Toward a future that works: we live in a fiscal house of cards

Finance minister Tom Marshall tabled a record-setting interim supply bill on Tuesday, seeking almost $2.0 billion to cover government spending for the first third of the next fiscal year. Based on that, the provincial budget estimates will come in as close to $6.0 billion as not.

In comments last month, Marshall said that spending on health, education and social welfare will consume 70% of spending in the coming fiscal year. At the same time, Marshall has been talking up the need to deal with the provincial government's debt load.

Bond Papers has noted before that Marshall's comments on the debt, while apparently sincere, have a hollow ring about them.  After all, Marshall has served since 2003 in a cabinet that has been doing plenty of talking about the provincial debt, yet the same cabinet has done precious little about it.

In fact, a closer look at government spending over the past four years shows the extent to which the current cabinet has followed a fiscal policy built on a house of cards.

Figure 1, left,  shows the growth in provincial government spending from 2003 to 2007. Overall, spending has increased 23% and consistent with the planned spending for the current fiscal year, this figure is more than double the cumulative rate of inflation in the same time period. [Note:  Amounts shown are in thousands of Canadian dollars unless otherwise noted.]

Some specific categories of spending have increased more dramatically.  Spending on the natural resources department, tourism, innovation, and agriculture has grown by 55%.  Transportation and communications spending has grown by 43% and spending on general government operations was 53% higher in 2007 than it was in 2003.

Spending in other departments grew by lesser amounts.  For example, health - by far the largest single spending item - received $1.64 billion in 2007, up from $1.3 billion in 2003.   [Figure 2, right, below] That represents an increase of 26.4%.  Education is up by 20.5% and social welfare spending has increased by 15%.

Debt servicing, interestingly enough, has actually declined by 6% and dropped consistently from 2003 until the 2007 estimates.  For some inexplicable reason, the finance department predicted an increase in debt servicing.

It's inexplicable since the current exchange rate coupled with low interest rates would suggest that the cost of merely paying the interest on public debt would continue to decline. 

Even at an estimated $511 million for 2007, debt servicing consumes a mere 10% of the annual provincial budget. Compare that to health care,for example, at 32% of expenditure or education at about 20% of spending. Debt servicing is the only category of government expenditure to experience any decrease in the past four years.

And that reduced servicing cost isn't due to any government action.  Contrary to the popular impression, the current administration has actually increased the public sector debt load, that is the accumulated deficits and direct borrowing. [Figure 3, left]  Direct debt, that is the amount owed directly by the provincial government had been declining steadily for the years before 2005. Since then, it has been increasing.

Total debt, that is direct debt plus debt owed by Crown agencies, is $500 million larger in 2007 than it was in 2003, the last year of the Roger Grimes administration.

To make the point absolutely clear, bear in mind that the debt has increased at the same time that provincial government revenue has increased at an unprecedented pace. 

Revenue growth is driven entirely by high oil prices and mineral prices;  that point has been made repeatedly by Marshall and his predecessor. That revenue growth has permitted the spending increases from Figure 1.  That revenue growth comes from non-renewable resources and the peculiar global market situation which cannot be expected to last.

The extent of the revenue growth, though, is often lost in recent public commentary that focuses entirely on surpluses, especially the surplus of nearly $1.0 billion estimated for the current fiscal year.

Figure 4, right, compares spending growth with revenue growth.  The red line shows revenue growth as estimated in the original 2007 budget.  The purple line represents an additional $1.0 billion in revenue.  That may overstate the result this year, but if it does, then the exaggeration is not that great.

Finance minister Tom Marshall's second budget will increase the steep upward climb in public spending, fuelled entirely by anticipated growth in revenues from two economic sectors.

The provincial government's budget policy is built on a fiscal house of cards. In the next post in this series, we'll take a look at the provincial economy as a whole, with some projections as to what may occur in the near to medium term.

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NL to boost public spending by seven times forecast rate of inflation

An interim supply bill table on Tuesday in the provincial legislature anticipates a provincial budget for 2008 of about $6.0 billion.

Finance minister Tom Marshall told members of the House of Assembly Committee of Supply that the interim supply bill increased spending by 14% over last year's interim supply bill.  The 2007 bill boosted spending by 12% over the previous fiscal year. Marshall said the increase covered inflation plus projected growth in program spending.

The Bank of Canada forecast inflation at 2% for 2008.

The Government of Newfoundland and Labrador spends more per capita in its annual budget than any provincial government in the country, except for Alberta.

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Chevron shows Hebron project for 2012+, currently in 'evaluation'

In its most recent presentation to financial analysts, Chevron lists the Hebron project as currently being in the "evaluation" phase, with a possible start up sometime after 2012.

The company also lists planned exploration drilling in the Orphan Basin in 2008.

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Flak Bait or CJC?

Why didn't the innovation department ever reveal anything about SAC Manufacturing until after Bond Papers and the Telegram started poking around?

According to innovation minister Trevor Taylor, it was due to some problems in "communications protocols". That's the explanation he gave on Tuesday in the House of Assembly.

Some of the communication protocols, Mr. Speaker, I have to admit, were somewhat lax in the early going of the development of these programs. I have asked our department, our communications director and our executive to review our communications protocols to ensure that that instance does not happen in the future. I can assure the House and the people of Newfoundland and Labrador, there was no attempt to try and hide this information from the people of Newfoundland and Labrador and we will be making changes, as I have said, to our communication strategy to ensure that this does not happen in the future, Mr. Speaker.

Uh huh.

Riiiiight.

So apparently, having a protocol of openness, transparency and accountability wasn't enough.  No word of the cash when it was handed out.  No word of the cash when the company hightailed it to Alberta and definitely no word to the public - or apparently the Auditor General, either - when the company went under a mere nine months after getting the provincial government cheque from Taylor's department.

Makes sense though since a protocol of releasing reports within 30 days wasn't clear enough even for the guy who wrote it to make him wonder why three year old reports were just coming to his attention in February - as he first said - or sometime early last fall as he now admits.

And just for good measure Taylor slipped in the stock response whenever this administration screws up:  "it won't happen again."

People handling communications are used to being on the receiving end of moaning and complaining from reporters.

It's called taking flak, as in the German abbreviation for fliegerabwehrkanone - anti aircraft cannon.  Turns out Trevor's comms director is taking flak from the back now too.

Honestly, though, Taylor's buck-passing probably feels a bit more like his comms director got promoted from flak bait to Chief Javelin Catcher.

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Williams contradicts own claim he didn't know secret hospitals report existed

Premier Danny Williams admitted today he knew of a report on the state of city hospitals early last fall despite his claim in late February  [link to March 3 version of story from Western Star] that he didn't know the reports existed.

As he told the Telegram's Rob Antle: "I didn’t know that report existed myself... But this came to my attention this week."

Under questioning from opposition leader Yvonne Jones, Williams said he learned of the reports in a request from Eastern Health to fund a consultant's study on health care in the region.

Williams likely received the memo he mentioned on Tuesday when the provincial cabinet began considering the 2008 budget.

As the Telegram reported two weeks ago [01 Mar 08, not on line]  cabinet approved a $2.0 million increase in the capital repairs budget for 2008 - up from $14 million - but Williams said the budget was increased to $20 million after the scandal became public.

Williams told reporters today outside the legislature that he knew the reports existed but had not read them.  There was no explanation of why Williams didn't probe further, considering that his administration supposedly has a policy of releasing reports within 30 days and of releasing an action plan within 60 days of a report being received.

There's also no explanation of why he said he'd denied knowing the reports existed and yet suddenly admitted he was aware of them all along.

Williams's admission goes a long way to explaining why he has taken no disciplinary action against cabinet ministers and officials for keeping the report secret.

Hansard update:

It's always interesting listening to a lawyer answer questions.  They don't think like normal people and words take on curious properties they don't have when spoken by other humans.

Here's what the Premier said specifically in answer to a question about when he - that is Danny Williams, Q.C. - first became aware of the existence of reports on hospitals and other health care facilities in the province.

Recall that in his first answer - two weeks ago when the issue was hot and the pollsters were gathering data -  Williams said he'd never heard of the reports.

The questions was simple and direct: "When did you become aware of these reports, that they even existed, and the recommendations that they contained?"

The answer was considerably less direct:

From my own perspective, I have never seen that report; but, having said that, the first time that we would have even become aware of it as a government – I remember back – it would have been early last fall when the Cabinet was asked to provide a half-million dollars for a consultant report in order to consider infrastructure issues and site planning, and that was part of that overall plan, but I have never personally seen the report myself over the thirty months.

Right off the bat, he wasn't asked if he'd seen the report.  Williams was asked when he became aware of their existence.

Next he gives an answer which contradicts his public comment in late February.  There's a huge difference between saying you never knew the reports existed and then saying  that "we" as a government became aware of them last fall some time.

It's actually possible Williams himself was aware of the report when it was originally prepared or shortly thereafter.

Notice the phrasing:  "we"  and "as a government".  This isn't the usual royal "we".  This is obfuscation.  Williams is speaking about the reports being brought formally to cabinet. The answer doesn't preclude the prospect that the reports were hidden from view and not formally entered into the budget process.  Cabinet ministers and the premier may well have known about the reports and informally agreed not to deal with them.  Only much later did they notice them "as a government."

Notice as well, that in answer to a subsequent question on the planning and budgeting cycle, the Premier remains vague:

There was no detailed presentation on this particular report as, in fact, as I understand it, it was a buildings assessment - is exactly what it was. So it was discussed in the context of the overall infrastructure program and site planning and maintenance and repair generally.

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NL gov orders empty care home to close for "life safety"

One of the personal care homes ordered by the provincial government to install sprinklers or close has closed, despite having no residents, according to a news release issued Monday by the province's health minister and his municipal affairs colleague.

The home closed effective Monday.  Another home, with just four residents, also closed.  The closure ordered resulted from a 2003 directive from the province's fire commissioner that personal care homes with five or more beds had to install sprinkler systems.

The original order affected 81 homes across the province. The homes were licensed annually by the province's health department, despite what the Monday release claimed was a lack of emergency procedures.

However, under a government regulation in effect since 2001, all personal care homes are required to carry out monthly fire and emergency evacuation procedure drills.

17. A personal care home shall carry out monthly fire and emergency evacuation procedures in accordance with the required standards.

In February, 22 homes were ordered to install sprinklers or make arrangements to install sprinklers within 30 days or cease operations. The government news release issued at the time said the closure orders were issued because of concerns about the safety of residents.

In a related story, 10 hospital and nursing homes operated by the provincial government remain in operation despite a lack of sprinklers. Patients in those facilities require a higher level of care than those in personal care homes and would require considerably more assistance to evacuate in the event of an emergency.

Fire Commissioner Fred Hollett said Friday he found no immediate fire or life safety issues in the 10 hospitals and nursing homes.

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Why did the reporter cross the road?

[Cross-posted to The Persuasion Business]

Geoff Meeker poses an interesting question in a couple of posts at his Telegram blog.  Meeker himself is a former journalist who crossed over to what many reporters refer to only half jokingly as the Dark Side.

Geoff's asking for some comments and with any luck reporters and people from the communications/public relations world will join the conversation.

He poses some questions to get things started:

What is driving this exodus? I suspect that it’s primarily a matter of money. Do governments and corporations pay that much more than the media (okay, I know, but how much more)? What should news outlets do to stem the tide and keep their people (and can they afford it)? Is this migration diminishing the quality of journalism in the province? Is the supply of young people coming into journalism enough to meet the demand? If you’ve recently made the jump, do you have any regrets? Or are you feeling good about the move? What do journalism students think about this issue?

To help stimulate the conversation, here are some observations from the perspective of someone in the public relations business who isn't a former reporter or a graduate of a public relations program.

1.  Why did the reporter cross the road?  Because he/she can.

Over the past four or five years, the number of reporters crossing to public relations in this province has been astonishing.  It's not unusual to see people walking straight out of a newsroom and straight into a mid-level position that was advertised as requiring a minimum - a minimum  -of five years experience in public relations including experience providing issues management advice to senior decision makers.

If there is no perceived difference in being a reporter and being a public relations practitioner, some people will switch careers just because they can.

There is no set path into the persuasion business. The track Jamie Baker is taking makes perfect sense.  he's going from writing copy for a newspaper to producing an in-house magazine for a local union.  There are plenty of communications jobs working for a university or a business that are essentially the same as working for a news outlet.

Public relations does require a massive shift in thinking, though, and in many cases requires a skill set for planning and management a reporter working in a newsroom wouldn't have.

PR isn't rocket science, but that doesn't mean it's easy either.  It comes with its own problems and pressures, just the same as any other job.

Many organizations make the mistake of assuming that PR is about media and therefore the best person to handle the job of fending off reporters' calls is another reporter.  Managing media relations is only one part of a broader set of public relations responsibilities. 

Fundamentally, though, the shift is from being an observer to being an advocate. Ideally, journalists gather information and present an account of what they found usually in a specific medium.

Public relations is about persuasion.  It's about having a point of view and presenting it fairly and with integrity.   Picking the medium is just a small aspect of the overall job. 

2.  The flow is one way.  At the same time, and at least in the local marketplace, while reporters cross effortlessly to communications jobs, the same isn't true the other way. That's not something confined to Newfoundland and Labrador; it's common across Canada.  A former communications director for the American president can wind up with a Sunday morning news show, but try to find a single example of the same thing happening in Canada.

Columnist maybe.

But PR professional to reporter?  How about to an editor's job?

Keep thinking.  You might recall one.

Now think of the number of reports who've moved from the newsroom to a PR management job.

3.  The money is better. Townie Bastard Craig Welsh offered some observations on the cross-over phenomenon in January. The post was prompted by a former colleague of his who was quitting the reporting game to take a job in a hardware store.  The back story - which he didn't share in detail - is appalling but undoubtedly money and time is a factor.

As Craig notes, in his own case the switch was driven by a family move to a new locale.  There are many reasons for switching jobs.

4.  The stress is lower.  Okay.  That one is just funny.

5.  The switch from "hack" to "flack" isn't a local phenom either.

Here are some relevant links:

-  From journalism to PR to teacher.

-  The National Press Club (Washington, DC) had a professional development session on the topic.

-  A profile of three cross-overs, courtesy of Kings J school alumni magazine.

-  A profile of Susan Murray, in which Susan uses the "s" word approvingly.

-  Another profile of reporters who made the switch, again from Kings.

-srbp-

A green throne speech by e.e. cummings

The bright new realities awaiting Newfoundland and Labrador demand the new way of thinking that My Government has boldly embraced. No longer can we afford to listen to those who try to impose on us their own outdated way of thinking. The time has come for us to chart our own course, to determine our own destiny, to think outside the box that others have tried to confine us within. New realities require new approaches. As the world continues to change, we must continue to adjust our game plan to ensure the approach we take is working.

2008 Speech from the Throne

The latest throne speech from the Williams Administration is a masterpiece of environmental policy.  It recycles everything from policies to themes to specific phrases.

It begins with the now cliche praise for someone else's accomplishments.

There is the obligatory mention of the 2005 federal handout agreement in a phrase which includes claims for things which the administration did not do:

As a result of our collective efforts to wrestle down the deficit, to ratchet up growth and to reach an agreement that fulfilled the promise of the Atlantic Accord, we are – for the first time in our history – poised to come off equalization very soon.

The annual deficits were slain and economic growth achieved due entirely to high oil prices and to oil and mineral development agreements negotiated before October 2003. The provincial government will achieve "have" status because of the achievements of people other than the ones currently sitting at the cabinet table.

Claiming credit for other people's money is not a new theme for this administration and the throne speech adds to the litany:

My Government has made significant investments in new health infrastructure and capital repairs and maintenance in health facilities throughout Newfoundland and Labrador over the last four years, totalling $128 million.

...

Our health care system has been further strengthened by an injection of $76 million over the last four years in capital equipment, which included such major investments as the addition of five new CT scanners throughout the province, an MRI machine in Corner Brook, a third MRI for the Janeway Children’s Hospital, and funding for two new radiation bunkers and radiation treatment machines for the Dr. H. Bliss Murphy Cancer Centre.

The capital purchases were made with federal cash and, by the provincial governments own calculations, its repair and maintenance budget has been less than 414 million per year.  To do the math, simply deduct the $76 million from the $128 million.  The remainder works out to the four year total. In light of recent revelations about secret reports on the state of health care facilities in the province, such self-praise is surprising even for an administration that has never been afraid to polish its own knob.

Above all, this speech continues the administration's annual homage to e.e. cummings, a practice established with the Premier's first province-wide address.  There is no cliche too shop-worn, no phrase stripped of meaning from overuse to be trotted out yet again.

Ultimately, though, this throne speech proves to be riddled with the internally contradictory claims which beset the administration's policies.  In the same speech that proclaims a goal of self-reliance, there is the bitter moaning about hand-outs not delivered as promised. 

There is reference to strong government, but nothing on fixing the evident problems in an administration that have kept secret reports on hospitals, that have seen bridges used by thousands go without a proper engineering inspection, and that has seen some of the most serious breaches of personal privacy in the country.  The promise of whistle-blower protection laws will have to stand the test of experience.  After all, this is an administration which holds itself to be accountable and transparent, yet which took four years to proclaim its own accountability law and whose lobbyist registration legislation is honoured more in the breach than by the observance.

"quite frankly

on a go forward basis

we cannot be a die-ing race,

proud, strong and determined

net importer of people

masters of our own destiny

energy warehouse

my First Minister will oversee

my First Minister will

keep us whole

wrestle and ratchet and reach self-reliance

to chart our own course

our day is now beginning to dawn

to determine our own destiny

to think outside the box

with pride, hope and self-assurance

under the leadership of My First Minister

continue the journey we have started together

nothing could be further from the truth"

He spoke angrily.  And drank a glass of water.

-srbp-

From the Conservative Gospels

A reading from the Book of Loyola, beginning at the seventh chapter, ...

Now this is how you write, Ivan.

-srbp-

Dunderdale blows smoke on the offshore

The province's energy minister thinks that just one drill rig doing exploration work offshore makes Newfoundland and Labrador "a top destination for international oil and gas exploration investment".

That's not bluster.

That's nonsense.

Plain and simple.

Nonsense.

And in the words of the Premier, "[w]e can't allow things that are inaccurate to stand."

The Henry Goodrich will actually be shared among companies doing both exploration and delineation drilling offshore. If this really was a top destination, the companies would each have landed their own rigs and pulled them from other projects to work here.  If this was a top destination, the rig shortage wouldn't prevent companies from investing accordingly.

They haven't sent a bunch of rigs to the local offshore area.

They've sent just one and worked out a time-share on it.

That's because this isn't a "top destination" for international oil and gas exploration or development.  What's worse, energy minister Kathy Dunderdale knows  - or ought to know - that her news release is complete garbage. The only people she is fooling with it are people who know nothing of the oil and gas industry.

Aside from rig activity, another good indicator of being a "top destination" for exploration would be the number of land parcels offered each year by the offshore regulatory board for bids. Land is offered for license based largely on interest expressed by potential bidders.

Last year, there was one.

Just one.

That was on the west coast, adjacent to a series of parcels that are already being explored, mostly from shore.

Four parcels were advertised last year for possible gas exploration offshore Labrador.  That sale actually closes this year in one of the longest offering periods on record.

They may not go, however, unless the provincial government actually finishes its generic gas royalty regime.  It's only been in the works for 10 years, five of them under the current administration.  All that's been released in that time period is a single draft.

The uncertainty in the offshore produced by government policy is having a measurable, negative impact on investment and the rig release is a good sign of it.  If there actually was great interest, Dunderdale and her staff wouldn't have time to issue releases heralding it.  They'd be too busy doing the work involved.  They wouldn't need to write self-congratulatory news releases.  The evidence of the interest would be the huge number of rigs offshore, the large number of foreign accents everywhere on the East Coast and the cash flowing in St. John's more heavily than the affections of the corner boys and girls along George Street.

There are other, less colourful indications that the local offshore is not the top destination for exploration.

As the chart at left shows, the past two years have been among the lowest in the history of lands sales in the offshore area. [Data source: CNLOPB]

By contrast, the period after release of the generic oil royalty regime in 1997 were some of the most prolific both in terms of parcels offered and in licenses issued.

Notice that the drop in interest in the offshore coincides with the collapse of the Hebron talks in 2006.

And before anyone points to the record year of sales experienced just after the October 2003 election, recall that those parcels were offered based on the climate established before the new administration's policies took hold.  Since the policies were unfurled, the local offshore hasn't been that attractive.

We can all wish it was otherwise, but the facts speak for themselves.

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AG innuendo prompts audit invite

The offshore regulatory board released a copy of an invitation to the federal and provincial auditors general to conduct an audit of the board.

The invitation was extended on 29 February but posted to the board's website 07 March, along with other correspondence with provincial auditor general John Noseworthy.

In the letter, chairman and chief executive officer Max Ruelokke notes that the board is concerned about "recent comments in the media concerning its finances which may be construed to imply some impropriety in the Board's finances."

That would be comments by Noseworthy, who is no stranger to making unsubstantiated accusations.

The offshore board also released the full exchange of correspondence with Noseworthy.  It's especially revealing to see that at no point does Noseworthy even attempt to back his position with facts or legislation.  He merely makes the claim that the offshore board is within his jurisdiction.

This directly contradicts his own official view, maintained on his office's website , that does not list the board as an entity subject to audit by the provincial auditor general.

The exchange of correspondence is relatively short and lasts over the course of a month.  It concludes with a copy of a report  in which Noseworthy falsely accuses the board of refusing to provide the auditor general with unrestricted access to the board's records.  it didn't.  As the correspondence plainly indicates, the board expressed its view that both the federal and provincial auditors general should conduct a joint review of the joint federal-provincial board.

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The quarterly advertising poll

Bond Papers has raised questions before about CRA's quarterly omnibus polls.

At the time of writing, there's no link to the official release.

The graph at left is a reminder of the gap between the actual vote result last fall and CRA poll results.

The blue line is the CRA PC support for "decided" voters". 

The red line is the CRA result as a percent of all respondents.

The orange line is the CRA category for "undecided", "no answer", and "will not vote."

The election results are represented by dots.  The brownish one is the PC popular, that is the share of people who actually voted.  The blue triangle is the share of all eligible voters and the green circle is the actual percentage of eligible voters who didn't vote.

Take a hard look at the image.

Get a ruler if you have to and measure the gaps.

They're big. The gap between CRA's Tory vote, as a share of all respondents, matched to its correct October comparison - the actual vote as a percentage of all voters - and you'll find a different of 20 percentage points.

CRA consistently inflates the level of Tory support in the province and, while the figures aren't shown here, they consistent deflate the support for the other two political parties.  It doesn't matter why; the most likely reason is the way CRA conducts the poll.  The fact that the numbers are off by a wide margin is undeniable.

-srbp-

 

Related posts: (Some links may not work due to URL changes at source.)

• Shaggin' polls - a discussion of poll results and the New Brunswick election.
• Playing the numbers - part of a series on poll goosing.
• Polls and the stuff they tell you - discusses poll results in 2005 with a reference to party support over time. be wary of the statements about records you may read in news accounts.  They sometimes confuse poll questions.
• Pull the other one - from September 2007 and comments by CRA president Don Mills about the timing of certain government announcements.
• Williams PCs only 3 points ahead of Rideout's PCs 17 years later - From 2006, comparing CRA and Telelink poll results.
• The secret of their success:  Roger Grimes - an interpretation of CRA polling data that might surprise some people.
• The answer is simple: it's polling time - the most likely reason for the sudden resurgence of the ABC campaign.
• Andy, Danny, the PUB and the polls - why did Danny Williams suddenly change his mind about Andy Wells? As we know now and the Premier knew at the time, CRA started polling on 12 February.  Check the date of the post.
• Something's off:  Newfoundland and Labrador political polls.
• The projections, the polls and the political reporters.
• First poll results.  From the 2007 general election campaign.

Jack Layton, High Commander of the Space Patrol

Tom Rideout, Time Lord.

Jack Layton, Space Cadet.

Same concept.

Jack managed to finagle an invitation to share his genius with Lou Dobbs on CNN.  Supposedly they were talking about the North American Free Trade Agreement.  That's the agreement that allows goods, services and people to flow more freely through Canada, the States and Mexico because they are - after all - North America.

Jack thinks NAFTA is bad.

Because we ship things to China and they ship them back.

China is now in North America.

or Canada is in Asia.

Just to give you some examples. We ship raw logs from our forest all the way over to China where they are turned into products and they come back and we buy them. We even find sometimes the products don't meet our standards our here. I heard you talking about toxic toothpaste in the U.S.

And that last bit was a mention of toothpaste made in China - not Mexico, the US or Canada - which turned out to have some little goodies in it that we don't allow in toothpaste made or sold in North America.

But Jack wasn't finished there.

Not by a long shot.

We've been facing toxic toys here in Canada. There goes the jobs. The trees go and they take the jobs with them and I know the West Coast is experiencing many of the same things. We need some fair and sustainable trade. That's what we've got to put together.

Toxic toys?  That would be the ones made in China which is not in North America, except in Jack's universe and the whole toy fiasco had nothing to do with NAFTA at all.

Jack talked about logs going to China.  He didn't mention a single word about Canadian lumber products that have trouble entering the United States contrary to NAFTA.

That would be trade between two countries party to the agreement Lou and Jack were supposed to talk about.

That's the North American free trade deal.

Not the Chinese one.

Because China isn't in North America.

Except in Jack Layton's world.

Next week, Jack will amaze Lou with his explanation of how putting up trade barriers within Canada will affect the gravity on the moon and allow Americans to become more loving and caring towards their Taliban brethren since, after all, Kabul, is just south of Detroit and Jack has, ya know, been advocating peace with the Taliban because Jack loves America.

But seriously, is this kind of basic stupidity now the pre-requisite for being a politician in Canada or are Tom Rideout and Jack Layton actually related?

To infinity and beyond! Update:  There's video. And yes, Lou Dobbs did refer to Canada as a parallel universe. That would be the parallel universe in which China is evidently in North America. or Canada has moved to Asia.  One or the other, depending on which way Jack's leaning in the shot.

h/t to BCer in Toronto for the vid link.

 

-srbp-

Your offshore mileage may vary

You have to read the ExxonMobil analyst statement to get it.

Read all of it.

Especially read the warning at the front about how the document contains certain forward-looking statements.  It's a hideous piece of English but the caution section is there for a reason.  It's right there at the beginning for a reason.

ExxonMobil's current forecast is subject to change and lots of things can happen to affect whatever it is the company is saying in there right now.  They want their investors, potential investors and others affected by ExxonMobil corporate decisions to be aware that things can change and the company may have to change with the times. The whole thing boils down to an old Internet acronym:  YMMV. 

Your mileage may vary.

With that in mind, it was a bit strange to see Deanne Fleet's orgasmic predictions on CBC's supper hour news based on the ExxonMobil analysis.

It was a bit strange because none of it is the least bit new.

ExxonMobil listed three projects that it expects to pursue offshore Newfoundland.

1.  Exploration:  The company expects to drill another hole in the Orphan Basin this year or next, along with its partners.  Okay, we pretty much knew that.  The Orphan basin exploration might be affected though by rig availability.  it might also be affected by the announcement yesterday that Shell is looking for someone to either farm in or buy out its 20% interest in the exploration license.

2.  Hebron:  The memorandum of understanding is there but the final deal is held up for some unknown reason. ExxonMobil lists Hebron as a project expected to start sometime after 2011.  Take that into careful consideration because that's exactly what Exxon has said since negotiations collapsed in 2006.  Hebron is not expected to start until after 2011, three years from now.  No work in the meantime.  Some preliminary stuff but nothing major until after 2011.

That pushes first oil out closer to 2020 than not and and that means it will sometime in the mid 20s and possibly beyond before the project pays off.  That - among other things - demonstrates the potentially great folly in the Williams cash giveaway in the current financial framework.

3.  Hibernia South:  It's listed for start-up in the 2009/2010 time period. Okay.  That's all well and good but in the meantime, there's no sign the Hibernia partners and the provincial government are any closer to any understanding on anything related to this project than they were when energy minister Kathy Dunderdale penned her name to the bottom of a bunch of letters that displayed nothing if not a fundamental ignorance of the entire project.

A cause for optimism?

Maybe.

But if experience is a harsh teacher, the sadistic bastard that is our experience of the Newfoundland offshore and provincial politicians has taught the value of those forward-looking cautions at the front of investor forecasts.

Our mileage has varied considerably from what the pols would have us believe.

-srbp-

Re-announcing the announcement: the latest provincial government version

An eagle-eyed e-mail correspondent noted that Charlene Johnson's announcement of green public buildings was  announced about a year ago.

What was it Danny Williams said about that business of announcing old announcements so that it appears like more money than is actually there?

Oh yeah:

"But to come in and double- and triple-announce money, that's giving the appearance of being new money, that's misleading...".

We couldn't agree more.

It's misleading.

-srbp-

It's different when you make the rules for yourself

The odd thing about municipal affairs minister Dave Denine's comments on the provincial government's unsprinklered hospitals is that it is exactly what privately-owned personal care home operators said about their own facilities. 

In fact, they didn't say it themselves.  They worked it out with officials of the health department. Extra staff.  Special evacuation procedures, pretty much everything that Denine says about hospitals and nursing homes operated by the government.

Bear in mind, too that people in the government facilities are considerably less mobile than the people in most of the personal care homes. Think bed-ridden versus using a walker or cane.

It's funny how perspective changes when you make the rules for things you operate versus making the rules others have to live by.

Denine on personal care homes:

"This has come to the point that we just couldn't continue on any longer," Denine told reporters in Corner Brook, where the provincial cabinet has been meeting.

"The timeframe has come and gone when this should be done…. This has to be moved forward for life safety issues."

Denine on government operations:

"They know what they have to do in case of emergency. There [are] fire doors there that help prevent fire from spreading, and the fire commissioner's office is satisfied that all necessary precautions are in place," Denine said.

And when will the sprinklers be installed?

Denine said the government has classified all the hospitals as a high priority, and that they will either have new sprinkler systems installed, or the buildings will be replaced over time.

That's pretty much what the personal care home operators did.  The last 22 were doing it as well when Denine and his colleague Ross Wiseman decided to get self-righteous.  At least one of the 22 homes was finishing the installation when the closure order was delivered. Another was sorting out the last details of building a completely new facility.

And health officials knew all about it before the orders were delivered.

Sounds like a poll stunt as much as the evident hypocrisy.

An update involving a sprinkling of uncomfortable phrases:  The provincial fire commissioner has either been gagged or has muzzled himself but late on Thursday, he issued a news release indicating he was  "comfortable" with the fire safety situations at 71 provincially-owned health facilities.

He's "comfortable."

That's such a wonderful, meaningless phrase.

Now aside from the fact fire commissioner Fred Hollett has been kept under lock and key since this whole hospital scandal broke, it's a bit hard to take this news release as anything other than an effort to get out from under the weight of the scandal. 

It is severely lacking in credibility from the get go, and the content doesn't help.  There's even a table that is supposed to provide some background information on the fire commissioners opinion.

Notice the crucial bits of data that are missing.

Like when was the building last inspected by someone from the fire commissioners office.  Of the 10 sites listed, six show as being inspected only on request of the agency operating the building and there's absolutely no indication when they were last inspected at all.

Only four show the date of the last inspection.  Of those, three were inspected in 2006, with at least one of those having last been inspected almost two years ago.

It's nice to know Fred Hollett  - no relation, by the way - is comfortable with all that. it's nice but it's totally irrelevant.

When it comes to the safety of the sick and elderly, most of us think hard facts and proof are more important than Fred's emotional state.

And what else is there?  A claim that government has spent $128 million over the past four years on "new health infrastructure and capital repairs and maintenance, including fire sprinkler systems...".  You see, as soon as a news release supposedly about the fire commissioner's professional opinion starts quoting a cabinet minister talking about how much money government has spent, you know you have an old fashioned bit of knob-polishing going on.

You see that phrase includes purchases of major pieces of capital equipment like MRIs.

That sort of stuff - paid for with federal cash - doesn't explain why Eastern Health went looking for money to deal with critical and near critical issues totalling $90 million and got a mere $3. million.

When the facts aren't on your side,  you issue a release like this and start ordering Kiwi turd-coloured polish by the case.

-srbp-

Does Ottawa have a sprinkler fund too?

Charlene Johnson announces renovations to government buildings as part of an energy efficiency move.

Good announcement.

Read down towards the end of the news release, though to find out the money is entirely federal cash under an energy efficiency program.

Any bets that Dave Denine and Ross Wiseman are wondering if they can call a cease fire in the ABC campaign to see if Steve's got some cash to fix up hospitals?

-srbp-

The Sasquatch Hunters

There are a few people in Newfoundland and Labrador who think that the 1927 Privy Council border between Labrador and Quebec has been changed.

It hasn't.

The 1927 border is the legal border between Labrador and Quebec.

What has some people upset is a recent map of Quebec (left), issued by the Quebec provincial government, which shows two borders on the southern portion.

The 1927 border is clearly marked.

The other one - to the north of it - represents where the border might be if one amended the 1927 decision to encompass the headwaters of rivers that flow south.

Basically the Privy Council determined the boundary of Labrador took in all land from the headwaters of rivers flowing into the Atlantic.  On the portion flowing generally southward to the St. Lawrence, they didn't apply the same rule. The Privy Council drew a line across the parallel, hence the straight portion shown clearly on the map.

Legally, that's the border.

The 1927 one.

The Government of Quebec can draw as many pictures as it wants. Unless and until the Quebec government tries to exercise legal jurisdiction north of that 1927 line, there isn't an issue.

And they won't do that because, while they draw pretty pictures, Quebec lawyers know where the border is.

They even mark it on their maps:  Trace de 1927.

And those people who insist the border is changed?  Well, they are a bit like people who run around looking for Sasquatch.  They "know" it's there and they keep hunting for evidence.  They haven't turned up any evidence, but they keep looking for it all the same.

They don't turn up any evidence because, as most people know, the Sasquatch doesn't exist except in drawings people made up.

-srbp-

Shell looking to sell Orphan Basin exploration interest

The Reuters version:

CALGARY, Alberta (Reuters) - Royal Dutch Shell Plc's  Canadian unit is hunting for a partner willing to take a stake in an expensive exploration play off the coast of Newfoundland.

Shell Canada Energy is looking for a company willing to farm into its 20 percent stake in the Orphan Basin exploration play. Any successful bidder would pay drilling costs in return for an interest in the properties.

"We are simply looking to see if there are parties interested in sharing the cost and risks of our interest in the next Orphan well," Jeff Mann, a spokesman for Shell, said on Wednesday.

Shell Canada, the Canadian arm of the European oil and gas major, holds the stake in a 21,250 square kilometer (8,205 square mile) block in the basin, 350 kilometers off the East coast of the Canadian province. Chevron Corp (holds 50 percent, while Exxon Mobil Corp  and Imperial Oil Ltd each have 15 percent.

The partners have already drilled one well at the play at a cost that some reports have pegged at more than C$200 million ($202 million), while a second is expected to be drilled this year. Water depths in the region range from 1,500 meters to 3,000 meters (0.93 to 1.9 miles).

The Newfoundland government expects that the basin could yield fields containing more than 1 billion barrels of oil.

($1=$0.99 Canadian)

(Reporting by Scott Haggett; Editing by Peter Galloway)

Superfast Update: Shell and ExxonMobil are also selling oil and gas interests in the Dutch North Sea.

Shell was also turned down for approval from American securities regulators to list Alberta tar sands interests among its assets.  That leaves the company with an apparently weak reserve replenishment ratio. Regulators are reportedly concerned the tar sands represent a high risk of project failure.

The SEC [Securities Exchange Commission] has so far refused permission for Shell to book tar sands, believing that there is a high risk of projects failing.

-srbp-

Ex-queeze me?

Premier Danny Williams announced a formal agreement to expand White Rose.

Cool.

Reported by AOL Money, based on a Canadian Press story dated on March 4, 2008.

Not last December, when the "formal agreement" was announced, sans any mention of acquisition price for the shares. Not a "final and binding agreement', mind you.  A formal one. That must be a contract in white tie and tails.

Or last September, when the telephone deal - the "informal" one solely for campaign purposes? - got dropped in the middle of a speech.

And it certainly wasn't earlier in September when the province approved White Rose expansion.  Note the difference between White Rose and Hibernia South.

Hmmm.

Very curious.

Since the companies involved here are publicly traded - that is, unlike PetroNewf - there are some restrictions about making announcements over and over again so it seems a little odd this deal has been announced now two or three times.

Someone should ask Danny for a copy of the "memorandum of understanding, the "formal" agreement and the "final" agreement, and any other agreements signed by the province's oil company.

Oh yes, and while you're at it, see if you can find out the real acquisition price for the White Rose shares.

Hands up anyone who thinks it was more than the $44 million originally announced.

-srbp-

Cluck. Cluck. Moo.

The chickens are coming home to roost.

The cows are coming home,too.

Early on Wednesday morning government and union officials are expressing surprise at the layoff of 50 workers at Hibernia.

They shouldn't be.

They've known it was coming since Kathy Dunderdale - on Danny Williams' orders - cancelled Hibernia South.  She did so on the flimsiest of flimsy excuses, not the least of which was acknowledging that she and her officials had failed in their duty to gather information until it was way too late. The subsequent exchange of correspondence with the offshore regulatory board showed Dunderdale's arguments were weak, if not downright phony.

You see, with Hibernia South, the drilling program at the province's first offshore field was pretty much done.  Whatever was left could be handled by one of the two drill derricks on the platform.  The Hibernia Management and Development Company knew it.  Provincial government officials should have known - but that can't be assumed given past admissions of obvious things missed.  Everyone else knew it because it's in the documents filed at the offshore board over the past two decades ago and long since a public document.

Had the provincial government closed the deal on Hibernia South development, we wouldn't be seeing these layoffs.  We also would be seeing the increased capital expenditure over the next two years that would help offset the downturn in the economy, until Hebron construction cuts in.

And that's what Wade Locke said a year ago and what he's repeated just this week in the Chronicle Herald.

Here's what he said in February 2007, right on the heels of Dunderdale's offshore blunder;

With all four fields being developed to their potential, provincial revenue from the oil and gas sector would peak at $1.4 billion in 2012, generate more than $1.0 billion to the provincial treasury for another 12 years [beyond that] and yield in excess of $500 million per year for at least another eight years. ...

However, at this point the following caveat is important to bear in mind: these tremendous impacts may never be realized. They are contingent on Hibernia South and the Hebron project proceeding. If these developments do not proceed, then the revenue from the oil and gas industry will fall from $23 billion to $9 billion. In other words, while enhanced prosperity is within our grasp, there is a real risk it may not be realized. Furthermore, this risk is directly affected by decisions that are within the control of the Government of Newfoundland and Labrador. [Emphasis added]

And here's what he said just this week in discussing this province becoming a "have' one in 2009;

But all of this is based on the assumption that further oil projects at South Hibernia and Hebron move ahead after being stalled in negotiations between oil companies and the Newfoundland and Labrador government.

"Right now, it’s important to get an agreement on South Hibernia," said Mr. Locke.

"This is important for continuity of revenue flow to government and the industry while waiting for Hebron to get started. South Hibernia is worth in excess of $20 billion alone. I find it hard to believe that two parties can’t come to an agreement on how to share $20 billion, . . . but I’m sure it will happen and I base my calculations on that."

That's not happening, however.

Hebron still isn't signed.  There's no official explanation but Danny Williams has tried to suggest the oil companies are slow in their approvals process.

There might be another contributing factor:  Danny doesn't have the cash to meet the financial commitments, that is without driving the province in debt. 

Anybody wonder why Danny didn't just up and pay for all those needed hospital renovations this week? 

Forget that for three budget cycles during which ministers did nothing about it.  Why didn't the premier do what he usually does in these cases:  whip out the chequebook and make the boo boo go away?

Well, for one thing the provincial government is looking at a period of flat-lined or decreasing revenues. If oil prices drop this year, as expected, there'll be a drop.  If the US economy slows down, there'll be a drop.

At the same time, Williams and his colleagues have busily built up expectations and swollen public spending as if the boom of the past couple of years could go on forever.  They seemed to believe their own publicity that indeed with the second coming of the mortal saviour, everything was different, that somehow, all the problems the province was facing were due to sheer incompetence of everyone who went before.

They've also faced increased expenses due to a growing economy.  Ask anyone who has tried to due house repairs.  Costs have gone up.  Fuel prices are up and the costs of materials is up.  And all those construction workers who'd be in the housing industry waiting for Hebron which was about to start two years ago until Danny canned it?  Well, they've hightailed it to Alberta too. Altogether capital costs have shot up.  It's unavoidable in the economic climate the provincial government has created through its offshore decisions.

Except they thought they were different.

And all those polls did was reinforce that sense of arrogance.

And pride.

But pride doesn't meet the bills.

At the same time as forecast lowered revenues and demands on the public treasury that exceed the revenues, there's an obvious tussle within the administration about finances.  That debt clock Tom Marshall is carrying around is aimed squarely at anyone in his own cabinet who might want to spend hundreds of millions, perhaps by borrowing.  Borrowing increases the debt and increasing the debt is not good for a whole bunch of reasons.

Danny Williams is throwing token cash at the hospitals scandal because he doesn't have any more.  he's facing an unalterable cash commitment at White Rose.  The acquisition cost is significantly higher than forecast.  So is the provincial share of capital costs because the capital costs are higher.

And Hebron?  Well, every day the deal isn't signed and oil prices stay high, the acquisition cost is considerably higher than the $110 originally forecast.  Every day the deal isn't signed the capital cost commitments go up just a that much more and those are capital expenditures that can't be avoided.

It's not like a hospital, which you own and control and which doesn't have sprinklers.  With the hospital you can plan to spend 414 million on all hospitals even though the ones in St. John's alone need $70 million in critical repairs.  And then when the secret reports get leaked accidentally, you boost the $14 to $20 million but it's still tokenism because you can make those decisions.

But Hebron?  There are timelines to be met.  Hard and fast timelines. There's nasty partners who expect you to pay your bills on time, especially considering the unholy grief you put them through for your tiny piece of the action with no management rights.

Danny Williams has cash enough to meet expenses, he just doesn't have enough cash to meet the things that need to be done and to meet the other obligations he's built up over the past three years but that don't really need to be done. 

At the same time, delays in offshore projects are producing results  - real, undeniable results - that were known and predicted at the time projects were cancelled or needlessly delayed.  Go back and look at what's been written here:  you'll find it all.

It doesn't take a rocket scientist to figure out what's going on.

The entire freakin' barnyard is headed back to the barn.

-srbp-

No case for crowing

When voter turnout drops to a mere 41% from the already abysmal 44.7%, there's no reason for any news story to write about increasing a share of popular vote. 

This link happens to be to a CBC story; undoubtedly other media will take up the same general approach.

Why wouldn't they?  it's standard political reporting, and to make it worse they can quote political scientists who speak in terms of a stunning victory.

Yet, not a single one seems the least bit curious as to why 60% of the electorate stayed home.

That's a pretty significant question especially given this description of Alberta:

Driven by the booming oilsands, the province is grappling with major growth pressures, including a lack of affordable housing and aging infrastructure, as well as balancing environmental concerns with the massive oilsands developments.

Ed Stelmach won.

But 60% of Albertans didn't vote, let alone vote for him.

-srbp-

ABC Comedy Central

Somehow, the Premier likely never thought his great political theatre called "Anybody but Conservative" would degenerate quite so quickly into absurdity.

One day it looked destined to be the next West Wing.  Next day it's Three's Company without the sophisticated humour.

ABC meets the comedy channel.

What else can you call it?

First there's Not too much to ask starring the former environment minister, backed by a guy who got his professional acting start in tourism commercials.  Clyde Jackman keeps going after the federal government for not ponying up money for Cupids. 

But, as it turns out, the executive director of the Cupers Cove Foundation packed it in last August after he was getting no where with either the feds and the province in the request for $12 million.

But that's not the funny bit.

Peter Mackenzie was really peeved when the provincial government told the foundation they needed to lower their expectations for provincial cash.  Jackman's department tossed $2.0 million on the table against a $12 million "ask", to use the cabinet vernacular these days.

Then Jackman's department went to the feds demanding $7.0 million. Jackman points to Quebec City which got $110 million in federal funding.

But as regular readers already know,  that province tossed in 50% of the cost.  All Jackman and his predecessor, current intergovernmental affairs minister Tom Hedderson, would do was cough up $6 million over three years ($2.0 million per year, not in total) and the federal cash would have flowed like water.

Those zany ministers are at it again, folks. Every episode you can hear one or the other say:  "is it too much to ask?"  And from off camera comes the small voice:  "Apparently, it was for you."

Then there's 5 Wing.  It was supposed to be an action/adventure hour but turned into endless comedy.

Labrador Affairs minister John Hickey likes to issue news releases that lambaste the Harper Conservatives currently running the country for ignoring a base that is crucial for protecting Canada's northern sovereignty. Only last month he was claiming that the woods around Goose Bay were ideal training areas since they could simulate any terrain in the world.  But of course both those releases were just a reaction to federal stories.

The comedy here, aside from the really obvious?  Hickey campaigned to put Harper in office in the last federal by-election and the Labrador by-election.

In very short order, Danny Williams went from having a political impact to running a comedy/variety show.

-srbp-

"Petty, mean and intimidating"

And those are words from a guy who likes Danny.

Now admittedly, the guy hadn't seen NTV news on Friday night or seen the Telegram coverage, so he was only commenting on Paul Oram's version of the attack on Lorraine Michael.

So when the opposition does its job the Government, or at least one of its ministers throws out the threat of not supporting providing the money needed to offer opposition. I have to say it was not a classy move on Oram’s part. Petty, mean and intimidating. The Premier should put him on a leash.

R'uh R'oh.

'Cause here's where the whole thing started:

“Lorraine Michael is out calling on us to do this and do that, and saying she’ll be annoyed with government if we don’t get this done,” the premier told The Telegram late Friday.

“By way of interest, you should know this — Lorraine Michael now has a request in to the management committee (at the House of Assembly) for a raise. So here is the champion of the people out there, who’s calling on the government to do this and do that, and now, after all the heat over MHA salaries … has come back and looked for a special raise as leader of the New Democratic Party.”

That's gotta hurt something, especially when the piece goes back to the standard government Blackberry line right at the end, even if the excuse of blaming it all on Harper contradicts everything that preceded it:

That said the stepping stone, the $10 Billion carrot dangled in front of us and than cruelly yanked away by Ottawa would repair a lot of hospitals, roads, bridges, schools, sewers, water supplies and allow us to pay down our debt while we are in a positive cash flow position. Spending all of our surpluses to catch up on generations of under funding is going to leave us more reliant on the federal government when our non-renewable resources are depleted than we ever were.

You see, the provincial government has had growing income of its own for the past four years.  The surpluses are not the growth:  they are a sign of how massive the growth has been. They are also a clue has to how the provincial government's spending has grown over the same time period.  There's been more money spent in the past three years than at any time in the province's history ever. Newfoundland and Labrador spends more per capita on government operations than every provincial government in Canada except for Alberta.

And on top of that growth in budgeted spending, the cash surpluses (the money left over on annual operating budgets at the end of the year), have totalled almost $2.0 billion in 2005, 2006 and 2007 combined.

Yes, the cash coming in the door on top of what was forecast has actually been as much as the entire one-shot transfer from Ottawa's coffers in 2005.

So even with all the growth in public spending and with all the surpluses piling up, the provincial government still opted not to repair critical health care infrastructure, even though it clearly had the cash.

Randy Simms made Paul Oram look foolish because Simms wasn't talking about  "[s]pending all our surpluses."  He was talking about budgeting.  And he wasn't talking about chronic under-funding:  that suggests the prior governments had the cash but opted not to spend it.

Dead wrong, and even wronger  - if that's possible - considering that those words came from a former executive assistant to a cabinet minister.  As he should know, until now the provincial government often had to face a drop in revenues every year.  Often, provincial governments didn't have money to meet existing needs and normal inflation.  Having a windfall of almost a billion dollars was unthinkable and having such a bonus on top of huge growth in revenue anyway was the stuff of wild fantasy.  "Underfunded" only works if you understand the word means "didn't have the cash to do things with in the first place."

But that's not what he meant, clearly.

Nope, trotting out the "promise" myth is just like the attack on Lorraine Michael;  it's just a subtle version of the same kind of distraction.  The provincial government doesn't want a discussion in public of spending priorities based on accurate information.  Open, informed public discussion  - like a sitting legislature - gets in the way of government doing whatever it wishes.

What the "promise" fable returned to in that post is actually what Paul Oram was trying to do:  make excuses for why government did what it did.  Oram went on at length trying to explain why there were more demands on government cash than there was cash.

Yada, yada, yada.

Yeah and if Harper...

The attack on Michael is a scurrilous personal attack, but the goal remains the same.

It's all just a distraction.

Pretty fast update:

Well, your humble e-scribbler and two others pointed out the obvious, namely that the Premier actually started the attack.

The response?

Well the Premier needs a better attack dog because Oram never pulled it off very well.

-srbp-

The ticking equity cost clock

Finance minister Tom Marshall likes his debt clock.  That's a little electronic thingy that ratchets up to show how much money is being spent servicing the public debt. 

It's good to mention the debt and to commit to a plan to pay down debt, but when debt servicing accounts for only 10% of your annual outlay, it's a bit disingenuous - there's that word again - to talk about debt like it was the biggest problem facing cabinet.

But it's funny in all the talk about money that the fin min doesn't talk about the escalating cost of starting up the provincial oil company.

He doesn't make a passing reference but doesn't note it as an escalating cost:

Marshall said about $350 million of that surplus will be spent on infrastructure. More than $100 million will be used to buy an interest in offshore oil developments.

The only equity outlay in the current fiscal year is for White Rose.  Hebron isn't done yet.  White Rose is actually ramping up.  Hebron 's final agreement  - and therefore the final costs - haven't been sorted out yet.

So "more than $100 million for White Rose" then.

When the project was announced initially, the actual cost of buying the 4.9% interest was pegged at $44 million.

That's it.

$44 million.

Marshall just told us that White Rose will now cost almost three times what we were told.

And before you get all excited, the so-called "handling fee" on every barrel of oil associated with the provincial shares doesn't get factored in there.

First of all, it's a fee that gets applied when the oil is pumped.

Second of all, even if we stupidly agreed to pay it in advance, that still only works to about another $38 million.  That still adds up to less than $100 million.

Third of all, the initial capital costs and operating cost shares also don't drive that number to "more than $100 million".  The first extension is set to cost around $600 million or so. take 5% of that and add it on.

In order to get the White Rose acquisition costs over $100 million we'd either have to pay every fee and charge up front, even before the work was done, or there's something else going on.

The something else might be in the discrepancy between the initial announcement of the deal and the final one.  In the first version, we were told the acquisition price of $44 million subject to "due diligence", reservoir verification and so on. In the second version - when the final agreement was done - the acquisition price mysteriously disappeared.

Gone.

Vanished.

Not discussed.

Maybe someone should ask the finance minister what exactly that equity cost actually is.  It sure doesn't look like what we were told first.

It might well be that every day the Hebron deal goes unsigned, the cost of the project is also escalating beyond what we were originally told.

-srbp-

How do you say "disingenuous"?

Try "Minister of Finance."

The provincial finance minister is on CBC bright and early Monday morning picking up a theme he started a week or so ago while on the road with his budget roadshow.

Seems that the provincial government is running into cost over-runs on its capital works budget.

Not surprising at all. Costs for building supplies, gasoline and so forth have all increased.

But Marshall talks about how the current surplus, of nearly a billion dollars, is being spent.

Marshall said about $350 million of that surplus [of $880 million] will be spent on infrastructure. More than $100 million will be used to buy an interest in offshore oil developments.

That's not really the whole story though.  Minister Marshall should note - as he has in the past - that the $350 million is actually not extra spending.  It's just replacing money the provincial government planned to borrow to do whatever capital works they had in the pipeline.  It's not that there's anything wrong with spending the cash instead of borrowing;  it's just a little misleading not to make it plain that, despite an unheard of surplus, no new infrastructure work is being done.

of course, the rising cost of infrastructure has nothing to do with why Mr. Marshall and his colleagues kept a report secret for three years that documented the sorry state of city hospitals.

Oh yes.  And why they did nothing about the report's contents, except hide them.

-srbp-

When the going gets tough,

The losers get stupid.

Hilary Clinton's campaign is in trouble so her team produces a beautiful 30 second television spot.  It's just a tiny bit more sophisticated than the famous anti-Goldwater spot from the '64 campaign, but not by much.

Problem:  It's a great ad for John McCain. Someone who already knows the world's leaders, who knows the military and who has been tested before?  Yep a navy pilot who's been in combat, spent time in a North Vietnamese prison and who has been around the block more times than Monica's little blue dress.

Sometimes in politics, when the going gets tough, the losers get desperate or in this case stupid, which adds up to the same thing.

 

 

 

 

For good measure, here's the classic "Daisy" spot from the 1964 campaign. LBJ versus Goldwater.

When people talk about attack ads, this is the grandmother of them all.

But notice that it was aimed outward from LBJ, instead inward, as in the Hilary spot.

Nice concept.  Wrong client.

And even if it is suppose to be a pre-emptive strike, it's hardly good strategy to shoot yourself in the foot before someone else shoots you.

-srbp-

 

 

 

 

Uppus datum:  Charles Cheeseman made some valid comments on this original posted and he linked to Obama's response spot. Incidentally, do yourself a big favour and go visit Charles own' blog.

The Obama response is another reason why Clinton's spot turned out to be a dud.

For starters, Obama got to take a simple line:  "It's judgment that matters."  But look at the spot and you'll see a bunch of other smart, simple things.  For example, it steals the opening visuals from Hilary.  Then it rams them down her throat by showing Obama with visuals and a voice over that talk of his security background.

Notice especially the reference to Obama working with Luger on arms control.

That would be Republican Senator Richard Luger from Indiana.  Security initiatives, apparently blessed by a stalwart Republican and all of this airing in a state where security and Republicans are big.  Heck, even Texas Democrats make Stephen Harper look like a wimp.

This spot really plays well to Obama's strengths.  Yes, he's a Democrat, but he appeals to moderate Republicans and Independents much like Clinton and other Southern Democrats have tended to do.

And if all that wasn't enough, the thing is done cheaply and quickly.  You gotta like that:  on time, on target and under budget.

Consider as well, that in the current polling Obama and Clinton are in a tight race among Texas Democrats.

The latest poll has Clinton ahead in Ohio, but tied with Obama in Texas. That pretty much runs the same in other recent polling.

Obama's spot might be a shade more effective because his message is simple and right in front of your face.

Clinton's is a bit too subtle. Add to that the data in the second poll link She already owns "experience" as a quality and experience was the second most important quality among those voters polled.

She gets her doors blown off by Obama as the "change" candidate, but on the issues question, they are tied. What Hilary needed in Texas  - if this polling is accurate -  was something demonstrate that she and the voters were speaking the same language on the same issues.

It's a fundamental strategic question:  where do you put your effort, since resources are always limited?  If Clinton needs to pick up votes, she's not going to get them by playing to a point she already dominates. Bear in mind that in that same polling, her identified supporters are pretty much solid in their choice.  Obama's aren't as solid. Once you hit a certain number - like 93% - it gets progressively harder and harder to win every additional point.

Solely from the standpoint of cost-effectiveness, it's more profitable to put energy somewhere else.  It's like running as a candidate for the Liberals or the New Democrats federally in St. John's.  The Tory vote is pretty much a solid block.  Play up your Tory credentials or sound like a Tory in the mistaken belief you need to be a Tory to win the seat and you are pretty much wasting your time.  More people vote against Tories federally than vote for 'em.  Tories usually win because the non-Tory vote is split.  There are way more votes to be had with far less effort and cost on the left than on the right.

Lots of candidates make those strategic errors.

let's see after the Texas primary whether Hilary chose wisely or not.

Bandaids, buck passing, a scurrilous personal attack and the possible breakdown of cabinet government

Despite posting record operating surpluses in each of the three years since it received reports on the needed repairs and life safety improvement province's hospitals, the Williams administration planned to increase spending on hospital repairs by just two million dollars in its upcoming budget. 

The plan was to spend $14 million instead of the $12 million budgeted in those three record surplus years.

That is until news broke this week of the problems.

Now, according to Premier Danny Williams , that $14 million will be increased to somewhere between $20 to $28 million. Williams said $14 million of that will go to the four sites in St. John's, including the provincial health centre at the Health Sciences Centre.

You can read about it on the front page of today's Telegram. Williams comments were also reported on NTV News on Friday evening.

Previously secret consultant's reports were released this week by the provincial health department after health minister Ross Wiseman inadvertently referred to them.  The assessments, completed in 2005 showed that four St. John's area health centres required $134 million in required repairs.  over half that amount - $70 million - was classified as currently or potentially critical.

The provincial allocation for St. John's amounts to just 20% of the amount identified as critical or potentially critical just three years ago.  In the meantime, the situations have deteriorated and the costs have increased.  According to CBC, which broke the hospital scandal earlier this week, the bill for St. John's hospitals could top $170 million if all work was done this year.

"It's growing faster than we can keep ahead of it," said Keith Bowden, director of infrastructure and support for Eastern Health, the regional authority that manages all hospitals and clinics in the city area, as well as the rest of eastern Newfoundland.

"I mean, we're not keeping ahead of the curve at all."

The reports on the St. John's hospitals were kept secret despite a written commitment from Williams in his 2003 campaign manual to release government-commissioned reports within 30 days of receipt and to have an action plan made public within 60 days to address the reports.

Reports on other hospitals in the province - so-called facilities reports - may also exist.

According to provincial finance department figures, the Williams administration posted a $524 million surplus on its operating budgets for 2005 (capital and current) and a $141 million surplus in 2006.  In 2007, the surplus is projected to be more than $880 million yet while the finance minister and the health minister knew of the hospitals problem, the surplus was redirected to other spending, including covering some of the costs of creating a government-owned oil and gas company.

In the Telegram, Williams defended his health minister saying that Wiseman didn't create the problems. 'We inherited this and we inherited a mess," Williams said.  While that's true Williams' administration also hasn't done anything to deal with the problem and obviously hadn't planned to do anything until the secret reports were uncovered by media inquiries.

For his part, Williams denied knowing anything about the reports. Given the Premier's penchant for nano-management, his claim seems odd but if we take him at his word - there's no reason not to - Williams has now pointed to a far more sinister problem within his administration. 

If Williams is correct, three successive ministers of health, including the man he just appointed to head the energy company's board of directors withheld crucial information from him and potentially other members of cabinet.

Williams claim suggests a fundamental breakdown in the operations of cabinet government in the province. Ministers cannot properly make crucial decisions, such as government spending, if details of major issues are hidden from them.  The secrecy cloak that apparently kept these reports from the public also applies within government too, if Williams' comments are accepted at face value.

Opposition parties were highly critical of the Williams' administration handling of the hospital scandal this week.

"This report has sat on the desk of three ministers," [Liberal health critic Roland] Butler said.

"Yes, the debt has to be looked after," said Butler, who said Health Minister Ross Wiseman should be lobbying Finance Minister Tom Marshall, "trying to find out if he can get the money to correct those serious issues, sooner rather than later."

New Democratic Party leader Lorraine Michael called on Williams to relieve Wiseman in light of his performance on a serious of scandals within the department.  In an interview with NTV news, Williams attacked Michael personally, claiming she was being hypocritical to criticize Wiseman when she herself had been looking for a raise from the House of Assembly management committee. 

There's no logical connection between the two issues, but the attack was a trademark Williams' personal smear.

Update:  CBC has other examples of repairs needed in hospitals around the province. Seems there are hospitals without sprinkler systems. 

CBC's Deanne Fleet reported on this in the Friday news cast.  Neither the fire commissioner nor municipal affairs minister Dave Denine were available Friday to take questions on the growing controversy.  Denine and health minister Ross Wiseman dropped the regulatory hammer on 22 personal care homes in the province just three weeks ago for not having sprinklers installed.

Operators, who had been warned of the sprinkler issue in 2003, were given just 30 days to install systems or get signed contracts for installation or face immediate closure.

You can likely figure out Fleet's questions to the fire commissioner and to Denine.

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Mon Dieu! Other places are experiencing demographic change?

From Macleans, a story on resettlement along the Lower North Shore.

Aylmer Sound is an isolated, anglophone community. The town's down to four residents and those four will soon be gone as the province cuts off services. The provincial government has offered financial incentives to get people to move to nearby communities.

There is no road into the town. As you will hear in this little slide show Martin Patriquin had to take a $1200 Air Labrador flight - yeah, that's right 12 hundred bucks - into a nearby town and then head overland.

Maybe you'd have better luck than your humble e-scribbler figuring out the fare on Air Labrador's website for an imaginary flight from St. John's to La Tabatiere, the nearest airport to Aylmer Sound.

Accept the start dates offered by the system which, presumably are dates the airline flies into the community and you get back a message saying there are no flights on those dates.

Air Labrador is owned by the Pike Group of companies, whose head offices are in St. John's.

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