The importance of staying competitive

The Government of Ontario is creating 75 scholarships aimed at attracting top graduate students to Ontario universities.

Meanwhile, in another province, the university not only faces declining enrolment but also a freeze on funding for graduate students thanks  - apparently - to some management cock-ups rather clumsily spun as a good thing.

On the upside, the provincial government’s research and development corporation announced on Wednesday it would provide funding over three years to support work by eight doctoral, 12 masters and two bachelors students at Memorial University.

“World-class research is at the heart of Memorial University and I’m delighted that 22 of our students have received RDC’s Ocean Industries Student Research Awards,” said Dr. Christopher Loomis, Vice-President (Research), Memorial University. “Graduate students are an essential part of Memorial’s research success. The competitive funding provided by this scholarship program will enable them to conduct research that is important to Memorial University and critical to the future prosperity of the province.”

 

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A mere pittance

Just a few other observations come to mind at the end of the week on the province’s newest old research and development agency.

The original post – that highlighted the sooper sekrit powers the R & D agency has – can be found here.

1.  Glenn Janes,  The chief executive officer of the thing, was appointed in December 2007. 

2.  The legislation to reinvent the agency was passed through the legislature in December 2008, isn’t in force yet and is already being amended in a bill currently being rushed through the legislature before the nurses’ strike hits.  It’s a council or agency or thingy since one of the changes being made will give cabinet the power to change the name whenever it feels like it.

3.  On the one hand, support for research and development is good.  On the other hand, $25 million is a paltry sum.  Well, paltry compared to what will be flowing from the oil and gas sector – for example – under offshore board regulations. 

The first three projects will pump considerably more than that annually.  As The Telegram described it in February:

The new rules require companies to spend a percentage of their annual offshore revenue on research, development, education and training activities in the province.

The rate will vary from year to year. This year, for instance, it is 0.36 per cent.

Basically, one project offshore will pump more cash into research and development than the provincial government alone.  We are talking hundreds of millions from Big Oil thanks to the offshore board.

4.  Had the government been really serious about R & D, they could have worked a deal with the oil companies to channel the Big Oil R & D payouts through the revamped agency/council/ thingy.  Since they appointed Janes way back in 2007, it’s not like they didn’t have time to work that into the Hebron talks or something.

5.  Speaking of Hebron talks, getting excited about $25 million in funding for R & D seems a bit odd given that the provincial government settled for a flat amount from Hebron.  That flat amount  - $120 million over the entire 25 year lifespan of the project - is way below what the project would have had to put into the provincial economy if the offshore board regs were applied. 

Put another way:  Big Oil involved in Hebron will shell out about less than $5.0 million a year.

Put another way still, Hibernia alone has put on average almost $20 million a year into local research and development since first oil in 1997.

6.  A couple of years ago there was plenty of tough talk, but the reality is that both the royalty deal and especially the R & D aspects of the Hebron project are actually a lot less than they should have been.

That’s pretty ironic, considering the Premier was quoted by the Financial Post two years ago talking about the need – supposedly – to get more out of Big Oil, not the less he settled for:

"In these times of extremely high oil prices where consumers are bearing the burden and companies are taking in exorbitant profits, the time has come for new arrangements for projects on a go-forward basis."

It was a new arrangement, of course, just one that ensures the companies keep more of their cash from Hebron.

7.  When it comes to the independence needed to run a successful research and development operation, the new agency won’t have it.  The chief executive officer is appointed by cabinet – not the agency’s board – and all staff hiring must be approved by the minister. 

With any R & D agency like this, autonomy should be the watchword.  Think of the research successes at Memorial University and its associated agencies.  Instead what we are getting is like a think tank where the thinking is watched over by Joan Burke and her colleagues. 

That never works well, especially if this new agency is going to be funding social science and policy research. 

All of this is a big shame really, since the guy in charge is evidently a sharp fellow.  Too bad he is working under such obvious hindrances.  It would be hard to imagine Janes came up with these himself working from what he described as a clean sheet of paper.

Maybe in a few years time, some other administration of whatever political stripe can  fix the fairly obvious problems with what started out as a really good idea.

40 years ago.

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More offshore R&D cash

The Supreme Court of Canada declined to hear an appeal by oil companies into a court decision on research and development rules set by the offshore regulatory board.

That means more money for research will flow in Newfoundland and Labrador from Hibernia and Terra Nova.  White Rose already operates under the new rules that fix a percentage of revenues to be spent on research and development.

The decision will also affect the Hebron field when and if it is developed.

Under the provincial government's agreement with the Hebron partners, $120 million is earmarked for R&D activities.

Despite that spending commitment, Ruelokke says the R&D rules will still apply to the project.

"It'll be bound by whatever our guidelines require."

If the R&D formula works out to be more than the Hebron agreement target, more research and development spending will be required.

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Ruelokke, Rowe and the Rule of Opposites

A couple of years ago, you couldn’t swing a dead cat without hitting a comment by Danny Williams to the effect that Max Ruelokke as head of the offshore regulatory board would be a really bad thing.

How bad?

Andy Wells would be better kinda bad.

The hysteria surrounding that nationalist cause of that moment – Ruelokke is hardly a Newfoundland name, is it? – prompted at least one local journalist to question the value of the rule of law since it was obviously [insert eye roll here]working against “us”.

Ruelokke and the offshore board are looking a lot like O’Brien/50% and the 1985 Atlantic Accord: something that was officially “bad” when it suited the current administration’s purposes but which turned out to be good in actual experience.

It’s yet another manifestation of The Rule of Opposites:  what is correct is the exact opposite of what the official government line was at the time.

Hibernia management and Development Company and Petro-Canada are suing the offshore regulatory board over its rules on local research and development.

At issue: new offshore R&D spending rules brought in by the Canada-Newfoundland and Labrador Offshore Petroleum Board in 2004.

Those rules require HMDC and Petro-Canada to spend a percentage of their annual offshore revenue on research, development, education and training activities in the province.

That money was estimated by the board in 2007 at $25 million annually, depending on world crude prices.
Under the new rules, the board has the right to suspend production licences if oil companies fail to meet their R&D spending obligations.

Both HMDC and Petro-Canada say the board has unilaterally changed the rules in midstream and they question its authority to do so.

Incidentally, the Hebron deal includes a huge give-away on research and development but that’s another story.

So this case has been working its way through the courts with the offshore board winning at every turn. The oil companies are now headed to the Supreme Court of Canada for the last legal round of the fight.

Odds are they’ll win again.

But you can’t help but notice that this is running contrary to the predictions from a certain segment of local public opinion.

The courts appointed by Ottawa, the courts that ruled “our” oil wasn’t our oil in the early 1980s are here standing by the crowd at the offshore board led by Max Ruelokke as they protect Newfoundlanders and Labradorians yet who, we were told emphatically, would not act to protect the best interests of Newfoundlanders and Labradorians.

And the appeals court justice who dissented from the majority opinion  - i.e. who sided with the oil companies - was a guy Jerome Kennedy recommended to go to the Supreme Court of Canada last September 6.  Kennedy’s recommendation of Mr. Justice Malcolm Rowe – along with Mr. Justice Leo Barry - was faithfully reported by the voice of the cabinet minister at the time, even if they don’t like you reading stuff from that long ago. (you can find the story through google but clicking on it generates and “error” message.)

Amazing as it seems, in the case of the offshore board – like Equalization - you really can’t go wrong most times by taking the government position of the moment and thinking the opposite.

And what about those oil companies like ExxonMobil that were “bad” in 2006 but which are now called “our offshore partners” by everyone from the Premier to his official spokesperson in natural resources?  Well, judge for yourself.

Your humble e-scribbler didn’t accept that they were enemies when some people wanted you to think that.  These days, they aren’t friends.  They are just companies doing business in the offshore and they should be treated as such. 

In the case of the suit against the offshore board the companies are just doing what they think is in the best interest of the people they represent: their shareholders.

That’s basically what the offshore board is doing on behalf of the people of Newfoundland and Labrador. Funny though how what happened is exactly the opposite of what some people wanted you to believe.

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