Protecting domestic T & A

From Canadian Press:

The Conservative government is set to unveil new legislation aimed at keeping foreign strippers out of Canada.

Talk about a government that has already exhausted its agenda.

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Just say no

It's not on line but this story appeared in today's Telegram.

It appears here thanks to someone with better typing skills than your humble e-scribbler.

Analyses remain secret; Province won't release examination of system

by Rob Antle

It's been an argument fought largely without the help of any hard numbers or firm facts. And the provincial government is doing its part to ensure the situation stays that way.

The Williams administration confirmed this week it won't make public any of its analyses of changes to the federal equalization system.

Requested data

The Telegram requested the data a month ago under provincial access-to-information laws.

The province says doing so would violate both cabinet confidences, and a portion of the law dealing with the financial and economic interests of a public body.

A spokeswoman for Premier Danny Williams steered questions to the provincial Department of Finance, which denied the request.

Williams has been at war with Ottawa since the federal budget was tabled March 19.

The Harper government sidestepped a key election promise on equalization, instituting a cap on benefits.

Williams was apoplectic, commissioning a nationwide advertising campaign condemning the prime minister.

The feds, meanwhile, insist the province can stay in the old equalization system and retain the uncapped Atlantic Accord.

No hard numbers

Neither side has tabled any hard numbers to back up their respective opinions about the benefits of the new system versus the old.

Earlier this month, Ottawa told The Telegram it would require 1,056.67 hours just to prepare to release 31,700 pages of documents analysing the potential impact of the new system on Newfoundland and Labrador.

The federal Finance Department said it would take another 69 hours just to find the information. Total bill: $17,500.

Province just said no

The province, meanwhile, shut the door entirely.

Last month, Williams skated around three separate questions from reporters about whether he would release provincial analyses.

"It depends on how far we can go," he said April 18.

Equalization is fiendishly complicated, with factors as diverse as the price of oil, the value of the Canadian dollar and the economic performance of every province potentially shifting benefit levels.

Projections released

To date, the only person who has publicly released any projections of the new system's impact is Memorial University economist Wade Locke.

Locke first calculated that the new system could provide a boon of $5.6 billion to the province.

But a new set of parameters - based on changes in federal budget implementation laws - turned that boon into a bust. Locke's revised analysis showed the new system would provide $1 billion less than the status quo over 12 years.

The MUN economist has urged the feds and the province to make public their own projections.

Neither side has expressed much interest in doing so.

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Fun and games with the Premiers

The Prime Minister is finally getting around to meeting with the Premiers.

With the recent federal budget, it should be an interesting affair.

Maybe that's why the Premier of Newfoundland and Labrador has been absent from the House of Assembly so much.

He's getting ready for the big showdown, expected on June 2.

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Back to the future: an overview of Equalization

Lost in most of the current kerfuffle on Equalization is any understanding of what the federal transfer program does or how it evolved.

Thomas Courchene contributed a simple historical summary of the program to Policy Options in March. The following extract suggests that the current Equalization approach is very similar to the one introduced in 1962:

At this juncture, it is important to recognize that equalization has played another key role in the evolution of our federation. Over the years the federal government transferred progressively larger shares of the PIT [federal personal income tax] and CIT [federal corporate income tax] to the provinces, which made Canada one of the most tax-decentralized federations in the world. Arguably this tax decentralization would not have been politically acceptable to the "have-not" provinces were it not for the existence of equalization. In this sense, equalization also benefits the rich
provinces, since it allows them to reap the benefits of their superior tax bases.

In the 1962 quinquennial revision of the tax arrangements, the share of PIT entering the equalization formula was increased to 16 percent (with an interim increase to 13 percent in 1958). For present purposes, however, the importance of the 1962 revisions is that natural resources entered the formula for the first time, thereby beginning a complex and volatile relationship that has influenced the evolution of Canadian federalism well beyond the fiscal arena. The concern at issue in this time frame was that resource-rich Alberta was receiving equalization.

To prevent this, the formula was expanded to include resource revenues — 50 percent of the three-year average of provincial resource revenues would now be eligible for equalization. While this would exclude Alberta from receiving equalization, it would have substantially increased the total level of equalization. To temper this expansion the equalization standard was reduced from the TTPS [top-two-province standard] to a national-average standard (NAS).

This modification was short-lived. Following up on its 1963 election platform, the new Pearson government restored the TTPS standard and removed resource revenues from the formula, replacing them with the "resource-revenue override"; henceforth, 50 percent of the resource revenues accruing to a province would be deducted from that province’s equalization entitlement. The return to the top-two-province standard meant that Ontario was again the only "have" province, but the resource revenue override precluded Alberta and BC from receiving equalization.

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Polling in public policy

From David Herle, a provocative discussion of the role played by public opinion research in modern politics and government.

As the blurb from this month's Policy Options puts it:

"The role public opinion research plays in guiding governmental communications is often dismissed as partisan and not necessarily in the public interest," writes David Herle, who begs to differ. As the former pollster to the federal finance ministry in the 1990s, Herle’s polls and focus groups shaped support for balancing the budget and creating the fiscal dividend. Other policies, he writes, "can be sacrificed because (Ottawa) couldn’t talk about them to Canadians in a way that made sense to them." He also identifies five rules of current Canadian public opinion: Canadian social values, transparent governance, activism rather than retrenchment in government, and the enduring regionalism and evolving views of the Canadian federation.

Herle has a striking observation on how Canadians view the separation of powers between federal and provincial governments. In light of recent musings by local nationalists, Herle's assessment might give a clue as to why the tone of the provincial government's most recent battle with the federal government is going over like a lead balloon:

Rule 5 — Views of the federation are evolving. The fight between "a strong central government," on one side, and "a community of communities," on the other side, is over, and both sides won.

Most Canadians have settled on a division of labour between levels of government that is based on what they see as the appropriate roles and competencies.

Program delivery is seen as being best done by provincial or even local governments. They are seen as being better able to manage programs and are thought to have a better sense of what the actual needs are, province by province, community by community.

The cities agenda is coming up into the national agenda for a reason. However, that does not mean that people want or will accept a balkanized Canada. They see it as completely appropriate for the federal government to fund programs in areas of provincial jurisdiction — in fact, most of the things people really care about, such as health care, education, early childhood education and the environment, are outside federal jurisdiction. They would not stand for a federal government that refused to help in those areas. In addition, they want the federal government to demand national principles and consistent approaches and applications.

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SK should pick friends carefully: Hirsch

Todd Hirsch, a former chief economist with the Canada West Foundation warns Saskatchewan is sending the wrong message by siding with Nova Scotia and Newfoundland and Labrador over Equalization. His column appears in the current issue of Policy Options.

But the danger of Saskatchewan joining as brothers-in-arms with Newfoundland and Nova Scotia is that it conveys the message that Saskatchewan’s economy is in trouble. Nothing could be farther from the truth.

The unemployment rate in Newfoundland is above 14 percent. In Saskatchewan, it is under 4 percent — behind only Alberta’s as the lowest unemployment rate in the country. Saskatchewan’s economy has grown consistently at or above the national rate of real growth, and is likely to be the second- or third-fastest-growing province in 2007. Strong energy prices, rising real estate values, a burgeoning mining sector and a world-class hightech research sector are restoring business confidence. Even agriculture is doing reasonably well this spring.

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Budget accuracy: NL consistently strong results

One of the great unfacts that has crept into political dialogue in Newfoundland and Labrador is that fiscal accountability and sound management suddenly arrived in October 2003.

This report by the CD How Institute shows that over the past 10 years, the Government of Newfoundland and Labrador has been consistently accurate in its budget forecasting. The province showed a mean variation in spending changes off just 0.99%, ranking second in accuracy to Quebec.

Some of the biggest variation in forecasting revenues has been in the past two years - FY2005 and FY 2006 - with variations of 5.8% and 15% respectively.

Prior to that the largest variation was 1997-98 when the provincial budget underestimated revenues by slightly more than 10%, and 1998-99 when the provincial governments revenue actually declined. The difference between forecast and actual was -6.32%.

According to the Howe study, the Government of Newfoundland and Labrador is forecasting a 10% growth in spending in FY 2007. That's double the growth in the federal budget and five times the growth in the Ontario government.

Spending growth of 10% is also more than two and a half times the projected real growth in gross domestic product, according to a recent report by Scotia Economics.

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There is a conspiracy

Expect the local nationalists to be up-in-arms about these two announcements, both of which are surely evidence of the great conspiracy to favour Nova Scotia over Newfoundland and Labrador.

The first is ecclesiastical, but they are all mainlanders under their vestments, obviously.

The second is yet more federal pork for Halifax.

Never mind that the Port of Halifax has a major problem with smuggling.

That anti-smuggling job should be in Buchans.

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Scotia Economics projects top to bottom of pack for NL

Scotia Economics joins all the other forecasters in projecting that Newfoundland and Labrador will lead the country in economic growth in 2007.

Like everyone else, Scotia also projects the province's economy will trail the country in2008.

The update report - released on May 3 - turned up on vocm.com today.

The original report, released in March, was covered by Bond Papers at the time.

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Separatists Across Canada: Unite!

You have nothing to lose but the idea you are alone.

Old news: Harvey quits, Kent to seek Tory nod

You read it first here and here.

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Oil companies oppose Alberta royalty hikes

From Oilweek:

In a written submission to a provincial royalty review panel, the Canadian Association of Petroleum Producers says oilsands projects have a lot of major obstacles to overcome before producing even a barrel of crude. This includes multi-billion dollar up-front cash layouts, long lead times and swirling cost pressures for both material and labour.

"Looking at royalties per barrel in the early years of a project is like looking at a child from age three to six and then saying, 'they will never amount to anything important over their lifetime,' " CAPP said in its submission.

The oilpatch lobby group said oilsands developments are among the most expensive energy projects in the world to build.

Years of unprecedented high commodity prices and a string of record profits from Canada‘s big energy companies has triggered an undercurrent in Alberta that the oilpatch is not paying the province enough.

Under the current structure, companies pay just one per cent of gross revenues until all construction costs are recouped.

The rate then climbs to 25 per cent of net royalties.

The complete CAPP presentation can be found at capp.ca. It describes the oilsands resource, the existing royalty regime and some details of how the oilsands have been performing financially:

There is also a general public perception that royalties have not kept pace with increased commodity prices. But, as noted above, oil sands royalties and lease payments have increased 16 fold in the past five years — from $250 million to $4 billion — to become a major contributor to the provincial surplus.

As of December 2006, 34 of 66 projects covered by the Generic Regime are now in post-payout phases and more are reaching payout quickly. But just looking at the number of projects does not show that just 10 projects make up 88 per cent of the oil sands production. Th is means that about 75 per cent of oil sands projects by volume are paying the 25 per cent post-payout royalty.

In many cases, these projects have achieved full royalty payments ahead of schedule, precisely because the regime is instantly responsive to commodity prices. As prices have risen, so too have gross revenues, thus increasing both the amount of the gross royalty and increasing the fl ow of funds to pay down capital costs and move the project to post-payout royalty payments. In a high-commodity-price environment, projects pay out faster — and then pay higher royalties sooner. If prices decline, royalties automatically adjust to support project economics.

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One for Chuck

Apparently Russian strongman Vladimir Putin is one of the "leading lights" of our time.

Who'd a thought Putin could make such an impression on a former politician in this province? Check out "20 Questions" from yesterday's Sunday Telegram if you think anybody is making this stuff up.

Anyway, here's a suggestion to the guys looking ahead to the Tory ad campaign this fall.

Forget the "Morning in America" thing you might be kicking around. It's so 20th century.

Go for this one: a local version of Takogo kak Putin.

That whole local strongman thing really rocks some people in the province. Take on the oil companies. Battle anyone. The only one to fight for the Motherland.

Sure, it's Euro-dance crap, but so what?

A bit corny, a bit patronizing to women but hey, if it works for the crowd that call Bill and Randy to sing the glories of your guy, then this would work too.

Just look at that last paragraph.

It screams "Rowdy Revolution", maitres chez nous and every other hoary cliche you can think of it.

My boyfriend got into trouble again,
Got into fights, got drunk on something.
He made me so mad that I chased him away,
And now I want someone Putin.

Someone like Putin - full of strength,
Someone like Putin - who wouldn't drink,
Someone like Putin - who wouldn't insult me,
Someone like Putin - who wouldn't run off.

I saw him on the news yesterday,
He was saying that the world is at the crossroads,
With someone like him it's easy at home or when visiting,
And now I want someone like Putin.

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How rigged was my rally?

Was the non-partisan rally really a non-partisan rally after all?

Was Danny Williams appearance a coincidence, as most assumed?

Not if you take some of the implications from Craig Westcott's commentary on CBC Radio's St. John's Morning Show.

The audio will be posted later on Monday.

Food for thought.

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Update: For those who can't access the facebook shots, there are some others here, at Kim Goodyear's photography site.

How big was my rally?

Geoff Meeker asks the question: how big was the rally?

He notes the widely varying reports in local media on the size of the crowd attending the Friday Rally for Danny.

It's a good question. Initial reports were several hundred. Then the number 1500 was tossed around. The organizers claimed 3000 and one of the organizers subsequently claimed between 3500 and 4000 people showed up.

Well, the only photos that have turned up so far are these. There's no way of knowing exactly when they were taken but given the various shoots in this group, the number of people looks more like 1500 or less rather than double that.

Estimating groups like this is a bit of a mugs game.

Unless someone did a head count or had a means of tallying people as they showed up there's no way of knowing.

But here's a simple question: does the size of the crowd matter?

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Adding seats to Commons, feds should reform senate too

Proposed changes to representation in the House of Commons will more fairly represent Canadians across the country, irrespective of where they live.

The move is designed to avert regional tensions in the country, according to the Globe's Brian Laghi.

Well, senate reform is long overdue. Creating a senate comprising representatives elected in equal numbers from each of the provinces would restore a balance to the national parliament as a whole. represent the population fairly in the Commons. Represent the provinces - i.e the regions where Canadians live - in a new senate.

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A tightening labour market

A recent Syncrude job fair in St. John's didn't turn out very many prospects, according to the National Post.

They [the recruiters] are well aware of the challenge. Even in St. John's, where the unemployment rate, at about 15%, is the highest in the country and disposable income the lowest, the turnout is poor relative to what had been expected.

Only about 20 people trickle in for the Friday evening session. Another15 come for one on Saturday morning. Hundreds of expectant seats are empty. Organizers and others wonder if this market is tapped out. "Almost every week there is someone here," said Paul Barnes, Atlantic Canada manager for the Canadian Association of Petroleum Producers.

It's not just oil sands employers, he notes. Alberta's service sector, from Wal-Mart to Swiss Chalet, is also recruiting, offering transportation to Alberta and signing bonuses.

The hollowing out of the local labour market is one result of both the Hebron failure and the pull of a booming economy in Alberta.

As the Post notes, many workers have become trans-continental commuters, leaving family in Newfoundland to work for weeks at a time and flying home for brief rest periods.

Skilled workers from Abitibi's Stephenville operation are doing that, for example. Many, though, are near retirement age and once they hit the magic age, they'll be shutting down and retiring in Stephenville. Many in the formerly bustling mill town on Newfoundland's west coast are contented for now. Others wonder what happens when the retirees come flooding home if there is no new employer to replace Abitibi.

The labour crunch was one of the major considerations in trying to move Hebron forward last year. Oil industry insiders were acutely aware of the challenges in finding workers for a major industrial project as Alberta continues to draw more and more from all parts of the country.

"If Hebron went ahead tomorrow, we'd have a hard time finding staff," said Tony Goobie, a former chairman of the Newfoundland Ocean Industries Association, and the general manager of Eastern Valve & Control Specialties.

A smelter/refinery complex being built by Inco at Long Harbour and the prospect of Lower Churchill construction beginning in 2009 will stretch the local labour market to the point where the province will have no choice but permit companies to import skilled trades workers from anywhere they can find them. Many may well be Newfoundlanders and Labradorians who have moved to Alberta but who will commute in the opposite direction for the sporadic work on major construction jobs likely to occur in Newfoundland and Labrador over the next decade and a half.

The provincial government is moving ahead with new programs designed to produce skilled workers. The province has already announced a reciprocal agreement with Alberta that would recognize work experience in Alberta for skills certification in Newfoundland and Labrador. The catch is that workers need to maintain permanent residence in this province.

But in the absence of local work on major projects, many may wind up heading to Alberta and elsewhere and staying there. Greg Locke is a Newfoundland photojournalist who recently left the province to take up a management position with a weekly newspaper chain in Alberta. Locke's already noted that among ex-pat Newfoundlanders and Labradorians he's met so far, he hasn't found one genuinely pining to return home. Once settled in Alberta, workers tend to stay.

Remittance work is nothing new in Newfoundland and Labrador. Offal News' Simon Lono discussed the idea in February of workers who ship cash back home from foreign countries. It's a well-established idea in the developing world and to some it may be shocking to appreciate that the idea thrives within Canada.

Locally, though, the remittance economy has been booming in recent years. The provincial government's work programs actually encourage the remittance economy in its commuting variety, especially since the migrant labourers taxes go to the provincial treasury and their heads count toward the federal government's Equalization income support program for provincial governments.

Remittances are inconvenient for this government because they represent a policy failure: people who have taken the initiative and have left the province for work rather than heed empty government assurances that something will be done for them and their communities.

Before Confederation, remittances were a way of life. A 1931 book by Joe Smallwood, written to introduce Americans to the easternmost part of the continent - then an independent country - put it this way:

Back in the early part of this decade [Smallwood actually mean the 1920s], when the flow of emigration to the United States and Canada was at its height, somebody facetiously declared that our principal exports were "codfish and men". There was a tragic vein of truth in it. At all events, even away from Newfoundland, many of these natives sons are contributing importantly to-day [sic] to the upkeep of the country. The money orders paid within Newfoundland from the United States and Canada in the past three years for example, were as follows...

Smallwood then listed a total of $2,081,232 from the United States between 1927 and 1929 and another $712, 054 from Canadian sources in the same period. [Source: J.R. Smallwood, The new Newfoundland, (New York: MacMillan, 1931), pp. 111-112].

Neither Statistics Canada nor the Government of Newfoundland and Labrador have investigated the scope of the remittance economy.

The labour market reality in Newfoundland and Labrador is garnering some attention from government. Programs may help generate workers, but in the absence of major industrial development, there is little to keep workers in the province any more than there may have been in the heady days of independence.

Workers will look outside Newfoundland and Labrador to earn a living. So too will an increasing number of companies in the oil and gas sector, among other sectors.

Promises of a rowdy revolution or of a return to independence, built on little more than myth and superheated rhetoric seem to be little more than a fatuous diversion from a meaningful discussion of public policy.

After all, is more income support for the provincial government any replacement for local economic development?

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h/t to Greg Locke.

Quebec Cartier eyes Wabush Mines

No English-language reports yet, but here is the Quebec report, from lesaffaires.com:

Les Mines Wabush, situées à Sept-Îles, est dans la mire de Québec Cartier pour qui elle a accepté dernièrement d’ouvrir ses livres afin que cette dernière puisse examiner d’un peu plus près la santé de l’entreprise minière.

Québec Cartier pourra donc faire une étude comptable de Mines Wabush mais n’a pas encore donné de date en ce qui a trait au dépôt d’une offre officielle d’achat. Des échanges ont toutefois eu lieu entre les deux entreprises et des experts de Québec Cartier sont venus visiter les infrastructures de la mine.

Québec Cartier appartient maintenant au groupe européen Arcelor Mittal et ce rapprochement avec Mines Wabush pourrait très bien s’inscrire dans le cadre de son plan minier qui s’étend jusqu’en 2026.

Une autre grande compagnie minière, Consolidated Tompson, s’était montrée intéressée par la mine de Sept-Îles à l’automne dernier. Elle a toutefois choisi de se concentrer sur un projet d’usine pilote de réduction du manganèse, d’une valeur de 1M$, qui assurerait la survie de la mine Scully de Mines Wabush au moins jusqu’en 2021.

Essentially, Quebec Cartier is conducting a financial assessment of Wabush Mines with an eye to making an offer on the company.

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Alaska gets tough on pipeline bill

From the Anchorage Daily News:

JUNEAU -- Gov. Sarah Palin's gas pipeline bill sailed through both houses of the Legislature on Friday as last-minute opposition pushed by the state's big oil producers melted away.

Passage of the bill kicks off a competitive bidding process for the right to build a multi-billion dollar North Slope gas line. Palin refused to compromise with opponents in the Legislature's closing weeks, saying her bill would get a pipeline built on terms favorable to the state.

Complaint a vendetta says Armoyan

Geroge Armoyan is calling it a vendetta.

That's the complaint by the Government of Newfoundland and Labrador that Armoyan engaged in insider trading when he sold off shares in Fishery Products International.

"It's just ridiculous -- everything I did was within the law," Armoyan said in an interview. "There is no doubt this is a politically motivated strategy by the government. Anybody who says something negative about the government, they try to create problems for them. It's an abuse of power."

Note to CanWest fact checkers:

Check facts.

This statement is completely false:

The Newfoundland and Labrador government won the power to approve the sale of company assets when St. John's-based FPI was restructured two years ago.

FPI is controlled through an act of the provincial legislature. In 2006 - not 2005 as this sentence suggests - the legislature amended the FPI Act to give cabinet the authority to approve any say of FPI assets. Prior to that any sale of assets would have required approval of the legislature.

Further, the company was not restructured in 2005.

Note as well to Globe fact checkers: the complaint isn't with the Ontario Securities Commission. Fish minister Tom Rideout, seen at right at an anti-FPI rally held in February 2006, made the complaint to the Newfoundland and Labrador securities watchdog.

There is no indication Ontario regulatory authorities have taken any action nor is there any public indication Armoyan failed to abide by existing securities laws.

As reported, Rideout's accusation suggests criminal activity. There is no evidence of criminal activity.

As Rideout described it to reporters on Friday, his concerns focus on the possibility Armoyan violated an FPI board directive banning directors from trading in FPI shares during the sell-off talks.

There is no public record of such a directive.

Rideout is also concerned that some unnamed individual or company has acquired more than 15% of FPI's shares, the limit set in the FPI Act.

In that situation, Rideout's complaint would be with the purchaser, not the seller and the situation would not involve any form of insider activity.

Rideout is the province's attorney general.

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