Change and Challenge: Chapter One - The Changes

The Changes

In the fall of 1990, the Government of Newfoundland and Labrador began the process of developing a strategic economic plan for the Province. This planning process involved three phases. During the first phase, government departments and agencies reviewed their activities, assessed the economy's strengths and weaknesses, and identified threats and opportunities within our existing resource industries as well as in our other strategic industries.

Further research and analysis concerning various sectors of the economy were undertaken during Phase 2, and a public consultation paper was published to give the people of the Province an opportunity to have a say in the vision, guiding principles and actions that have become the strategic economic plan. The Advisory Council on the Economy (ACE), an independent advisory group comprising representatives from business, labour and other groups, co-ordinated the release of nearly 11,000 copies of the consultation paper, and in the fall of 1991, public consultations were held in 16 locations across the Province.

Altogether, the public consultation process resulted in 15 public meetings, 15 meetings for formal presentations, 5 regional round tables, a provincial round table, and the submission of 261 written briefs. Government also held meetings with industry groups, and several submitted reports. A final report on the results of the consultation process was prepared by ACE and published in April 1992.

This process provided some sobering insights into the challenges the Province's economy must face and established that there is a broad consensus for change. Most people now realize that government spending is becoming increasingly limited, and that there must be less dependence on government transfers. Most also recognize that working together to establish a competitive economy is the key to strengthening our economic and social fabric.

Some of the fundamental changes that people said they wanted to see are:

• A change within people. There is a need for a renewed sense of pride, self-reliance and entrepreneurship. We must be outward-looking, enterprising and innovative, and to help bring about this change in attitude we will have to be better educated. During the consultation process, most people agreed that education is essential to our economic development.
• A change within governments. Governments (both politicians and the bureaucracy) must focus on long-term economic development and planning, while still responding to short-term problems and needs. Government programs and services must place a greater emphasis on the quality of the services provided and on the client. Changes in education, taxation and income security systems are also considered critical to our economic development.
• A change in relationships. To facilitate the necessary changes in the economy, new partnerships must be formed among governments, business, labour, academia and community groups. In particular, better co-ordination between the federal and provincial governments in the delivery of business and economic development programs is needed to eliminate duplication and to prevent confusion for those who use them.
  

The final phase - implementation, monitoring and evaluation -begins with the release of this strategic economic plan. The plan will be monitored and evaluated as it is put into effect, to ensure that it is working and that it is responding to new challenges and opportunities. Throughout this process, Government will continue to encourage public participation and to seek the advice of business, labour, academia, community groups and individuals throughout the Province.

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Chapter Two - The Challenges

Bond Papers stands for smart rss blogging

Show your support for blogs with this golf shirt, new from The Bond Store, in time for the summer.

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Province plugging project

[UPDATE! Premier Danny Williams and natural resources minister Kathy Dunderdale will be meeting with unnamed investors on Sunday and Monday in Qatar trying to bail out the troubled NLRC refinery proposal, according to vocm.com.

The news release announcing the trip by the Premier and minister gave no duration for the entire visit, but referred to unspecified meetings in Qatar after the CNA campus graduation ceremony. it appears the trip was planned all along to include specific representations by provincial officials on behalf of a private sector proposal.

On a humorous side note, the government news release still produces a banner at the top of your Internet browser referring to a summer basketball camp, four days after Bond papers first pointed out the programming SNAFU.]

Natural resources minister Kathy Dunderdale told the Telegram that she and Premier Danny Williams are promoting the troubled NLRC refinery project to potential investors during their trip to the Middle East.

"Part of what we are doing over here is looking for new investments and we'll be promoting the refinery in terms of attracting a partner, so hopefully this project's going to continue".

Last week, NLRC director Brian Dalton told an oil and gas industry conference in St. John's that NLRC was actively seeking investment in several areas of the world, including the Middle East, for the stalled project.

NLRC sought court protection from creditors on Friday. SNC Lavalin is seeking approximately $20 million in unpaid fees for engineering and design work done by the consulting firm for the refinery proposal.

In court documents filed Thursday, SNC Lavalin subsidiary BAE-Newplan alleges "NLRC is looking to sell the project without 'independent oversight, review and approval' by unsecured creditors, and made a questionable security arrangement with a related company."

NLRC involves Altius and several European investors in a proposal to build a 300,000 barrel per day refinery in northern Placentia Bay, Newfoundland.

Altius is involved in several mineral and energy developments in Newfoundland and Labrador and elsewhere.

The company lists a Lower Churchill equity stake as one of the projects it is actively pursuing.

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NLRC seeks bankruptcy protection

Newfoundland and Labrador Refining Corporation, proponents of a 300,000 barrel per day heavy sour crude refinery for Placentia Bay are seeking court protection against creditors.

One of the creditors, SNC Lavalin, served notice on Thursday that it was seeking a court declaration that NLRC was bankrupt.

In a statement issued Friday, NLRC said:

NLRC management is currently working with its advisors to determine the optimum method of restructuring, which may include the sale of its assets. A further update will be provided at a later date once key decisions are made.

Earlier this week, NLRC director Brian Dalton told the annual NOIA oil and gas conference that the company was seeking investors in the Middle East, India and the Far East.

The refinery project has been in trouble for some time.

NLRC acknowledged in March 2008 that it had been unsuccessful in finding investors in the United States. Comments at the time were similar to ones given this week to CBC News:

Dalton said the company's problems with financing are "due to the deterioration of global capital markets."

By contrast, as Bond Papers previously noted, Dalton told the Financial Post in April 2007 that the project would only succeed if the company could find one major oil player.

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Related:

"Oh to be in the Gulf now that the cash is in bloom" in which Danny Williams, Kathy Dunderdale, Rodney Macdonald and Gary Lunn all head to the Middle East around the same time.

"Refinery marginalia" (October 2006) which notes, among other things the similarity between a provincial government news release and one issued by NLRC.

"Curious refinery logic" (October 2006)

"Chances of second refinery in NL more remote" (October 2006)

"Two degrees of separation revisited" (August 2006) Altius, Aurora, Newfoundland and Labrador Hydro, Brian Dalton, Dean Macdonald, Danny Williams.

At the same time, Altius is also pursuing a feasibility study on a second refinery in the Come by Chance area. The study was announced in February by Premier Danny Williams and then-energy minister Ed Byrne. The announcement was highly unusual since government [apparently - ed.] played no role in the [apparently - ed.] entirely private venture.

Change and Challenge: a strategic economic plan for Newfoundland and Labrador, Introduction

When it was released 16 years ago this month, Change and Challenge marked a departure in the provincial government's approach to economic development and diversification. The document subtitled "a strategic economic plan for Newfoundland and Labrador" laid out a long term approach to diversifying the provincial economy. It called for a transformation of culture, away from a dependence on government initiatives and government control and toward one based on individual initiative and private-sector entrepreneurship.

The plan did not promise easy answers, nor did it fixate on one sector of the economy or on large megaprojects. Change and Challenge represented the result of a long development process that was itself crucial. The long period of discussion and consultation both inside and outside government helped to develop a consensus among those who took part in the discussions.

Development of the plan lay with a economic planning group, appointed by cabinet in the summer of 1990 under the chairmanship of the premier's chief of staff, Edsel Bonnell. The group brought together a diverse set of individuals with an equally diverse set of ideas. There were within the group contending ideas, as former chairman of the Economic Recovery Commission Doug House describes in his book Against the tide.

The process was not an easy one but the fruits of the group's labour proved substantial. It's echoes can be seen in government policy four administrations after it first appeared, even if the old fixation on resource megaprojects and government paternalism in all spheres has come to fill the vision of policy makers once again.

Unfortunately Change and Challenge has not been available online before now. When it first appeared the Internet was in its infancy locally and so no electronic version was produced.

To overcome that problem and to mark the anniversary of this historic achievement, Bond Papers will present the strategic economic plan, chapter by chapter, over the next several days. The original document contains charts and graphs, all of which were printed in black and white as a cost-saving measure. They are recreated here in colour, where possible. Other than that there have been no changes to the content.

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Change and Challenge:
a strategic economic plan for Newfoundland and Labrador
June 1992

A Living Document

Foreword by Premier Clyde K. Wells

On behalf of the Government of Newfoundland and Labrador, I am pleased to present the Strategic Economic Plan which will determine the focus and direction of the Province's future economic development activity.

This document is the result of nearly two years of research, analysis and public consultation by Government. On behalf of my colleagues in Cabinet, I wish to express our gratitude to the Advisory Council on the Economy for conducting and evaluating the public consultation process; to the 261 organizations and individuals who submitted formal briefs and to the many hundreds of people who participated in regional discussions; to the private sector working groups from specific industries who provided valuable background information and recommendations; to the Economic Recovery Commission and Enterprise Newfoundland and Labrador for their significant participation in the entire planning process; and to the many Government officials from various departments and agencies who worked diligently and effectively in the research, evaluation, and compilation of an enormous amount of economic data.

The Strategic Economic Plan, in its final form, is the synthesis of hundreds of other documents, including statistical reference works, reports, working papers, studies, and briefs. The objective of the Cabinet working group of senior officials (the Economic Planning Group) was to produce a final document that would be as succinct as possible without sacrificing essential supporting data or background material.

This is an Action Plan. The 134 action items in this document are not merely philosophical observations or even statements of intent; they are commitments by Government based on specific decisions of Cabinet. These decisions were made carefully, taking into account the representations made by special interest groups and the general public, and always in the light of our fiscal capacity to support desired economic initiatives. They are presented here in the context and sequence of the plan itself, and not in any particular order of priority.

Implementation of the Strategic Economic Plan has already begun. Many initiatives were undertaken during the process of preparing the document. Others will start with the announcement and release of the Plan, but there are some programs which cannot be ready for implementation for months or even years to come. The Plan does not promise overnight miracles, but establishes the basis for economic recovery through sound, effective, and focused long-term planning. This is the only approach that can have credibility, because the people of Newfoundland and Labrador indicated clearly in the public consultation process that they would not take seriously any schemes that promised "quick fixes" or band-aid solutions to our structural problems. Indeed, in the pages which follow it will be shown that even if the province's growth doubled the national rate every year, it would take 20 years of such economic performance simply to reach the Canadian average.

Finally, this document is not the end of the strategic planning process for Newfoundland and Labrador; rather, it is just the beginning. We live in a constantly changing global economic environment, and every day brings new challenges and new opportunities. Our economic strategy must always be flexible enough to accommodate change and to accept challenge.

Change & Challenge is, therefore, a living document for the Newfoundland and Labrador economy in the latter years of the 20th century and beyond 2000. It is a plan prepared not just by government and business, but by the people of every region of the Province. That is what gives it the best prospect of success in charting the course for economic recovery and future prosperity.

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Chapter One - The Changes

Tube lawyers

This week's provincial news brought reference to Perry Mason.

For those too young to remember, Perry Mason was a fictional defence attorney, played superbly by Canadian actor Raymond Burr. The weekly series ran from 1957 to 1966 and was reborn as made-for-television movies until 1993. Almost invariably Mason was able to beat his opponent, district attorny Hamilton Burger, by showing that someone other than Mason's client was guilty of murder. Mason didn't just do his thing in court: he solved the crime by bringing the real criminal to justice with help from Della Street and investigator Paul Drake.

If the stories weren't good enough for you, the show had one of the coolest themes of any television show, as this clip from the second season demonstrates.



For another generation, there was Ben Matlock. Southern charm. Southern cool music and the irresistable Andy Griffith. The show was drama leavened with comedy.



Then there's Law and Order. Say television lawyer and more television viewers across North America are likely to think of Jack McCoy than Perry Mason. Played by Sam Waterston, McCoy epitomizes what many people would like to think is the kind of person serving as the local prosecutor. A tough, relentless, principled guy outwitting the crook's hired guns, McCoy's gone too far at times but his heart always seems to be driven by a passion for justice.



Metaphors can be useful to help someone understand a point you are trying to make. Pick the one that resonates with the audience and your job is done. if the audience's frame of reference is already somewhere else, a poorly chosen metaphor can undermine an argument no matter how good it might seem to you.

Still, none of this is real. They're all just damn entertaining shows.

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Chief of Staff: "I can't recall"

It's not the one you think it is.

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"Fair use": an American cheat sheet

It's free and it applies to the United States, but it's still worth a look.

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Associated Press, bloggers and the "fair use" concept

Associated Press (AP) is in the middle of a controversy over its recently announced policy requiring Internet sites to pay the news service for printing excerpts of its stories even in cases where the excerpt is as little as five words long.

The issue centres on copyright and contending definitions of what constitutes "fair use". Until now, "fair use" has allowed bloggers and others to use short extracts from AP news stories. In the case which triggered the spat, links to the original AP story were provided. AP will now expect payment for each use.

As Standford University Library's website notes, fair use is based on the belief that individuals may freely use portions of copyrighted materials for commentary and criticism. That's a paraphrase, by the way; if you want the full text please follow the link provided. It's important to note at this juncture that there are some differences in Canadian and American copyright law, but the concepts of "fair use" or "fair dealing" are generally similar.

You'll see plenty of quoting done at Bond Papers, typically to illustrate a point and to give proper credit to the source of the original quote or idea. The point is not to claim credit for someone else's ideas or words nor is the idea to deny any sort of financial gain due to a copyright holder for the sale of the rights to reproduce the work.

On occasions in the past, Bond Papers provided full articles and in one case the copyright holder protested. Since the copyright holder was absolutely right in its contention that the practice infringed on its copyright, the practice stopped. Short excerpts are used and in all cases, a link to the original, full text is provided. There was no demand to remove the old materials but were the same copyright holder to make the request, compliance would be forthcoming.

It's really pretty simple, in that respect.

Likewise, Bond Papers has pretty much eliminated the use of images to illustrate posts since, even though the images may be widely available through the Internet, and even though wordmarks or other efforts were made to indicate the source of the image, the likelihood of violating copyright outweighed the value of the image. If Bond Papers was a commerical site, we could factor in payments to rights holders as part of the cost of doing business. Since the site doesn't generate any revenue, it's simply easier not to use other people's work unless there is some overwhelmingly positive benefit from doing so. Then we'd deal with the issue of seeking permission.

Changes to the copyright law have turned out to be a divisive issue in Canada. Michael Geist is one of many in Canada who are criticizing Bill C-61, a bill to change the existing copyright law in Canada. Local photographer Greg Locke recently wrote about the benefit to professional photographers of the bill. Locke notes that the bill finally puts image creators on the same copyright footing as other creative people. google the terms and names used in this paragraph and you'll find an endless stream of news coverage and commentary on the subject.

When Bond Papers started, the idea of quoting bits of articles or stories and providing links reflected nothing more than the age old academic practice of citation. Fair use allowed for the use of an idea, provided proper credit was given and provided that some reference was offere dto enable a reader to check for himself or herself that what was attributed to an individual was actually what the individual said.

That practice remains and until someone wipes out that notion of fair use - there's no sign of that yet - then that's what the practice around these parts will be.

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Oh to be in the Gulf, now that the cash is in bloom

Persian Gulf that is.

Qatar:

Danny and Kathy. (unspecified cash talks related to energy developments) When you click the link, note the top of your browser reads "Sport Newfoundland and Labrador - Volleyball Summer Camps 2008.

Rodney. (Hunting for gas)

Saudi Arabia:

Gary. (International meeting on high oil prices.)

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When news isn't news but the real news isn't reported

One of the things that keeps your humble e-scribbler entertained during the drizzly, foggy nights of capelin weather is comparing news reports.

On Tuesday, there was Premier Danny Williams' opening remarks to the annual NOIA oil and gas conference in St. John's.

CBC was hyping the thing despite there being no concrete evidence whatsoever that Williams was even vaguely contemplating announcing the conclusion of Hebron deal. The reasons behind the hype-fest are as inscrutable as the real reasons for the whole Andy to the CNLOPB or Andy to the PUB thing.

CBC even gifted the Premier with 15 minutes of free province-wide airtime right before the 9:00 work whistle started so that he could deliver a yawner of a stock speech. He didn't ask for it; they gave it willingly and based on absolutely squat in the way of concrete information.

There were no hotel spaces booked for the launch. No sign of print work or any of the other things that would happen if there was going to be a major announcement of a final and binding agreement between the provincial energy company and the oil companies on Hebron.

And if the absence of all those usual indicators wasn't enough, and just to make it overwhelmingly clear, bear in mind that no less a personage than the Premier himself poured cold water over the whole idea of a Hebron announcement coming in his in his Tuesday remarks.

"I can't be overly optimistic that we will achieve it by next week," said Williams on Friday, but said a 25-per cent chance is a fair statement that an announcement will come next week. "I can tell you, though, that I'm extremely confident that this is going to get done in reasonable time frame.".

Williams said the confidentiality part of the agreement is the biggest hold up, especially now that the province owns an equity stake in Hebron.

That was the Telly version. Other media carried similar remarks either from the Premier or from his spokesperson who used, one must note the exact same words about the percentage chance of an announcement.

So then came the speech and the Premier's predictions were dead on.

With the Hebron speculation proven hollow, both CBC and the Telegram used the possibility of a new development application for Hibernia South to lede their stories on the speech. The timeline of that issue given by the Premier could be another post, but let's stick with Hebron.

In the scrum, the Premier was asked about the negotiations. He gave a slightly different version of the negotiations than we've heard before, saying that at one point he'd anticipated a deal by the first of April.

Well, when the memorandum of understanding was released, the final legal agreements were expected within a "few months." When the end of the year came, the deal date was moved to February.

April wasn't discussed publicly but at one point in the spring, the Premier said the whole thing was slow because the oil companies' approval processes weren't as swift as those of the provincial government.

The expected date for a deal was June. Now it's the first week of August. Anyone notice the "two months hence" pattern?

Anyway...

Note the comment in the scrum about about the current talks and what's being discussed on Hebron.

Confidentiality was dealt with "some time ago."

No news stories have mentioned that discrepancy and it isn't a small one. In fact, it leads you to the issues mentioned by the oil companies in a Financial Post story last week. They talked about questions about how much of the work would be done in Newfoundland and Labrador, how the province would pay for its share of the costs and how the oil companies will shift around their shares to give a few to the province's energy company.

No one in the local patch has questioned whether a Hebron deal would be finalized. They've known the deal would have to get done since the MOU was announced last August.

How much work gets done in this province - forget the GBS because that was a given before talks broke off in 2006 - is an issue that the local oil industry is extremely concerned about.

If you skip past the superficial comments and the hype and recognize the obvious disinformation about the confidentiality portion of the deal, you might start to wonder if the oil companies are concerned about whether the local labour market can handle the Hebron project what with most of the province's skilled tradesmen off in Alberta.

They wouldn't want to be tied to performance commitments the local labour market can't keep unless the provincial government was prepared to either relax the local benefits provisions or step in a share the increased costs of doing work locally and shipping in the workers to do it from Heaven knows where. After all, the oil companies want the job done quickly, cheaply and on time. If they have to meet political targets - versus business ones - they'd like to offload those on someone else and who better, in their minds, than the energy company owned by the people who are pushing for the political targets?

If that's what the hang-up in Hebron talks is really all about, that would be a significant conundrum for the provincial government and it would certainly cover off two of the three items the industry representatives mentioned to the Financial Post.

A deal will get done, but if that's the sort of thing that is currently holding things up, it's a major point of disagreement. We may not see a deal for a few months beyond August.

Overall, though, it's interesting to examine the news because sometimes what's reported as news isn't real news at all. There's was no likelihood of a Hebron deal this week and the Premier said so.

Sometimes, the real story is missed entirely even when it's right in front of everyone's face. It didn't make it into the first news cycle. As with the negotiations, let's see what tomorrow brings.

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Resist the hype

or is it the spin about a possible Hebron deal being announced this morning.

Not gonna happen.

Too much left to negotiate.

But that's not to say the Premier won't be saying positive things about Hebron moving along and there being discussions about possibly getting the Hibernia South extensions underway.

Nothing concrete or finalised, mind you.

Just positive, generic words.

And that's all they are.

Words.

Only the action counts, and that's the action of pen scribbling across bottom of page.

If there's no news conference scheduled or even under discussion, all the rest is hype and spin. Both are just synonyms for bullsh*t.

Now it's interesting to speculate why one news organization is pushing something that no one in the industry is expecting, so here's a simple proposition for the gang at CBC:

five Bond Bucks - the notional currency around these parts - says the only thing we'll hear from Danny Williams on Tuesday morning are vague platitudes.

Any takers?

0915 Update: 15 minutes of free province-wide radio airtime to deliver... the most generic, stock off-the-shelf government energy speech yet.

The only variation from the stock government energy speech? The sentence right at the beginning that said there was no announcement and, indeed no news on Hebron and Hibernia South.

The kernel of news buried in it? The Lower Churchill project has already been sanctioned. Money will be spent and the only thing that will stop it is, well, nothing.

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Privatizing Hydro: a glance back

Introductory Note:

One of the more controversial proposals over the past 20 years was the privatization of Newfoundland and Labrador Hydro.

Much of the Hydro privatization story has passed into myth, much like the Churchill Falls story. Unfortunately for anyone interested in looking more closely at the idea of Hydro privatization today, some of the documents publicly available 15 years ago are no longer readily accessible.

Following is a text of an address delivered by Premier Clyde Wells to the St. John's Board of Trade in November 1993. It is the prepared text, not a transcript of the actual speech. It doesn't need much comment; the thing speaks for itself.

In order to produce this post, the original hard copy of this speech was scanned electronically. Please note that errors in spelling and so forth may remain, despite careful editing.

Next in this series will be the 1969 Churchill Falls contract. Given the documents length, it will take some time to scan and edit and the subsequent online versions will be broken down into smaller segments.

Government of Newfoundland and Labrador

Restructuring and Privatizing the Electrical Industry
of Newfoundland and Labrador

An Address by
The Honourable Clyde K. Wells
Premier of Newfoundland and Labrador
to the
St. John's Board of Trade
November 17, 1993
Check Against Delivery

I want at the outset to express my appreciation to the Board of Trade for giving me this opportunity to advise you and through you the people of the province of the government's position with respect to privatization of Newfoundland and Labrador Hydro.

Contrary to some suggestions you have been hearing this is not a proposal intended to benefit a particular company or group of people. This proposal is intended to benefit the province and its people both in their capacity as electrical ratepayers and in their capacity as taxpayers. It is also completely consistent with the overall economic vision and goals that the government is pursuing for Newfoundland and Labrador.

In June of 1992, after nearly two years of research and extensive consultation throughout every region of this province, government released its strategic plan entitled, Change and Challenge. At that time we stated that Change and Challenge is a living document for the Newfoundland and Labrador economy in the latter years of the 20th century and beyond the year 2000. To quote:

Our economic vision for Newfoundland and Labrador is that of an enterprising, educated, distinctive and prosperous people working together to create a competitive economy based on innovation, creativity, productivity and quality.

Two of our set of eight guiding principles for economic development are worthy of repeating today:

1. The private sector must be the engine of growth. While it is a role of government to create an economic and social environment that promotes competitiveness, it is the enterprising spirit of the private sector that will stimulate lasting economic growth, and
2. Government policies and actions must have a developmental focus where the client comes first. The structure of government must be streamlined, efficient and responsive to public need and to changes in the economy.
   

As well Action Item 31 of the Strategic Economic Plan specifically commits the government to "avoid providing services where they can be provided by the private sector".

The ultimate goal of privatization and restructuring is to improve the economy as a whole. There is hardly a country in the world today that does not have a major privatization plan in hand. These plans constitute a main pillar for the future economic strategy of most governments.

December 1992 Economic Statement by the Finance Minister

As part of his address to the House of Assembly on December 4, 1992, the Honourable Winston Baker, Minister of Finance, reviewed the state of the provincial economy and outlined a number of important decisions that the government was taking to deal with our financial and economic position.

One of the fundamental policy statements articulated by Mr. Baker at that time was government's decision to review the various operations, crown corporations and agencies of government and to pursue a privatization and restructuring program for those areas presently in the public sector that could be owned and operated by the private sector. That was also consistent with the government's often stated position that scarce and difficult to raise public funds should not be tied up providing commercial type services that the private sector is prepared to provide unless there is an overwhelming public policy reason for so doing.

Since the presentation of that economic statement, we have been pursuing the privatization of several government activities including the provincially owned Computer Services Corporation, certain assets of Newfoundland and Labrador Housing Corporation, Newfoundland Hardwoods and Newfoundland and Labrador Hydro. We are currently considering other possible restructuring and privatization opportunities.

One of these has attracted a significant amount of attention in the past few weeks. That one is Newfoundland and Labrador Hydro.

A little background might be helpful to a full understanding of the issues.

In 1989, Fortis, the parent company of Newfoundland Power, approached government with a view to purchasing certain select rural assets of Newfoundland and Labrador Hydro, mainly all the lower voltage transmission and distribution assets. Government, on the advice of Hydro and others, rejected the offer. Fortis, offering slightly different terms, pursued the matter again in 1992.

Government again asked Hydro for advice. The Board of Directors of Hydro initiated an assessment of the Fortis offer. The Board also decided to review at the same time various other alternative structures for the province's electrical industry.

Hydro retained ScotiaMacLeod and RBC Dominion Securities, two of Canada's largest and most respected investment dealers. These two companies have participated in billions of dollars of successful privatization and restructuring transactions in Canada and throughout the world. It is noteworthy that they were the lead advisors in the recent successful privatization of Nova Scotia Power. They have also been the senior fiscal advisors to Hydro and the province for over ten years.

The financial advisors recommended that Hydro and the government reject the Fortis offer because it did not represent fair price and payment terms for the assets in question and was not the best strategic alternative for the future structure of the electrical industry of Newfoundland and Labrador.

Hydro's Board of Directors and its advisors pursued the assessment further and ultimately advised the government that the status quo was obviously a viable option but if the government wished to privatize it could do so successfully either by privatizing Hydro on a stand-alone basis or by first merging with Fortis and/or Newfoundland Power and then selling its shares in the merged company. They did however advise that the combination with Fortis/Newfoundland Power was preferable to a stand-alone privatization, from the point of view of government, taxpayers and ratepayers, if the combination could be effected on acceptable terms.

Government reviewed the results of this process, but before proceeding decided to further consult with experienced electrical industry experts both within and outside the province. All affirmed that in the event of privatization, merger was the preferred course and nearly all recommended privatization as the best course for government to follow. Accordingly the government decided:

1. To reject the offer from Fortis; and
2. That it was in the best interest of the people of the province to pursue the restructuring and privatization of the industry by either merging Hydro and Fortis/Newfoundland Power, or by privatizing Hydro on a stand-alone basis.
   

Shortly after making this decision, the President of Hydro, the Minister of Mines & Energy, and I met with the Chairman of Fortis and the President of Newfoundland Power. At this meeting on August 30th, we asked them if they were interested in participating in an investigative process to determine whether the merger of the two Newfoundland electrical companies into a single integrated investor owned utility might be achievable and in the interest of all concerned.

I also advised the Fortis/Newfoundland Power representatives that if satisfactory progress towards a merger that would achieve government's stated objectives could not be accomplished in a reasonable period of time, then we would proceed to privatize Hydro on a stand-alone basis.

Overview of the Negotiation Principles and Current Status

It might be helpful to review some of the major principles and objectives that we established for these discussions, and to provide an overview of the major components that will be part of any merger with Fortis/Newfoundland Power, or the privatization of Hydro on its own.

Objectives Established

Before any discussions began with Fortis/Newfoundland Power, government established its set of overall objectives for any merger between Hydro and Fortis. In summary, these objectives are:

1. To get the highest reasonable price possible for its hydro assets;
2. The elimination of the guaranteed debt of Hydro from the Province's financial statements is to take place as soon as possible, and the government is to have no future financial responsibilities.
3. To achieve the most efficient and effective provincial electrical industry.
4. Either by restructuring the industry or privatizing on its own, government would intend to divest itself fully of its shareholdings in the electrical industry (except for its investments in Churchill Falls (Labrador) Corporation, the Lower Churchill Development Corporation and the Gull Island Power Corporation) as soon as practical, by way of a broad public offering of common shares in Newfoundland, the rest of Canada and possibly elsewhere.
5. Discussions are to proceed in an appropriate and orderly manner and both parties are to observe confidentiality until an understanding in principle can be disclosed, or negotiations are discontinued. This is normal and necessary in a negotiation of this nature.
6. The initial executive management team and the initial board of directors of the merged company would require input and approval of government.
   
7. Ownership, voting and possibly other restrictions would apply to the shares of the new merged entity to ensure the electrical industry is widely held and not controlled by a small number of individuals or corporations, nor controlled by foreign investors.
8. To ensure the restructured and privatized industry is well capitalized and credit worthy so that it will be able to finance the Province's future electrical requirements, and
9. To achieve stable or improved revenues for the provincial treasury from the electrical industry.
10. Within the context of these objectives to minimize the rate increases charged industrial, commercial and domestic customers in the immediate and longer terms.
    

A few days after the initial meeting with Fortis representatives, the Chairman of Fortis informed me that they were interested in participating in such discussions. Accordingly it was agreed to establish negotiating teams to start the discussions. It was also agreed that the public and Fortis shareholders should be made aware of what was occurring. This was done by a joint news release on October 1st. These discussions are now proceeding but they are still at a very preliminary stage.

Fortis has not yet agreed to fully meet the requirements of government, that I have just outlined, to ensure that what occurs is not a take over by Fortis but is genuinely a merger of the two corporations with the final structure reflecting the level of assets and strengths each of the two parties will bring to the merged company. Unless such requirements are met there will be no merger.

Major issues to be addressed

Recent public commentary has raised a variety of questions. Valid or not these questions should be addressed. I will do so by posing the questions that have been raised and providing government's answer.

Why is the proposed transaction a merger?

1. The only way to effectively eliminate the duplication that presently exists and would continue to exist if Hydro were simply privatized on a stand-alone basis would be a merger. All of the expert advice available to government recommends such a merger.

2. The newly merged company would be neither Fortis, nor Hydro, but a true combination of the people, assets and shareholdings of Hydro and Fortis.

3. The percentage of the new entity that is coming from the government's ownership of Hydro is the majority interest in the new company, and will then be sold to investors in Newfoundland and Labrador, throughout Canada and the world by a public share offering.

Why is Hydro and Government negotiating only with Fortis?

1. Newfoundland Power, a company wholly owned by Fortis, is the only other electrical utility in the province and it distributes electricity to 85 % of all electrical customers in the province. Any effort to restructure the industry in the province must include Fortis, and only Fortis.

2. The advisors and government are of the opinion that the most efficient operating structure for the electrical industry is to have a fully integrated operation for the generation, transmission and distribution of the product to the customer, and that can only be achieved by negotiating with Fortis.

3. We do not want control to be with another corporation outside the province and we do not want private interests, either within or outside the province, to buy Hydro. Therefore, it is not appropriate to seek bids for Hydro. The interests of the province will be best served if its electrical industry is a widely held public company that cannot be controlled by any group either within or outside the province and can raise the capital required for future growth of the industry.

Will the Government get fair value for its investment?

1. Most definitely, Hydro and government's financial advisors are among the best in the world. Their projections indicate a very attractive value can be achieved and that there will be a profit to the people of the province from the privatization of their investment in Hydro.

2. The government will not privatize Hydro, either in a merged entity or on a stand-alone basis, unless the value received is fair and is consistent with values other governments have received in similar privatizations.

3. The government will only agree to proceeding with a transaction with Fortis if the proceeds are at least equal to or greater than would be received by privatizing Hydro on a stand-alone basis.

4. Government will obtain an opinion from recognized investment bankers that the proposed transaction is fair to the taxpayers of the province. Without such an opinion there will be no merger.

How will the province's financial position be improved?

1. The guaranteed debt of Hydro represents approximately 18% of the total direct and indirect debt of the province. This will be significantly reduced immediately, and completely eliminated over the longer term. Hydro's current debt and equity today is approximately $1,250,000,000.

2. The province will receive a substantial amount of cash from the profitable sale of the securities that it will receive in the privatized company. This cash will be used to reduce the province's debt by lowering our future borrowing requirements, thus saving current account interest expense, which means avoiding tax increases and/or government program cuts that would otherwise occur.

Will this mean that there will be an increased outflow of capital from the province through payment of dividends?

I believe the answer is NO. More than 90% of Hydro's current interest payments are to institutions outside the province. While part of the debt will be converted to equity, dividend payments won't make us worse off. Thousands of Newfoundlanders and Labradorians will be encouraged to invest in the shares of the new entity, thus keeping more dividends in the province. In addition the retained profits in the new utility will be reinvested in new fixed assets within the province, no different than what occurs now. In total, more money will remain within the province.

Will this assist the province's credit rating?

1. The major U.S. credit rating agencies, Standard & Poors and Moody's visited with me and senior ministers and officials earlier this year. They were strongly supportive of government's plans to restructure and privatize various crown agencies including Newfoundland and Labrador Hydro, as well as our other financial management initiatives.

2. The province's total direct and indirect debt as a percent of gross provincial product is 61.5%, the highest in Canada. Financial institutions frequently emphasize this when commenting on the province's financial state or its credit rating. The elimination of the Hydro debt and the reduction of future debt and borrowing requirements from privatization can only be positive, and will result in improved creditworthiness.

What will be the government's on-going role in the electrical industry?

1. The new company will be totally subject to regulation by the Public Utilities Board in respect of all of its electrical utility activities.

2. Government will still be responsible for the regulatory policy regime of the electrical industry. We will be introducing a new Electrical Power Control Act that will ensure the people of Newfoundland and Labrador, and specifically the consumers, will continue to have an efficient, fair and reliable electrical industry.

3. The restructuring and privatizing of the industry will be governed by a Privatization Act which will outline the policies under which the new company will operate. This Act will cover major policy issues such as ownership rules, to ensure regulation and management of the industry remains within the province and not with other organizations in Canada or foreign countries.

4. The government will continue to control and be responsible for the development of future electrical development because it will retain ownership of Churchill Falls Labrador Corporation, The Lower Churchill Development Corporation, all other Labrador water rights, all undeveloped island water rights, and the policy direction for non-utility independent generators and alternate power sources.

Will electrical rates increase?

1. Rates in the future, as now, will only be set after hearings by the Public Utilities Board. Under any of the alternatives of the industry, including leaving things as they are today, rates will increase as costs increase.

2. Privatization, whether by merger or on a stand alone basis, will cause some additional rate increase beyond that which would otherwise occur in the first five years. That additional increase due solely to privatization should average about 1 % per year or less. Merger and privatization should result in lower rate increases beyond that five years.

3. Any rate increases must be considered in light of the benefits to the provincial treasury of privatization. Generally speaking the more the people as taxpayers get from the sale the more the same people as ratepayers will have to pay in the future. Government's objective will be to achieve the greatest fair return we can get while at the same striving to keep any increase at a minimum.

What will be the impact on the employees and the unions?

1. One of the objectives of the industry restructuring is to improve operating efficiencies. Merging two large utilities such as Hydro and Fortis/Newfoundland Power will result in the elimination of certain areas of duplication in management, administration, and maintenance. These will be identified and a fair and equitable program will be developed to accommodate early retirement, voluntary severance and position redundancies.

2. The Unions will be involved in the merger process if a transaction is agreed upon. So will the non union employees.

3. It is premature to speculate on numbers or specific areas of operating efficiencies that will result.

Concluding comments

On October 1st when we announced that we were beginning discussions with Fortis/Newfoundland Power, we stated that any transaction would have to meet three objectives:

1. To create a more efficient electrical industry.

2. To be fair to the current public shareholders of Fortis and Newfoundland Power and to the electrical utility ratepayers of the province, and

3. To maximize the proceeds of privatization of Newfoundland Hydro for the people of this province.

I hope my comments today have helped explain how we arrived at the strategic decision to begin a restructuring process for the electrical industry; that we are going about it in a careful and responsible way; and that the achievement of our objectives will be in the best interests of all the people of Newfoundland and Labrador.

The restructuring and privatizing of the electrical utility industry is not being done behind closed doors. I advised the people of the province as soon as the basis for negotiations was decided upon by both parties. We have considered many different alternatives; sought advice from the industry experts; and engaged highly respected and experienced financial advisors, before deciding to restructure and privatize the industry. We will keep the public and House of Assembly fully informed as discussion progress. In any event no such privatization can be completed without full debate and passage of the necessary legislation by the House of Assembly.

The government's stated policy is that we will privatize and restructure government operations, crown corporations and agencies where there is no overriding public policy purpose for government to remain as an owner. The electrical industry meets this policy criteria.

The province is being affected by the profound economic and financial forces which are impacting the economies of all countries of the world. These forces make it imperative that we make wise use of investment capital and that the electrical industry, and for that matter, all sectors of our economy, be operated in the most productive fashion possible. That is what we are seeking to achieve.

Thank you very much.

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Russert moments

There have been plenty of tributes to Tim Russert, the long-time host of NBC's flagship public affairs program Meet the Press, who died suddenly on Friday.

John Gushue flips a link to a compilation of Russert's top 10 "gotcha" moments.

Gushue's daily blog Dot Dot Dot is a marvelously eclectic compilation of posts presented in John's characteristic lean style. No long winded essays from Gushue. Just the facts. Just John.

If you haven't dropped by lately, take this peak inside John's mind.

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Cameron wins White Rose contract

Houston-based Cameron International has been awarded a US$235 million contract to engineer, construct and install subsea systems for the North Amethyst extension of the White Rose project.

Scope of the contract calls for Cameron (NYSE: CAM) to provide 13 subsea wellheads and Christmas trees, control systems, manifold components, flowline connection systems and engineering and project management support.

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It's all about control

You can read a profile of the Premier, this week in the Toronto Star.

You've heard it before but you can read it if you want.

Or you can skip to something really interesting: a series on how the Prime Minister's Office is clamping down on public communications from the federal government in a way that some veterans inside the Queensway are saying is unprecedented.

Public appearances by cabinet ministers – whether it's a speech or an interview – are carefully staged, starting with a "message event proposal" vetted by the Privy Council Office, the bureaucratic wing of the Prime Minister's Office (PMO).

And in a marked change from previous governments, now even basic demands for information from reporters, once easily fielded by department spokespersons, are sent to this office for review – and often heavy editing – before they are okayed for public release, government insiders say.

It's a series so you can see different things. Like the member of parliament who paid dearly for speaking out of turn. Like the policy of having everything vetted by officials in the communications and consultation branch.

Donald Savoie couldn't have written a more timely book. Too bad that of the three copies at Chapters locally, only one was bought up to yesterday evening when your humble e-scribbler bumped and jostled with the crowds picking up Father's Day stuff. That would be the one said scribbler bought last week.

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What a difference a week makes: the latest Hebron project stories

First - June 9 - a deal was "close".

There were just a few minor details left to sort out.

Mark Nelson, Calgary-based president of Chevron's Canadian subsidiary, said Hebron discussions are focused on such issues as how much of the project has to be built locally, how the province will pay for its share, how ownership interests will change to make room for the province.

Then the deal was perhaps as close as "next week."

The latest is that there's just a 25% chance the deal can be closed by the time the Premier speaks to the NOIA conference next week.

The biggest hold up - by logical extension there are other hold ups - is the "confidentiality agreement".

The curious thing about that version of the story is that Bill 35 - the latest amendments to the energy corporation legislation - essentially make just about everything connected to the deal and the project entirely confidential and exempt from just about every form of public disclosure except what is required by the offshore regulatory board.

Maybe everyone should just kick back with a cold one and let the whole thing work itself out. When there's a real deal, there'll be an announcement and not before.

Face it. If the stories are true the parties would be a long way from a deal at this point, like maybe 75% of the way from a deal. (Get it? If there's only a 25% chance of it happening next week, there's a 75% chance it won't and that could be a way of saying the final version of the deal is a long hot summer away from happening. That would still be well within the time frames people have been talking about for project start-up; it's just not as quickly as some of the local speculators have been hoping.)

They still have to sort out:

• a confidentiality agreement, in addition to the confidentiality agreement in the memorandum of understanding (Didn't that portion of the MOU alone take something like four months to hammer out?);
  
• how much of the project will actually be built locally given local labour market shortages;
• how the original corporate partners are going to re-divide their shares to give some to the provincial government; and,
• how the provincial government will actually pay for its share of the capital costs. That's the only thing that might be in question since the energy minister clearly told the legislature this past spring that "[t]he funds will be transferred from the government to the energy corp to purchase the equity in Hebron as well as in the White Rose extension."

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Never forget to remember

Maxime Bernier is the latest politco afflicted with what appears to be a virulent disease: amnesia politica.

“He doesn't remember forgetting them [the classified briefing notes], that's the question,” one source said.

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CDS wins national PR award

Outgoing Chief of Defence Staff General Rick Hillier is the first recipient of the Canadian Public Relations Society's (CPRS) president's award for outstanding public relations and communications management.

Hillier received the award at the CPRS national conference in Halifax, June 10.

In making the award, CPRS president Derrick Pieters said "General Hillier was selected for this honour for his outstanding leadership in communications and excellence in communications management. He has also demonstrated a commitment to two-way communication practices and relationship management."

CPRS represents more that 1800 public relations practitioners across Canada. Members commit to following a code of professional standards. They are dedicated to promoting professionalism in the practice of public relations. CPRS was founded in 1948 and this year celebrates its 60th anniversary. Today, CPRS is a federation of 16 member societies based in major cities or organized province-wide.

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From the G&M: "The broken chain of answerability"

By one definition, a gearhead is a person who is extremely interested in computer hardware and software and they work.

Well, if that's the case, then Donald Savoie could be called a govhead. He's got an extraordinary interest in and knowledge of the hardware and software of government.

Savoie holds the Canada Research Chair in Public Administration and Governance at the Universite de Moncton. He's an accomplished public servant and academic with a resume that would make even the highest achievers feel inadequate.

His most recent book - Court Government and the Collapse of Accountability in Canada and the United Kingdom - won't make the national best seller list, but among academics and others interested in how government runs, Savoie's writings will become required reading.

Savoie condensed part of his recent book into a two page article last month in the Globe and Mail. His observations should startle Canadians into re-examining the federal and provincial government sin the country. Likely, Savoie will go unnoticed, not just unheeded.

Let's hope not:

The relationship among Parliament, the prime minister, ministers and public servants is in need of repair, and we are ill served by pretending that all is well. We should no longer tolerate court government, by which a political leader with the help of a handful of courtiers shapes and reshapes instruments of power at will. Those with the power to introduce change for the better are reluctant to do so because they enjoy being able to wield tremendous power.

We need to define, preferably in law, the role of the prime minister, cabinet and the public service and give public servants an administrative space of their own to manage government operations, while recognizing that the prime minister and ministers must always have the authority to override public servants in all matters not covered by statutes.

...

What is to be done? The time has come to engage Canadians in a debate on the role of Parliament, officers of Parliament, the prime minister, cabinet and the public service, and for Canadians and public servants to tell Parliament, "Heal thyself." Political parties need to take the lead and launch a meaningful debate on the state of our national political-administrative institutions. The issue is vitally important, and parties should engage their members in the debate. It provides an opportunity for political parties to be more than election-day organizations, to offer meaningful opportunities for involvement and to become effective vehicles for promoting thoughtful debates and change.

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Create wealth fund: OECD

The Organization for Economic Co-operation and Development believes that a Norway-style overseas investment fund would be beneficial for Canada:

“It's not [only] an exchange rate play. It's a more fundamental issue” of investing the proceeds for the future, and helping manufacturing in Canada at the same time, said Angel Gurria, secretary general of the OECD, in Ottawa on Wednesday to release its report on the Canadian economy.

The OECD wants Alberta “not to be so procyclical ... not to spend all those revenues now,” said Peter Jarrett of the OECD economics department.

The federal government should set up a fund too, and set aside any windfalls in a transparent manner, he said.

The Norway idea is a popular one among some academics and government officials but has never gained traction among politicians in Canada.

Ottawa has said in the past that it can't calculate how much money it gets from the energy industry, given the substantial spin-offs of investment and production in that industry, Mr. Jarrett said. But there's nt reason it couldn't create a model.

“There is scope for doing so,” he said.

Bond Papers has discussed the idea at least once before. So far local pols have ignored the idea.

You find a summary of the OECD report at oecd.org.

Don't cut yourself on the edge...

Earlier today, from the CPRS national conference in Halifax, Joseph Thornley liveblogged a panel presentation on the impact blogs, youtube and a raft of other new Internet phenomena are having on employee communications.

CBC employees will enjoy the bit from Amanda Brewer and the impact the Internet had on the 2005 strike. Brewer was a CBC employee who left the company after the strike, took a job with Hill and Knowlton which has now been hired by Ceeb management to help the Corp cope.

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CPRS-NL submission to the Cameron Inquiry

[Editor's note: Following is the text of the submission made by the Newfoundland and Labrador Chapter of the Canadian Public Relations Society (CPRS) to the Cameron Inquiry, under the call for submissions in Part II of the Inquiry.

The only editorial change in the submission made here is to move the acknowledgements from its position at the front of the original document to the end.]

Submission to the Commission of Inquiry on Hormone Receptor Testing

by

Canadian Public Relation Society –Newfoundland and Labrador (CPRS-NL)
May 15, 2008

Legal roflmao of the week

roflmao.

Rolling on floor laughing my ass off.

Internet shorthand.

Anyway.

Post a few court decisions and someone sends along a link to a blog that is built entirely on the humourous goings-on in courts south of the border.

That's the United States, since this is being written in Canada.

Lowering the bar is the blog.

It's most recent post describes some of the arguments presented in FCC v. Fox Television. That's a case at the heart of which is whether or not fleeting uses of four letter expletives are sufficiently shocking to audiences that they should be banned entirely from broadcasting between the hours of six and 10 in the evening.

Seems the lawyer for Fox began his argument by using two of the seven words you can't say on television repeatedly and in full.

There's a link to another post about a Pennsylvania case where fines where handed out to a person being deposed and his counsel for the use of the infamous "f*ck" 73 times in the course of a deposition, while the word contract only came up 14 times. The fine worked out to $367 per "f*ck".

Some people have no sense of humour.

In any event, turns out that the Wall Street Journal has a law blog, which is is well worth checking out on occasion. There's also SCOTUSblog which is, as the name suggests, a blog about the Supreme Court of the United States. These both tend toward a more serious raportage of legal matters than the stuff you'll find at Lowering the bar.

In Canada, you can find The Court, which is a rather serious blog from Osgoode Hall law school about the Supreme Court of Canada and its decisions. A reference librarian from SCC has his own blog, titled Library boy. google around enough and you'll find a few more worth stopping by if you have a sudden taste for things about lawyers written by lawyers.

Too bad we don't get this kinda stuff from the local law courts. Something says there'd be plenty of really funny stories to relate.

Barristers may feel free to send their submissions for consideration.

Update: In order to ensure there is no confusion, the phrase "for consideration" used above should in no way be construed as an offer to pay for any posts a barrister may submit. Words are funny things and lawyers are good at using them. Let's make sure there is no confusion.

Further to that point, posts may be made under a pseudonym provided that your humble e-editor knows who is making the submission. The local bar is a small one and a pseudonymous post might be in order under the right circumstances. Barristers should be somewhat creative in using a pseudonym. Rumpole is right out, but any of the other characters are fair game.

Speaking of Rumpole, undoubtedly he'd have had something to say about the initiative in the United Kingdom to change the style of dress in court. There's a discussion paper on the subject, complete with illustrations of the old and the proposed new.

The reaction to the proposal - which could see an end to wigs in British courts - has been somewhat mixed. Here's a link to the Inner Temple library blog with posts on the reaction as covered in the media.

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From the Supreme Court of Canada

Where someone is from would obviously affect how one applies the Charter.

Was that sarcasm clear enough for the proponents of the ghetto school of judicial appointments?

Still, here's a case for the legally mind that's worth noting:

The accused made an incriminating statement, after four hours of resistance, immediately after being confronted by the interrogating officer with a prior statement obtained from him in violation of his constitutional right to counsel. The trial judge admitted the latter statement and convicted the accused on three counts of sexual interference. The Court of Appeal upheld the convictions.

Held: The appeal should be allowed and a new trial ordered. The impugned statement should have been excluded pursuant to s. 24(2) of the Canadian Charter of Rights and Freedoms.

A statement is tainted by an earlier breach of an accused’s constitutional
rights if the breach and the impugned statement can be said to be part of the same
transaction or course of conduct. Here, the required connection between the two
statements was direct and obvious. It was temporal, causal and, to some extent,
contextual. The interrogating officer concluded that he would not obtain the
incriminating admissions sought unless he confronted the accused with the latter’s
earlier inadmissible statement. He therefore proceeded to do so. In this way the
interrogating officer made use, knowingly and deliberately, of an earlier statement that the police themselves had obtained from the accused in a manner that infringed his Charter rights. This alone was sufficient to taint the subsequent statement and to cry out for its exclusion pursuant to s. 24(2) of the Charter. To hold otherwise would be to invite the perception that the police are legally entitled to reap the benefit of their own infringements of a suspect’s constitutional rights. And this would bring the administration of justice into disrepute.

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The elements of a good communications plan

Courtesy of Dave Fleet, a step by step guide to communications planning.

He starts - where else? - with a good overview.

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And it isn't in code

Israel's security service is blogging in hopes of attracting a few good nerds into the service.

Sounds like a farkocktah idea.

Who knows?

They might be on to something.

If you read Hebrew, you can check out the site here: Shin-Tech.

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D'oh!

Two "patriots".

One shags up a discussion of the courts.

The other shags up the current discussion on the Lower Churchill.

Both could have used a little fact-checking before launching into their tirades.

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To the crowd running Tammany Hall

St. John's municipal elections use mail-in ballots read by optical scanners.

The people running the thing should think about how their system works.

There's one way of screwing with the system technologically.

Then there's always the impact how the ballot is laid out can have on voters. Is it a coincidence that Doc and Ron were at the top of the columns separated by an abnormally long gap from the next name on the ballot and both won by handy margins?

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Things that go up...

Usually go down.

It's just a matter of when and how far.

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Related: "What goes up must come down"

Rest in peace, Jack. You earned it.

For every sleveen in politics, there's someone like Jack Byrne to keep your optimism alive.

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Truer words

"These numbers are ridiculous".

He should know.

We couldn't have said it any better.

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Back to reality

1. Two out of three residents voted for none-of-the-above. Before anyone gets too excited about the results of the St. John's municipal by-election, just take a look at the numbers.

Voter turn-out was about 33%.

The overwhelming majority of residents didn't vote. Period.

Even in a general election, voter turn-out is appallingly low. This by-election was nothing to crow about.

2. Municipal politics is no place for ideas.

While Doc and Ron both had help from professional advertisers, they ran campaigns devoid of any political oomph or presence. There were plenty of slogans but nothing that could even be mistaken for substance.

Voters weren't engaged in this campaign because no one engaged them.

Municipal politics is no place for ideas. This by-election proved it in spades.

No one should wonder why the city is in a financial mess. Check the size of the subsidy for Mile One today versus when these guys got elected in 2005.

Then look more closely at the Sink Hole's financial statements than accepting what are likely to be the councillors assurances that the thing is breaking even without an anchor tenant.

3. Then there are the surprises.

Debbie Hanlon.

Opposed by the Ron Ellsworth municipal machine and a bit of spite from another corner.

Wins with more votes in Ward Four than Ellsworth had the last time out in the general election. She put sweat equity into the job where Ellsworth just flicked cash at it.

The municipal system is made for a politician who works the phones tirelessly early on and has really huge name recognition.

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ECNL - Part 2 - Delayed

The second part of the mini-series on the energy corporation legislation is delayed.

There are amendments either already introduced or pending, some of which could change the meaning of specific sections of the bill dramatically.

Better to wait until the whole thing is finished and then put together a general description of the legislation and what the energy corporation will look like.

One interesting tid-bit that's turned up already: last fall, natural resources minister Kathy Dunderdale made a comment in an interview with Ted Blades, a comment that seemed strange at the time.

She said something to the effect that Hydro would buy power from the Lower Churchill. It seemed strange at the time since any Lower Churchill development corporation seemed like a natural subsidiary of Hydro itself and therefore, Dunderdale would have the company buying power from itself.

Turns out she was right, but the rest of us couldn't have known it in September 2007. The plan, as contained in the EnerCorp strategic plan - released in March 2008 - is to have Hydro as a subsidiary of EnerCorp alongside all the companies that used to be subordinate to Hydro.

So yeah. In order to get power to replace Holyrood generation, Hydro would have to buy power from its sister company.

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Energy Corporation of Newfoundland and Labrador (Part 2)

[This post was originally scheduled to post in June 2008.  For some reason, it never appeared. Your humble e-scribbler found it recently and decided to post it retroactively with the original date.  Note that it is an unedited draft. Some of the links may have changed since 2008.  The comments come entirely from the original version of the bill and were made prior to any actual experience with the corporation.]

In Part 1, we offered some links to information on or related to the Energy Corporation of Newfoundland and Labrador (EnerCorp).

In this part, we will take a look at some specific issues that have come up as a result of proposed amendments to the energy corporation act.

Space does not permit a detailed dissection of the entire energy corporation and all the issues surrounding it nor will the following offer any views on the merits or demerits of the energy corporation and the legislation under discussion.

Instead, we will look at four specific aspects dealt with in the provincial government news release on the amendment bill and attempt to describe what the provisions of the bill mean.

1. Establish public accountability process.

The Energy Corporation Act establishes that the corporation is accountable to the legislature through the minister and cabinet.

EnerCorp is an agent of the Crown. As such:

A Crown corporation that has agent status enjoys the constitutional immunities, privileges and prerogatives that are enjoyed by the Crown and can bind the Crown by its acts.

The Crown is ultimately fully liable and financially exposed for all actions and decisions by its agent corporation while the corporation is operating within its mandate. In other words, the corporation's assets and liabilities are the assets and liabilities of the government. [Emphasis in original]

Bill 35 further develops the accountability process in several specific ways.

First, it establishes that unless otherwise indicated in the approval given by cabinet to establish
a subsidiary, the subsidiary will be incorporated under the provincial Corporations Act or the appropriate legislation of any other jurisdiction.

A subsidiary established in this way is not an agent of the Crown. That means that:

the government is not legally liable for the specific actions of the corporation, unless the corporation acts under explicit direction of the Crown, and has, in the eyes of a court, created a common-law principal-agent relationship.

A non-agent corporation would normally be subject to federal, provincial and municipal taxation like private sector corporations.

As well, the subsidiary may be a partnership involving both EnerCorp and non-EnerCorp companies. The agreement establishing the partnership or joint venture may specify financial arrangements, the distribution of shares, as well as the distribution of seats on the subsidiary's board of directors.

Bill 35 does not alter the existing subsidiaries, namely Newfoundland and Labrador Hydro, Churchill Falls Labrador Corporation, Twin Falls Power Corporation, Lower Churchill Development Corporation (non-operating) and Gull Island Power Corporation (non-operating).

Overall, this approach is consistent with past practice in Newfoundland and Labrador and with the Government of Canada.

Second, EnerCorp is required to hold an annual general meeting to which the public are admitted and to issue an annual report. (s. 5.1 and s. 5.2) A private sector corporation's annual general meeting would normally be held to allow shareholders to vote on certain measures such as electing new directors and to receive reports from the corporation.

In this case, however, directors of EnerCorp are appointed by cabinet. The subsidiaries are governed by their own articles of incorporation. Members of the public may attend such a meeting, but there is no indication what status they might have beyond that of silent observer.

In the case of the annual report, EnerCorp is required to present its consolidated financial statements and such other reports on its activities as it may wish to report on or as directed by the minister. Whether or not this provision applies to any subsidiaries would appear to depend on the articles of incorporation.

Third, Bill 35 provides that EnerCorp and its subsidiaries are subject to audit by the auditor general, to the access to information act and similar statutes, the extent of disclosure beyond cabinet is restricted more than in the existing legislation.

For example, the access to information act (ATIPPA), already provides for withholding commercial information. Bill 35 changes that significantly by defining "sensitive commercial information", giving EnerCorp's chief executive officer the power to determine what constitutes sensitive commercial information under the Act and requiring that his decision be followed by the auditor general and other officials

Under Bill 35, "sensitive commercial information" is defined as:

information relating to the business affairs or activities of the corporation or a subsidiary, or of a third party provided to the corporation or the subsidiary by the third party,...

In other words, all information is potentially "sensitive."

The test or procedure for determining sensitivity is given at s. 5.4:

where the chief executive officer of the corporation or the subsidiary to which the requested information relates reasonably believes

(c) that the disclosure of the information may

(i) harm the competitive position of,

(ii) interfere with the negotiating position of, or

(iii) result in financial loss or harm to

the corporation, the subsidiary or the third party; or

(d) that information similar to the information requested to be disclosed

(i) is treated consistently in a confidential manner by the corporation, the subsidiary or the third party, or

(ii) is customarily not provided to competitors by the corporation, the subsidiary or the third party.

If the corporation consistently considers the number of its employees to be sensitive information, then it must be withheld from disclosure.

In the case of the auditor general, the same general approach applies. As well, in the event of a dispute, the chief executive officer's decision must be followed with the withheld information provided to cabinet in a separate report:

In the case of a disagreement between the auditor general and a chief executive officer respecting whether information in a draft report is commercially sensitive information, the auditor general shall remove the information from the report and include that information in a separate report which shall be provided to the Lieutenant-Governor in Council in confidence as if it were a report to which section 5.5 applied.

Some additional specific types of sensitive information are given in Bill 35 which must be withheld. These include:

financial or commercial information, including financial statements, details respecting revenues, costs and commercial agreements and arrangements respecting individual business activities, investments, operations or projects and from which such information may reasonably be derived,

and

information respecting legal arrangements or agreements, including copies of the agreement or arrangements, which relate to the nature or structure of partnerships, joint ventures, or other joint business investments or activities,....

It is not clear whether cabinet may make or would make such information public general terms or if it would be kept confidential. It is also not clear to what extent any changes to the organization of a subsidiary - for example, in its ownership other than a complete withdrawal of any EnerCorp interest - would be disclosed under this Act.

- srbp -