sites in response to tourist demand, and request the Federal Government to take similar action for facilities falling within their jurisdiction.

78. Seek Federal Government participation in the establishment of a National Wilderness Park in Labrador.

79. Pursue improvements in the quality of the Gulf ferry service operated for the Federal Government by Marine Atlantic and seek a reduction in fares.

80. Implement a new highway signs policy to address current industry concerns and provide dear direction and information for travelers.

81. Increase production and enhance the quality of crafts through expanded community college programs and additional field instruction.

82. Through adequate research and development of products, effective promotion, provision of operating capital for producers, and the establishment of marketing agencies (retail and wholesale) within and outside the province, ensure that craft production and marketing are integral components of the tourism and culture industry.

Energy


Energy represents a large and growing component of the provincial economy. It is a critical part of virtually every production process, and its price, availability and reliability are of the utmost importance to economic progress. Factors affecting energy thus influence our productivity and competitiveness, especially the heavy industrial users of electricity. Its price and availability also affect the standard of living of the Province's citizens.

Total energy demand in 1990 was equivalent to about 20 million barrels of oil. Increases in the residential and transportation sectors were offset by a substantial decrease in the industrial sector, attributable to a decrease in mining and manufacturing activity. Overall, refined petroleum products accounted for 65% of energy consumption, electricity 27% and wood fuel 8%. Transportation is the largest energy-consuming group (42%), followed by industries (29%), residential use (20%) and commercial establishments (9%). It is estimated that the direct contribution of the energy industry to the Province's Gross Domestic Product (GDP) in 1990 was in the order of $571 million, or 7%.

Strategy Statement. Government mil work to ensure that efficient energy resource management is used to strengthen the contribution of energy to overall economic development objectives.


Action. The Province will

83. Undertake a thorough review of existing energy policy to ensure that it is consistent with changing local, national and international economic conditions. An important aspect of this work will be to consolidate the many components into a comprehensive and integrated energy policy document.

Electricity Generation


Under current demand forecasts, there will be a need for an additional supply of electricity to the island portion of the province as early as 1996. Given the anticipated demand estimates and the lead times necessary to bring a new supply on line, Newfoundland and Labrador Hydro recently called for proposals for the supply of 50 MW of capacity from small hydro sites for that time frame. Decisions about these additional sources will have to be made within a year or two.

One option for meeting the shortfall beyond the year 2000 is the development of the Lower Churchill River hydro sites, including a transmission link from Labrador to the Island. The National Energy Board shows the Lower Churchill River development as ranking number one in economic priority among 45 identified energy projects in North America. This option would provide an assured long-term supply of electricity to the Island for the 21st century and would accommodate any feasible industrial activity in Labrador but is dependent on an agreement between Newfoundland and Labrador Hydro and Hydro Quebec.

Because of uncertainty associated with the Lower Churchill development, it is necessary to consider a strategy to meet the anticipated supply shortfall in case that development is delayed or does not proceed. In either case, to meet its requirements the Province would have to rely more extensively on other alternatives, such as other hydro developments, alternative energy developments and/or expansion of the existing Holyrood oil-fired plant. In addition, the Province will have to pursue improvements in energy efficiency and cogeneration, primarily as a means to improve the competitiveness of local industry.

Strategy Statement. The Province's objective is to ensure the development, generation and distribution of electricity in the most economical and efficient manner, to ensure that the balance of supply and demand is maintained and to maximize economic benefits to the Province from energy projects.


Actions. The Province will

84. Continue to pursue development of the Lower Churchill River so as to maximize economic benefits to the Province and provide residents with a long-term supply of electricity at a stable price.

85. Through the Department of Mines and Energy and Newfoundland and Labrador Hydro, prepare a plan for energy efficiency and the development of various energy sources to ensure the future balance of energy supply and demand for the Province.

86. Amend the Electric Power Control Act to broaden the mandate of the Public Utilities Board, including giving the PUB the authority to review agreements such as that envisaged for the Lower Churchill River Development.

87. Put in place policies to maximize electricity generated from small hydro developments as a means of increasing economic development and reducing dependence on imported oil.

Petroleum


The current policy of the Province with respect to onshore and offshore petroleum resources is to encourage and promote development in a manner which maximizes economic benefits to the Province. Presently, however, prospects for offshore oil and gas are uncertain because of such factors as the withdrawal of Gulf Canada from the Hibernia development, low prices resulting in low cash flow to industry, and competing projects elsewhere in the world.

For Hibernia, the best scenario is that the remaining owners will find a new partner and that the project will be finished with a production start in 1997. The worst is that the current difficulties experienced with Hibernia will not be overcome. In other offshore projects, the Province should see the start of development on at least one and possibly other fields, such as Terra Nova, Whiterose and Hebron, by the year 2000 or shortly thereafter.
Though the present level of exploration is low, the geological potential of the Grand Banks area is significant and future drilling is expected to find additional commercial-size fields. The offshore and onshore areas of the Province's west coast also offer some promise, as evidenced by the interest in land sales and seismic surveys in the past two years.

Strategy Statement. The Province will encourage both onshore and offshore exploration and development opportunities through all measures available to it, including the continuing development of a regulatory framework sensitive to changing economic conditions and global competition for investment.


Actions. The Province will

88. Develop and implement competitive generic royalty regimes for both onshore and offshore petroleum production.



89. Work with the Federal Government towards identifying and eliminating constraints in the current land tenure system for the offshore area.

90. Actively monitor and provide advice and direction, as required, to the Canada-Newfoundland Offshore Petroleum Board to maximize the use of goods and services provided from within the Province.

91. Insist on having appropriate input into employment and industrial benefits plans as a prerequisite to the start of individual oil exploration programs and new oilfield developments.

92. Aggressively pursue supplier development initiatives and ensure that full and fair opportunity to bid is provided for contracts related to petroleum exploration, development and production.

93. Develop a program to ensure that onshore and offshore petroleum resources are promoted in an effective manner.

94. Ensure that the employment and industrial benefits from the Hibernia project production phase are maximized.

Energy Efficiency and Alternative Energy


Energy efficiency and alternative energy can play an important role in the state of the Province's energy supply in the 1990s. The Department of Mines and Energy, in consultation with representatives from the private sector, has prepared a ten-year Strategic Plan for Energy Efficiency and Alternative Energy. This plan will improve the efficiency of energy use in Newfoundland and Labrador through new technologies and better operating practices for vehicles, equipment and buildings. The plan also encourages the development of local alternative energy resources, such as waste wood, peat and small hydro developments.

Strategy Statement. The Province will develop its alternative energy resources and promote energy efficiency as a means of contributing to its overall energy requirements, to lessen its reliance on imported petroleum products and to create new business opportunities.


Actions. The Province will

95. Implement the recommendations of the Strategic Plan for Energy Efficiency and Alternative Energy. Some of the key actions of this plan are

• to establish a diverse program of measures, ranging from information dissemination to legislative changes, to reduce costs through energy efficiency improvements and the use of alternative energy sources, with the aim of improving the competitiveness of local business and industry;
• to continue to promote, through support for energy research and development, alternative energy technologies and engineering studies, and economic development of the province's vast peat resources; and
• amend regulations to facilitate the development of hydroelectric and other potential energy sources by independent power producers.

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Change and Challenge: Chapter Six - Enhancing our resource industries