A quickie rejoinder to Ron Penney

So Ron Penney thinks Andy Wells - Ron's boss - is qualified to head the offshore regulatory board.

Then he says two things that are odd, if not contradictory. First he says that all the heads of the board to date haven't had a background in regulatory agencies - or for that matter oil and gas. Therefore, the chairman doesn't need to have an oil and gas background, or indeed any knowledge of the industry at all.

Second, Penney says there's a need to make a change in the board's leadership because the board hasn't been doing a good job, led as it has been, by guys who don't know the industry.

Ok.

Well, the stated qualifications - agreed to by Danny Williams from the outset - called for a change in direction for the board's leadership by specifying that the new chairman and chief executive officer would need extensive knowledge of the oil and gas industry, as well as technical knowledge given that the board is a technical regulatory body.

So the critieria used to judge Andy's candidacy already reflect Ron's supposed desire for change.

Here's the specific set of criteria since Ron clearly hadn't read them before he made his comments:

Candidates will have an in-depth knowledge of Newfoundland and Labrador'’s offshore oil and gas activities, along with a demonstrated ability to manage an organization with diverse technical and regulatory responsibilities, and to work effectively with senior industry and government officials. Qualified individuals will also have a good understanding of the structure and operation of the Canadian and international petroleum industry. Applicants will have extensive experience in the operational aspects of offshore petroleum activities, including full knowledge of related business, financial, safety and environmental matters, and of federal and provincial government legislation and operations. In addition, candidates will have experience in dealing with industry associations and a wide range of non-government organizations. This position requires exceptional communication skills.

On that basis, Wells is not qualified for the job.

Now, that's not just my opinion.

It's not just the opinion of Mr. Justice Halley.

Danny Williams said it when he signed off on the qualifications listed above long before he decided Andy Wells was the guy for the job.

Danny Williams said he when he endorsed these or similar criteria to be used by the binding arbitration panel.

Using Danny Williams' own criteria, the arbitration panel decided Andy Wells isn't qualified for the job: Max Ruelokke is.

For a guy who supposedly played a key role negotiating the Atlantic Accord (195) - the real Accord - Penney doesn't seem to know the document very well. Penney told the Telegram the board needs a shakeup because it hasn't done a good job of delivering benefits to the province.

As Ron knows - or ought to know - that is not the offshore board's job.

It never was. Not even when Ron was inking the deal in 1985.

The job of setting and delivering benefits to the province rests with people like Danny Williams, on whose behalf Ron was obviously speaking.

On that basis, and given the internal contradictions in his comments, Ron Penney is wrong both on the background to the offshore board and on Andy Wells.

After all, Ron's "rationale" was almost exactly the same one Danny's been offering, contradictions, serious factual errors and all.

Just like Danny.

Right down to the self-massage.

Mainland drivel

Only a reporter not from Newfoundland and Labrador could write the drivel found in a recent Macleans profile of Premier Danny Williams.

If Macleans has laid off the fact-checkers that helped to keep the magazine on the top of the reporting pile, they might want to reconsider and get them back on the job pronto.

Among the dubious - in some cases laughable - claims:

- that Danny Williams is likely the only Premier of the province to suffer a lower quality of life as Premier;

- that Williams' personal popularity has gone up since he lost a deal on Hebron in April;

- an unquestioning repetion of Williams' ludicrous claim that Hebron meant $10 billion to the federal government. It meant at least that much to Williams but nothing even close to that to the federal government;

- that Williams came out on top during his Larry King Live appearance with the Maccartney's over the seal hunt. Even some of his staunchest supporters have come to udnerstand the poor boy got snookered into the appearance and then got screwed at every turn by a show that was skewed to Heather and Paul; and

- that brinksmanship with Paul Martin "allowed Williams to drag Newfoundland from the edge of bankruptcy". High oil prices did that, not Danny Williams. Macleans' business reporters might want to take a look at Williams spend-happy government to get a more accurate take on this one.

It would almost make one believe that Williams negotiated on-going flatulent coverage from Macleans as part of his deal to sell Cable Atlantic to Ted Rogers. Rogers owns Macleans..

Oh well, since Williams has started to blacklist local reporters who ask him tough but fair questions, the poor guy will have to take the ego-stroking he apparently craves wherever he can get it.

"We're lovers and we're fighters," Williams says. "Newfoundlanders and Labradorians like to be loved."

L'etat c'est moi, indeed.

This week's Spindy

1. Front page article on some ministers' helicopter rental expenses. Not much detail, missing consideration of ministers' overall travel expenses, but still a cute little story.

My favourite is the 5K spent by one minister - Paul Shelly - to get to a career fair in Harbour Breton, the Town the Premier Forgot.

2. Column by Ryan Cleary in which he advises that the Premier has put the Indy on a blacklist. The crime: asking questions the thin-skinned petulant former hero of the Indy thought were "inappropriate" and a "personal attack".

The Premier's personal publicist - she who communicates only via Crackberry e-mail - either agrees with the bullshit decree or lacks the professional judgment and business stones to talk some sense into her client. (As an aside, between the comments from the Telly this week about government's directors of mis-"communication" and the vapid letter co-authored by several of my colleagues taking the Telly to task, I gotta admit I am with the Telly.)

Cleary's best line is the one where he notes - for Danny the Wonder Pony's benefit, no doubt - that the come-out-swinging at everyone all the time thing gets a bit old after a while.

Ryan is right. Problem is, Ryan, when you are a one trick pony, taking away your trick doesn't improve the show. He doesn't have time to learn a new trick as he orders his personal publicist to blacklist you, blackball you and other wise try to bollocks you up for daring to do your job.

Let's face it people: if Danny has turned on the Indy - and does it in such a chickensh*t way - odds are good, other media in town have been or will be getting similar treatment. That is they'll be blacklisted unless they conform to Danny's idea that their role is to be cheerleading for him.

Anyone remember when Danny explained that cheerleading was everyone's job in the province? He makes the decisions. We stand behind him and tell him how wonderful he is.

Ryan must have missed that memo.

3. Missing this week: a column from Radio Hydro Queen. The ramblings seem to have taken their toll on Ryan Cleary's time and patience. Instead, note the letter to the editor from former CBC producer Bill Kelly in which he lambaste's the former columnist for her lack of credibility.

Bill just recites a bunch of well-known stuff about the woman who built her name on radio call-in shows but seems to have abandoned them in a snit. Well, at least the VOCM ones. No talk-balk line at CBC is safe from her rantings these days. Would somebody at VOCM apologize to her? Puhleese.

Bill can expect a string of e-mails from said Hydro Queen, most of which will be incoherent strings of phrases. Don't bother deciphering them. Just delete them, Bill. It saves time.

4. Best piece of all: Ivan Morgan's piece on a former Canadian army sniper from Newfoundland. Doesn't need description. Just read the piece.

Canadians in Afghanistan, yet more

This video clip is additional footage to the 02 Aug 06 post on operations on or about 08 Jul 06 by 2 PPCLI.

This footage is considerably more rough and shows both the Canadian fighting alongside Afghan forces and footage from the next day showing Canadians inspecting the Taliban/insurgent position they were attacking.

Note the Afghan soldiers firing RPGs (rocket propelled grenades) and mention of an airburst, along with the sound of the incoming round and explosion.

Again, this footage shows the very close quarters in which fights take place.

This is not work or family-friendly due to language and violence.

Canadians in Afghanistan, still more video

Video of elements of 2 PPCLI ambushed by Taliban forces, Sangin, Helmand province, 15 Jul 06.

This not family or work friendly due to language and violence. Note at one point, a grenade being tossed less than 50 metres from Canadian positions.

This video and others posted demonstrate the close-in nature of the Canadian operations, with action occurring in very confined spaces. Grenades are commonly used.

At one point toward the end of this clip, notice a heavy thumping bang coming from the left of the Canadians' position as they advance. This appears to be the 25 mm canon on the LAV-III providing covering fire.

RPG is a Russian-made rocket propelled grenade; it was designed originally as an anti-armour weapon but has come to be used as a form of light artillery. in Chechnya, anti-Russian forces have been known to fire the rocket upward like a mortar. In Somalia, local fighters found them to be useful anti-helicopter weapons.

Frag refers to a fragmentation grenade. Soldiers will shout "frag in" or "grenade" to warn nearby comrades that a grenade has been thrown.

Canadians in Afghanistan, more video

Footage of a dawn assault by soldiers of Alpha Company, 2 Princess Patricia's Canadian Light Infantry, 13 Jul 06. Location given as Hydarabad, Helmand province.

Note this is rough footage and is neither family nor work-friendly owing to language and violence.

At one point in this video, soldiers are warned to take cover as an air-burst is coming. Listen for the whistling noise as the round (artillery?) approaches, followed by a small explosion and a puff of black smoke in the air. This shell has sprayed the area immediately underneath with small pieces of metal.

Of course, I think my boss is the greatest guy in the universe

City solicitor Ron Penney is in the Telegram today insisting, among other things that Andy Wells is more qualified than anyone to head the board regulating the province's offshore industry.

We'll deal with the serious shortcomings of Penney's analysis over the weekend.

In the meantime, at left is a photograph of the group that negotiated the Atlantic Accord (1985) along with the provincial and federal ministers involved. The crowd standing are a mix of federal and provincial officials. Seated, left to right, are: Bill Marshall (provincial energy minister), Brian Peckford, Brian Mulroney and Pat Carney (Marshall's federal counterpart).

Ron Penney is the second from the right, standing. Andy Wells other chief advisor on oil and gas matters - besides Penney - is the fellow in the beige suit standing with his hand on Brian Peckford's chair. That's Cabot Martin, for those who don't recognize him.

The best quote of the entire piece comes right at the end:

"This is an important public policy debate. It's important that people have the views of somebody who is knowledgeable about this issue."

The first sentence is absolutely correct. That's why the debate has been raging for a year now. It's also why we'll deal with the substance of Penney's views in a later (and sadly longer) post.

If Penney's assessment of his current boss' sterling qualifications had merit, Penney wouldn't need to swell himself with the gratuitous self-massage of the second sentence.

Federally-funded rugby centre doesn't fit program specs

A new $6.3 million recreation complex attached to a privately owned rugby club doesn't seem to fit the criteria for the federal-provincial program from which most of the funding will come.

Loyola Hearn, Newfoundland and Labrador's federal cabinet representative announced $4.0 million will be spent on the project by Ottawa and St. John's out of the Canada-Newfoundland and Labrador Municipal Rural Infrastructure Fund.

Established in 2005, the municipal infrastructure fund was intended to support development of infrastructure in rural parts of Canada, with an emphasis in Newfoundland and Labrador on so-called "green" projects.

Touted as a provincial recreation centre, the new complex will include additions to an existing privately-owned rugby club facility in the heart of the province's largest city and within easy commuting distance of several publicly owned or publicly-accessible sports facilities.

The national programs main website shows just how unusual it is to see funding for an urban sports complex under the rural fund, particularly one closely associated with a private sports venture.

The majority of projects already announced in other parts of Canada cover water and sewer installation and upgrading, fire service improvements, and road and bridge work. In March, the Governments of Canada and New Brunswick announced two ice skating complexes costing a total of $30 million for Fredericton, the province's capital city, based an application by the city council. That appears to be the only project of its type.

The provincial government isn't listed as one of the eligible applicants on the Newfoundland and Labrador program website. According to the information there, eligible applicants include:

Local governments including towns, regions, or local service districts; Inuit Community Councils; and non-governmental organizations whose application is supported by a resolution from a local government.

Read the actual agreement though and you see that the provincial government can apply and own the infrastructure, even though the provincial government sits on the joint management committee that approves applications.

Today's announcement contained no details of the management arrangement for the new complex even though it will include privately-owned space. Nor has it been revealed which organization applied for the federal and provincial funding.

Hearn doles out pork; soldiers still waiting - Updated

Loyola Hearn will announce today that the federal government will pump cash into a new "provincial" recreation centre being built on Crosbie Road in St. John's to replace a facility at the former Torbay air base.

[Update: According to the news release, the provincial and federal governments will contribute a total of $4.0 million from a jointly funded rural infrastructure agreement. Another $1.3 million will come from the City of St. John's and another $1.0 million will be raised by Sport Newfoundland and Labrador, a local rugby club and other fundraising. The provincial recreation centre project will apparently include a major addition to a privately-owned rugby club facility.]

The City of St. John's has already committed cash to the new building.

Meanwhile, Hearn ignores - as his predecessors have ignored - the need for a new headquarters and offices for the Regular Force presence in St. John's, cadets and four of the army and communications reserve units in the province sit in buildings slated for disposal.

Estimated cost of the project is $68 million to house Canadian Forces Station St. John's, cadet headquarters, The Royal Newfoundland Regiment, 56 Field Engineer Squadron, 36 Service Battalion and 728 Communications Squadron.

It's hard to understand why the federal government would pump cash into a building that is entirely the provincial government's responsibility to build yet a much larger and more important project that is entirely a federal responsibility sits stalled somewhere in the depths of the federal bureaucracy.

What's worse, the reserve units and CFS St. John's are responsible for considerable economic activity in the St. John's area, far more direct economic activity and benefit than the provincially-owned and operated facility will create.

Hearn might toss up the O'Connor defence plan to drop a new reserve unit in St. John's as a reason for the delay. That is just an excuse. None of O'Connor's pork-spending has been costed or approved and it may well take years before we see the first soldier of that unit in uniform, if we ever see him or her.

[Update II: As Back Talk host Denis Molloy noted, Hearn apparently assured everyone that the new DND headquarters is under active consideration. The problem is that it has been under "active" consideration for the better part of a decade through administrations both Liberal and Conservative. The hang-up in approval for such a necessary project remains inexplicable.]

In the meantime, the members of our Canadian Forces work away in buildings left over from the Second World War that are slated for disposal and that should have been demolished years.

Hearn should show a bit of interest in this project rather than gaining some publicity for himself pumping cash to support a provincial government the feds shouldn't be supporting and announcing millions for communities from a program put in place by the previous Liberal administration - and needlessly delayed by the provincial government.

Insights into the Premier's mindset

From the decision of an Ontario judge on a lawsuit filed by Henley Capital against Cable Atlantic, Inc. in a dispute over fees owed to Henley for advice and support provided Danny Williams and Dean MacDonald in selling Cable Atlantic to GT Group Telecom and Rogers in 2000:

"We are adamant that your client is not entitled to any additional compensation and will only pay same if ordered to do so by the Supreme Court of Canada.

Judge yourself accordingly!"

Danny Williams to solicitor for Henley Capital, January 5, 2001.

At that point, Cable Atlantic had paid Henley slightly more than $65,000 against an invoice for services rendered that eventually totaled almost $400,000.

Williams, who apparently had not seen the agreement between Henley and Cable Atlantic until after the sales were concluded, contended in the letter that the fees agreed upon were considerably less than Henley billed and that Cable Atlantic hadn't really needed Henley's assistance since the company principals - Williams, MacDonald and other senior officers - knew enough to conduct the sale themselves without Henley.

At several points in the decision, the judge notes that Williams and MacDonald considered Henley's work to have been a "hobble", local slang for a small, inconsequential job.

The pattern in this case is interesting on several points.

Firstly, Henley's work is diminished by Williams and MacDonald to the point of near insignificance despite evidence that Henley's work and his advice garnered significant financial benefit to Williams and MacDonald. The court was told and repeats the characterization that Henley's contract was considered a hobble.

Secondly, Williams is described in the decision as going "ballistic" when seeing Henley's invoice. Williams' temper is legendary.

It is almost incomprehensible that MacDonald did not show the Henley contract to Williams . Since the court has accepted this as fact, there is nothing to do but marvel at the notion that such a failure would occur. Perhaps Williams never paid the final settlement and the legal costs out of his own pocket, requiring instead that MacDonald foot the bill.

Thirdly, as in the quote above, Williams is prepared to take firm positions - perhaps in the heat of the moment - and then to sustain that position despite the costs.

In this instance, had Williams as majority shareholder decided to settle the account at the outset, the total outlay would have been around $400, 000 on a gross profit of close to $300 million in cash and stocks.

Even if Williams had settled this matter after trial - the decision was rendered on 31 May 2004 - the total costs would have been considerably less than the final tally.

Instead, Williams expended considerably more than that over a five year period in legal fees and associated costs including giving evidence in a Toronto courtroom. The case went through a first hearing and a subsequent appeal to the Ontario Court of Appeal that rendered judgment in a succinct four paragraph judgment in late June 2006.

There is holding to a position on principle; then there is holding to a position despite the financial and other rationales in favour of settlement.

This entire court case is odd since Williams' law firm based its insurance business on the simple premise that, in almost all instances, insurance companies are prepared to settle for a quantity of cash based on a rational cost/benefit assessment. In Williams' case, he apparently operates on the basis of never changing a position and never settling under any circumstances until there are simply no alternatives.

Fourthly, there is an interesting comment on Williams' memory of events or his account of events. At one point, henley gave evidence, supported by testimony from John Tory, then heading Rogers, that Tory had contacted Williams on a particular date to make another offer on cable Atlantic. Williams denied having spoken to anyone from Rogers on that date.

Fifth, MacDonald is described in the 2004 decision as having amended his testimony or altered his testimony as evidence was presented contradicting his statements during discovery.

Sixth, overall, it is interesting to note that at no point did Williams or MacDonald attend to negotiating a final version of the initial contract, addressing performance bonuses or, after the deals were concluded to achieve a resolution of the dispute other than through court.

The initial decision notes that MacDonald's response to an e-mail from Henley containing a draft services contract was "bantering", but apparently not substantive. Subsequently, and despite repeated efforts by Henley to talk cash with MacDonald on additional fees and charges, no discussions took place. Finally, when the dispute arose over the invoice, neither Williams nor MacDonald ever met with Henley face-to-face in an effort to resolve the dispute short of court.

This fits the seat-of-the-pants approach taken to the federal government in 2004/05. At that point, no firm proposals were presented to the federal government until November 2004.

It also suggests that similarly slap-dash negotiating style that would have contributed ultimately to the collapse of the Hebron talks. Poor communication could easily have led to both parties misunderstanding what had been agreed upon. Ultimately, Williams tendency to take firm decisions and not back off them - irrespective of the consequences - can easily be seen to parallel the experience with Hebron. Once he had decided on an equity position, he would easily sacrifice $10 billion for a mere $1.5 billion in the same way that in Henley v. Cable Atlantic he was prepared to pay out twice or three times the disputed invoice in total costs only to ultimately wind up losing the battle.

For Max Ruelokke, the implication here is that we may well see the matter headed to a higher court. We may also see the appeal period played out and an announcement made settling the matter as quietly as possible. The only thing certain is that Williams is unlikely to comply with the recent Supreme Court decision unless he absolutely has no alternative.

For Hebron, it's hard to know what henley might indicate other than giving a better understanding of how the supposedly masterful negotiator could fail, without a good reason. Once he locked his mind into a position, there simply is no shifting him, no matter how irrational the consequences are.

Lord doomed in NB?

Bernard Lord will ask the Lieutenant Governor to send New Brunswickers to the polls on September 18 as the boy-king of Canada's only bilingual province seeks a third term as premier.

Given that he only won last time by a single seat, let's say the fight will be close this time.

Good money would be on Lord heading for the Opposition benches.

What he said

Offal News on Kathy Dunderdale, Danny Williams and the delay on the Max Ruelokke file.

It's called negligent discharge

Accidental discharge in a case like this is like describing a suicide as "killed while cleaning his weapon".

It doesn't describe what happened. In order for the weapon to fire, there had to be a round in the chamber. That's risky enough considering that even if the safety was on, it can easily become dislodged in an vehicle accident.

That's when bad things happen.

Like in this case.

Let's get a board of inquiry going right away and make sure the weapon doesn't have a problem and the battalion standard operating procedures are the right ones.

Radio Free Terra Nova

One man's take on a local media outlet and its presentation of news from The Hill.

For sale: one tiny mental box

"If an interested buyer for the mill does come forward, government will do what it can to facilitate a negotiation with Abitibi," said [natural resources minister Kathy] Dunderdale.

"At this point, however, no one has expressed an interest given the state of the pulp and paper industry globally."

That's a section from a CBC news story on reaction to the application by Abitibi Consolidated to tear down the former papermaking mill at Stephenville.

Now a minister might be forgiven for such a statement if it wasn't for the fact that Dunderdale just finished up a tour in a department supposedly devoted to eceonomic development in the province and for the past year or so she has been part of a committee looking to diversify the Stephenville economy in the wake of the mill closure.

For all Dunderdale's love of vapid business-school cliches like "doing the due diligence piece", here's one that isn't meaningless: paradigm shift.

In plain English it means getting your head out of the same rut you've been stuck in. Or, as seems to be the case here, getting one's head out of one's posterior.

The reason the Abitibi mill closed in the first place was because of the very reasons the twenty or so companies government approached gave for not wanting the mill.

So why in the name of merciful heaven, would Dunderdale and her colleagues think they could find a papermaking company interested in taking over the Stephenville mill?

Let's not even mention the business un-friendly climate her boss has created with pointless row after needless racket with people who do nothing other than refuse to bow to his latest demand.

Dunderdale and her colleagues need to show they can see some future for the former Stephenville mill other than papermaking. (They really need to show they actually read and understand the briefing books their long-suffering officials keep handing them.)

Rather than giving permission to demolish the Abitibi mill, maybe Dunderdale can assess the impact of demolishing the exceedingly small mental box in which she and her colleagues apparently keep their collective imagination.

Until Dunderdale starts thinking outside the box, there's precious hope for anything new economically to happen in Stephenville - much less the province as a whole - any time soon .

Watching Tom Hedderson

The Department of Tourism, Culture, Recreation and Personal Promotion for the Minister is running a series of cheesy televisions spots on Rogers Cable in the St. John's area and likely on Rogers cable outlets across the province.

In the St. John's area, the spots are running in support of a summer replacement show for Out of the Fog that is similar in format and which has sucked up so much of the local Rogers budget that the usual broadcasts of the annual regatta were scrapped this year.

The spots don't appear to be part of the usual tourism promotion; heck, they wouldn't be part of any credible promotion designed to get people to travel around the province and see the sights.

You won't find reference to these spots in the tourism marketing strategy. The in-province approach lists these objectives:

- to increase resident in-province travel and expenditures by motivating residents to vacation in-province.

- to increase resident knowledge of activities and attractions that occur during all, spring, and winter seasons as well as the summer period.

- to increase frequency of travel by motivating residents to take additional and more frequent short trips during the shoulder seasons as well as their annual summer vacation. Increase focus on the shoulder seasons.

- to provide value-oriented advertising opportunities for tourism operators.

The spots feature cabinet minister Tom "The Watch" Hedderson purportedly kayaking and doing other stuff he clearly doesn't do in his real life.

As much as the marketing gurus are likely to come up with a bunch of excuses for wasting the money explanations for this particular advertising concept, I doubt very much ordinary people would accept the idea that seeing a politician most of them barely know looking incredibly stiff and uncomfortable would support these objectives.

The reality is that these spots just don't fit into the professional ad campaigns we've come to expect from our tourism marketing campaigns. No one should blame the agency of record (AOR). The new AOR has turned out some decent spots and worked to apply the marketing strategy. Their stuff can be found a Tourism Newfoundland and Labrador under the title "Beauty on Film" in the "Sights and Sounds" section.

The "Watch Tom Hedderson Float in a Kayak and Pray to God it Doesn't Flip Over" campaign isn't on film and it is far from beautiful.

Bad enough that the Williams administration has been wasting a great deal of its advertising dollars over the past couple years on this kind of bumpf, just like the Grimes and Tobin crowd before them. Surely everyone has heard - and then quickly started to ignore - certain ministers appearing on VOCM talking about summer driving season, as part of VOCM's usual summer advertising, moreso than doing anything substantive for the public and the government.

Bad enough that over the past 10 years all members of the House of Assembly and cabinet ministers have gone back to the hideous Peckford era practice of spending tax dollars to send messages of greeting to this and that group featuring little more than their smiling mugshot.

Basically, what we have running on Rogers is nothing more useful than some personal promotion for the minister at taxpayers expense. Since it's television, we have to ad in the production costs of the different spots and the ad time to see it is one of the most useless and at the same time most costly of these personal promotion for politicians.

The spots should stop immediately since they represent an entirely inappropriate way to spend public money.

Over the past few weeks, Newfoundlanders and Labradorians have been treated to one too many stories of politicians - Liberal and Conservative alike - who, over the past decade have spent public money to their own individual benefit. They've watched the stories spill out and the politicians fumble with excuses and inadequate responses. Now they can share Tom's "watch" fetish.

Tom and his colleagues should know that the public are watching closely.

They shouldn't assume the public is liking what they are seeing.

48 hours

And still no word from the provincial government in response to Monday's ruling on Ruelokke v. Government of Newfoundland and Labrador.

In the meantime, it seems the rest of us are just supposed to sit around listening to Roxanne on the iPod.

No interest, indeed

There is something oddly appropriate about the headline on a release from natural resources minister Kathy Dunderdale advising that the Stephenville Mill will be scrapped but assuring us that she and her colleagues are still working dilligently on a "strategy".

The headline: "No interest expressed in Stephenville mill".

The confirmation of government's position is in a quote from Joan Burke, education minister and the member of the legislature representing Stephenville: "Perhaps now that this matter is settled, we can all fully concentrate our efforts on diversifying and strengthening our economy..."

The only problem with Burke's position is that it is exactly the opposite of what she and the Premier told the people of Stephenville repeatedly over the past couple of years. From Williams election pledge that the mill would not close right down to the prospect of expropriating the property, Williams and his minister made great promises.

They talked of having a fall-back position, a so-called Plan B.

Turns out there was no Plan B, except perhaps as expressed in the quote from Burke, above.

With this news release, the Williams administration is accepting Abitibi's proposal to demolish the entire Stephenville mill structure and restore the site as near as possible to its original state before the mill was built in the 1970s.

What this means is that government is unwilling to purchase or otherwise acquire the building and have it available for alternative uses besides papermaking. Government has deemed it better to obliterate completely any sign of the mill than to look at any form of industrial development in place of the Abitibi mill.

So what are we to make of the talk over the past few years?

Not much, apparently.

In the release, we are not even given the courtesy of some hard, factual information. We are not told that a thorough engineering and financial assessment have shown it is actually better to let Abitibi clean up the site and let someone start from scratch.

We are not told very much of anything actually.

Nope.

All we get in the news release are hoary cliches about diversification and a commitment to doing something. Accountability, transparency, openness - genuine communication - all are missing.

The one thing we can be thankful for is that Stephenville is not being handled like Harbour Breton, at least at this point. There, people have been kept hanging for two years with glowing promises and commitments, none of which have come true. At least in Stephenville, people know the thing is over and those that have not already gotten on with their lives can do so now.

It is oddly appropriate, therefore, that the release title mentions a lack of interest. The headline refers to the lack of intereest of other parties in operating the plant as a papermaking mill.

Given the content of the release, though, it would seem the headline also refers to a certain lack of interest on the part of the current administration in any of a number of things. Not the least of these would be any role the mill site itself might play in the future "economic diversification" of the area supposedly being developed by the committee of ministers that leads a task force of officials - that lives in the house that Jack built? - as they set about "exploring a number of value-added options that have been identified for the region, with technical support being provided by staff of the Department of Natural Resources."

No interest, we are told.

No interest, indeed.

Pressure mounts to appoint Ruelokke

vocm.com's question of the Day feature yesterday focused on the provincial government's refusal to obey the law and acknowledge Max Ruelokke as chairman and chief executive officer of the province's offshore regulatory board.

The numbers were running heavily against government all day, including at one point hitting 76% in favour.

The Premier's Office e-mail tree mustn't be working very well these days. Their ability to fill up call-in lines is weakening and in this case, even a last minute deployment - after 9:00 PM - couldn't swing the votes in their favour.

The final vote remains 54% in favour of Ruelokke.

Danny got 28%.

It's not the only such vote Danny has lost and believe when you are told that Williams pays serious attention to these things. Why is incomprehensible, but he takes this sort of rigged voting very seriously. Gets kinda annoyed when he is beaten at his own game.

Churchill Falls background

It's hard to find a concise summary of the facts surrounding the Churchill Falls development.

One of the best ones is in the Supreme Court of Canada decision Re Upper Churchill Water Rights Reversion Act, [1984] 1 S.C.R. 297.

This is a famous case among the nationalists, pseudo-nationalists and a few other assorted types hanging off the end of the bar at the Ship.

There's a really brief summary of the whole affair on the Wikipedia site, but the SCC summary is also pretty short and it is factual. It stands as one of the sorry results of the windmill tilting Brian Peckford did on a number of issues only to lose badly in the courts.

The financial summary from the judgment is interesting especially in light of the number of times people like to run around claiming that Quebec owns Churchill Falls or Quebec has control of our natural resources and wants control of the Lower Churchill as well. These people conveniently forget that when it appeared CFLCo would fall into bankruptcy, Hydro Quebec entered into the ongoing recall/resale of power agreements beginning in 1998 designed solely to forestall CFLCo from becoming 100% owned by Hydro Quebec. The political fall-out from such a development would have been disasterous.

Hydro Quebec with its technical knowledge and financial support - most importantly in the form of performance guarantees - was crucial to the overall successful completion of the project.

In light of what is going on these days, it is always useful to get some background information that is reliable. In that same light, I am eagerly awaiting the revision of a paper recently completed by Memorial economics prof Dr. Jim Feehan on the negotiation of the 1969 contract.

The issue should be the subject of a book, but the paper - when the revised version is released - should be an important contribution to our understanding of a controversial, but often misrepresented episode. In any event, the information contained in the SCC decision is a tidy summary until someone writes the definitive book on the entire Churchill Falls affairs.

Extract:

In order to finance the project CFLCo was required under the provisions of the Power Contract to raise $700 million out of an estimated total cost in excess of $900 million. In addition to bank loans of between $100 and $150 million, CFLCo borrowed $100 million by the issue of General Mortgage Bonds, pursuant to a Deed of Trust of which General Trust of Canada was Trustee, known as the General Mortgage Trust Deed, which was executed on September 1, 1968. It was amended by a supplemental Trust Deed dated May 15, 1969. Pursuant to the Trust Deeds CFLCo assigned and charged all its assets and rights under the Statutory Lease and the Crown leases to the Trustee. The Lieutenant Governor in Council for the Province of Newfoundland consented to this assignment on August 1, 1968.

The bulk of the financing came from the sale of First Mortgage Bonds. CFLCo borrowed $540 million on the security of Series A bonds and a further $50 million on the security of Series B bonds. These funds came from lenders outside the Province of Newfoundland and largely from the United States. The Royal Trust was constituted Trustee for the bondholders under a First Mortgage Trust Deed entered into by Royal Trust and CFLCo on May 15, 1969. As security, CFLCo assigned all its assets and rights under the Statutory Lease and Crown leases and all its rights under the Power Contract. General Trust intervened in the Trust Deed as Trustee under the General Mortgage Trust Deed, granting priority to

[Page 305]

the First Mortgage Bonds, Newfoundland also intervened in the Trust Deed confirming its consent to the assignment by CFLCo of its assets to the Royal Trust, which consent had been given on May 12, 1969 by an agreement, known as the Financial Agreement, between the Royal Trust, CFLCo, and the Province of Newfoundland. This agreement was made pursuant to and given the force and effect of law by The Churchill Falls (Labrador) Corporation Limited (Financing) Act, 1969 (Nfld.), c. 76, (the Financing Act).

At the time of the hearing of this appeal [early 1984], according to the statement of facts which forms part of the record, there remained owing by CFLCo in respect of the above-described borrowings $98 million in General Mortgage Bonds, $458,620,000 U.S. in Series A First Mortgage Bonds, and $45,804,000 Cdn. in Series B Bonds. It is against this background that the Power Contract between CFLCo and Hydro-Quebec was signed on May 15, 1969. It is a lengthy and detailed document. Under the contract CFLCo agreed to supply and Hydro-Quebec agreed to purchase virtually all of the power produced at Churchill Falls for a term of forty years, which was renewable at the option of Hydro-Quebec for a further term of twenty-five years. The price to be paid for the electricity was to be based on the final capital cost of the project. Provision was made for CFLCo to retain a fixed amount of power for use within Labrador by its subsidiary Twin Falls Power Corporation. In addition CFLCo could recall on three years' minimum notice up to 300 megawatts (MW) to meet the needs of the Province of Newfoundland.

The importance of the relationship between CFLCo and Hydro-Quebec to the success of the Churchill Falls development is made evident by a reading of the Power Contract. Each party was to be responsible for the construction of transmission lines on its side of the Quebec-Labrador boundary. To ensure compatibility of the two systems, the

[Page 306]

contract provided that transmission lines and related facilities were to be built according to Hydro-Quebec's specifications. Hydro-Quebec was given a supervisory role over CFLCo with respect to maintenance of the development and also acquired the right to operate the plant in the event of CFLCo's failure to do so. For its part Hydro-Quebec agreed to make funds available for the completion of the project over and above the $700 million to be raised by CFLCo in exchange for mortgage security. If CFLCo lacked the funds necessary to meet debt service payments, Hydro-Quebec agreed to advance the necessary monies in exchange for debentures and shares of CFLCo. The Quebec utility also agreed to pay the difference between six per cent and any greater rate of interest payable by CFLCo on its obligations. Although Hydro-Quebec owns only 34.2 per cent of the issued shares of CFLCo (the remaining 65.8 per cent owned by Newfoundland and Labrador Hydro, a Newfoundland Crown corporation), a voting trust arrangement provides that no substantial changes in the financial or other obligations of CFLCo can be made without the consent of 75 per cent of the shareholders. [Emphasis added]

Good advice likely unheeded.

Offal News has an interesting positive suggestion for Danny Williams to help him out of the self-imposed jam on the offshore board.

Too bad Williams doesn't get good advice.

Really too bad he never takes good advice.

This mill will not close!

"Expropriation is still an option for the provincial government if it finds another operator for Abitibi-Consolidated's soon-to-be-shuttered paper mill in Stephenville, Premier Danny Williams says."

That was the lede for a Rob Antle story in Telegram last December.

Here's the latest plan for the Stephenville mill, as announced today in the environmental assessment bulletin issued by the provincial government:

(2) Stephenville Paper Mill Site Decommissioning (Reg. 1281)
Proponent: Abitibi-Consolidated Company of Canada

The proponent proposes to decommission and rehabilitate the pulp and paper mill site in Stephenville. The infrastructure and physical features to be decommissioned include: the main pulp and paper mill building including steam plant, maintenance shops and administration offices; paper storage sheds; effluent treatment facilities and pipelines; wood yard; industrial landfill systems on the east side of Route 490; hydrocarbon bulk fuel storage facilities; fuel and process storage tanks; water and sewage systems; transformers and other electrical equipment, etc. A summary of the Environmental Site Assessment (ESA) Phase I work is also included. The decommissioning of the site is scheduled to commence in 2006 and is tentatively scheduled to be completed by 2008. The undertaking was registered on August 7, 2006; public comments are due by September 12, 2006: and, the minister's decision is due by September 21, 2006.

The minister encourages all interested parties to become involved and to make comments known. Comments on submitted documents are invited from the public, addressed in writing to the minister, and are welcome prior to the deadline date shown.

How quickly they forget.

Stuck in a decision loop?

Rule 1: The Boss is always right.

Rule 2: If the Boss is wrong, see Rule 1.

Amateur computer programmers Geeks and nerds many microchip-centuries ago used to like setting up loops in their programs and watch what happened.

or sometimes they'd make a loop by accident and wonder why their computer stalled.

Is the Williams decision-loop slowing response to the Halley decision on max Ruelokke?

It's well over 24 hours since the decision and no sign of a response from government yet.

Could it be the government is in a decision loop?

If they appeal the decision they are guaranteed to lose. This will only increase the criticism of the Premier for fighting a lost cause anyway. Note the only public support he has on this file is from people who get regular messages from his office telling them what to say.

If he accepts Max, as he should, then the Premier has to admit he lost....that maybe he was wrong.

At no point has Danny Williams ever admitted to making an error nor has he apparently ever lost. There's always been an ability to redefine the issue so he comes out smelling like a rose.

This isn't a question of ego.

Put that aside and the decision becomes easy. Let's move on and get to the bigger issues facing the province.

Make a decision and accept the judgment and the story is gone in less than 24 hours.

Delay a decision or worse - appeal it - and the bleeding will continue for weeks and weeks.

Then you can add this bleeding to the other bleeding on so many fronts and the regular CBC Radio political updates will be re-named "The Premier Has A Bad Week, Week 52".

We don't need it. Danny doesn't need it.

We need the Premier to get back to working on the files that have a promise of success for him and for the province as a whole.

Gordo and the return of the Connie pork brigade

We've written before about the odd choice of Gord O'Connor, the former lobbyist for defence manufacturers and old-style retried general as Minister of National Defence.

Head to back to articles written in the late winter and early spring and you'll see comments on the obvious shortcomings O'Connor's defence policy which was designed to turn defence spending into pork.

Well, today's Globe has the story of the Stephen Harper administration invoking a national security clause in the Agreement on Internal Trade that allows the feds to micromanage where in the country $8.0 billion in defence spending will go.

There is a trough.

As much as the Connies used to criticize those with their nose supposedly in it, once in power, the Connies are following a long established Conservative tradition of wasting defence dollars and using defence spending as goodies to hand out for political gain.

How long will it be before Steve has the Gucci loafer closet filled, too?

Take all the time you need

The Ruelokke v. Government of Newfoundland and Labrador case ended yesterday before lunch.

The Williams administration knew the decision was coming and knew there were basically only two possibilities. Either they'd win or they'd lose. Since the Premier already committed to abide by Mr. Justice Halley's decision - whatever it was - then there really isn't much to ponder.

So why is the provincial government having such a hard time giving its official reaction - even a preliminary reaction - to the decision?

The Premier has been noticeably silent, indeed he's been all but invisible these past few weeks.

Word on the street is that the powers that be can't sort out who will speak: Will Danny Williams go out there and deal with it himself or will he send his proxy minister, Kathy Dunderdale?

Take all the time you need, gang.

The way government has handled this file tells us all a great deal about how this administration operates.

Their lack of a reaction on this file is just part of the bigger picture.

Ruelokke wins; government's actions called reprehensible, callous

Mr. Justice Raymond Halley handed down his ruling in the case Max Ruelokke was forced to bring against the Danny Williams government in an effort to have Williams and his cabinet live up to the law governing the offshore regulatory board.

Ruelokke won.

Halley's comments on the provincial cabinet's actions in the matter are scathing, calling Ruelokke's treatment at the hands of cabinet "reprehensible". Halley said "[o]n the whole, the Respondent has treated the Applicant with contempt
and disrespect." (p. 22)

Several new details of the case emerged in today's ruling, details that undermine the credibility of the government's campaign to install St. John's mayor Andy Wells in the job as head of the board regulating the offshore industry.

According to Mr. Justice Halley, before the hiring process was sent to a third party arbitration panel, federal natural resources minister John Efford offered to split the combined chairman of the board and chief executive officer job and send only the board chair position to the panel. Williams and the provincial government never took up Efford's offer despite subsequent claims they wanted to split the job in the interests of "good governance."

Minister Efford initially advised the Respondent that the federal government intended to submit only the position of Chair of the Board for mandatory arbitration.
It was at that point that the Respondent had an excellent opportunity to insist that both governments proceed under section 12 of the Act for the selection of the Chair and that Panel or another Panel be constituted under section 24 of the Act to select a different person to be the CEO of the Board. According to the Respondent, the good
governance of the Board was "“at stake"”.

Instead of proceeding with the selection of the Chair of the Board only as suggested by Minister Efford, the Respondent appears to have embraced the "“one person"” concept. In reply to Minister Efford'’s letter, the Respondent issued a press release on August 25, 2005 in which Minister Byrne announced that Dean MacDonald would be the province'’s representative on a Panel that would select one person to be both the Chair and CEO of the Board. (p. 9)

Halley also confirmed that the selection panel used Robertson Surette, the company hired to conduct the initial search for chairman/CEO to conduct the second arbitration panel. The initial approach by RobeSuretterrette was scuttled by Danny Williams bizarre and thus far unexplained efforts to foist Andy Wells on a process that was nearing completion.

Halley called Andy Wells unqualified and said "it was mischievous for the Respondent to continue to 'push' for his appointment [of Andy Wells] after the Panel had made its decision." Bond Papers reached the same conclusion on Wells' lack of qualification last July.

So far no one has been able to come up with a good explanation for the Premier's "mischief" beyond pique.

While Danny Williams said three weeks ago he would abide by Mr. Justice Halley's ruling, odds are good that Williams will opt to appeal this decision to the Supreme Court of Canada if need be.

The Premier was unavailable for comment today. Let's see what he does on this file next.

Anyone wanting a copy of the decision in pdf format can simply drop me an e-mail.

The Four York Harbourmen

Monty Python used to do a sketch in which four elderly gentlemen sat about inventing ever more outrageous stories about how tough it had been growing up in their little corner of Yorkshire.

It loses a lot without the broad Yorkie accent but there were a couple of gems like:

"There were hundred and fifty of us living in shoe box in middle of road."

The climax of the sketch is Eric Idle, as the fourth Yorkshireman, who finally launches into a tirade:

Right. I had to get up in the morning at ten o'clock at night half an hour before I went to bed, drink a cup of sulphuric acid, work twenty-nine hours a day down mill, and pay mill owner for permission to come to work, and when we got home, our Dad and our mother would kill us and dance about on our graves singing Hallelujah.

FIRST YORKSHIREMAN: 

And you try and tell the young people of today that ..... They won't believe you.

ALL: 

They won't!

It's like the Upper Churchill and the lengths some people go to "prove" just exactly how bad Hydro Quebec is screwing us. We already blogged this, but the whole subject is a goldmine of information.

Something under the bed is drooling

The agreement between Hydro Quebec and BRINCO for the development and operation of the Churchill Falls hydro-electric project stands as one of the most lop-sided agreements in Canadian history.

The provisions that garner the most attention are the ones requiring Churchill Falls Labrador Corporation (CFLCo)- the company managing the site, jointly owned by Hydro Quebec and Newfoundland and Labrador Hydro - to sell power to Hydro Quebec at a phenomenally low, fixed rate until 2016 and from 2016 to 2041 to sell the power at fixed rates that are lower again.

The Upper Churchill contract remains a touchstone for nationalist and other ire in Newfoundland and Labrador. Such is the emotion raised by the subject that it rivals the popular hatred in pre-1933 Germany of reparations under the Versailles Treaty that officially ended the Great War.

Much has been written in the past five years about the Upper Churchill contract with claims as to how much money Hydro Quebec makes from the project versus what accrues to Newfoundland and Labrador through the Crown-owned Newfoundland and Labrador Hydro.

In a December 2005 article, The Independent claimed that "[d]ue to the lopsided nature of the 1969 contract, Hydro-Quebec is currently earning an annual profit of close to $2 billion compared to Newfoundland and Labrador's $32 million." No source is cited for the statement. An August 2005 article in the same newspaper claimed "since 1972 [Hydro Quebec] has gathered an estimated $23.8 billion in revenues; Newfoundland and Labrador has made approximately $680 million." Again, no source is cited for the information.

The same information was cited by Memorial University professor Dr. Chris Dunn in a February 2005 article on the Atlantic Accord. Dunn cites The Independent's so-called balance sheet on Confederation since 1949.

Former Premier Brian Tobin told Toronto's Empire Club in 1996 that:

Hydro-Quebec is buying Churchill Falls power at 1969 prices and re- selling it at 1996 prices. Under the agreement, this will go on for another 45 years. The windfall profits for Hydro-Quebec are immense ... and unconscionable.

Since full power came on stream from Churchill Falls in 1976, Hydro- Quebec has received benefits averaging about $600 million a year. Newfoundland and Labrador has received benefits that averaged $23 million a year. Recently, that has slipped to $16 million a year.

From 1976 to 1996, Hydro-Quebec received 96 per cent of the benefits, while Newfoundland and Labrador got only 4 per cent. To put this in perspective, in 1995, while Hydro-Quebec received benefits of $1.4 million a day from Churchill Falls, Newfoundland and Labrador received just $45,000 a day.

His successor, Danny Williams has made much the same argument using much of the same language and the same figures.

At least two things are noteworthy in the examples provided above, examples that are consistent with virtually every single comment on the Upper Churchill project and alleged revenues gained by Hydro Quebec from what Brian Tobin clearly asserted was the practice of reselling Upper Churchill power at windfall prices.

First, not a single source - let alone a verifiable source - is cited for the figures.

Second, the figures vary widely and one might also note wildly. Brian Tobin's figure of $600 million annually is low, even allowing for electricity prices in the mid-1990s. Danny Williams claim of $1.0 billion is large but some of the more extreme claims, such as those of The Independent have put the figure as high as $2.0 billion annually.

There is one assessment that does provide some slightly more detailed information. A paper prepared by the Centre for Spatial Economics for the Royal Commission on renewing and strengthening our place in Canada reproduces analysis completed by the Newfoundland and Labrador Department of Finance. It is important to note, however that the figures represent theoretical losses for Newfoundland and Labrador as a result of the long-term, low-fixed-price power sale portions of the Upper Churchill Contract.

The Department of Finance estimated lost revenue for both CFLCo and for the Newfoundland and Labrador government for the period 1991 to 2001 based on several scenarios and assuming that power could have been sold for $20, $30 and $40 per megawatt hour above existing rates.

On the face of it, these assumptions are nothing short of fantastic. They are entirely devoid of any of the historical basis on which the original development took place. In and of themselves, the assumptions proceed from the very best case scenario in which the original contract negotiators were not only free of financial pressures but were also able to foresee subsequent developments in energy pricing such that they would provide the best possible power sales terms less than 20 years after the project achieved full power.

On top of that, the finance department estimates - at least as reproduced by the Royal Commission paper - that CFLCo would turn over all revenue to the shareholders and that, in turn, Newfoundland andLabradorr Hydro would have turned over all additional revenue to the provincial government.¹

If we accept all those assumptions, the province's Department of Finance projected that for the years between 1991 and 2001, the Government of Newfoundland and Labrador would have received the following amounts of revenue:

Year: Amount (pricing assumption per megawatt hour [mwh])

1991: $294.0 million (+$20/mwh) to $589.1 million (+$40/mwh)

2001: $315.0 million (+$20/mwh) to $630.0 million/mwh

This is a far cry from figures cited in any of the examples given above. Moreover, it must be borne in mind that these are theoretical losses of revenue. No evidence has been presented that Hydro Quebec actually sells Upper Churchill power at the highest possible prices and therebycollectss the windfalls Brian Tobin claimed. This is not to say of course that such a situation might not theoretically exist; but it is a long way between theory and proof or even between theory and a conclusion based on a balance of probabilities.

All we can say with certainty of these figures - the only ones from an identifiable source - is that they represent theoretical losses based entirely on the assumptions of the economists conducting the analysis. If they assume different can-openers, then the entire analysis heads for the ash can.

Some will undoubtedly wonder why this argument about amounts is important. After all, the nuclear winter theorists only confirmed that nuclear war would be an unmitigated disaster. Whether or not Quebec is reaping windfalls or the magnitude of the windfalls is irrelevant: the contract is still a disaster for Newfoundland and Labrador, some would argue.

This would be true except that it appears that entire argument is based on fantasy. it should go without saying that fantasy is no basis for public policy.

More importantly however, the Upper Churchill contract has become nothing more than a convenient tool which successive politicians have used to bludgeon their adversaries for more than three decades. Such is the impact of the Upper Churchill mythology that an otherwise viable agreement with Quebec in 1991 to develop the Lower Churchill fell apart in large measure due to fear in both Quebec and this province that references to the Upper Churchill agreement would cause a political and popular backlash in both provinces.²

In the same way that the Conservative Opposition attacked Wells on the matter in 1991, Progressive Conservative leader Danny Williams - aided by then-Hydro chairman Dean MacDonald - used Lower Churchill negotiations and the spectre of the Upper Churchill to bludgeon Roger Grimes a decade later. The only difference was that the 1991 Conservatives felt a deal ought to have been done.

Danny Williams has repeatedly exploited popular fears of the upper Churchill at every juncture.Hee repeats the pledge that he will not do a bad deal, as was done in the 1969 agreement. Williams repeated use of the Upper Churchill contract as a political device is more than mere partisan rhetoric.

At the very least, his enthusiasm for describing Newfoundlanders and Labradorians as victims of foreigners and corrupt or stupid local politicians serves only to undermine public confidence that they - individually or collectively - can ever negotiate a "good deal." So widespread is the self-doubt that has come from decades of the victim myth that in the recent film contrasting Newfoundland and Ireland, comedian Mary Walsh lambasted her fellow Newfoundlanders as too stunned to make a decent deal.

The "No bad deals" pledge may also lead Williams himself to poor decisions. There is good reason to believe that Williams walked away from the Hebron offshore oil deal, at least in part, for fear that some would argue - utterly without reason - that it was a repeat of the Upper Churchill give-away.

In the recent pursuit of the Lower Churchill development, Williams has also made questionable decisions. He tossed aside what appeared to be a viable and beneficial proposal from Ontario and Quebec in favour of the go-it-alone option. In making the announcement Williams made much of the psychological aspects of his decision with references to being master of our own destiny. Yet he made no mention of the financial impact of doubling the provincial debt in pursuing the $9.0 billion project solely on the credit of Newfoundland and Labrador taxpayers.

By the same token, Williams' option of avoiding sales to Quebec might also prove to be so difficult a feat that the project will not be built. Worse still, it might be built but under economic terms that will be far less beneficial to the province than ones that were already in front of his face. In hydro-electricity development, as in oil and gas, timing is the key and Williams may well have fouled the timing for the Lower Churchilldrivenn largely by a demon of his own invention.

The only way to get past this issue is to de-claw the Hydro-Quebec demon so carefully created by so many politicians and others for their own, often self-serving purposes. Only by understanding what actually occurred in 1969 or at any time in the past, can we expect to make sound public policy decisions and, in the process, come to appreciate that collectively, Newfoundlanders and Labradorians are already capable of mastering their own destiny. They can never do so on the basis of fantasy and fear.

By de-clawing the Hydro Quebec demon we do not ignore an ignominious contract; rather, we restore to ourselves collectively and individually the wisdom to succeed.

If we do not despatch the Hydro-Quebec bogeymann lurking underneath our political beds, we may find ourselves saddled with an enormous and entirely unnecessary financial burden from a genuinely bad deal, or worse still, left with a Lower Churchill project that failed for nothing other than a politican's fear of saying yes to a very good deal.



___________________________________________

¹ First we assume a can-opener redux. The authors of the report state the revenue was assumed to be turned over to the shareholders and then carry forward certain other assumptions about the theoretical impact of Equalization reductions on the resulting revenue. Unfortunately, this is yet another huge assumption which has equally huge implications for the rest of the analysis.

Until the early 1990s, the provincial government did not make a habit of claiming dividends from Newfoundland and Labrador Hydro. NLH is the shareholder in CFLCo, not the Government of Newfoundland and Labrador.

Since the theoretical assumptions were applied only to the decade before 2001, we have no way of knowing what would have occurred in the 1980s, and hence what the financial state of the provincial government would have been in the recession of the 1990s. This is what drove the claiming of dividends and therefore the assumption in the cited report that government would have ultimately received all added Newfoundland and Labrador revenues from the theoretical projections.

² See, for example, Jason Churchill, "Power politics and questions of political will: a history of hydroelectric development in Labrador's Churchill river basin, 1949-2002", prepared for the Royal Commission on renewing and strengthening our place in Canada, March 2003.

Specifically, the proposal called for a 30 year contract that would initially grant Hydro Quebec access to 2,400 MW of power but this amount would decline over time such that by the end of the contract in 2031, Newfoundland and Labrador would have had 3,200 MW available to either use, to export, or some combination thereof. Newfoundland and Labrador would also have provided energy security well into the twenty-fi rst century and access to 800 MW of power at 3 mills/KWH. This would have granted the province competitive energy rates in terms of the Canadian average and the province would have secured a $12 billion asset which would have generated income and employment into the subsequent century. The deal also included an escalation clause and stipulated that Hydro-Quebec would pay approximately between 73-74 mills for the energy. Additionally, the project would involve the Lower Churchill Development Corporation and the province served to receive upwards of $14 billion through its 51 per cent share in the company. This amount could have been increased if the province decided to buy out Ottawa's 49 per cent share. The deal was projected to be of far greater value than the Hibernia Project. In terms of personal income benefits it was expected, by 2001 to have yielded $2.7 billion in terms of personal income benefits as opposed to $2.1 billion for Hibernia and $710 million in gross government revenue as opposed to $610 million for Hibernia. (Briefing to cabinet, December 1991, cited as footnote 100, page 55.)

Annoying INCO?

Danny Williams said publicly that INCO and the striking union should go back to the table and see if they can settle their differences...

which is exactly - as in word for word exactly - what NOIA told Danny to do with the Hebron thing.

Two questions:

1. Should the president of INCO tell Danny to piss off because he is annoying?

After all, that's what Danny told NOIA to do.

2. Why is Danny treating INCO - and its supposed steal of a development deal differently from ExxonMobil?

Peace in Middle East at hand

Heading into a Liberal caucus meeting on Friday, Quebec premier Jean Charest called for a cease fire in southern Lebanon today, saying his position is "similar" to that of the G8 group of countries.

How nice.

I am sure the Israelis and Hezbollah will cave in to that pressure.

Paul Wells' take on the recent Premiers' meeting in St. John's couldn't have been more accurate.

What's next?

Danny Williams hops a plane to Jerusalem to see if his expert negotiating skills can work where everyone else has failed?

Bernard Lord promises to make Middle East peace an election issue in New Brunswick?

Ralph Klein delays opening the Alberta legislature so he can go fishing with the Israeli prime minister?

Provincial legislators lease office space from themselves

The Telegram is reporting today a story originally covered by The Independent, that some members of the House of Assembly operate offices in their constituency from buildings they own.

The Telly version is considerably better detailed.

Ed Joyce (Lib. - Bay of Islands) and Kelvin Parsons (Lib. - Burgeo-La Poile) own the rental properties in which their offices. According to the Telegram story, both charge $350 per month to their House of Assembly accounts as rent on the office space.

When contacted by the Telegram, both MHAs noted that the price they charge government is less than they were charging previous tenents. Both were also quick to point out that they were within the rules established by the Assembly's Internal Economy Commission. Both also claimed to have written permission from Clerk of the House to rent their own property to themselves and bill the cost to the House.

With all due respect the savings - if any - are irrelevent. Both members of the legislature are personally benefitting from public money. The decision on which space to lease was made solely by the legislators themselves.

It's about as clear-cut a case of conflict of interest as one can get.

As for the rest of their excuses, both Joyce and Parsons point to the need for a public inquiry into the entire House of Assembly mess. The legislators themselves set up rules both on constituency allowances and the management of the House accoutns that allowed this sort of conflict of interest to take place over several years. The same group - the Internal Economy Commission - also set up the system that allegedly allowed for the missappropriation and misspending of over $4.0 million between 1999 and 2006.

The current review by Chief Justice Derek Green will propose new rules, but without a more detailed - and entirely public - examination, Green's recommendations will likely have the value of the sensible rules proposed in 1989 by former MUN president Dr. M.O. Morgan and followed until June 1996.

Green's review will be conducted entirely behind closed doors and has no mandate to delve into the previous misspending. In June 1996, the House of Assembly's internal management board voted to change the way constituency accounts were handled and in 1999/2000 changed other rules which the members knew or ought to have known would leave the Assembly's accounts rife for the sort of abuse that has recently come to light.

Politically, a public inquiry would be unpalatable to the Williams administration: in addition to the former Liberal government member's of the IEC would be examined, two current and one former senior minister in the current administration would also likely be examined on their decisions.

Deputy Premier Tom Rideout, finance minister Loyola Sullivan and former House leader Ed byrne sat on the IEC during the period after 1999 when crucial decisions were taken and much of the alleged abuse occured.

At least half of the alleged misspending/misappropriation took place after April 2004. When the scandal broke in June, Premier Danny Williams and other senior officials maintained that administrative changes made in the House of Assembly in April 2004 would make it difficult for abuse to occur after that date. Having agreed with those comments initially, subsequent reports by the Auditor General revealed sizeable financial irregularities occured up to at least December 2005.

Only a public inquiry will have the necessary legal powers to root out the truth of what has been going on with public money for the past decade.

Everything else is obfuscation.

Shameless fan-ism second installment

Yes, you've read it here before.

It's true.

I am a fan of Lynda Calvert (left).

And we are overdue for the annual "It's nice to have Lynda anchoring the local news" post.


and it is great to have her back, even if it is just another summer fill-in job while the regular anchor takes a vacation.

Just like it's great to have someone other than Karl Wells doing the weather. As solid as Karl is, the guy has just grown kinda dull in the job. His replacement created a buzz because she is funky and unconventional in her approach. Once she got over a few distracting visual tics - like the need to bend at the knees when she moved her arms - her delivery got better.

There's a tendency in news anchoring to stick with the tried and true. With its new format, though, the revamped Here and Now supperhour news can mix things up a bit in the search for a format and content that draws more viewers.

Let's consider some shake-ups, like leaving Kris in weather and sending Karl off to do quirkier, human interest stories. The guy is probably crying for a break after centuries of pointing at the bloody blue screen.

Sometimes a change is as good as a rest.

Williams' Hebron folly more plain

While The Telegram editorial today softpedals the issue, let's make it clear:

By rejecting the Hebron development last spring, Premier Danny Williams gambled with a major public policy issue and lost.

Badly.

Predictably.

Williams gave up upwards of $10 billion in oil royalties, plus considerably more in related construction and job benefits because the deal didn't include his last-minute add-on of an "equity position" that he valued at a mere $1.5 billion over the life of the Hebron project.

Williams has never explained what was so important about the "equity position".

The United States Senate voted on Tuesday to open 8.3 million acres of offshore land in the Gulf of Mexico for exploration and development. Reserves in the land parcels are estimated to be 5.8 trillion cubic feet of natural gas and 1.3 billion barrels of oil.

To put that in perspective, the oil reserves are the size of the Hibernia field and more than double the size of Hebron. The gas reserves are more than the total reserves and resources offshore Newfoundland and about two thirds of the total offshore gas when Labrador is included.

A congressional conference committee will now reconcile differences between bills on the offshore lands policies passed separately by the House of Representatives and the Senate.

The Telegram notes that stability - one of the main attractions of the local offshore - has just been undermined by the opening of oil and gas resources in American waters. The Telly-torialist is right.

What they didn't note is that this week's development is further evidence that there are plenty of oil and gas development opportunities around the world and that the Premier's gambit was foolish as a consequence. The Telly also didn't admit that this same point was made previously by the Globe and Mail in articles and editorials the Telly criticized previously.

There are two consequences for Newfoundland and Labrador from this week's developments in the United States.

If - and that is a big if - Williams could theoretically re-start negotiations on Hebron, he will have to give up considerable revenues or forego considerable guaranteed local benefits to make Hebron attractive. The Gulf of Mexico is a well-established area and with its considerable infrastructure, any discoveries in the new parcels can be brought on line far more quickly and at much lower cost than anything offshore Newfoundland and Labrador. They are also far closer to refining and to markets.

If Williams could even get ExxonMobil to return his telephone calls any time soon, getting $10 billion in royalties and thousands of jobs for a mere $500 million in short-term tax concessions will seem like a fantasy.

The other consequence, a far more likely consequence, is that interest in the Newfoundland and Labrador offshore will diminish significantly for the remainder of Williams' tenure as Premier. The oil companies have better plays than Newfoundland and Labrador. Even if Williams lives up to his promise (threat?) to stay in office longer than Joe Smallwood, the oil companies won't be expressing too much interest in Newfoundland and Labrador.

Williams can't develop the resources himself because even if by some miracle he persuades Steve Harper to hand him the legal hammer to beat a field into production, Williams lacks the cash to go-it-alone through the newly minted Hydra oil and gas, hydro electricity and everything else under the sun corporation. Middle-eastern money or Asian money wouldn't change that situation much either, since those investors all have better plays elsewhere.

It's painful to be pessimistic about offshore oil and gas that only a few short months ago was finally becoming the cash cow it had been so long been heralded as being.

But now, after a few rash decisions, the oil and gas industry in the province in well and truly in the slings.

Premier Williams may like to talk tough and puff up his chest when talking of taking big risks.

Perhaps he would do well to remember that he is taking risks with our money, public money.

Perhaps we would do well to remember the same when he comes courting our votes next year. After all, if we want to know who is ultimately responsible for the state our province is in, we need only look in the mirror.

Worth the cash: Paul Wells on the Premier's meeting

It's been a while since Paul Wells' columns at Macleans gained a link from here.

Long overdue sez many and I'd agree.

So here's a link to his most recent online column (at macleans.ca) in which Paul points out that the Premiers' recent meeting in St. John's was a dismal failure.

Oh no. I fear I have fallen into the mocking tone that sometimes provokes a letter of rebuke from Benoit Pelletier, the Quebec intergovernmental-affairs minister, who plays the same role in the Council of the Federation that the former Cardinal Ratzinger once played in the Vatican: stern-eyed guardian of doctrine and lecturer of apostates. How could you take glee from the provinces' hardship? How does Canada benefit when the provinces lose? Doo-dah, doo-dah. But in fact, the provinces, understood as places where Canadians live and consent to be governed, are fine. Eight of them are in budget surplus. All enjoy near-record low interest rates and unemployment. It's the "provinces" -- understood as jumped-up satrapies whose potentates get to tell the governments of Brazil and China how to trade, as a break from telling the government of Canada how to budget -- that had a bad couple of days in St. John's.

Good thing Paul didn't say something about Danny. Then it wouldn't be an ersatz Ratzinger sending e-mails.

Nope.

The Premier's personal publicist might pick up the phone or, if the slight was grievous enough, the thin-skinned Prem himself would give you a ring.

It's another thing Danny picked up from Brian one day when they were playing golf together.

There'd be no chance of spoofing one of those calls.

Nosirreee.

BTW, speaking of spoofing e-mails: if any one of the eighty people or so who got e-mails purportedly from the Premier's e-mail address actually thought that an address saying "premier@gov.nl.ca" was the real thing, then none of those 80 people ever got an e-mail from the real account. Apparently, they also completely missed that the content defamed the Premier hisself.

lookit, people. A spoof has to mimic not merely the address of the sender but the content typically sent from that address. A real spoof is one of those supposedly from your bank or eBay asking for your account number and password. People get fooled because they look real.

If people actually though this fake e-mail came from The Danny, then they likely had never seen a real one.

If the computer nerds shut down the e-mail system on the off-chance these were real, then those guys need to re-evaluate the security system of the government computers.

Seriously.

The shareware obviously ain't cutting it.

But I digress.

As for Paul Wells, when all is done, head over to Inkless Wells, Paul's blog. It is - as usual - an eclectic mix of comments on everything from failing printers to Iggy the erstwhile Liberal leader to a devastating - but brief - review of the Miami Vice movie.

Biting. Funny. Worldly. Thoughtful.

Paul Wells.

What every blogger wants to be when they grow up.

Canadians in Afghanistan

Via youtube.com comes this video of Canadians in action in Afghanistan.

According to the title plate, the video was shot by Canadian Force Combat Camera 8-9 July about 25 km west of Kandahar. The segment opens with a short clip of junior officers or senior non-commissioned officers discussing the operation. At one point, one of the soldiers refers to "niner", radio short-hand for the boss.

You can find other Canadian Forces still and video imagery from operations at the combnat camera website.

The Premier's e-mail address

In the story running around today about someone spoofing the Premier's e-mail address, there seems to be some confusion - or at least a lack of clarity - about what went on.

When the provincial government's information technology czar refers to "the Premier's e-mail" he seems to be referring to the generic address "premier@gov.nl.ca". This is a general address that Danny Williams doesn't use or damn well shouldn't be using.

That address is there for show. It's like info@xyz.com. If this is the address that started turning up at 0100 hrs, it should have been possible to determine the e-mails were fraudulent immediately.

According to the IT czar it took upwards of 20 minutes to confirm there wasn't a security breach.

Hmmm.

If the unidentified individual has the Premier's real e-mail address - that is the one Danny actually uses - then there was possibly a much more significant security breach at the Confederation Building.

Conflict of interest you say, Danny?

[Updated - 1400 hrs 02 Aug 06, as noted]

CBC radio is running a story [link added] this Regatta Day focusing on Liberal party allegations that Danny Williams took a large donation from INCO to help cover the costs of the recent Premier's meeting yet criticized the Liberals for taking a political donation from INCO while it was the government party.

Danny Williams was unavailable for comment, according to CBC, but his personal publicist said the whole concern Williams had had applied only during the negotiations over the Voisey's Bay contract. That's when Williams was concerned about a conflict of interest apparently.  Now?  No problem.

According to CBC, Williams' publicist acknowledged the Premiers' political party had accepted donations from INCO at other times including in 2003 during the provincial general election. As CBC's web story reports,

Williams also banned the company from Tory fundraisers in 2002.

"We didn't want to be in a conflict of interest position, or be perceived as being compromised, quite frankly," Williams said in 2002. [quote added]

Apparently, the fact that INCO is trying to negotiate with the province over the smelter/refinery complex location wasn't in the publicist's notes.

Chevron exploration not linked to Williams

The Globe's Dave Ebner missed some important context when discussing the exploration drilling being conducted by Chevron in the orphan basin this summer. ("Chevron's east coast gamble: $140 million well Canada's most expensive", 31 July 06 print edition)

Some industry players have said Mr. Williams' tactics are discouraging investment, but [natural resources minister Kathy] Dunderdale believes the Great Barasway well indicates that the major oil companies still see good prospects offshore. "Exploration is always very good for the province," she said. "This is pretty significant."

Ebner missed the point - and Dunderdale wouldn't want to acknowledge - the simple fact that Chevron's exploration program pre-dates Danny Williams' term as Premier. The blocks involved were won in December 2003 but the bids for the parcels were based on estimates made before Williams was elected and certainly long before Williams' bizarre negotiating style became widely known.

Dunderdale is right in that the exploration does reflect a certain level of interest among major oil companies in the prospect of large oil and gas discoveries offshore Newfoundland and Labrador. That's a good thing.

But let's not mistake this for anything beyond what it is. Chevron and its partners made certain commitments in 2003 and they have to live up to those commitments or face losing the parcels and forking over unspent cash. Chevron is merely keeping its options open.

This exploration certainly doesn't mean that if the oil companies find commercially viable fields offshore they'll be lining up to meet again with Danny Williams too soon. The fall-out from last spring's spat and Williams' ongoing war of words with ExxonMobil have created an atmosphere of heightened emotion on both sides that will take time to settle down to a point where rational discussion can take place.

So when Ebner says exploration is picking up offshore Newfoundland and Labrador, he is talking about decisions taken three years ago. The full impact of the Hebron failure may only be known when new land offerings come up.

In the meantime, Ebner's article also highlights some of the realities of the local offshore that are missing from the self-excited rhetoric uttered by Premier Williams and his supporters. First, wells offshore are incredibly expensive compared to wells elsewhere. Each of up to 12 Orphan Basin holes that Chevron may drill will cost $140 million each and at best, odds are that only one of those holes will produce oil in commercial quantities.

Second, if there is a commercially viable find, then further wells will be drilled, at $140 million or more a pop, until the field can be well-delineated and its holdings properly estimated. Add to that the other costs of getting an offshore field into production and the risks that oil prices won't stay at US$70 a barrel for the full 20 years some of these fields will be in operation and one can see the magnitude of the financial risks involved.

Taken altogether, we must bear in mind that fallowfield legislation - Danny's latest darling - won't overcome the huge costs of developing oil and gas offshore Newfoundland and Labrador and it certain won't replace the reasoned bargaining that was needed, but sadly absent, from the massive Hebron project.

We must also recall that Williams' other pet project - turning the Crown-owned hydroelectric corporation into an oil and gas company takes cash and a willingness to take risks. Thus far Williams has been unable to show the money or even willingness to take the risks involved in being an oil and gas company. With the cash and risk-taking would come at least some of the rewards he claims would come from the Crown corporation having an "equity" position offshore Newfoundland and Labrador.

Everything else is hot air.