Oh, how far the mighty have fallen

In 2003:  a bevy of promises designed to restructure and rebuild the fishing industry.  Heady days were those:  “The industry must be restructured and managed to avoid the disasters of the past and adapt to the opportunities of the future.”

In 2009, the provincial fisheries minister can only defend his government’s policy by saying they have come up with the best make-work scheme ever:

This is the first time that the province has provided a CEEP program for harvesters and it is the best program the province has ever provided for plant workers. [Emphasis added]

Could there be any more astonishing an admission of the abject failure of the provincial government to deal with the fishery?

Well, that would be the laundry list of subsidies, money and other spending on the fishery in lieu of that restructuring and management promised in 2003.

Hand-outs are – by their nature – evidence of a government that has run out of ideas and/or political ability.

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Good news on fishery

It may have taken a global crisis to bring everyone together but the provincial government, the Association of Seafood Producers and the Fish Food and Allied Workers union have reached an agreement to develop a plan on restructuring the fishery.

Working groups will look at financing, marketing and overall restructuring.

The process will be directed and overseen by a steering committee consisting of two representatives from each of the FFAW, ASP and the Department of Fisheries and Aquaculture. An independent chair will be appointed by the Provincial Government and the working groups will be assisted by a facilitator from the department.

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Equity

The people of Newfoundland and Labrador have been hearing a lot about equity these past few years.

They’ve been hearing about it just recently from the fellow who likes to call himself the Leader of the Province. 

He mentioned it a few times within the past couple of weeks when he announced another offshore oil deal.  He was talking about equity as in shares in a business, as in the Government of Newfoundland and Labrador running a small oil company.

Listening to fisheries minister Tom Hedderson last week on CBC Radio’s Fisheries Broadcast, people in the fishing industry likely had another meaning of equity in mind.

Hedderson told listeners that the provincial government was prepared to help out the thousands of  people  - the “workers” - affected by the crisis in that industry. They’d help, at some undefined point in the future, maybe,  with some way of bridging people onto employment insurance.  The provincial government would find a way to stamp them up, but only if necessary and at this point while things were bad, the point of necessity didn’t appear to be there just yet.  Well, certainly, to paraphrase Hedderson, no one had come to government with the documentation to show them conclusively of the necessity at this point. 

And what’s more, anything else for the industry, well that would be a subsidy and subsidies were not the way to go, according to Hedderson.

The Premier said much the same thing last week, via another medium.

No subsidies. 

No “investments”.

Only make-work and then EI.

If necessary.

That’s where the other meaning of equity likely came in for a host of people.  The “equity” they were thinking of was equity meaning fairness,  equity meaning to treat like things alike.

The Telegram editorial on Thursday talks about some of the things people across the province have noticed.

The paper workers [at Corner brook Pulp and paper] got a full-court ministerial press: the moment the 130 layoffs were announced, not only Premier Danny Williams, but Natural Resources Minister Kathy Dunderdale, Human Resources Minister Susan Sullivan and Justice Minister Tom Marshall were all on the plane to meet with the workers' union that very afternoon. Heck, the news release had the names of a record-breaking five separate media staffers to contact on the bottom.

Not so with fisheries workers. When fisheries workers occupied a government building in St. John's on Monday, Williams was in Europe on what is arguably a mission with only limited possibilities for demonstrable success. (Williams is talking to European Union officials about the already-done-deal of the EU seal ban, and about Canada-EU trade negotiations, where the EU has already said they deal with national governments, not individual regional ones.)

Fisheries Minister Tom Hedderson was in Houston, and the only minister available to meet with the group was Kathy Dunderdale - but she'd only meet with the group if they agreed first to leave the building.

That's a very different response for workers in a very similar circumstance.

The Telegram calls it a double standard.

That would be treating likes things differently.

They are right.

That’s not equity.

It is in the inequity of its own policies - the real or perceived lack of fairness - that the provincial government finds the root of its current political problems with the fishery.

And offering to stamp people up, in place of “investments”, and only maybe, at some undefined point in the future, if necessary?

Some might call that iniquity.

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Fishing for sympathy without any bait

You can tell a government is up a political creek without a canoe let alone a paddle.

They issue windy news releases rattling off supposed accomplishments and how much money has been being spent on a given subject, in this case fisheries issues.

They’re just fishing for public sympathy but they don’t have any bait.

What happened yesterday doesn’t mean a row of beans to the thousands affected today by the current downturn in markets for all seafood products. It sure doesn’t deal with the problems being faced by the people in the shrimp industry. Those are the people, incidentally, currently shacked up in the fisheries department headquarters in St. John’s.

The pile of words – including the lengthy backgrounder – doesn’t do much to persuade anyone the provincial government policy is tickety-boo. That’s largely because there are a host of things in the release which are pretty much meaningless or which run against what is already known in public.

Take, for instance, this line from a fisheries minister who reputedly had to cut his vacation short to pump this out:

In the midst of a difficult year, the fishing industry is resorting to suggestions of quick fixes such as subsidies which do not deal with long-term structural issues and would violate international trade agreements.

International trade agreements were no never mind back in December when the provincial government had its eye on some really lucrative hydro assets belonging to Fortis, Enel and Abitibi that it wanted for itself.

The government has tried this line before and it still rings like a ripe watermelon tossed off the Confederation Building. If one release didn’t persuade everyone, a second one isn’t likely to do much better.

Then there’s the bit right after that:

The most significant marketing challenge facing the shrimp sector is access to markets and prohibitive seafood tariffs. Today, the Honourable Danny Williams, Premier of Newfoundland and Labrador, is in Europe addressing these issues. He is also addressing the proposed European Union ban on Canadian seal products.

Now if people in the province didn’t know the federal government and every other province in the country was working on a free trade deal with the Europeans this claim and the Premier’s sudden junket might have some impact.

However, earlier this year the Premier said he wasn’t going to participate in the trade talks - where there was a high-powered chance to deal with crucial issues like the shrimp tariffs - because he didn’t trust Stephen Harper to look after the province’s interest. By not participating in the trade talks, the Premier’s solution was to leave Stephen Harper to look after the province’s interest.

Bizarre, we know, but that was his logic at the time.

Now the Premier is trying to play a little catch-up but he is in a pretty weak position. . Before heading off on this quickie trip, the Premier said - in so many words - one of his goals was to make Europeans aware of Newfoundland and Labrador. if you have to start by making people aware, you really have an uphill fight.

One of his other goals was to bring up the seal hunt. Now you don’t have to be a rocket scientist or even a high school graduate to know that bringing up the seal hunt with a bunch of people who just voted to ban it from their shores is not very likely to make them amenable to cutting a deal on shrimp tariffs or much else.

And when they already know you like to call people names – like say “hypocrites”- they really aren’t likely to want to do more than politely listen before quickly getting down to things that matter. Like say trade talks with a G8 country and all the people from it who showed up for the meetings a few months ago.

The next great accomplishment in the release is also a plum choice:

As well, the province has implemented a Fish Price Setting Panel to resolve price disputes such as the one that is occurring now. There is a mechanism in place for the harvesters to appeal the price to the panel if they are dissatisfied with the current decision. They also have the option of re-entering negotiations with seafood processors.

That would be the same pricing system that has worked so successfully in resolving the current shrimp problem. Basically, the panel hasn’t been able to find a price everyone can live with and that’s after umpteen kicks at the proverbial catfish. So far the provincial fish minister’s only effort on this aspect of the current problem has been to blame the fishermen and the processors for failing to sort out a price. Hint: that’s what the panel is supposed to do.

That makes two smacks in your own head in one paragraph. You can see a pattern developing here. There is actually a third smack: part of the overall problem in fisheries management is this whole price-fixing approach in the first place, but that’s a whole other issue.

But wait.

It gets better.

Surely invoking the memory of fish policy made by a guy in a funny hat will persuade people that this is a government that has done much for the fishery.

"In 2006, we offered to purchase the marketing arm of Fishery Products International Limited for approximately $100 million. We later offered up to $5.4 million for a provincial seafood marketing council…”.

For starters, mentioning the FPI fiasco is a bit like going to Stephenville and telling them about the $15 million subsidy you offered to keep the mill open but the company didn’t accept. Your intentions don’t mean much if the offer wasn’t accepted and really doesn’t matter since the mill closed despite an unequivocal promise that the mill wouldn’t close on the Premier’s watch.

But the real sticky bit of this story is that FPI’s marketing arm only came available after what seemed like a long, protracted attack by the provincial government on that company. The Premier liked to take pot-shots at the company directors and if that wasn’t good enough, the Guy in the Funny Hat threatened a prosecution for supposed illegal processing. The whole prosecution seems to have taken an inordinate number of trips to the cabinet table – one would be too many - if some of the court documents in the case are any indication.

In the end, changes to the FPI Act actually made it easier to break up what had once been a very successful integrated fishing company with international markets.

This release is so successful at this point that its authors then try a little blame shifting, this time to the people involved in the fishing industry:

In the meantime, the industry continues to lobby the Provincial Government for additional seafood processing licences, despite their repeated calls for rationalization of the industry and despite the adverse effects that this would hold for plant workers.

Leave aside for a second the poorly constructed sentence that makes it hard to tell what it is that “this” refers to. Would issuing more processing licenses be bad for plant workers? Would rationalisation adversely affect the workers?

Let’s just note that, firstly, the provincial government alone has the jurisdiction over fish plant licensing. If they want more plants, they can license all they want. If they want fewer plants – rationalisation is the way to go, by the by – then the provincial government can create the circumstances to make this happen. They can set up the system to rationalise the number of plants and since fish plants are entirely provincial, they can put aside some oil money to pay for the “workforce reduction program.”

Secondly, it doesn’t matter a jot or a tittle what something called “the industry” wants since “the industry’ doesn’t exist as a monolith. Processors know there are too many plants. Workers know in their hearts there are too many as well. Some interests may be of a different view but – to be quite frank - the responsible rests with the licensing jurisdiction - i.e. the provincial government - to exercise its judgment.

And just to go back to the FPI thing: at a time when everyone seemed to understand that consolidation was needed to ensure for strong processors that could compete globally, the provincial government evidently thought the best thing to do was smash up the largest company and distribute its bits among a bunch of smaller operators. Even mentioning rationalisation just opens up a can of political worms for the provincial government, none of which are crawling willingly onto any hooks.

The rest of the release doesn’t get any better. At one point, the provincial government tries to claim that the industry is licensed “primarily” by the federal government. That’s despite the fact that the processing sector is entirely provincial and has the largest number of workers in it.

Go figure.

They even bring up the much talked about, much delayed and now much more costly aquaculture veterinary centre as an example of the commitment the provincial government has to the fishery. This release is a desperate effort if they have to put that chestnut out there.

The current crisis in the fishery is a real political test for an administration that has been remarkably free of such tests over the past five years. The administration hasn’t been handling it adeptly. Having the Premier and the fish minister leave town just as things were really heating up certainly didn’t help.

If this release is the best the provincial government can do in an effort to catch a political break, the fishery may well be in more trouble than it appears.

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Everything old is new again, fisheries version

From the New York Times, November 2, 1889, quoting a report by the Newfoundland Chamber of Commerce:

The lobster fishery has been expanded and is now a valuable factor in the exports of the colony “but it is much to be feared that indiscriminate fishing is injuring this industry.”

Then later:

A fisheries department has been organized and it has obtained a Superintendent for the work of artificially replenishing the cod stock.

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Lacking Ig-magination in shadow cabinet making

The guy from Nova Scotia gets the oil and gas portfolio, even though his province doesn’t produce a gigantic slice of the country’s light, sweet crude.

The guy from the province that does, gets fish.

Again.

Go figure.

For a recycled idea, the only thing fitting is a recycled critique:

But for far too long, Newfoundland and Labrador has been politically regarded as the home of fish and whine.

Count up the number of times fisheries and oceans in any party has gone to a Newfoundlander since 1949 either as minister or as an opposition critic. You'll quickly get the point.

…

Second, there is an even greater conflict created by putting in charge of fisheries (or acting as the critic) any politician from a province where the fishery is less a business than a Frankenstein exercise in social engineering.

The tinfoil hat brigade, the anti-Confederate sasquatch hunters will leap forward to blame the evil machinations of "Ottawa" for the plight of the local industry.  The sad reality is that the current mess is entirely the construction of the political, social and business interests of Newfoundland and Labrador, over successive generations, who have forestalled, undermined and otherwise opposed any real and positive reform.

In Newfoundland and Labrador, the fishery is a cult.  As with any cult, it has its high priests who will rush to the temple altar - in this case the local open line shows and fisheries broadcast - to declare any reformer as a traitor, as a heretic.  It is an inbred cult where satisfaction comes from shagging your own.  Onlookers are distracted from the spectacle by the claim that outsiders have covetous designs on the defiled or that foreigners need to be driven from what is left of the sanctuary.

Now don’t misunderstand.

Gerry’s a fine enough fellow even if – in his asinine crusade against Marine Atlantic – he forgets that this province is already connected to the rest of the country via a land link.   Hint:  Ask Todd about this mysterious place called Labrador.

Once again, we can only be underwhelmed by the potential for change represented by the Liberal’s latest shadow cabinet.

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Floundering

Question:  In what year did Earle McCurdy and the fisheries union not go to the provincial government looking for cash to bail out the fishery?

The economy is booming.

Earle tells us the fishery is in trouble and needs a government bailout.

The economy is tanking.

Earle tells us the fishery is in trouble and needs a government bailout.

McCurdy's answer to problems in the fishery is - of course - more of the same sort of thinking that got everyone into this mess in the first place. He is to fisheries management what Taco was to 1980s popular music.

Too bad Earle makes the news while people who actually have a roadmap out of the mess get ignored again and again and again and again and again... .

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Ho hum

While rookie member of parliament Siobhan Coady leaped past considerably more experienced caucus mates to get a post as the fisheries and oceans critic (and good on her), the last Dion shadow cabinet seems to be a case of sticking the Newfoundlander in charge of the fish.

Sure Coady has a family business in the fishery and therefore knows something about things that live in the ocean and the people who make a living - such as it is in most cases - from it.

But for far too long, Newfoundland and Labrador has been politically regarded as the home of fish and whine.

Count up the number of times fisheries and oceans in any party has gone to a Newfoundlander since 1949 either as minister or as an opposition critic. You'll quickly get the point.

There are more than a few substantive problems with this of course. 

First, there is an inherent conflict of interest in putting in charge of the fisheries department a politician with ties to the fishing industry.  That no one seems bothered by this is a sign that the fishing industry has no political clout in the country even though it is a significant economic sector in several provinces.

Second, there is an even greater conflict created by putting in charge of fisheries (or acting as the critic) any politician from a province where the fishery is less a business than a Frankenstein exercise in social engineering.

The tinfoil hat brigade, the anti-Confederate sasquatch hunters will leap forward to blame the evil machinations of "Ottawa" for the plight of the local industry.  The sad reality is that the current mess is entirely the construction of the political, social and business interests of Newfoundland and Labrador, over successive generations, who have forestalled, undermined and otherwise opposed any real and positive reform.

In Newfoundland and Labrador, the fishery is a cult.  As with any cult, it has its high priests who will rush to the temple altar - in this case the local open line shows and fisheries broadcast - to declare any reformer as a traitor, as a heretic.  It is an inbred cult where satisfaction comes from shagging your own.  Onlookers are distracted from the spectacle by the claim that outsiders have covetous designs on the defiled or that foreigners need to be driven from what is left of the sanctuary.   

Of course, there is also the third problem, namely the perpetual death struggle between local and national politicians. Williams penchant for whining and his love of personal attacks first on Loyola Hearn and then Fabian Manning, only added to the problem lately and gave the Conservative death struggle its unique characteristics.  Theirs is just the latest racket, though,  in what has been, essentially, an interminable struggle.

Consider, if you will, two groups of politicians sitting in a meeting room, discussing not how best to help unshackle the legion of wage-slaves chained to the splitting tables,  but rather jockeying to avoid being the one to take the political flack from the cultists. 

If any political party in Canada had any real interest in the people involved in the fishery, they would never appoint anyone from this province to serve as fisheries minister or as critic of the department.  Nor would they appoint someone from a neighbouring fisheries provinces who does little more than mouth the worship words of the local cultists.

And if any politician from this province wanted to do anything for the fishery other than perpetuate the misery in it, he or she would refuse any political responsibility for it either in cabinet or opposition. Better leave the job to someone not already seduced by the cultists.

Sadly, in the the New Democratic opposition and now the Liberal shadow cabinet, we have the same old cycle repeating itself once again.

As far as this appointment goes, Siobhan Coady has done alright for herself;  it's quite a plum and we get a fresh face on the scene.

But for the fishery? 

We'd venture there'll just be more of the same.

Wait.

What's that on the wind?

Could it be a news release on custodial management?

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The fishery: We are structured to underperform

[Note:  Following is the text of an address delivered by Derek Butler, executive director of the Association of Seafood Producers, October 30, 2008 to the Rotary Club of St. John's.

Butler's theme is both familiar and timely in light of recent decisions by the provincial government in the processing sector.  The audio of Butler's interview with the Fisheries Broadcast on the transfer of two licenses to existing plants can be found at seafoodproducers.org.]

 

 

Thank you, it is very kind of you to invite me to address you today. Good to be here, and again, I appreciate the invitation.

When a baby was killed when an airplane crash in the western USA in 1989 by being ripped out its mother’s arms and dashed up against the bulkhead, a political “solution” was proposed by having a federal law requiring babies to be strapped into their own seats on airplanes....

Well, that sounds eminently reasonable, I think we could all agree on first blush. Much of political rhetoric is based on this kind of illustration. Serious issue: step 1, identify the wrong problem, and be seen to be fixing it.

Or politics often identifies isolated problems to be solved, - not as trade-offs within an over system constrained by inherent limitations of resources, knowledge, etc.

Let’s see what happens with the airplane illustration.

…such a law, requiring parents to purchase an extra seat, would divert a portion of the traffic to cheaper alternative modes of transportation on the ground – most of which have higher mortality rates than airplanes, the result being that over a period of a decade, there would be an estimated saving of one baby’s life in airplane crashes, a loss of nine lives in alternative ground transportation, and an additional cost of $3 billion. [“An impact analysis of requiring child safety seats in air transportation,” Child Restraints Systems on Aircraft, Hearing before the Subcommittee on Aviation of the Committee on Public Works and Transportation, House of Representatives, July 12, 1990, p.215.]

The story illustrates dramatically, even graphically, the consequence of public policy defined on the basis of good intent, emotion.

Most - certainly too much - public policy is based on the intended consequence of that policy. “Save babies lives in fast braking or crashing airplanes.”

But you can only judge a policy by its actual outcomes, not by its intended consequence. The actual consequence is what counts. Sounds redundant, but it needs saying, and repeating.

Again, to quote my favorite economist, Thomas Sowell, “…the purpose of any policy tells you absolutely nothing about what will actually happen under that policy.”

The earlier example of child restraint on airplanes – which comes from his book The Vision of the Anointed: Self-congratulations as a Basis for Social Policy - leads to a new policy with a potential cost of billions, and more sadly, lives.

I am happy to say, after years of study, the FAA decided against the change, given the cost-benefit analysis above.

But that is how we too often approach things: with the intent, and often good motive, but without consideration of consequence, or outcome.

And I use it today, to illustrate a contention I’ve come to possess about how we manage and direct the fishery, in terms of public policy.

A fish plant closes?

Well, let’s save that fish plant. Noble goal, and in some sense, eminently feasible even, certainly for a given period.

A given number of actors – mayors, MHAs, ministers and union leaders, even new plant owners – can bring the forces to bear to save a given plant.

Having spent some time either working in or observing the political process – the world’s best spectator sport – I’ve come to see this as a classical political problem from this side of my career: identify the wrong problem, and then fix it or implement a policy with one intended consequence, and get an altogether different result. Ignore the result, and claim success.

Plant closes? Then let’s save the plant.

But why is the plant closing?

Is there enough resource to sustain it?

Is there a sufficient work force?

Does the plant have a procurement strategy? Is it overburdened with regulation? Does the plant have insufficient margins, squeezed between paying x for raw material, and only getting x-plus back from the market? Does it produce what the market wants, at the price point and in the quality form the market desires or requires?

We don’t often ask these important questions as much as we consider what might be the impacts on that particular plant closing on the local workforce and community.

Instead, we need to go back to the real business options, and there are just two, to maximize the value of the industry, to drive up incomes.

One, we can reduce our costs, and two, we can increase our revenues. Or we can try both.

The FFAW is on to the latter, as if that will solve all of our problems, but in a rather simplistic fashion. Just get more money out of the market. Charge more for the product. Ask for more money from those who buy our seafood.

Well, as I’ve reminded them in collective bargaining on occasion, when they suggest that is the way to tackle our problems, it doesn’t work that way.

GM did not lose $38.7 billion dollars in 2007 simply because some guy on the lot forget to flip up a higher price on the windshield.

They didn’t lose $2 billion in 2006, because someone in accounting forget to add a bigger digit to an invoice.

They lost money for structural reasons, related to tax liabilities, pension funds, labour costs, and a host of issues.

And asking the consumer for more money for those costs is not the solution, because in a free market, something is worth what you are willing to pay for it.

That includes a room in this hotel, an apartment or house for rent, or even something less tangible, like membership in Rotary.

And same for our seafood. It is not worth what we invest into it, the cost of harvesting, or production, or inventory costs, or financing costs. It is worth what the market wants to pay, or more precisely, is willing to pay.

Same thing for every stitch of clothes on your back, and every meal you’ve ever eaten.

That’s the economics and business reality of the world, and has been some time.

And let’s not have any of that foolishness that it doesn’t work. We are richer than 98% of the rest of the population of the earth. We are healthy, well-fed, satisfied beyond belief materially.

On the real indicators that matter: caloric intake, infant mortality, maternal deaths, life expectancy, access to potable water, literacy, you name it, democracy and free markets deliver.

All this to underscore that the fishery is a business, and just like much else of what we do to make a dollar, it should be structured so as to perform in that context; we can’t just ask the market to pay for our problems.

I am new to the fishery. I worked in, as the introduction noted, a completely different field, literally and geographically. This job is my first career employment in Newfoundland, which I started in 2004 when my wife and I moved home, like so many do, or want to.

I joke I am one of the few people who has come home to work in the fishery.

But work is a stretch. That’s not to say people in my business, in processing or harvesting, don’t work hard when they work.

But we have million dollar boats, and two million dollar boats, and multi-million dollar fish plants that all work for months, if not mere weeks.

That’s underutilization, or to look at it another way, overcapitalization, monies unavailable for investment in retirement funds, tourism, small business, education or training. It’s the opportunity cost of our structure.

If any airplane flew a mere 10 trips a year, and spent the rest of the time on the ground, we’d recognize we had a problem.

If Sobey’s was open just a few months a year, we’d laugh at their chances of making a go of it.

If hotel said our rooms are only for rent April 15 through end of Sept, and we have people sitting on the lawn waiting to get in in July, who might gladly take a room in October, but we close then, all our staff are on income support, we hope they’re around again in the summer when we open, cuz we stay closed for the winter, even though people are coming, we’d rather squeeze all our business into a few months…

What would we call it? …well, we’d call it the fishery.

Because we’ve done just that. And for too long it has been good enough. FAO and the World Bank have just released a report a few weeks ago called The Sunken Billions, addressing this same problem the world over. Some $50 billion, at a conservative estimate, representing the value of the fishery gone missing from the wrong structures and overcapacity.

Our problem is we have chosen to dissipate the wealth, with our structural inefficiencies, among as many participants as possible, to ensure we keep as many people working, spread it around, save this and that town, save this and that fish plant.

Well ask yourself: is it working?

Are our young people staying around because things are so good?

Towns repopulating because the fishery is such an opportunity?

The world beating a path to our products, or are we out selling a commodity?

We not asked too much of the fishery, for too long, and now we reap what we have sown: a social programme that has said $8000 or $10000 each is enough – and now our young people are gone, and soon, an entirely new demographic will follow: people of my parents generation, who want to see the grandchildren grow up… but have to go to Alberta and other places to do it.

My contention is the fishery of today is the fruit of 30 years of social engineering, of policy intent, with unfortunate consequences. And we lost one fishery that way already.

Alberta’s boom ‘today’ is one factor in people leaving the fishery, but so is 30 years of “this” is what the fishery will be, and not “this.”

We’re not living on the entrepreneurial merits of the fishery. We’re living off the natural abundance and wealth of our location, groundfish in its day, pelagics, and shellfish today.

Despite ourselves, almost, we have made something of it.

We open the fishery, squeeze in all the product like we’re drinking through a fire hose, and pray to the heavens the market can choke it down just as fast so we don’t have to finance it over extended periods and the currency doesn’t move against us while we are waiting.

The economist Michael Gardner addressed a recent gathering of industry at the coldwater shrimp conference in St. John’s, which brought together industry players from across Canada, the US, Europe and elsewhere, to address challenges in our shrimp industry.

And he said something very stark, very true. “We are structured to underperform.”

We have a billion dollar fishery, in terms of the production value of our fishery again last year. It was never more than half that in the past, but has hit the number or surpassed it several times in recent years.

We have a wealthy industry, or rather, an industry with potential for great wealth.

But as Gardner said, we are “structured to underperform.”

We have too much processing capacity.

We have too much harvesting capacity.

All designed and encouraged by different governments and organizations and vested interests to ensure the money was spread around.

This is not a business model that can endure. We can struggle. We’ll make a go of it. If anyone can, it’s a Newfoundlander …

The earlier example of airplane safety and child restraints illustrates the stark reality of every public policy choice we face. Every public policy is a trade off. There are consequences to every action.

And the intended consequences don’t count for much.

Someone once said "Some people embrace change, some choose to fight it. The ones who embrace and adapt, win." – Unknown

Or perhaps Henry Ford captured it bet when he said if you had asked the people what they wanted, they would have said a faster horse.

We in Newfoundland and Labrador must change our approach to the fishery, fundamentally, philosophically, from 30,000 feet.

Otherwise, we risk another reality, captured by the following words:

"If you dislike change, you're going to dislike irrelevance even more." Eric Shinseki

We need change, and it needs to start with the full acknowledgement that the fishery is a business, for the sake of harvesters in it, who are losing crew now to better opportunities in Alberta and elsewhere, plant workers for whom 10 or 15 weeks work is not enough.

We have built the industry on a deck of cards. We have marginalized incomes, tried to save fish plant after fish plant, increased harvesting capacity, and what do we have at the end of the day? Mediocrity as an industry. And every intervention leads to the Hayekian conundrum: once a government does intervene, the logic of intervention forces them to keep at it, to fix the last intervention. Can any government resist that (and after what damage is done?) so that instead we might make the industry a more sustainable economic engine and contributor to Newfoundland & Labrador?

Industry – harvesters and processors – both know that we must adapt to face the new realities of a more competitive China, higher fuel prices and the stronger dollar – and the latter two have turned around of late, but only as symptoms of a bigger problem we have not yet fully appreciated.

Instead, we have gone about things as of old, and expected a different result. That's, as the saying goes, the definition of insanity.

That challenge includes requiring a fresh look at the price setting mechanisms in the industry, unique in the world (Joey Smallwood's last piece of legislation in 1972). We have a collective bargaining structure for what is essentially a business to business relationship.

Are there bright spots out there?

Yes, some new policy to address new plant licences. Light on the harvesting side, with rationalization, combining.

And the resource remains strong, more good news.

And the industry is tackling new challenges like eco-labelling with the Marine Stewardship Council certification for our northern shrimp, showing our coldwater shrimp comes from a sustainable, well-managed fishery. We are Canada’s first fishery - and the world’s largest shrimp fishery - so certified, and consumers have the right to that assurance. It will be a proud legacy of my time in the industry.

But the same can't be said for the economic viability of the industry itself, in either harvesting or processing. It may be that the challenges of industry renewal are truly intractable political problems. Fair enough, but if it's confession time, no one is on their knees - except in terms of the economics.

Remember that baby in the airplane crash. You can save that one, but in exchange for how many more, and at what cost? And is that the goal of public policy? To save one part of the business, and sacrifice so many others parts.

I have to think, we can do better. I hope you do too.

Thank you for listening.

-srbp-

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

Brian Peckford irritates some cabinet ministers.

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

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

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

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

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

Oh deary.

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

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

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

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

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

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

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

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

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

Not a one.

Anyone who claims otherwise is telling fibs.

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

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

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

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

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

It hurts to have that pointed out, apparently.

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

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

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

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

-srbp-

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

TOM MARSHALL: Good morning Randy.

RANDY SIMMS: How are you doing?

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

RANDY SIMMS: And your hair stood on end.

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

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

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

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

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

RANDY SIMMS: Well speculate. Why do you think?

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

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

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

RANDY SIMMS: But you. . .

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

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

TOM MARSHALL: I strongly. . .

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

TOM MARSHALL: I would strongly disagree with that.

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

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

RANDY SIMMS: Well, you know. . .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TOM MARSHALL: Thank you. Bye.

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

Whither the fishery?

In the Wednesday Globe, Derek Butler, executive director of the Association of Seafood Producers of Newfoundland and Labrador, offers some frank insights into the state of the province's fishery and on the way ahead.

The fishery remains of great value. Newfoundland & Labrador‘s industry represents 25 per cent of landed value of seafood in Canada. The country's seafood exports totaled $4.1-billion, of which Newfoundland & Labrador's share was $798.2-million. Heady figures indeed. So where's the problem?

After the collapse of the ground fish and pelagics fisheries, programs were implemented to reduce the number of participants in the industry, to make it more viable for those remaining. Yet we have not done that. For too many years now we have struggled to qualify workers (those in the know will heave a collective sigh) and dissipate the wealth in the industry. Our intentions were good. Keep people working and share the wealth, but to such a degree, that few people could truly make a go of it.

The reason we are having a crisis is because we are expecting the fishery to carry 30-plus crab plants, and a dozen or more shrimp plants, and tens of dozens of ground fish and pelagics plants. We must break the cycle of false hope by adopting a rationalization program and putting in place funding to help those affected. At some point, government and the people in affected communities must be protected from the delusion that 10 weeks' work is enough.

...

Industry – harvesters and processors – both know that we must adapt to face the new realities of a more competitive China, higher fuel prices and the stronger dollar. Instead, we have gone about things as of old, and expected a different result. That's, as the saying goes, the definition of insanity. That challenge includes requiring a fresh look at the price setting mechanisms in the industry, unique in the world (Joey Smallwood's last piece of legislation in 1972). We have a collective bargaining structure for what is essentially a business to business relationship. We negotiate minimum prices around a table, and then go out on wharves around the province to conduct a second set of ‘free-market' negotiations and auctioneering precisely because the prices negotiated formally are minimums, and the overcapacity leads to irrational economics. This renders the collective bargaining process obviously redundant.

Are there bright spots out there? Yes, if one takes hope from the government-led renewal initiative last year (though of merit, it was not all industry had hoped for). The resource remains strong, and the industry is tackling new challenges like eco-labeling with the pending Marine Stewardship Council certification for northern shrimp, showing our coldwater shrimp comes from a sustainable, well-managed fishery.

But the same can't be said for the economic viability of the industry itself, in either harvesting or processing. It may be that the challenges of industry renewal are truly intractable political problems. Fair enough, but if it's confession time, no one is on their knees - except in terms of the economics.

-srbp-

FPI deal possible, but no quotas for Rideout

After a weekend meeting with the principals, federal fish minister Loyola Hearn is still optimistic a deal can be done.

There just won't be any quotas under the control of the provincial government and Tom Rideout, right.

-SRBP-

A rejoinder to the local fisheries myth-mongers

From Offal News, with chunks from Jeffrey Simpson's column.

We have at our disposal the policies to correct problems in the fishery.

Local myth-mongers simply refuse to change.

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