Needed: a local think-tank #nlpoli

Anyone who was paying attention to these things has known for about 25 years that the province would face a demographic crunch starting ‘round about now.

Anyone who has been reading Bond Papers for any length of time will know that demographics have been a big issue your humble e-scribbler has been banging on about pretty much since the beginning in January 2005. Go over to labradore and you will find what is known in the professional analyst trade as a shitload of posts, graphs and other sorts of information about demographics.

Collectively, we’ve got a good handle on both the magnitude of the problem and the implications. The problems are already here and the deliberate lack action by successive provincial governments means we are substantially behind where we need to be to cope with the consequences of a rapidly aging population.

So it is that after studying all the stuff that people have already produced about the problems the province is facing, the good folks at the Harris Centre at Memorial University have concluded that we need – brace yourself – “additional research” in order to “get ahead” of these changes.

Ye frackin’ gods.

The Bigger Picture #nlpoli

Whatever the provincial government is doing about its own spending or the provincial economy generally or whatever it is up to starts at 9:00 AM.

They announced an invitation-only event by Twitter a week or so ago that made it sound like the Premier would be the key player all day.  On Friday, the official announcement made it plain Ball is showing up for the kick-off and wrap-up. Another announcement had him with another minister doing a funding announcement at 10:00 AM.

Oh yeah, and that invite-only thing had transmogrified into a case where "the general public" can participate by live video using social media.

There you have it:  can't tell you what they are doing because they do not know what they are doing, otherwise known as "making-it-up-as-they-go."

No encouraging at all, but let's skip over that sort of eye-roll inducing stuff and think about some of the bigger issues.  We can then keep an eye open to see how they turn up - *if* they turn up - in this stunt at The Rooms.

Populations #nlpoli

Ross Reid has a new job. 

He used to be federal fisheries minister. 

Since 2003 or so, Ross has been a deputy minister in the provincial government.

Lots of people got excited last week when Premier Kathy Dunderdale announced that Reid would be deputy minister responsible for the provincial government’s population growth strategy.

Yeah, well, maybe people need to take a closer look before they get their knickers in a bunch.

Understanding Population Changes #nlpoli

It seems like Danny Williams can’t go two weeks without getting his mug on the news so it wasn’t surprising that on Monday the Old Man called the media together to unveil the latest name for his land development project south of Mount Pearl.

He wants to call it Galway.  Nice for his mom. But not really very newsworthy especially since to the rest of us, the land development scheme will always be Udanda or one of the dozen other names local wags have stuck on the thing.

After the show, reporters asked the Old Man about the latest population projection for the province.  This one is from the Conference Board of Canada and it concludes – not surprisingly – that the longer term trend for the population in Newfoundland and Labrador is downward.

“In my opinion, it’s absolute bullshit,”   said Williams.

It isn’t bullshit, of course, and despite what he said on Monday, the Old Man knows exactly what is going on in the province’s population.  That classic Williams contradiction – the truth versus what he said – makes it’s worth taking a look at the issue in greater detail to understand just what the population projections are all about. 

“So where do they come up with this?” Williams asked. 

Here’s where.

Don’t remind her, Tommy #nlpoli

The townie Tories are all a-twitter over federal Dipper leader Thomas Mulcair’s endorsement of Sheilagh O’Leary for mayor of Sin Jawns in the next municipal election.

On Monday, reporters asked Premier Kathy Dunderdale about Mulcair’s comments.  Here’s a bit of what she said, via CBC:

"I don't know how somebody who doesn't live here, is not on the ground, doesn't appreciate the demographics to start with and the particular issues, could be offering advice on who is best suited," said Dunderdale outside the House of Assembly Monday. [capitalization corrected]

“So the frig what?” would seem like a better, i.e. appropriately dismissive, response.  Instead Kath used a comment that begs for the retort that she does it all time:  talks about stuff when she doesn’t “appreciate the demographics” or understand what is going on.

Demographics in pictures #nlpoli

If you look at nothing else this week, take a look at a comment by  Matthew Kerby called “’Representative’ by population in Newfoundland and Labrador”. 

Before Kerby was a political scientist at the University of Ottawa, he practiced the craft at Memorial University.  He still takes an interest in the goings-on down this way and the population growth strategy caught his attention.

He’s got a good handle on the problem, noting the financial implications for the provincial government.  To illustrate the population trends, Kerby took the provincial government’s own forecasts and produced a set of animated graphics that show changes in the population over time.

The pictures show the population in five year age groups.  Males are on the left and females are on the right of the centre line.  The length of the bar horizontally shows how many men or women are in each age group.  Watch any one of the charts over time and you can see all those dimensions change simultaneously.

As Kerby notes, the changing demographics will have impacts on everything from government revenues from taxes to the demands for spending.

Go to Kerby’s commentary and you can find all the regions.  Just to illustrate what he’s done here, let’s take a look at the one for Grand Falls-Windsor, Baie Verte and Harbour Breton.

[Original disappeared from the provincial government website]

The numbers start in 1986.  Notice that the population is shrinking as it gets older.  Note that this trend starts right from the beginning. 

Not last week. 

27 years ago.

Now Ross Reid has to come up with some brilliant ideas to cope with this trend.

We should wish him good luck.

He’s gonna need it.

-srbp-

Quebec interested in lunatic megaproject

Around these parts it’s known as the Stunnel.

As in Stunned Tunnel.

It makes absolutely no economic sense but people like to talk about it.

And now, as CBC is reporting, the Government of Quebec is interested in the idea, but apparently at the behest of the Conservatives ruling Newfoundland and Labrador.

Talk about a place sorely lacking in new ideas.

- srbp -

Super-duper Mega Update:  The Northern Pen two days ago -

The Pen can reveal Quebec’s minister for transport Norman MacMillan wrote to provincial counterpart Tom Hedderson on December 1 agreeing, in principle, to undergo a joint study into not only the 15km tunnel, but the completion of Route 138 on the Quebec side.

The letter proposes “conducting a large-scale socio-economic study to investigate the current status and the potential evolution of economic activity and demographics within the entire territory in question, and whether the existing transport infrastructure is adequate.”

There’s a Radio Canada report as well.

Hobson’s Choice #nlpoli

The provincial Conservatives love to spend public money. 

That doesn’t sound very conservative and it isn’t.  Politically, the provincial Conservatives in Newfoundland and Labrador are more like Republicans than the Progressive Conservatives who used to run the province in the 1980s. American Republicans like to cut federal taxes and jack up federal spending and then blame the resulting financial meltdown on the Democrats.

Around these parts, the Reform-based Conservative Party, as the Old Man used to call them, blames everything on the Liberals.  That is the Liberals who, in case you missed it,  haven’t been in power in a decade.

The politics of information #nlpoli

A couple of recent post are reminders of how important it is to take a look at issues in the province from another perspective.

On June 10,  you will find a post about crab fishermen from New Brunswick who want to sell their catch to a company near Corner Brook.  The problem is that federal regulations limit where the fishermen can sell their catch. The policy is rooted in the sort of local protectionism that lay behind opposition in some quarters to European free trade.

Thursday’s post (June 17) was about remarks by Quebec’s energy minister about offshore oil and gas in the Gulf of St. Lawrence.  Pierre Arcand argued that Quebec had better sort out an agreement with the federal government over jurisdiction for the offshore resources.

Old Harry was sitting there waiting for development and Newfoundland and Labrador,  Arcand said,  was ahead of Quebec.  The result could be that Newfoundland and Labrador would  wind up reaping huge benefits from the Old Harry field.  Quebec, meanwhile, would be left behind. 

Sexist and inaccurate coverage at macleans.ca

Apparently, macleans.ca couldn’t find a story worth writing about from Newfoundland and Labrador so they had to showcase provincial environment minister Charlene Johnson as the poster child for provincial legislatures and their lack of maternity policies.

The thing is called “Why MPPs aren’t having more babies.”

There are more than a few factual problems with this piece so let’s start running through them.

1.  If you look at the demographics of the legislatures across the country you’ll like find that very few of the elected members are women and fewer still of those are in their child-bearing years.

2.  If you look at the men elected, you’ll also likely find most of them are at the point in their lives where their families are already started. A lack of clear maternity policies isn’t keeping women – let alone younger women – out of politics;  other issues are.

3.  It is incorrect to state that there is no maternity leave policy in the House of Assembly.  Johnson had to apply for leave, the same as anyone else would in any other situation.  Why the management commission or the Speaker hasn’t addressed her request yet is the problem. Johnson has obtained leave previously for medical issues.  This one would be no different, at the very least.  if Johnson wanted to take maternity leave, she’d have no trouble getting it.

4.  Therefore, the suggestion she’d have to pay a couple of hundred bucks is crap since it is highly unlikely the Tory cabinet minister would be denied maternity leave from a legislature dominated by the Tories and presided over by a Tory Speaker (even if by some remote chance her application might be denied.)

5.   There is an entirely different angle on this story, of course, which macleans.ca ignored in favour of the sexist one they took.  Like any, modern, progressive couple, Johnson and her husband didn’t see it as automatic that the woman had to take time off to care for the child.  After a month or so, Johnson is returning to work and her husband is taking parental leave .

6.  macleans.ca also didn’t note that Johnson is eligible for $1,000 for her child as part of the government’s bounty on live births announced during the last provincial general election.

7.  Referring to members of provincial legislatures as MPPs suggests that someone at macleans.ca needs to check the old style guide.  That particular appellation – short for member of the provincial parliament – is strictly found in Ontari-ari-ario.  They are members of the National Assembly in Quebec and Members of  the House of Assembly in Newfoundland and Labrador.

Canadian Press warns against using the abbreviations for provincial legislature members since the titles vary.  Good advice, but even in a pinch MLA – member of the legislative assembly – is generic enough to pass.

8.  Stories macleans.ca ignored in favour of this one:

-  Public funds diverted to partisan purposes (rather timely given goings-on in the U.K.

- The related story of a partisan appointed as chief electoral officer

And that’s just two of the juicier ones with some national relevance.

9.  As a last note, though, it was nice to see Judy Tyabji back in the news again.

-srbp-

The burst bubble

Only a few short weeks ago, Premier Danny Williams was claiming that Newfoundland and Labrador would be largely immune from the global economic crisis because it was protected by some sort of magical fiscal bubble.

On Thursday, Williams acknowledged that the bubble burst:

"But going out next year [2009] and the years forward … once you get into the $60 range, then you are starting to look at deficit situations."

Of course to anyone paying attention, Williams' magical bubble claim was preposterous:

1. The provincial government knew for some time  - pre-dating the October 2003 general election - that oil production would decline this year and every year from here onward.
2. The Auditor General, among others, has warned as recently as this past spring that massive increases in public spending since 2005 built on highly volatile  - and hence unreliable - commodity prices were unsustainable in the long run.
3. In October, Dominion Bond Rating Service changed the trending on the provincial government's finances from positive to stable with a cautionary note in its detailed analysis about the heavy dependence on volatile commodity prices.
4. Historic trending, coupled with an analysis of the causes of high oil prices in recent years, strongly suggested a correction would occur.  it was only a question of when the correction would occur.

New wells at White Rose and Hibernia will not restore oil output to the peak level, no matter what the price.  Rather it merely slows the rate of decline.

Hebron is not around the corner.  Even if it is sanctioned within the next twelve months, Hebron will not come on stream until sometime after 2018.  At that point, it will merely replace White Rose, Terra Nova and Hibernia which by that time will have ceased production or be on the verge of being tapped out.  One field cannot replace three.

Of course, we are already looking at deficits on a cash basis.  Bond Papers readers have known that for months.  There have been a series of posts highlighting economic forecasts of extremely poor growth in gross domestic product, forecasts that have only forecast even further shrinkage in the economy. 

On top of that, however, several specific posts addressed in detail the factors contributing to the current and future economic problems to be faced:

• On 27 October, a post described exactly the scenario the Premier confirmed on Thursday. In fact, that post underestimated the scope of the problem by assuming a much higher premium for oil sold in American dollars and then converted to Canadian dollars on a 30% premium.  The Canadian dollar has been trading at a 20% and Brent crude is trading - as of this writing - at around US$51 to $52.  That would translate to about $700 million less in oil revenue next year than this year.  This year's budget already projected a cash deficit of $414 million on current and capital account.
• A 12 March post titled "We live in a fiscal house of cards" describes the massive spending increases over the past four.
• A 21 March post titled "What goes up must come down" described the shaky foundation on which the spending was built.
• A 25 March post titled "Hebron and old people" highlighted two fiscal challenges well known to the provincial government that would boost spending at the very time that - even without a massive economic downturn - would strain the treasury.  One - the impact of demographics - has been known for decades and is unavoidable.  The other - debt for oil projects - was discretionary.

That last one is only one major item which will add to the provincial government's financial burden.  The money needed for the 5% shares of Hebron and White Rose, and possibly for a 10% share of Hibernia South will have to be borrowed, either from lenders or from the other partners.  That debt is not optional any more and in the case of Hebron, there will be no revenue for at least a decade from that project which would make the debt self-sustaining.

Any cuts to government spending in the coming months and years will further tighten the local economy and consumer spending.  The St. John's housing market, for example, is enjoying a boom built almost entirely on public spending.  Some have credited projects like Hebron but since that project doesn't exist yet, it's hard for it to generate anything but marginal economic activity. 

Nor has the St. John's market, for example, been buoyed by remittance workers.  Some of the boom can be traced to that source but the major beneficiaries of migrant labour revenue have been in areas like Stephenville or the Great Northern Peninsula.  St. John's remains a company town and the company is the provincial government.  Hack its spending, either in salaries, programs or capital works and you hack into the local service and retail sectors. Hack into those sectors and consumer spending, another staple of government revenue, will decline as well.

Nor can the provincial government look to other construction projects to boost the economy.  NLRC's refinery is dead.  The gas facility is rumoured to be still on track but until sod is broken, it remains nothing more than speculation.  Harvest Energy's expansion at Come by Chance has been shelved. The Lower Churchill project is also more talk than reality.

More than anything, the looming provincial government financial mess should put paid to the fairy tale that the current administration practices anything looking like prudent fiscal management.  To the contrary, it has shown repeatedly that there is little if any strategic planning to its spending beyond the need to present the best face to the polls or to have spending match income.

The current administration ignored any criticisms of its approach and specifically.  It emphatically rejected constructive alternatives to its spend-happy approach such as creating an investment fund from some non-renewable resource revenues. 

A former finance minister once forecast annual deficits of a half billion dollars a year. His successor borrowed $1.0 billion to fund public sector pensions.  The Premier himself committed to meet any future deficits with increased public debt.

By all appearances, he will get his wish.

The people of Newfoundland and Labrador will get the bill.

It didn't have to be this way.

-srbp-

Whitbourne, schools, and democracy #nlpoli

Parents in Whitbourne took the provincial government's English School District to court over the closure of the local school.

They won.

It's proof that a few determined people can use the tools at their disposal to fight for what they believe in.  They don't need some government-paid consultant, no matter what someone angling for a government job might suggest.  People need only have the courage of their convictions.

Courage.

Convictions.

That's all you need.  That's how democracy works.

Kremlinology 46: Premier Peek-a-Boo and the Dog Whistle #nlpoli

In a scrum with reporters after a public meeting about the Corner Brook hospital last Thursday,  Frank Coleman showed he has picked up the tendency of some politicians to talk about themselves in the plural.

The reporters asked about Coleman’s tendency to shun media interviews and to pop up here as if he were playing peek-a-boo. 

“We” had a strategy, Coleman told them,  of talking to the “family” first and “we” would get to everyone else after.  Coleman contrasted that with the opponent he wouldn’t name who spent a lot of time talking to “mainstream media” instead.

That’s a noticeable choice of words – “family” and “mainstream media” just like it is curious the way he referred to what will happen when he becomes “leader”.

Apparitions #nlpoli

You can go back to September 2006 and find one of the earliest references at SRBP to the impact the aging, shifting population would have on Newfoundland and Labrador.  The argument in the speech came from projections dating back to the early 1990s.

There was nothing radical or new in any of it.  In the decade after that post, the provincial government ignored the projections,  ignored the obvious implications of an aging population, and did all sorts of things to make matters worse.  Along the way,  SRBP and labradore have written about the problem and the fact that the politicians were making it worse.

Now that the problem has actually been in our faces for five or six years,  you are seeing more and more references to the changes in some parts of the province.  Like say the Great Northern Peninsula, where one town has lost 10% of its population every year since 2011.   That town likely won't be there within the next five years.  Other towns are in worse shape already.  Still others will be in the same position before too much longer.

There used to be some nice illustrations of how the population is changing.  SRBP included a link in a 2013 post that also included a commentary by Matthew Kerby, then a political scientist at Memorial University. The illustrations are gone. The facts are still there.

The Premier is supposed to release his vision plan for the provincial economy in the decade ahead.  Pay close attention to what he releases.  So far,  the Premier has ignored the bigger picture just like his predecessors did.  If Dwight Ball's plan doesn't take into account the impacts of demographics, then it will be less a vision and more another government nightmare.

-srbp-

Political Fashionistas #nlpoli

Before the year is out, we will have yet another strategy from the provincial government.

We were supposed to have this one on July 1, however like pretty well everything associated with the current crowd running the place, it is a day late.  The minister responsible for the strategy – Fairity O’Brien – says we will now have it some unspecified time in the fall.  That will be after Fairity releases a document that tells us what the government heard during some sort of consultation process that they are almost as fond of as they are of strategy writing.

The thing will likely also be a dollar short, as well, if recent experience is any guide.  You see this “population growth strategy” is actually the second kick at the cat for the provincial government.  Their existing strategies aimed at dealing with some of the factors affecting population were all dismal failures.

The facts should speak for themselves #nlpoli

The very best thing that may be said about the idea of a law school at Memorial University is that the proponents of the idea have failed to make their case.

The very worst is that the university is currently wasting everyone’s time by talking about something with no shape, no form, and hence no substance.

After all, the committee that held its last public meeting the other night  has the task – according to Memorial – of looking at “the demographics of existing Canadian law schools, current and future needs for more lawyers, and benefits to Memorial, among other goals.”

They needed to do this before they started “consulting”. 

Fractured Fairy Tales: Jerry Earle edition #nlpoli

Via VOCM,  the reaction of NAPE boss Jerry Earle to a study that showed the provincial government is overloaded with provincial public servants compared to the situation in other provinces:

Earle says while that might be true, there are good reasons, given the province's geography and demographics. 

He says even comparing Newfoundland and Labrador to the rest of Atlantic Canada is not comparing "apples to apples."

 Okay.

Jerry is actually right.  And wrong.

Being Cassandra

Professor Michael Enachescu has taken some considerable umbrage at the post "Pollyanna Dunderdale 2", specifically for the remarks that began the commentary. At his request, his first reaction is contained in a comment at the end of that post.

Fair enough.

At the outset, let's make it clear that the comments were not meant in anyway to question Professor Enachescu's competence as a geoscientist or his knowledge of the oil and gas industry locally or globally.

Rather, the CBC story linked in the original post and the interview [ram file] connected to it seemed to be exceedingly optimistic in dealing with the prospect of exploration returning to Labrador because four parcels offshore Labrador had been offered for bids in the most recent land sale by the offshore regulatory board.

In the interview Professor Enachescu said that we "have to be very cautious" in projecting what will occur offshore Labrador since exploration must come first. That's considerably different than the implication of the comment used by CBC in the online story. Professor Enachescu did not take issue with the quote so let's work on the basis that the comment was accurately quoted.

On the point about exploration and development, Professor Enachescu is absolutely correct: exploration will determine what if any resources are available. That knowledge must come before any development.

In the interview, he also described the potential of the parcels up for bids containing at least as much in the way of natural gas, natural gas liquids and oil as the existing significant discoveries at North Bjarni, Bjarni and Gudrid.

If that turns out to be the case, there would be a total of around eight trillion cubic feet of natural gas in the area.

Put another way, the natural gas available for development in the area would be about double the amount of gas in the Snohvit field currently being developed in the Barents Sea. Ted Howell noted Snohvit as an example of an offshore gas field located well offshore in a harsh environment. Mr. Howell pointed out that a number of factors have changed to attract the first interest in exploring offshore Labrador in two decades.

That is not really the issue, however.

Rather, the point of the two posts on the land parcels was that other factors may well see the four parcels going without bids.

The most significant factor would be the provincial royalty and benefits regime. The gas royalty regime - the one directly relevant to the Labrador parcels - has yet to be revealed. One of the reasons bids will close on those parcels in August 2008 may well be to give time for companies to assess the impact of that regime.

If the regime increases the costs of development beyond the point at which companies are willing to invest, then the parcels will lay fallow. Alternately, if the regime is one thing but the provincial government reserves the right to add costs, then the parcels may sit fallow because the financial environment is too uncertain in comparison to other places. Exploration investment in those cases will go elsewhere.

Companies may still take up the parcels. As noted in the earlier post, they may decide that the potential resources in the parcel would justify the risk and whatever royalty and benefits regime the province imposes. Companies may also decide that no matter what the royalty regime occurs, the long lead times involved - nine years to complete exploration and whatever time after that to develop any significant discovery found - may well give further opportunity to change the provincial royalty regime.

Look ahead to 2020. The existing offshore oil fields will be drawing down. The provincial government will be faxing increased costs owing to the impact of demographics. In the absence of any significant new offshore development, the financial pressures on a provincial government a decade and more hence may well cause that future government to amend whatever royalty regime is announced this year.

Exploration indeed must precede development. But, if we look at the issues potentially affecting private sector interest in the fields, it is much too early to determine whether we will even get to exploration in the first place.

The other possible interest in those fields, as noted in the earlier post, may be from the province's new energy corporation. That's the second possible reason for the long time bids will be open. As we learned last week, the province's new energy corporation will be running by early in the New Year. Exploration costs are well within the financial means of the energy corporation and the long lead time on this bid process would allow the new energy corporation seven months to sort out any interest it has in acquiring exploration rights.

Once again, though, there are simply too many unknowns to project with any accuracy what will happen with those parcels. We may have a better idea the closer we get to August and of course we will know with certainty on August 2.

In any event, and as much as we might wish it were otherwise, it is far too soon to be discussing the return of oil and gas exploration to the Labrador shelf. It is tempting to be optimistic - particularly in the wake of Hebron and Hibernia South - but experience with the local offshore over 25 years ( and including those two spectacular setbacks) should give us all an abundance of prudence and caution when it comes to projecting what will occur.

-srbp-

Demographics update

From labradore, a series of posts commenting on perceptions of where the province’s population is the greatest.

“Population Observation” I, II, and III.

This pretty little picture is one of the type some people find a wee bit disturbing, apparently.  It’s taken from the third post in the series that looks at the population decline on the Avalon peninsula.

Of rural areas, Labrador has had the “least bad” population decline, losing “only” eight percent of its 1986 population in the ensuing twenty years to 2007. The Northern Peninsula and the South Coast of Newfoundland had by then each lost nearly a third of the population they had in 1986.

The rural off-Avalon island as a whole has lost 23% of its 1986 population up to 2007 — a figure which is very comparable to the population loss in the Avalon Peninsula outside the St. John’s CMA during the same time period, 21%. Or, on other words, the rural Avalon has really done no worse, but no better, demographically speaking, than the rest of rural Newfoundland.

-srbp-

Jeffrey Simpson hates Newfoundland

Well, not really.

But that's what the myth-mongers among us would have us believe.

The leading critic of Simpson's latest remarks has re-opened her blog to public view and has taken to slagging Simpson on whatever radio station has an open line show or a viewer call-back line.

Plus ca change.

What Simpson actually said is available through Offal News and Simpson's interview with CBC Radio's On the Go.

Just to show how much Simpson doesn't know about Newfoundland and Labrador - note the sarcasm - here's a column on the Churchill Falls contract from 1986.

As for Simpson's remarks on the impact of demographics, you can find similar arguments here at Bond Papers last fall and in October 2005. There is nothing new in Simpson's remarks and as Simpson told CBC radio, there are a great many leading figures in the province who have discussed the issue with him at length in private.

Your humble e-scribbler isn't a leading figure even in his own house, so draw your own conclusions on who Simpson speaks with when he comes here.

A pitiful contract
Jeffrey Simpson
The Globe and Mail
Toronto, Ont.: Jul 3, 1986.
pg. A.6

Come-By-Chance periodically provokes a nibble of interest from some Israeli or Arab consortium, but most Newfoundlanders have consigned it and the other industrial failures to the far corner of their collective memory.

Not so with Churchill Falls, the Labrador hydro-electric project whose iniquitous terms can stir indignation in any Newfoundlander.

Another Smallwood legacy, the Churchill Falls project allows Quebec to make a killing on Labrador power. Quebec buys Labrador power for the laughably low rate of 3 mills and sells it for many times that rate in the United States.

Put simply, Newfoundland is getting shafted by the deal. All legal challenges, presentations to the National Energy Board and appeals to Quebec's conscience, good name, patron saints and anything else Newfoundland could think of have failed.

Quebec, after all, has a 65- year contract freely entered into with an agent of the Newfoundland Government in 1969. The power started flowing in 1976, and Quebec has been raking in the profits ever since.

Worse still, the contract calls for steadily falling rates to be paid by Hydro-Quebec for the duration of the contract.

Every failed legal challenge by Newfoundland merely solidified the sanctity of the contract. The federal Government, knowing that Quebec has nearly 11 times more parliamentary seats than Newfoundland, has been reluctant to intervene.

Quebec is legally obligated to do nothing but keep taking Labrador power at a low price and selling it for what the market will bear. It has argued that without Hydro-Quebec's consent and money, Newfoundland could never have developed Labrador power, since Quebec stands between the Churchill River and potential export markets.

Under Rene Levesque and the Parti Quebecois Government, Quebec's position remained as unyielding as it was simple - a contract is a contract is a contract. That position echoed the one taken earlier in the 1970s by Liberal Premier Robert Bourassa.

Now Mr. Bourassa, who was returned to power last December, is making modest noises that perhaps Quebec might be flexible. Newfoundland formally presented new proposals to him in March, and Premier Brian Peckford wants a meeting in the coming months. Experts from Hydro-Quebec and Newfoundland Hydro have been meeting.

It is too early to know whether Quebec is serious or is merely making polite, inconsequential noises. The Churchill contract, enduringly important news in Newfoundland, stirs barely a flicker of interest in the navel-gazing Quebec media.

Any re-opening of the Churchill contract would have to be part of a broader package of developing the hydro potential of Gull Island, further along the Churchill River.

Whether Quebec is even interested in Gull Island depends, in part, on Mr. Bourassa's hydro priorities.

He is outspokenly wedded to James Bay II, and hasn't tipped his hand about Gull Island.

Mr. Bourassa, an avowed federalist, is not required to do anything to help Newfoundland, Canada's poorest province. He has the province over a barrel, and he can keep it there for as long as he wishes. A sense of decency and the spirit of federalism, however, should make him stop lording it over Newfoundland.

-srbp-