You can press your thumbs as hard as you like...

What with the official government pollster in the field and what with a  video taken at the Provincial Conservative $500 a plate fundraiser circulating  (who paid for the video gig, guys?), don't believe for one second that it hasn't gone unnoticed among the thumb clickers on the Hill that the initial "Danny did it" spin on the Inco smelter story is pretty much dead.

It wouldn't be surprising to find that one entire office-load of Blackberries has been sent back  for replacement what with the buttons pressed through the casing from all the frantic texting that is surely going on.  It's not like they didn't organize one of the most intense pitcher plant deployments in over a year to try and forestall any possible slippage in the numbers collected by the official government pollster.

The pitcher plant story line got right down to Bill Rowe and the infamous Tony sharing their beliefs that had the entire Voisey's Bay deal from start to finish was, in point of fact, due entirely, solely, totally and utterly due to the singular  magnificence unprecedented on the planet of the guy who paid Bill Rowe's tab in Ottawa.

But no matter how hard they tried to drown it, the truth about Voisey's Bay surfaced and people acknowledged that the Voisey's Bay was a good thing and the Premier really had very little to do with it then or now.

Even Roger Grimes got in a few licks of his own in the process:

"It was a good deal for Newfoundland and Labrador from start to finish, regardless of what the Opposition was trying to say," he said.

"Mainly, Danny Williams [was] trying to suggest it was full of loopholes and so on, which has proven so far definitely not to be true," Grimes said.

Not true?

That's putting it mildly.

The better part of seven years after he first started talking about loopholes and problems neither Danny Williams nor his deputy nor anyone else has shown the loopholes, problems or other weak spots in the Voisey's Bay deal Danny Williams claimed were there.

That's because - evidently - they don't exist.

If they did, Danny Williams would produce them.

Ultimately, that is the giant bluff that wound up being called this week much to the chagrin of Bill, Tony and bunch of others. 

And all those thumb clickers, they discovered that no matter how hard you press those keys,  eventually the truth gets out. 

People understand that stuff you pay for that says you did a good job is nowhere near as persuasive or gratifying as having people - of their own accord - tell you that in hindsight you were right and they were wrong.

They can press your thumbs as hard as they like and you can't change that.

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Something didn't add up...

From the Globe and Mail editorial on Friday:

In his somewhat ruthless takeover of much of his party's organization, Mr. Ignatieff has also demonstrated a knack for the more hard-nosed aspects of party politics – or at least the ability to attract organizers and backroom veterans capable of doing the heavy lifting. Among Mr. Dion's many problems was an inability to rally his party behind him; Mr. Ignatieff, who seems to be amassing high-profile supporters by the day, would be less likely to suffer that fate.

Now this takeover didn't happen within the past couple of days.  It must have happened over the past couple of years.  That is, Iggy's crew had to take over key positions while Dion was still leader.

And if that's the case, little surprise then that Dion had an "inability to rally his party behind him".

And if that's the case, then it's little surprise that the party didn't do very well at the polls recently what with all the Iggy people in charge of everything and their not really convinced of Dion's leadership in the first place. 

Might that explain some candidates less than enthusiastic performance during the election, including turning up as star players in Conservative attack releases?

Hmmm.

Something didn't add up all along.

But it's starting to.

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Ho hum

While rookie member of parliament Siobhan Coady leaped past considerably more experienced caucus mates to get a post as the fisheries and oceans critic (and good on her), the last Dion shadow cabinet seems to be a case of sticking the Newfoundlander in charge of the fish.

Sure Coady has a family business in the fishery and therefore knows something about things that live in the ocean and the people who make a living - such as it is in most cases - from it.

But for far too long, Newfoundland and Labrador has been politically regarded as the home of fish and whine.

Count up the number of times fisheries and oceans in any party has gone to a Newfoundlander since 1949 either as minister or as an opposition critic. You'll quickly get the point.

There are more than a few substantive problems with this of course. 

First, there is an inherent conflict of interest in putting in charge of the fisheries department a politician with ties to the fishing industry.  That no one seems bothered by this is a sign that the fishing industry has no political clout in the country even though it is a significant economic sector in several provinces.

Second, there is an even greater conflict created by putting in charge of fisheries (or acting as the critic) any politician from a province where the fishery is less a business than a Frankenstein exercise in social engineering.

The tinfoil hat brigade, the anti-Confederate sasquatch hunters will leap forward to blame the evil machinations of "Ottawa" for the plight of the local industry.  The sad reality is that the current mess is entirely the construction of the political, social and business interests of Newfoundland and Labrador, over successive generations, who have forestalled, undermined and otherwise opposed any real and positive reform.

In Newfoundland and Labrador, the fishery is a cult.  As with any cult, it has its high priests who will rush to the temple altar - in this case the local open line shows and fisheries broadcast - to declare any reformer as a traitor, as a heretic.  It is an inbred cult where satisfaction comes from shagging your own.  Onlookers are distracted from the spectacle by the claim that outsiders have covetous designs on the defiled or that foreigners need to be driven from what is left of the sanctuary.   

Of course, there is also the third problem, namely the perpetual death struggle between local and national politicians. Williams penchant for whining and his love of personal attacks first on Loyola Hearn and then Fabian Manning, only added to the problem lately and gave the Conservative death struggle its unique characteristics.  Theirs is just the latest racket, though,  in what has been, essentially, an interminable struggle.

Consider, if you will, two groups of politicians sitting in a meeting room, discussing not how best to help unshackle the legion of wage-slaves chained to the splitting tables,  but rather jockeying to avoid being the one to take the political flack from the cultists. 

If any political party in Canada had any real interest in the people involved in the fishery, they would never appoint anyone from this province to serve as fisheries minister or as critic of the department.  Nor would they appoint someone from a neighbouring fisheries provinces who does little more than mouth the worship words of the local cultists.

And if any politician from this province wanted to do anything for the fishery other than perpetuate the misery in it, he or she would refuse any political responsibility for it either in cabinet or opposition. Better leave the job to someone not already seduced by the cultists.

Sadly, in the the New Democratic opposition and now the Liberal shadow cabinet, we have the same old cycle repeating itself once again.

As far as this appointment goes, Siobhan Coady has done alright for herself;  it's quite a plum and we get a fresh face on the scene.

But for the fishery? 

We'd venture there'll just be more of the same.

Wait.

What's that on the wind?

Could it be a news release on custodial management?

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No sense of shame

From a news release by government House leader Joan Burke in an announcement that the provincial legislature would re-open for its fall sitting on November 25th:

The sitting of the legislature is an important part of our democratic process.

Yes it is.

Well, it would be if the opposition didn't have to shame Burke into making an announcement.  In past years, the party house leaders shared information informally so that they could be properly prepared to engage in, as Burke puts it, "productive session with respectful and healthy debate on the legislative agenda".  That's a pattern of non-partisan co-operation that dates back decades in the legislature.

Word from the hallways of the legislature is that so far Burke has shown her opposition counterparts the same regard as she's given to the Memorial University Act, the Memorial University board of regents and senate and university president Eddy Campbell.  Her approach so far is pretty much in keeping with her small-minded approach to funding the opposition parties, well at least the Liberal one.

No indication would she give of when the House would open and so far no advance warning, in confidence, of what general areas would be coming up for debate.  No indication that is until after opposition House leader Kelvin Parsons issued a news release pointing to "a continuous trend developing in this province that our current government will wait until the absolute last minute to open the legislature and then rush towards closure in the shortest time possible."

Still no word on the legislative agenda apparently nd Parsons is likely not holding his breath.  Burke will probably let him know a couple of days beforehand.

Seems that Burke is playing the petty partisan game just as roughly as her boss does, but then again, contempt  - whether for the traditions of the House or the legislature itself - is a hallmark of the current administration since it first took the government benches in 2003.

That's what makes Burke's references to the democratic process such a nose puller. 

Expect the session to be shorter than normal, since the opposition is likely going to be pushing the government hard.  Under the circumstances, given the stress from the financial hard times cabinet is wrestling with and given that Burke herself will come under scrutiny for her hand in the Memorial University mess,  the government's real lack of regard for the legislature and the democratic process will shine through.

After all, that's what happened in December 2006 when they last faced some serious problems.

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Free Newfoundland!

From a comment by Wallace Ryan on a cbc.ca/nl story:

Despite the ugly words of Canadians, Newfoundlanders and Labradorians are finally closer to our dream of returning to those pre-WWI days when we were a rich nation full of promise and bravery.

I think it's time for us to reassert our nationhood and reclaim our heritage that has been sullied too long by Canadians. The only way we are to survive the demographic time bomb that threatens to make Newfoundland and Labrador second class citizens in this supposedly equal confederation is to reconstitute ourselves as an independent nation.

I'm sick of hearing our proud people maligned and mocked by our so-called fellow Canadians. I'm not a Canadian. I'm a proud citizen of the nation of Newfoundland and Labrador.

Free Newfoundland and Labrador.
Vive Newfoundland et Labrador Libre!

Ah yes, the glorious days before the Great War.

Political corruption, religious segregation, poverty, disease, health care and education that rivaled anything found in a modern underdeveloped country.

Such a glorious place that a huge portion of the first volunteers were rejected because they did not meet the minimum requirements of being 5 ft 2 inches in height with a chest measurement of 35 inches.

Sheer heaven!

We must free Newfoundland.

We must free it, that is,  of such unashamed ignorance.

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Super-COD

A Lockheed Aircraft video of launch and recovery trials of a modified Marine Corps KC-130F Hercules on the aircraft carrier U.S.S. Forrestal (CVA-59).

This gives new meaning to carrier on-board delivery.

The burst bubble

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

On Thursday, Williams acknowledged that the bubble burst:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By all appearances, he will get his wish.

The people of Newfoundland and Labrador will get the bill.

It didn't have to be this way.

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What part of this wasn't clear?

The wrong candidate the last time.

The wrong candidate this time.

The wrong candidate any time.

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Put on your tinfoil hats

ALCOA, the company that retained a lobbyist for two years on the Lower Churchill project, is slashing another 350,000 tonnes from its production in light of declining global demand for aluminum.

That brings the total ALCOA reduction to 615,000 tonnes this year, or 15% of the company's total production capacity.

Rio Tinto is reconsidering an $11 billion project in Saudi Arabia and Vale is also cutting output. 

Aluminum prices have plummeted by more than 40 per cent to around $1,995 a tonne on the London Metal Exchange since July as demand from industries as far afield as aerospace and soda cans has shrivelled up.

Inventories held in LME warehouses have ballooned to 1.55 million tonnes, equivalent to more than half the yearly output of Australia, a major supplier.

“Cuts, such as the one by Alcoa, and the Chinese stimulus package, could help the market, but it will take time to work off the massive inventory build-ups,” Investec Resources analyst Darren Heathcoate said.

All of this pretty much makes speculation about an aluminum smelter for Labrador seem pretty far fetched.

Well, far fetched to people who aren't wearing tin foil hats.

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...and I'll respect you in the morning.

Remember the three great statements people said but no one believed?

Well, add a new one to that:  the "we don't have a quorum" excuse for cancelling a meeting that every single member knew about weeks ago and committed to attend.

We know they committed to attend because the news release announcing the meeting was issued just this past Monday.

The problem seems to be on the government side.  The last meeting turned into a political fiasco  - a national political fiasco - with the three Provincial Conservatives following orders and playing the pettiest of petty politics with funding for the official opposition.

That bit of nastiness happened when the official government pollster - Corporate Research Associates  - was doing other things so maybe given that CRA is in the field as we speak, the government members don't want anything but the happiest of happy news out there to upset the polling.

We should at least we should be grateful they used the quorum nonsense.  They might have said they couldn't have a meeting because Trevor had to wash his hair that afternoon.

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Budget watch

Brent crude - the benchmark for Newfoundland and Labrador's offshore light sweet - is trading at US$53.10 at 2:30 Eastern time.

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Thanks, Roger Grimes

Vale Inco will build a smelter at Long Harbour, as the company announced in its October 16 capital expenditure report and as Bond Papers told you last week (Friday to be precise).

The new smelter will use hydromet technology and will be finished by 2011.

The provincial government issued a news release on Wednesday - now that November polling season is under way - even though the information came from Vale Inco on Friday of last week (read the news release !).

The new facility will deliver about 5,000 per years of construction employment and 450 jobs annually.

On top of that the provincial government forecasts the value of the Voisey's Bay project at $20.7 billion.

Not bad for an agreement the Premier used to say had holes in it so big you could drive a truck through them.

The announcement last month confirms that in January 2007, as reported by the Toronto Star, Vale Inco was looking to fast track Long Harbour to have it in service before 2011.

 

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15 ideas for a stronger Newfoundland and Labrador

Introduction

When Brian Peckford and Clyde Wells spoke of getting the provincial government off Equalization, they understood that such a development would merely reflect a greater strengthening of the provincial economy and society. Their policies and those of successive administrations aimed at economic development and diversification which would deliver a stronger economy that would in turn create wealth for Newfoundlanders and Labradorians.

The current state of affairs in Newfoundland and Labrador reflects more the result of those policies coupled with the unexpected good fortune of global economic conditions than it does a sustained commitment by the provincial government to implementing coherent strategies.

The following series of posts will offer 15 ideas on different areas of social, political and economic affairs aimed at strengthening Newfoundland and Labrador.

Strengthening the treasury

1.  Reduce the public debt by 50% within 10 years.  Beginning in the early 1990s, successive administrations restructured public borrowings to convert debt held in foreign currency.  As a result, the current burden on the treasury is significantly reduced and uncertainty due to currency fluctuations has been all but eliminated. 

Since 2003, the accumulated borrowings of the provincial government and its agencies has grown and the current government commitment is to increase public debt to meet any unforeseen needs. Direct debt had actually declined before 2003.

Debt servicing costs - paying only the interest on the debt - is one of the largest amounts spent by government annually.  Paying down debt frees up more money to spend on needed programs and services and improves the ability of government to meet any economic downturns without resorting to borrowing.

2.  Balance the books, every year.  Government surpluses in recent years have been built on the blind good fortune of astronomical oil prices.  Those prices are an unreliable source of cash.  On a cash basis, the provincial government has actually been in debt each year since 2005.  That means new borrowing to add to the burden of public debt.

Balancing the books is possible.  It just needs the political will to do it.

3. Limit annual spending increases to the rate of inflation.  Provincial government spending has increased by as much as seven times the annual rate of inflation in each of the last three years. That's unsustainable in the long run and with the current economic crisis, the excesses of the past three years are about to catch up to everyone.

Limiting spending to the rate of inflations allows for natural increases and commits government to eliminate unnecessary, ineffective or wasteful spending.

4.  Make non-renewable resources revenues a long term benefit by creating an investment fund, paying down debt and funding infrastructure. 

5.  Ensure that any new programs can be funded within the spending limits for annual increases and anticipated revenues.  Review existing programs annually to ensure they meet objectives and are run as efficiently and effectively as possible. 

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Actions speak louder than words

St. John's deputy mayor Ron Ellsworth is showing that talk is cheap.

In his case, that would be his own talk about greater openness in the city's budget process and his most recent campaign promise to get the city back to basics.

Ellsworth is a relative newbie to politics having been elected first in 2005 as a ward councilor, but so far his public comments have been more like a veteran of the uncommunication school.  Take, for example, his comment on postponement of a curbside recycling program - about as basic as it gets these days  - due to an apparent lack of cash:

"We have to make tough decisions on tough issues, and this is one example of that happening," Ellsworth said in an interview.

"I'm not very happy about what we've had to decide to do, but the reality is that we do have limitations and when we have budget constraints like this, the first thing we look at is new programs."

Ah yes.  Tough decisions.  On Friday when this story broke, he was pushing the "opportunity" offered by this delay. Now it's the tough decisions.

Then he played the empathy card, followed by the admonition to speak out:

"I understand the frustration and concern by those that are very close to environmental issues. ... They should make their voices known."

He understands the frustration  - but with what he is not clear - but that, quite obviously,  won't change his mind since these are tough decisions that have already been made. 

And speaking out is all fine but sadly, Ellsworth - as chair of the city finance committee - has been way less than forthcoming with any concrete information about the city's finances. Oh yes, and the tough decision has already been made, in case you missed that.

Ellsworth gave absolute no information to CBC Radio on Friday morning past, even when the interviewer gifted him with a chance.  He fell back on the "opportunities" crap.  Then there were figures coming from somewhere about a seven million dollar shortfall and one million to implement the program.  This evenings' news referred to three million for implementation.

It almost goes without saying that the numbers don't add up.

Ellsworth spent some time taking calls from residents on Monday on a CBC call-in show.  They weren't happy. There's nothing for them to be happy about, especially considering that one of Ellsworth's lines has been that the public expect council to manage public money wisely.

Sure they do.

But what Ellsworth is missing is that voters in St. John's are increasingly unsatisfied with politicians who pay only lip service to ideas like openness and focusing on the basics.  They expect action.

To voters, managing money wisely would not mean boosting the subsidy to something that isn't a core city service - i.e. Mile One - over the past two years by the amount Ellsworth has said the recycling program needs in start-up cash. Bond Papers readers will recall that these subsidies have been unpopular around these parts. To voters, basics would include recycling.

To voters openness means giving basic information and it goes along with the inclusiveness of asking voters for their views before making a decision about how to spend their money. They know Ellsworth's track record on openness isn't a good one.

While it would be tempting to just throw up ones hands in frustration, or to dismiss Ellsworth as a lost cause, he still has an opportunity to bring his words and his actions into line.

First, he can put the city's financial information in public.  He has that ability as deputy mayor.  He can give the public a real chance to review the city's plans and voice their concerns.  If need be, council can reverse it's recycling decision. 

After all, if the city's habit of overspending is as bad as Ellsworth claims, there simply won't be cash in two years to implement this basic recycling program. And if he has really been the voice of reason and fiscal responsibility then the voters will back him against his supposedly free-spending colleagues.

Second, city council needs to bring in the auditor general to review the books.  He may well uncover some little secrets that need to be aired out if the city's finances are to be put on the right track. An audit by the province's financial watchdog will at the very least give everyone a common basis for discussion.

Now if none of that happens, Ellsworth and his colleagues run the risk that come next fall, voters won't be pleased.   They'll be in a mood to throw the bums out, as the saying goes.

Ellsworth and his colleagues can change now or they can let the voters make the change next fall.

Actions do speak louder than words, and voters are judging Ellsworth and his colleagues by their actions.

As he heard to day, they've been measured and found sorely wanting.

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The hope and generosity of our soul

There's a fine line between an homage and a blatant rip-off of an idea.

In this case, a video produced by local advertising company Bristol is  pretty much a giant rip of a recent video by Will.I.Am based on a speech by Barack Obama.

The rip-off in this case goes beyond merely aping the style of the Obama video.  It twists and distorts the fundamentally uplifting qualities of the Will.I.Am and Obama originals in a way that would be funny were the issues it raises not so serious.

Recall that Yes, we can! used an Obama speech, set to music and repeated by a host of musicians and actors.  The Obama speech is as fine an example of public oratory as anyone on the planet has seen in a generation.  It is delivered in characteristic Obama style and it's message is fundamentally one designed to bring people together in a united effort to bring about fundamental change in their country and in the world.

Listen to the words:  Yes we can to prosperity and opportunity.  Yes we can heal this nation.

By stark contrast, the recent speech by Danny Williams is one his vintage speeches of personal pride and division.  The province and its people are a backdrop.  The video reflects that, of course, by using Williams extensively.  The only other people in the video are - as with the woman inserted in a still picture - in the background.

Even the Obama title itself  - Yes, we can - is a positive, inclusive reinforcement of the defining feature of the Obama campaign:  a movement of unity. Yes we have cannot be heard without understanding that, as the news stories of recent days conveys, others do not.

The Bristol rip-off starts, as with the Williams speech, with a toast, a celebration of triumph.  It includes right behind it a clear sign that this is a triumph over others:  who in their wildest dreams would have believed, we are told, that we would be "as good or better off than any other province."  We know what we are fighting for, we hear yet again as if there is a renewed call to arms to be found in having the provincial government go off Equalization.

Of course, this is not the first time a stirring speech born of the politics of hope and unity has been twisted to serve the politics of division.  In his acceptance speech at the 2001 Provincial Conservative convention, Danny Williams turned John Kennedy's clarion call to public service into something entirely self-interested:

John F. Kennedy said: "Ask not what your country can do for you but what you can do for your country."

I say to Newfoundlanders and Labradorians: "Ask not what we can do for our country, because we have done enough. Let's ask our country what they can do for us."

In Newfoundland and Labrador, the ignoble politics of division rears its misshapen, misbegotten head once more.

Our country requires more than ever a renewal of hope among all Canadians for a future built on shared values and shared purpose.  Our province and its people need the assurance that "have" status is built on the wealth and prosperity of the people who live and work here, not on the blind luck of high oil prices.

We do not need more of the anger that has characterized the past seven years of public rhetoric. No one needs to hear, even by implication, of the value of fighting.

Barack Obama's recent victory shows the power of hope and unity, of the unmistakable power of a style of politics which calls upon the very best qualities of the human spirit.

McCain and the Republicans tried what has become the international conservative stock and trade:  fear and division. 

Whatever led Bristol and its associates to produce this video, it should stand as an example of how much the relentless messages of strife have weakened the foundation on which our society is built.

We must wait, evidently, for an awakening within individual Newfoundlanders and Labradorians that what we need to have is a rekindling of the optimism, the abundance of hope and the compassion in our souls that we had, not so very long ago, and in far darker economic times than the one we now face.

Only with those values in our hearts will have not truly be no more.

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The Lord's Prayer

An unconventional armistice day post.

Update: Spike Milligan was arguably one of the most influential comedians of the 20th century. An accomplished musician, Milligan served during the Second World War as a gunner in a field artillery regiment of the British Army.

He served through North Africa, Sicily and Italy before succumbing to combat stress. Milligan was diagnosed later in life as having bipolar disorder.

Milligan was a relentless social and political commentator throughout his post-war life. He worked to make the world a better place, a fact not realized even by members of his own family until some of his letters were discovered after his death.

In this video, Milligan merely takes a stock British Army character or style, namely the sergeant major and imagines the Lord's Prayer as delivered in the verbal style of one of these parade square demi-gods. It may be an in joke but for those familiar with the senior non-commissioned officer of not so long agao, the effect is worth at least a giggle if not a few hearty guffaws.

Armistice Day is a time for sorrowful reflection. However, we would be remiss if we did not recall that the men and women who served were human. Milligan's life should remind us all of their humanity and ours.

World Bank warns of impact on poor

Robert Zoellick, head of the World Bank, is warning that the global credit crisis threatens to become a human crisis.

One of the most likely affected will be remittance workers, people from underdeveloped regions and countries who work in more affluent places and ship large portions of their wages home to support families.

Closer to home remittance workers and migrant labourers working in Alberta and elsewhere in Canada - largely responsible for the recent economic boon of regions like Stephenville and the Great Northern Peninsula -  may soon have less money to send back or may be heading home looking for work where work simply doesn't exist.

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In the wake of Iceland's fall

From the New York Times, a story on the impact Iceland's economy collapse has had on ordinary Icelanders:

In Kopavogur, a suburb of Reykjavik, Ms. Runolfsdottir, the recently fired secretary, said she had worried for some time that Iceland would collapse under the weight of inflated expectations.

“If you drive through Reykjavik, you see all these new houses, and I’ve been thinking for the longest time, ‘Where are we going to get people to live in all these homes?’” she said.

The real estate firm that used to employ Ms. Runolfsdottir built about 800 houses two years ago, she said; only 40 percent have been sold.

By Icelandic law, Ms. Runolfsdottir and other fired employees have three months before they have to leave their jobs. At the end of that period, she will start drawing unemployment benefits.

Meanwhile, her husband’s modest investment in several now-failed Icelandic banks is worthless. “They were encouraging us to buy shares in their firms until the last minute,” she said.

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Long Harbour a go!

As much as Danny Williams and his team tried to bad mouth the Voisey's Bay deal, it will deliver just as it has been delivering millions into the public treasury.

He said there were holes in the deal to drive a truck through. 

Well, the only trucks associated with the deal trucks have been loaded with bags of cash for the Premier to spend.

Vale Inco's 2009 capital expenditure commitments contain the news that, as expected, the company will build a new refinery at Long Harbour:

Pursuant to an agreement with the Government of the Province of Newfoundland and Labrador, we will build a commercial nickel processing facility in Newfoundland and Labrador to produce 50,000 metric tons of finished nickel per year, together with up to 5,000 metric tons of copper and 2,500 metric tons of cobalt, utilizing the ore from the Ovoid mine in our Voisey Bay mining site. The decision about the technology to be employed in this project will be made at the end of this year. The investment is subject to Board approval. [Emphasis added]

No word yet on when the truck will arrive to make the announcement.

Don't be surprised if it happens in November poll goosing season with a joint company/provincial government announcement to boot.

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First, we assume a smelter...

that might possibly lead to making stuff to make cans that we can assume a can-opener to use on.

Take a deep breath.

We are now in a world where we are not starting a project by assuming a can-opener.
And really we are not even assuming a can.

Nope.

Now Memorial University economist Wade Locke is going beyond his prediction that the provincial government may post a surplus greater than predicted last spring to say he thinks there'll be a major economic development announcement for Labrador shortly.

Now we are fantasising about a plant to make to stuff to make the cans out of.

Speculation centres on an aluminum smelter and Locke's cheshire cat grin in an interview with CBC sure fueled the idea that some company - possibly Vale Inco - will be making the announcement related to the Lower Churchill.

Take another deep breath and let's look at what we know - as opposed to what is pure speculation.

1. The provincial budget will very likely be in deficit on a cash basis and if things financial keep going south, the $544 million surplus forecast on some other basis would also be tough - if not impossible - to achieve. Let's see how close Locke comes on that prediction before we accept the megaproject one.

2. The only Newfoundland and Labrador project - the ONLY project - in Vale's 2009 capex announcement in mid October was the Long Harbour smelter. There's no mention at all of an aluminum project or anything else vaguely like it for Canada.

3. To make it even more unlikely there's a real smelter project in the works from Vale, the company's capex commitment gives Vale's strategic view:

Vale’s strategy for the aluminum business is focused on the organic growth of upstream assets, through the development of its high quality bauxite reserves and the very efficient low-cost alumina operations.
As recently announced, we will build a new alumina refinery, Companhia de Alumina do Pará (CAP), and expand our Paragominas bauxite mine (Paragomias III), both located in the Brazilian state of Pará.

CAP will be responsible for the implementation and operation of an alumina refinery, located in Barcarena, close to the alumina refinery of our subsidiary Alunorte. CAP will be 80% owned by Vale, and 20% by Hydro Aluminium. [Emphasis added]

The initial production capacity of the refinery will be 1.86 Mtpy of alumina, through two lines of 930,000 tpy each. The new refinery has potential for future capacity expansions up to 7.4 Mtpy.

4. How do you spell massive subsidy? Aluminum smelters need huge amounts of cheap power. Lower Churchill power would not be cheap unless the provincial government agreed to sell the power over the long term at or below production costs.

Quebec uses its considerable generating capacity for power from plants that are already paid off to help subsidize aluminum enterprises in that province.

Critics point out that it would far more beneficial to export the cheap power for profit than subsidize aluminum plants.

It's not like the trend has been to build aluminum plants as far from possible as markets.

5. Even if by some chance a project is announced, it's construction would be tied to the Lower Churchill which itself remains a dodgy proposition. Lack of confirmed long-term sales contracts and the current economic downturn have put that project further in doubt.

6. Even if we are talking about an announcement, it would be for a project that, in the most optimistic scenario wouldn't be built and operating until closer to 2020 than not.

7. It's the November poll goosing season. Put that together with Locke's actual comment quoted by CBC and you have the sort of overblown hype coming from insiders that we've usually seen about the Lower Churchill project since 2003:

"There are significant projects being considered, energy intensive ones for the province that will make the earlier start of the project more viable and it will act more like a loan guarantee for the Lower Churchill that will allow them easier access to capital," he said.

Projects are being considered.

That doesn't mean they are confirmed.

The rest of the comment likely reflects the view inside the Premier's Office on what sorts of financial daisy-chains are necessary to keep the $9.0 billion project alive, at least in the minds of its proponents.

Of course, that doesn't mean that even the Lower Churchill is as likely as Locke claims.

After all, it's not like the Premier has refrained from hyping a dead dog before when it suited his purposes.

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Amen to that

Telegram editor Russell Wangersky points out in his column this week that local political campaigns suffer from an obvious lack of new ideas.

It’s been so formulaic that there have even been candidates lamenting the state of the media for failing to do riding profiles of each of the federal ridings.

The only thing more lacklustre than the recent campaigns would be a panel of local reporters discussing the campaign.  Gee, maybe they'll talk about things they knew but didn't tell their audiences, just like they did last time.

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GFW mill faces uncertain future

Union members at AbitibiBowater's Grand Falls Windsor paper mill rejected a company restructuring plan.

The company is looking at ways of reducing costs at the mill, built in 1905.

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Friday Math

1.  Brent crude is trading at $58.67 per barrel.

2.  The Canadian dollar is worth $1.18 against the American dollar.

It's easier to plan a party and pump out happy face uncommunication than provide an update on the provincial government's finances.

Polling season is just a bonus excuse.

Obviously.

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Canary in the oil sands

In tough economic times, migrant labourers are a clue to how bad things are getting.

They are a clue.

Like a canary in the coal mine or in this case, the oil sands.

When those canaries flock back home, that fact is usually not presented as a triumph.

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Uncommunication

Public relations involves communicating with people to gain and maintain support.

Communicating:  the activity of conveying information.

Information: a collection of facts or data or knowledge about specific events or news.

Seems pretty easy both to understand and to do, but apparently not.

Take this sound bite, for example, from a news conference to answer reporters' questions about the dismissal of the lab director at the Health Sciences Complex in St. John's:

"I implore you, this decision today was made about the future, not about the past."

Now lest you think this is a case of selective editing, I'd suggest you follow the link to the TransCon story on the news conference.  Notice how little of it is taken from information - that is hard facts - told by the people sitting at the head of the boardroom table.

Most of it, like most of the news stories on this firing, draws attention to other issues, like evidence at the Cameron Inquiry about the improper and possibly illegal disposal of Crown assets.  A piece of important laboratory equipment was handed over to a private individual apparently free of charge.  This individual refurbished it and sold it for a tidy profit.  What's more, the computer that went with the machine included patient data - it could be as much as every test ever run on the thing - which the Inquiry managed to retrieve.

There may well be other aspects to this that aren't in the public domain, but with just what is already out there, it isn't hard for people to put two and two together and conclude Gulliver's sudden departure is connected to events that came to light at the Cameron Inquiry.

What you have in this case could be called uncommunication. 

Think of it as the opposite of communication because uncommunication doesn't involve the conveying of facts, data or knowledge. 

Quite the opposite.  It's not about conveying information at all.  Uncommunication actually leaves the recipient in worse shape - at least with respect to facts, data and knowledge - than if he or she knew nothing at all.

Take another government example of uncommunication: the workplace health and safety commission's computer security failure.  You don't have to look hard to see an effort to avoid providing information - facts, data and knowledge - to anyone.  There are plenty of words strung together as sentences but, as with the Eastern Health comment above, they are for the most part devoid of any clear meaning.

Or consider the lighter version, namely the tendency of cabinet ministers to repeat cliches and verbal ticks so frequently they get turned around in them.  Like, this line from the Premier's scrum on Monday:

...it’s so important for our children, for our youth, to realize that this is a historic day, this is a turning point for them, in their lives, on a go-forward basis.

Yes, even the future is coming on a go forward basis.  Perhaps we will move forward on a go forward basis into that future.  The Premier's Maserati has three gear positions:  Go forward on a go forward basis, go backward on a go forward basis and park on a go forward basis.  He likely bought it after doing the due diligence piece, another of his cliches that every cabinet minister recites.

His language is so riddled with verbal ticks and meaningless phrases, it is difficult sometimes to understand if he understands what he is saying. 

Let's not forget his "don't quote me on that" bit from the same scrum:

we’re just very proud and honoured and very pleased that in fact right now we can go it alone and excuse me, don’t quote me on that we can go it on our own, from that perspective.

If there is a difference between "we can go it alone" and "we can go it on our own" then it is one only in the Premier's mind. If there is some importance to that phrase then that too remains only in the Premier's mind. We are going it alone on the Lower Churchill supposedly, but are looking for financial backing, financial partners and a loan guarantee from Ottawa.

The phrase means nothing.

This phenomenon is not confined to government circles. 

Take, for example, the case of NLRC, the proposed refinery near Come By Chance.  At the heart of the company's recent legal travails appears to be uncommunication;  that is, according to a statement of claim the company failed to disclose that key financial backers had withdrawn. That issue hasn't be clarified such that a news report on Thursday stated that the company was fine until law suits started.

However, that may not be true.  The company may have appeared to be fine.  But if the statement of claim proves true, that was only an appearance. Company statements, including the memo obtained by CBC discuss generalities without conveying meaningful information.  If the statement of claim is true, there may even have been withholding of information - in other words: uncommunication.

The trend is not universal.

Rutter Technologies announced on Thursday it had won yet another contract to build components for the light armoured vehicle family currently in service in both the Canadian and United States armies.  The news release contains all the relevant information you need to know why this is important plus there are a couple of obligatory feel-good statements from key people involved.

Summary:  $14.6 million from General Dynamics Land Systems to build electrical systems for the Stryker vehicle over the next 19 months that will increase the Stryker's current carrying capacity.  The components will be built by Rutter in St. John's at its facility on Thorburn Road.  Rutter will hire an unspecified number of additional people and add another shift at its plant.

Lay that release side by side with one announcing yet another half million dollars of public money in a manufacturing company and you'll see the uncommunication of the government release. The feel-good statements far outweigh the factual stuff, a hall-mark of uncommunication.

As Rutter demonstrates, the trend to uncommunication is not universal.

There is still hope...

on a go-forward basis.

Arrrrrggggghhh.

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Double Denouement

1.  A creditors' meeting today will determine if NLRC will finally fold, putting an end to the refinery project near Come By Chance.

Relations between NLRC and its largest unpaid creditor, though, have been strained.

BAE Newplan Group, a subsidiary of Montreal-based engineering giant SNC-Lavalin, has filed a statement of claim against NLRC in Newfoundland Supreme Court, alleging that NLRC had been deceptive while describing its financial health.

Until earlier this year, when financing for the project fell through, the NLRC proposal was moving ahead a steady pace. It had gained solid community backing, as well as crucial approval through the environmental assessment process.

That last paragraph could use the words "appeared to be" instead of "was".  Several crucial details weren't in the public domain until BAE-Newplan filed suit.

Has anyone determined if the three major European investors are still involved in the project or did they bail sometime in 2007 as some reported earlier?

2. AbitibiBowater posted a big third quarter loss, CBC News reported on Thursday.

The union at the company's operation in Grand Falls-Windsor has until Friday to decide on a restructuring proposal for the mill or face closure.

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Pip off for the polls!

Apparently, the provincial government is organizing some sort of province-wide celebration of not getting Equalization.

1. What are the odds CRA will be in the field when the party takes place? [Hint: They poll in November and release the results in the first week of December]

2. Surely the Premier, his finance minister and their political staff could better spend their time filling the people of the in on the actual state of provincial government finances what with the current international situation than planning a party.

Funny hat and noisemaker update:

"We do plan to mark this momentous occasion," said Elizabeth Matthews, spokesman for Premier Danny Williams. The plans are still in the preliminary stages, but Ms. Matthews says a major celebration will be held.

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The Premier's scrum, de-spun

Following are some observations on comments made during the Premier's scrum on Monday.

1. Two sets of books? In the Monday scrum, the Premier clearly indicates the provincial finance department prepared Equalization estimates of as much as $18 million.   The Estimates for Fiscal Year 2008, the projection for Equalization payments are $2.7 million.  This is the second year in a row where numbers contained in the spring budget varied wildly from numbers released mid way through the fiscal year.

For example, last year's fiscal update claimed that oil royalties would be $562 million more than projected and would  hit $1.6 billion.  The budget estimate was for $966.5 million, a difference of $633.5 million.

The fiscal update claimed mineral royalties would be $120 million above estimate to reach a total of $347 million.  In fact, the budget estimates held mineral royalties at $270 million.

It is extremely difficult to keep an accurate picture of provincial finances when these sorts of discrepancies occur.  This isn't a matter of comparing accrual versus modified cash accounting.  This is a case of ministers giving different sets of numbers at different times.

2.  "fund up pensions".  The Premier listed funding public sector pensions as one thing he was surprised at being able to do.  His comments suggested the unfunded pension liability has been dealt with.  According to Dominion Bond Rating Service, there is still about $2.0 billion in unfunded pension liabilities.  Here's how DBRS put it:

(3) Unfunded pension liabilities remain sizeable, projected at just over $2 billion in 2007-08. The Province has made considerable efforts to reduce these liabilities, largely as a result of the 2005 Atlantic Accord and other special contributions to help improve the funding position of both the teachers’ and public servants’ pension plans. However, declining interest rates and the recent deterioration in equity markets are likely to further add to unfunded liabilities. [Emphasis added]

3.  Danny's Accord dies exactly as he knew it would.  A reporter asked about the renewal of the Atlantic Accord.  Williams answered that the Accord was a separate payment made under a different department than finance and that it would continue.

Either he was confused in the rush or he didn't want to admit the truth, but the Accord the reporter meant was Williams' Accord signed in 2005.  His question didn't deal with the obvious point, namely that under the provisions of the deal, being off Equalization in 2009 means the deal dies.

Period.

Meanwhile, the real Atlantic Accord's (1985) offset provisions continue until 2011/2012.

The difference between the two is even more stark.  The 1985 deal puts real cash into the treasury every year.  The 2005 thing hasn't produced a penny of real cash since the fat advance payment cheque in 2005.

4.  "money back into the pot".  At one point the Premier refers to the province putting money back into the pot, as in the Equalization pot. 

Not exactly.

Equalization comes from the federal government's general revenues, that is from things like taxes.  No provincial government pays into a pot and in fact there is no pot in the first place.

5. "Don't quote me on that."  labradore picked up on a curious little portion of the scrum where the Premier says:

we’re just very proud and honoured and very pleased that in fact, right now, we can go it alone, and mumble mumble — excuse me, don’t quote me on that, we can go it on our own, from that perspective.

The "mumble mumble" from the labradore transcript is very plain in the video at CBC.  The Premier says "Don't quote me on that" meaning don't quote that I said "we can go it alone." 

The Premier's been backing off, or appearing to back off, his usual pseudo-separatist rhetoric lately.  There's plenty of phrases about the great country in the NewSpeak these days, for example.  Even his old habitual verbal tick of calling the country "the federation"  - as if to emphasize it is not a country but a loose association of quasi-independent fiefdoms - has all but vanished. 

The timing in rhetorical shift is coincidental with the end of the last federal election and the global financial crisis.  It's also a rather curious shift in language since there doesn't appear to be any obvious reason for it.  Maybe there is polling showing the separatist schtick doesn't play well.  

Whatever the cause it is yet another example of the contradictory public policies and public statements.  We've seen the same thing recently on the economy and government finance.  One minute things are fine, the next minute there's going to be stringency. Some times there are two contradictory messages within the same scrum or interview.

After hammering away at Confederation since 2001,Williams' sudden praise for the country seems about as consistent as Ryan Cleary trying to portray himself during the last days of the federal election campaign as the potential saviour of Confederation.

6.  The O'Brien Option.  A reporter asked whether the provincial government decided whether to stay with the old  Equalization or picked the O'Brien formula with a cap.  The Premier said no decision had been made and one did not need to be made until next March.  He mentioned last year when the finance minister announced an election decision - which he said wasn't actually a final decision - only to switch to another option later on.

If the provincial government doesn't qualify for Equalization in the current fiscal year, what difference does it make which option it picks?

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More public cash for private business

Dynamic Air Shelters, a manufacturer located in Grand Bank is poised to get more public money.

That would be on top of public money - $180,000 -  in early 2008.

And that was on top of public money - $250,000 worth - in 2007.

Update:  And that's in addition to almost $500,000 from ACOA in 2006.

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Remember, remember...

The fifth of November.

The Reactionaries

Dissident Anglicans in St. John's recently heard what to them will be comforting words from Bishop Don Harvey.

Harvey told the congregation that they are staying true to traditional Anglican faith, while the Anglican Church of Canada is straying by allowing a more liberal interpretation of the Bible to conform with societal pressure on allowing same-sex blessings.

"And when Jesus is asked about marriage, Jesus immediately does what we should be doing and that is quoting scripture," Harvey told the congregation.

"He says, ''Therefore shall a man leave his father and his mother and cleave unto his wife' — not his partner."

Your humble e-scribbler is a direct descendant of Thomas Collett so let's just say it is not in the tradition of this Anglican to accept what a bishop says as being law merely because it comes from a bishop.

So what exactly would this "traditional" Anglican faith be that Harvey speaks of?

In this instance there are at least two problems with Harvey's contention and his action  - in essence - in leaving the Anglican communion.

First, as he ought to be well aware, scripture has been frequently reviewed, examined and interpretations revised in light of many influences over the centuries.

It is disingenuous to suggest that the current debate within the Anglican church in Canada is offering a more liberal view of equal marriage or to cast his view of those and his like-minded Anglicans as "traditional". 

If we were to accept his view, on the face of it, the dissident band will be returning to a set of beliefs many of them may not share. 

Jesus does, as Harvey puts it, what we should be doing. By extension, Harvey is suggesting that we then to return to all the provisions of the Old Testament which - as part of the totality of scripture - forms the basis of modern Christianity. 

These are, one presumes, immutable and cannot be reinvented or reinterpreted to suit what Harvey derides as "permissiveness".  The members of the two new parishes had best check their own closets for theological skeletons on divorce or the ordination of women or a host of other similar topics already addressed and resolved by the church.
.

As a final remark on this point, let us leave the lampooning of such reactionary sentiments to those who have done it best. In a famous episode of the West Wing, president Jeb Bartlet lays waste to the doctrinaire approach as easily as anyone might but with the eloquence of a Hollywood writer.

Second, Harvey and his followers have not embraced "traditional" Anglican values.  Rather they have divorced themselves from the wider community of Anglican faith.
The Anglican communion was formed in dissent and it has maintained itself through the centuries as an inherently Protestant church which emphasized that the foundation of faith is the relationship between each of its members, as individuals, and God.

Sometimes controversial issues arise, whether equal marriage or - a generation ago - the ordination of women.  These contentious issues were handled through thoughtful contemplation and through the attainment of a consensus amongst individual Anglicans irrespective of what collar they wore.

By leading a group of dissidents out of the communion altogether, as he is currently doing, Harvey is doing more than merely helping "traditional" Anglicans   - might "real" be a synonym he'd accept? - stay consistent with their faith.  Rather, he is rejecting the manner in which the Anglican communion has grown and survived.  Surely, that alone must be troubling enough to give these Anglicans pause.

Take that from a man whose ancestor took great issue with the edicts of a bishop a century and a half ago but who never once, as far as anyone knows, ever considered himself to be outside the communion into which he had been baptised.

That decision was made by a bishop.

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Get it?

In the midst of the sheer bullshit about Equalization and "Newfie jokes", and all the miserably wrong reporting on such subjects consider these words:

Whatever happened to "Proud Strong Determined"? What became of "Masters of our own domain"? We are we still assessing our worth or sense of accomplishment by means of a purely relative measure.

nottawa makes a point almost surely guaranteed to go flying past the locals, especially in the jet ski community.

In a province where the economy is tanking this year, the long-predicted Equalization event isn't the measure of success the Premier is making it out to be.

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The 800 megawatt controversy

Former premier Brian Peckford tried to set the record straight today on a controversy over a deal in a the 1970s to bring 800 megawatts of power from hydroelectric power in Labrador to the province.

Peckford appeared in an interview [link to podcast] with CBC St. John's Morning Show host Jeff Gilhooley.

The deal is mentioned in a new biography of Frank Moores, premier from 1972 to 1979 in whose administration Brian Peckford served as energy minister.  The book by Janice Wells - author of the Gin and Tonic Gardener books - contends that Peckford scuttled the deal between Moores and Quebec Premier Rene Levesque.  The deal required that the province, which had nationalised the Churchill Falls Labrador Corporation, cease any legal efforts to contest the 1969 Churchill Falls contract in exchange for the power or revenues equal to that much energy.

Wells claims that Peckford was in tears with agitation and threatened to resign taking with him half the cabinet.  She reportedly includes a valuation of the deal by Memorial University economist Wade Locke that the 800 megawatts would have been worth $4.0 billion over time. Wells discussed the supposed deal in an interview with Gilhooley that aired on October 23 [link to podcast] and refers to the episode as a failure on Moores' part.

Since the book isn't generally available in bookstores yet, it is difficult to know what sources Wells relied on for her version of events or if she cites any specific references.  Peckford contends he did not speak with her beyond a single conversation.

There is confirmation of the episode and of the general interpretation offered by Peckford in his interview.  That confirmation comes from Jason Churchill's summary of hydroelectric development in Labrador that he completed for the Vic Young commission.  Churchill writes:

Meanwhile, there were numerous other attempts and near-breakthroughs during Moores’ premiership. In the late 1970s, Quebec Premier Rene Levesque made a special trip to St. John’s to attempt to entice Moores into accepting a deal to start hydroelectric development on the Lower Churchill River. Levesque’s proposal involved a trade-off; Quebec was willing to be generous, in terms of benefits, in exchange for Newfoundland and Labrador relinquishing any future rights to challenge the 1969 Churchill Falls Contract. Meetings appeared on the verge of success as the two Premiers were planning on making a joint announcement. There was, however, a rub. On this occasion Moores’ Minister of Mines and Energy, Brian Peckford, was only informed of the Premier’s plans just previous to the proposed announcement. Peckford
emphatically rejected the idea of giving up in perpetuity any rights to seek redress of the infamous 1969 Contract. His emphatic objections were sufficient to thwart the proposed deal.54

On another occasion, Peckford was engaged in positive negotiations with his Quebec provincial counterpart Guy Joron. Peckford described Joron as being “extremely understanding of [Newfoundland’s] situation”. With the tacit permission of Premier Levesque, Joron had appeared willing to contemplate changes to the 1969 contract as long as it was part of a broader project to develop the Churchill River Basin. However, this idea of linking changes in the Upper Churchill contract to develop the sites on the Lower Churchill River brought strong opposition from Hydro-Quebec officials who thwarted the efforts of the Quebec Cabinet Minister.55

The footnotes for these paragraphs reveal the sources. Note that Churchill interviewed senior public servant Vic Young for his account.  Wells states that a portion of the intense discussions took place in Young's office.

54 Interview Jason Churchill with Brian Peckford, 3 December, 2002. Interview Jason Churchill with Vic Young, 18 December, 2002.

55 Interview Jason Churchill with Brian Peckford, 3 December, 2002.

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Nice cap d'ere buddy

Unless the federal government is drastically changing the Equalization program yet again, entitlements are capped at the level of the lowest non-recipient province.

And might that be Newfoundland and Labrador setting the cap for transfers to provinces like Ontario?

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The real meaning of dignity and self-respect

For the first time since the Government of Canada  created the program in 1957, Newfoundland and Labrador does not qualify for Equalization payments from the federal government.

This is a goal of every administration since 1957, except for the current one which has repeatedly campaigned  to find a way of extending Equalization payments to the provincial government indefinitely.

In 1982, Brian Peckford concluded his provincial election victory speech with words that embodied both the goal and the perceived ignominy of the hand-out: ""I am more convinced than I have any time in the past that Newfoundlanders and Labradorians speak [with] one voice when we all say one day the sun will shine and have-not will be no more."

Less than a decade later and facing economic circumstances not seen in the province since before Confederation, Clyde Wells said he longed for the day when the provincial government didn't receive a dollar of Equalization. In his remarks well pointed to self-respect - genuine self-respect - and to the sort of genuine self-determination that cannot come from the sort of the dependence of the provincial budget on federal transfers:

By doing this, and by having equalization cut this way, we are coming closer to looking after our own needs and we are coming closer to recovering some of the dignity and self-respect you lose when you depend on the federal government for 47 percent of the revenue [in the provincial budget].

I can't wait to see the day when we don't get a dollar.

Dominion Bond Rating Service recently noted the current provincial government's dependence on federal transfers as an area of concern.

Energy deals from Hibernia (begun under Peckford and completed under Wells) to Terra Nova and White Rose (negotiated under Tobin) and mineral deals like the Voisey's Bay agreement (negotiated under Roger Grimes) - savagely attacked by Danny Williams while in opposition - generated the revenues necessary to propel the province off Equalization.

Economists have forecast since 2003 that Newfoundland and Labrador would cease qualifying for Equalization within five years (i.e. by 2009/2010), based on revenues developed before October 2003 and long before anyone thought US$70 a barrel oil was anything more than the predictions of lunatics and amateurs.

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APEC catches up

Gross Domestic Product in Newfoundland and Labrador will grow just 0.2% in 2008, according to the Atlantic Provinces Economic Council.

Oil production will drop 15% this year.  That's pretty much as expected.

In fact, it's all pretty much as expected, if you've been following Bond Papers and the whistling post.

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Canadian Blog Awards 2008 - Nominations Open!

Nominations for the 2008 Canadian Blog Awards opened November 2 and will close November 22.

Then starts the rounds of voting until the winners are chosen.

So head on over and nominate your favourite blog (there are a raft of categories), favourite blog post or favourite post series.  You can get straight to the nominations page by clicking the banner below.

 

 

 

 

 

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Inflation menace? Not so much.

Yes, with the world economy in a bit of a crisis and central banks and political in the West worried about recession, the inflation hysteria has subsided in most places.

Like Australia:

"The clear deceleration in annual inflation since June signals quite starkly the speed at which the inflation problem of the last few years is unwinding,'' said Joshua Williamson,  a senior strategist at TD Securities in Sydney.

"The depressed domestic economy, especially for consumer demand, together with the sharp fall in commodity prices, suggests we could be in the early stages of a substantial deceleration in price pressure,'' he added.

The biggest decrease in the index came from falling prices for fruit and vegetables, holiday travel and accommodation, and household services, today's report showed. Those declines were partially offset by higher costs for financial services, books and newspapers.

Or Europe:

European inflation edged down in October, data released Friday showed, as a result helping to pave the way for the European Central Bank to deliver another hefty rate cut next week.

Or even the United States:

As dozens of countries slip deeper into financial distress, a new threat may be gathering force within the American economy — the prospect that goods will pile up waiting for buyers and prices will fall, suffocating fresh investment and worsening joblessness for months or even years.

The word for this is deflation, or declining prices, a term that gives economists chills.

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Staff failure

Republican vice presidential candidate Sarah Palin found herself on the receiving end of a prank phone call. 

Two Montreal comedians posed as French president Nicholas Sarkozy.  They had her going for five minutes before they let her off the hook.  Her office issued a statement admitting she'd been fooled.

Well, actually she wasn't fooled.  Her staff was.  They failed their job of protecting her from this sort of fun. ordinarily staff should have screened the call and confirmed the identity before putting it through.

Yet more evidence Palin and her people aren't ready for the job she's running for.

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The deafening silence

Federal finance leprechaun Jim Flaherty has been signaling the need to cap the Equalization system this year.

"It's a federal program; we will put a limit on the growth of it," Mr. Flaherty said. "This is not something that is discretionary. We must do this, otherwise the integrity of the program will be under attack."

Flaherty says that in the face of a possible federal deficit for the first time in ages (i.e. the last time the Conservatives ran the place), it won't be possible to have a 15% annual increase in the funds allocated to the federal transfer.

Based on government data, federal transfers to other levels of government have surged 57% in the past five years, to $46.1-billion in the most recent fiscal year from $29.3-billion in 2003-04.

"In this time of fiscal uncertainty, we cannot sustain that rate of growth," Mr. Flaherty said this week.

Flaherty is likely to lay out the whole thing for his provincial counterparts at a meeting in Toronto on Monday. 

Newly minted provincial finance minister Jerome Kennedy will be at the meeting.

Okay.

For the past five years, the current Provincial Conservative administration has been hammering away at the need for increasing federal transfer payments to Newfoundland and Labrador.

For the past two, the entire Family Feud between the Provincial Conservatives and the their federal cousins centred on an effort to get Equalization payments in addition to oil and gas revenues, even if, under ordinary circumstances, Newfoundland and Labrador wouldn't qualify for the Equalization top-up.  In fact, this idea of getting effectively 200% of oil revenues  (all the cash plus Equalization hand-outs) is the original demand Danny Williams made to Paul Martin. 

That's why it is so bizarre that the provincial government talked about anything but Flaherty's remarks over the past couple of days.

Trivia was the order of the day at the cabinet shuffle and what wasn't trivia was pretty much stock stuff. Take a look at the raw scrum tape - via CBC - and you'll see the lightweight routine.

There's a reference to being fine on the current budget, without understanding that means increasing public debt if the budget targets are met.

There's some slagging of the oil sands and a claim that there won't be any delay on Hebron. No one apparently noticed that the Hebron project hasn't been sanctioned yet.  How exactly can you forecast "no delay" in a project that has no timeline yet?

The ultimate superficial commentary came on the matter of representation.  In Ottawa, there's not a problem since it's like the local cabinet where everyone looks after everything everywhere. Later on, the Premier refers to Susan Sullivan and filling in the hole in the dough, giving proper cabinet representation for a region of the province not previously represented in the Conservative cabinet.  Sarah Palin couldn't have reasoned it anymore consistently, right down to insisting - in a manner of speaking - that a little fellow from up the shore could see Labrador from his house.

But nothing of the substantive issues facing the province, beyond a comment that there might theoretically be some difficulty in forecasting oil prices.

As for the consistent set of demands from the current cabinet for more cash hand-outs from Ottawa and Jim Flaherty's comments, there was nary a peep either from the cabinet or from reporters.

The silence was deafening.

Well, except for the CBC audio picking up messages coming to the Blackberries in the room.

The end result is that one wonders what, exactly will be the policy direction taken by cabinet "on a go forward basis".  Until now, the cabinet has been fairly consistent in its remands for reparations from Ottawa, in its insistence that it can go-it-alone provided Ottawa ponies up the cash. The same ministers sit in place today, with a very minor number of exceptions, as sat in place in October 2003.

Yet, there is an evident change in perspective.

It can't be driven by the prospect of going off the Equalization system.  That was forecast in 2004, even without the subsequent transfer deal with Paul Martin.

There's something else behind it.

You can tell by what isn't being said.

-srbp-

One man band

Former Australian Prime Minister John Howard liked to go-it-alone on major policy decisions, according to a new documentary on his administration.

Howard adviser Arthur Sinodinos made it clear the office knew how radical a GST was.

According to a colleague, Mr Sinodinos said: "We've taken a boat, we've sailed it down the coast of Africa and we've gone into the jungle and pulled out the meanest, nastiest gorilla we could find, sailed back to Australia and let it loose on the streets."

That same lack of consultation is clear regarding Mr Howard's historic letter of December 19, 1998, to then Indonesian president BJ Habibie telling him Australia was changing its policy and backing for the first time an act of self-determination for East Timor. Says then deputy prime minister Tim Fischer: "Let me tell you something: the most important letter ever written during the Coalition government's period of office, leading to the creation of East Timor, never went to cabinet."

Given current trends, one wonders how much of this approach applies in parliamentary democracies. 

In some instances, it might appear that the first minister is clearly the one directing things. 

In other instances, the first minister's staff appear to have a hand in the ongoing management of government including extremely serious policy issues, sometimes without apparent adult supervision.

There are certainly parallels in the Australian experience to trends Donald Savoie identified in his recent book on the Canadian and British experience.

One-man band's appear popular.

Being popular doesn't mean they are either effect or - from a constitutional perspective - desirable either.

-srbp-