Free tuition at NL university for Nova Scotians: NL NDP leader

The Newfoundland and Labrador local of the New Democratic Party wants taxpayers in her province to give Nova Scotians free tuition at Memorial University.

Sounds idiotic, doesn’t it?

But that’s exactly what she wants to do, at least if you follow the thrust of Lorraine Michael’s July 8th news release.

In the release the NDP leader said that “free tuition is essential to ensuring that all of Newfoundland and Labrador’s young people get equal access to education they will need for their own, and by extension, all our prosperity.”

Wonderful stuff.

Then she cites in study released by her party president Dale Kirby, wearing his education professor hat.

Kirby and his colleagues surveyed Memorial University students from Maritime Canada and asked them some questions about why they decided on studying at Memorial University. As the executive summary in the report notes, the number of Maritime students at Memorial went up “ten-fold’ in the past decade or so. And as the report also notes, there have been other reports, most notably by news media, in which Maritime students identified cost as one of the big reasons for them coming to Memorial. They can study at a comprehensive university that has a decent reputation overall(outstanding in some faculties) and they can do it cheaper than they could at Dalhousie or Acadia or University of New Brunswick.

They come here because the tuition is cheap, they said. 

So, reasons Michael, free education for Nova Scotians will benefit Newfoundland and Labrador.

She does not explain how. 

Odds are she can’t.

That’s not important, though. 

In the world of Conservative-style retail politics, all a political party has to do is offer this sort of cash incentive to win votes. It’s like the one about cutting taxes on gasoline or home-heating products.  None of those ideas make any sense except as a way of luring voters:  give us your vote and we’ll give you cash.

The foolishness of the free tuition idea is actually right there in Michael’s release. All you have to do is think about it for a second.

You see all those Maritime students frig off back to Nova Scotia or New Brunswick or Prince Edward island once they get their Memorial University degrees.  They only come here because they can get a decent university paid on the cheap.  They don’t spend four years at Memorial because they plan to settle in Hibb’s Hole once the drinking…err…studying is done.

And if lower tuition is already bringing in the mainland students in droves, then odds are free tuition will attract droves more. The university will have to hire more professors and build more classrooms and laboratories.

And who will pay for this?

Why the taxpayers of Newfoundland and Labrador, of course.

Now think about that a bit more.

In a province where the government is facing a pretty severe financial problem because of foolish spending, the New Democrats want to spend millions more to make university education free.  Then they’ll have to spend hundreds of millions more making the university larger to accommodate all the new students.

And where will thousands of those students come from?

Why Nova Scotia, of course, the most populous province in Atlantic Canada.

Now where else has Nova scotia cropped up lately?

Yes. 

Of course.

Lorraine Michael, Kathy Dunderdale, and Yvonne Jones want to spend billions on this Muskrat Falls project so they can ship cheap electrical power to Nova Scotians.  Newfoundlanders and Labradorians will pay the full cost of the power plus a profit for Nalcor and Nova Scotia-based Emera so that Nova Scotians get a break.

And this is how Newfoundlanders and Labradorians will gain a long-term benefit from their natural resources:  by selling discount electricity to Nova Scotians. 

That sounds an awful lot like this education scheme Lorraine and Dale have cooked up.

- srbp -

The politics of energy subsidies

From the Atlantic Institute for Market Studies comes a timely rejoinder to the policy in Prince Edward Island of subsidising energy prices out of tax dollars. The arguments in this post refer to the New Democratic Party policy of taxing tax off home heating prices but the concept is the same. The piece is also a timely one for Newfoundland and Labrador where Lorraine Michael recently embraced the policy.  

The argument against the policy of cutting home heating taxes is simple:

It gave people with more than sufficient ability to pay a subsidy they did not need. It encouraged continued consumption at unsustainable levels and it helped the poor not by treating the problem (inefficient homes and too much consumption), but by treating the symptom (high electricity bills).

In Newfoundland and Labrador one suspects that political parties eager – or desperate – for votes in the coming year will lay this sort of policy on thickly to try and buy them up. 

The ruling Conservatives, despite their supposed reform-based Conservative philosophy, are already trying to sell a future deal on the Lower Churchill as a guarantee of stable prices. They don’t talk about the huge subsidies the thing may well involve or that the whole thing will add enormously to the public debt. Incidentally, the likely reason the Premier has stopped referring to loan guarantees as loan guarantees is that he is acutely aware that any Lower Churchill project as he has proposed it will – inevitably – demolish once and for all any claims about the current Conservative administration’s performance in controlling the public debt and deficit.

It’s all bollocks of course.  Energy prices in the province will stay stable anyways without the Lower Churchill.  NALCOR’s own energy demand forecasts don’t support any such megaproject to supply juice to the island portion of the province.  And with a bit of conservation and efficiency, what increased demand there is could go down.

That’s one of the reasons why this AIMS article is interesting:  it specifically points to conservation as an economically sound policy:

the need for some electricity does not undermine the basic math that it is still cheaper and more efficient and, long term, more sustainable to reduce consumption.

At the same time, providing subsidies to allow everyone, but especially low and fixed income Newfoundlanders and Labradorians, to improve the energy efficiency of their homes would treat the problem of high heating bills rather than the symptom.  At the same time, leaving the prices to reflect the cost of production would promote conservation and efficiency.  The whole idea is progressive socially in addition to being economically and ecologically sound.  It beggars the imagination to figure out why political parties would head down a road of subsidies they know is simply  unsustainable.

- srbp -

NALCOR: the power of nostalgia

Via labradore comes a copy of the 1978 ad used to push the idea of selling Lower Churchill power to Nova Scotia, New Brunswick and Prince Edward Island.

Next up:  NALCOR invests in a pet rock factory.

- srbp -

Williams announces political exit plan

Danny Williams always said that building the Lower Churchill was the only thing he wanted to do before leaving politics. He took a huge step down that road in 2006 when he rejected other options in favour of the supposed go-it-alone strategy.

With no markets and no money for the project, and with setback after setback in the environmental and land claims fronts, the odds were slim he could achieve that dream.

Slim odds, that is, until this weekend. Williams told provincial Conservatives he is trying to lure Nova Scotia and Emera  into a deal to build a greatly scaled down version of the project.  That confirms he is trying to cut a deal so he can leave politics.

The Telegram reports that:

The agreement would develop the smaller of the two parts of the project — Muskrat Falls — first and work towards the larger part — Gull Island — later on.

If the deal comes to fruition, Lower Churchill power would travel from Labrador to the Island part of the province first, to eliminate the Holyrood generating station.

There are more than a few problems with that proposal as the Innu Nation pointed out in a recent submission to the environmental review:

• the capital cost of Gull Island includes the costs of the 230/735 kV switchyard (est. $130M), communications infrastructure (est. $70M) and other costs associated with construction of the first of the two projects – these costs would need to be borne by Muskrat Falls if it is constructed first;
• cost savings, such as reuse of the construction bridge and construction camps, and staged mobilization from Gull Island will no longer be available to Muskrat Falls and must be added to its capital cost (est. $50M total);
• construction costs at Muskrat Falls could potentially increase for other reasons as a result of Gull Island not being in place during construction, including costs for larger diversion facilities and cofferdams (est. to be determined);
• based on the information in Table 23 of the Supplemental Report, the capital cost of Muskrat Falls is $2682/kW compared to $1902/kW for Gull Island meaning that it has a lower rate of return and will generate less cash flow; adding an estimated $250M to the capital cost of Muskrat Falls results in an estimated capital cost of $2985/kW.

On top of that, the residents of eastern Newfoundland would wind up bearing most of the costs for power they actually don’t need.  There is no plan to shut down Holyrood, as NALCOR has already acknowledged publicly, so the power isn’t needed to displace the diesel generators at that plant. Still, taxpayers would left paying for it.

And even if NALCOR did shut down the Holyrood diesels, the 2008 seizure of hydro-electric assets owned by three private sector companies coupled with the shutdown of the Abitibi mill at Grand Falls meant that NALCOR has more than enough generation to meet existing and forecast demand already. They just don’t need the juice.

It gets better. Weak electricity prices coupled with the front-end loading of capital on on Muskrat Falls would likely mean power sent to Nova Scotia, New Brunswick and the United States could only sell at heavily discounted prices. Even Muskrat Falls power at a break even price would likely be too expensive for the markets to bear.   That’s an old and fundamental problem with trying to sell Labrador power so far away from Labrador.

No problem for NALCOR, these days. Thanks to changes made to the Electrical Power Control Act in 2006, the Hydro Corporation Act, the Public Utilities Act,  and government policy, NALCOR wouldn’t suffer any losses. The company can export all the discounted power it wants  knowing that the people of Newfoundland and Labrador will wind up paying for it.

As for a federal loan guarantee mentioned in the Telegram story, the Premier can look forward to a truly sweet deal. In 2006, federal Conservative party leader told Premier Williams that a federal Conservative government would consider joining in the project in the same fashion as Hibernia.  That would mean only one thing:  an equity stake. What a massive climb down that would be to go from attacking Stephen Harper as a kitten-eating alien to welcoming him in on the Williams Legacy Project.

None of that would actually matter if Williams was planning to stay in Florida permanently before the next election, though.  He need only announce a memorandum of understanding with Nova Scotia and Emera to give him the excuse he’d need to go wheels up on the private jet. His successor would get the job of negotiating a deal.  And if the whole thing fell apart, Williams could just point to his successor and shrug.

If Williams is close to any sort of announcement on the Lower Churchill it can only be part of a plan for him to exeunt stage right, tout de suite. 

Well, that or this is just another part of Williams’ revival of the 1964 ploy conveniently timed for polling month. That could be another version of something BP noted in another post:

Interestingly enough, the rumour started to sputter a couple of weeks ago with talk of an impending Lower Churchill announcement in November.  Those of us who’ve been following the latest saga of the Lower Churchill didn’t see anything obvious on the horizon.  The environmental assessment process is bogged down with  significant problems. There are no markets and no money and the provincial government itself can’t afford to backstop the $14 billion project all by its lonesome.

Anyone who seriously thinks this is exactly what the Premier announced is in for a rude shock.

- srbp -

Almost immediate update:  Added reference to rumour about polling month from earlier post.

Williams, Dexter ink secret energy deal …but with whom?

A service contract between a public authority and a private sector concessionaire, where the public authority pays the concessionaire to deliver infrastructure and related services, Typically, the concessionaire, who builds the infrastructure asset, is financially responsible for its condition and performance throughout the asset lifetime, or the duration of the agreement.

P3 Canada Fund definition of public-private partnership

Newfoundland and Labrador Premier Danny Williams and Nova Scotia Premier Darrell Dexter have apparently signed a deal to build underwater electricity transmission between the two provinces in partnership with a private sector company or companies.

Williams revealed the agreement when he launched into yet another tirade against the province of Quebec during a hastily-called news conference in St. John’s last week.

Williams said that the two provinces applied for federal funds in late June under the federal government’s public-private partnerships infrastructure funding agreement.

But that’s all he said about the secret deal.

Six weeks after the provinces reached an agreement, the people of both provinces still don’t know when the deal was signed, the conditions of the agreement, how much taxpayers will be on the hook for or the proposed financial arrangements with the private sector company or companies the two governments are or will be partnering with.

In his scrum, Williams very obviously avoided giving a simple, direct answer to a question on costs. He said only that the project cost would be billions depending on which combination of dams and transmission routes NALCOR built.

The cost of the project is currently estimated at more than $14 billion, including an interconnection to the United States. A study completed for the Nova Scotia government earlier this year  - reported by the Chronicle Herald but no longer on line - put the cost of the interconnections between $800 million and $1.2 billion.

Williams also made the false statement in his scrum that the decision of the Regie de l’energie – presumably meaning the May decision – had blocked NALCOR transmission through Quebec.

Meanwhile, though, the public doesn’t even know the name of the company or companies involved in the new secret deal on an intertie to Nova Scotia.

And obviously, there has to be a private sector partner or partners involved even if the two provincial governments haven’t said anything about that aspect of the deal.

The federal government established the $1.2 billion P3 Canada Fund in 2007 to “develop the Canadian market for public-private partnerships for the supply of public infrastructure in the public interest.” The fund will supply qualifying projects with a maximum of 25% of the projects qualifying direct construction costs. 

Typically, public-private partnerships include private involvement in everything from design to the long-term operation of public infrastructure. As the fund’s annual report puts it,

[t]he P3 procurement model is unique in that the private sector assumes a major share of the responsibility for the delivery and the performance of the infrastructure – from designing the concept, architectural and structural planning to its long-term maintenance.

The public sector gets needed infrastructure at reduced risk and cost.  Among the examples cite din the annual is the Confederation Bridge between PEI and New Brunswick.

In order to qualify for assistance under the fund, the private sector partner must have a substantive, continuing role in the project.  It must design or build the project and finance or maintain and operate it. [Round Two application, s. 5.2] 

In a P3 project, the private sector partner would also typically share in the profits of a long-term project as well as adopt risk. In some scenarios, as the application appendices suggest, the project may offer potential spin-off money-making opportunities for the private sector partner separate from the core public interest in the project.

Infrastructure assets developed by public authorities are rarely used to generate additional revenue. In some instances, private sector providers are motivated to develop opportunities for revenue beyond the public authority payment stream and this could be used to reduce the cost to the public authority.

Applicants must submit a business plan for the project between September 2010 and March 2011.

While Danny Williams mentioned a connection between the secret deal and the Lower Churchill, the Nova Scotia intertie is a separate project.  

It’s also bizarre that Williams mentioned possible shipment of power from Nova Scotia to Newfoundland and Labrador.  Demand projections used in the Lower Churchill environmental review show that demand on the island isn’t strong enough to support development of the Lower Churchill, let alone warrant importing power from Nova Scotia.

And if the intertie carried Lower Churchill power, there’d be no need to send Nova Scotia power into Newfoundland and Labrador.

A connection to Nov Scotia without the Lower Churchill would facilitate the development of untapped alternate energy potential on the island of Newfoundland.

To do that, though, the provincial government would have to abandon the 2007 energy plan and Williams’ obsession with the Lower Churchill.

- srbp -

New 500 MW intertie for NS and NB

New Brunswick Power and Nova Scotia Power are looking at the prospect of building a new 500 megawatt connection between the two provinces.

The Chronicle Herald estimated the connection would cost $200 million when they reported on the potential interconnection earlier in July.

- srbp -

Darrell Dexter: sucker

From the Chronicle-Herald:

Premier Darrell Dexter had a private meeting Monday with the president of Newfoundland’s energy corporation in an attempt to have electricity from the Lower Churchill Falls hydro project go through Nova Scotia.

Dexter apparently thinks the project is going somewhere and that there is any intention to run a power line through Nova Scotia.

Danny Williams hasn’t even been able to convince Hydro-Quebec to take an ownership stake in the project currently valued – not at $6 billion as claimed by the Herald – but at more like $10 billion. Heck, he even got bitched slapped into an emergency session of the legislature after his legal drafters tried a childish bit of word-play to screw with the 1961 Churchill Falls lease.

On top of that, the province’s finances are apparently so tight they have to cut health care despite having billions flowing in oil revenues. 

There are no – that’s right:  no – customers for the project.  A potential deal with Rhode Island has been buggered up. And that’s something the Premier once described as being “very,very” crucial to the project.

The land claims deal vital to getting the project going is lost in the wilderness.

The timetable on the project has been pushed back repeatedly and there are even rumours swirling now the thing will be sent back for a major environmental overall because the first set of environmental documents submitted to the federal assessment process were grossly deficient.

And, most amazingly of all given Dexter’s efforts to get in at the front end, there just are no plans whatsoever to run a power line from Labrador anywhere near Nova Scotia. 

If the Nova Scotians is fronting any money for this thing or even thinking of dropping cash on the Lower Churchill, he is being snookered, big time.

-srbp-

Darrell Dexter’s Dipper Dozen

Nova Scotia Premier Darrell Dexter’s cabinet comprises a mere 12 members including himself.

Interestingly, the news release is written in the style of what has come to be called a “social media” release.

The new cabinet includes 38.7% of the government caucus and only 23% of the members of the legislature.

Wonder what the comparative numbers for Newfoundland and Labrador would be?

43% and 39.5%.

There are 19 members in the current Newfoundland and Labrador cabinet, including the Premier.  Notice that the Premier is not included in the list of cabinet members even though he is President of the Executive Council.

There are 44 Progressive Conservatives in a legislature of 48 seats.

The new Nova Scotia cabinet is considerably leaner than any cabinet in Newfoundland and Labrador in the past 40 years or so. 

-srbp-

The lesson from Nova Scotia

In Newfoundland and Labrador these past few days some local adherents of the Orange Creed – that’s New Democrats, not Protestants or Dutch – have been buoyed by the success of their Nova Scotia brothers and sisters.

Others have been talking about the prospect of local New Democrats doing the same thing here that Darrell Dexter and his party did in persuading Nova Scotians to take a chance on voting NDP.

Therein lies the first lesson local New Democrats should learn:  Darrell and the crew didn’t ask Nova Scotians to “take a chance” on anything.  They presented a professional, credible alternative to the other two parties. 

There was no chance involved.

There was a choice.

A few years ago, the Nova Scotian Dippers were like other labourites.  Being a New Democrat was to be part of a social cause or a social group, not a bunch who seriously thought of winning an election.  That’s not unusual. Other labour parties have gone through the same thing.  The Labour Party in Britain once cherished ideological purity over electoral success.  So too did New Democratic parties across Canada.

But, like those other labourites elsewhere,  the Nova Scotian New Democrats decided it was better to be in office than standing impotent on the sidelines with their ideological purity intact.

That’s the second lesson the local New Democrats need to learn:  there is no substitute for power.  You can have all the lovely ideas you want but if you don’t win the election it’s just as well to order another round at the Ship and explain your theory to the bottom of a pint of Guinness.

You get to win by organizing.  Find volunteers.  Get people who know how to organize. Raise money and put it in the bank.  Find candidates.  Reach out and bring new people and new ideas into the fold.

Inevitably, there will be a crowd who will get pissed at the loss of ideological purity, but that’s the price of shedding the sack-cloth and the stench of burning martyr and donning the mantle of government.

Equally inevitably, for every old bolshevik who abandons ship for the Greens, there’ll be two or more new people who either weren’t in politics before or who defect from another team.

The two major parties don’t get elected because people vote the way their parents and grandparents did.  That’s a convenient excuse dreamed up by someone who just can’t face facts. 

The two major parties get elected because they hold onto a cadre of supporters and then add on a whole bunch of people who change their votes from time to time. The other two major parties appeal to voters with the platforms and promises by finding out what voters are looking for and then offering it to them.  Put another way, they get elected by building coalitions of people who have similar views or who can find enough reasons to vote for one team over another. 

That’s basically what politics is about:  bringing people together and that should be what New Democrats do naturally.

But they don’t.  Instead, they try to not just distinguish themselves but drive a wedge between themselves and voters.  New Democrats of the old school make it seem like it is a sign of moral weakness to have voted for the other two parties at some point.  Before one can vote New Democrat one must first  admit the sins of ones voting past.

That’s the essence of that common NDP refrain that the other two parties are all alike.  Predictably, it turns voters off.

Think about that for a second and then look at two New Democrat leaders.

Think about Jack Layton, he of the “they are all alike” school.

And then think about Darrell Dexter.

If you can perceive the differences, and you are a New Democrat, then you are well on your way to learning the Lesson from Nova Scotia. You are well on your way to bringing a genuinely competitive alternative to voters.

-srbp-

EnCana approves $700 million Deep Panuke gas project

CALGARY, Alberta, Oct 25 (Reuters) - EnCana Corp (ECA.TO) will build its own pipeline to ship gas to shore from its C$700 million ($721 million) Deep Panuke gas project off Nova Scotia rather than use the line from the nearby Sable project, an EnCana spokesman said.

EnCana had been weighing the two options since before it restarted regulatory proceedings early this year for the Atlantic Canada gas development.

"Each of the parties (EnCana and the Sable partners) looked at it. It was agreed that technical, commercial and operational circumstances were not something we could come to an agreement on. It didn't have optimal benefits for both," EnCana spokesman Alan Boras said.

EnCana gave the corporate green light on Thursday to Deep Panuke, which will be the first new project off the coast of Nova Scotia since Sable was developed in the 1990s.

It is due to start producing 200 million to 300 million cubic feet of gas a day in 2010.

The cost of building the pipeline to Goldsboro, Nova Scotia, from the gas field, 250 km (155 miles) southeast of Halifax, is included in the overall C$700 million capital budget, Boras said.

Sable partners Exxon Mobil Corp (XOM.N) and Royal Dutch Shell have their combined 18 % interest in the Deep Panuke project on the auction block.

-srbp-