03 December 2008

Hearn on BQ: "There are some really fine people in the Bloc."

The Bond Papers Wayback Machine is a useful thing.

Well, useful for people like your humble e-scribbler.

Not so useful for the people - like Conservatives - who hope people have really poor memories.

Former federal fish minister Loyola Hearn turned up on local radio today talking about the evils of cuddling up to the Bloc Quebecois. Hearn has grave concerns.  The country might break up.

You will recall Hearn as one of the architects behind the merger that created the Conservative Party and put Stephen Harper in the Prime Minister's Office.

Not surprising then that he is telling us all how nasty those separatists are and how dangerous it is to get in bed with them.

So nasty in fact that back in 2004 when the Conservatives tried a group grope with Gilles Duceppe and his colleagues, the Blockies balked but Loyola kept trying to keep the flames of minority coalition passion alive.

No "one foot on the floor" thing for Loyola:

“I have no problem with the fact they are there to look after Quebec, I’m there to look after Newfoundland, and the six other MPs also, and if we’re not we shouldn’t be there,” Hearn told The Sunday Independent. [Full text below]

...

"There are some really fine people in the Bloc, you know," says Hearn. "Probably more so than any other party … quality individuals."

When asked about Quebec’s ongoing contention that Labrador is part of Quebec and not Newfoundland, Hearn says it’s a claim that sounds strangely familiar.

“It’s no more than us disputing the nose and tail of the Grand Banks.”

...

“We should take a lesson from the Bloc in dedicated support for your province. However, if the screw tightens where you’re looking to put forward your separatist views, then government can’t give into those wishes,” says Hearn.

Yes, even the sacrosanct Labrador border would not stand in the way of the Conservative march to power in 2004 using every possible means, including trying to avoid having an election.

It's time like this when immortal words about Conservatives come to mind:

They have to lie — the truth isn’t their friend right now. Get angry. Mock them mercilessly; they’ve earned it. ...You could eat their lunch, make them cry and tell their mamas about it and God himself would call it restrained. There are times when you are simply required to be impolite. There are times when condescension is called for!

There are times when condescension and mockery are called for.

Loyola proves it.

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Conservatives on the Bloc

By Jeff Ducharme (St. John's)
The Independent
Sunday, July 04, 2004

Bloc Quebecois leader Gilles Duceppe may have already put the kibosh
on a coalition with the Conservatives, but St. John’s South MP Loyola
Hearn says it could work.

"I have no problem with the fact they are there to look after Quebec,
I’m there to look after Newfoundland, and the six other MPs also, and
if we’re not we shouldn’t be there," Hearn told The Sunday Independent.

Hearn won a tightly contested battle for the federal riding of St.
John’s South in the June 28th federal election. The incumbent Hearn
beat Liberal challenger and political neophyte Siobhan Coady by a
scant 1,500 votes in a race that came down to the wire. Hearn calls
the battle the toughest of his long political career.

Prime Minister Paul Martin barely maintained his grasp on power
winning 135 seats compared to Conservative Leader Stephen Harper’s 99
seats. If the Conservatives could cozy up to the Bloc and their 54
seats, the two parties could control the House of Commons with a total
of 153 votes between them. The Liberals and NDP could have a narrow
advantage with a combined 154 seats.

“We’ve indicated all along that we’re willing to work on an issue-by-
issue basis,” deputy Conservative leader Peter MacKay told CTV’s
Question Period the day before voters went to the polls.

But the Conservatives may have a hard time forming any type of
coalition with the Bloc. Duceppe and his party oppose the
Conservative’s platform of scrapping the Kyoto Accord and its anti-
abortion stance.

“There are some really fine people in the Bloc, you know,” says
Hearn. “Probably more so than any other party … quality individuals.”

Hearn credits Bloc MPs as being among the first to support his private
member’s bill calling for custodial management of the Grand Banks.

Natural Resources Minister John Efford found himself mired in a storm
of criticism because he avoided the vote, saying if he had voted for
the bill he would have been thrown out of cabinet.

“The earliest to come on board and some of the strongest supporters
were people from the Bloc,” says Hearn.

When asked about Quebec’s ongoing contention that Labrador is part of
Quebec and not Newfoundland, Hearn says it’s a claim that sounds
strangely familiar.

“It’s no more than us disputing the nose and tail of the Grand Banks.”

Hearn says any coalition with the Bloc is touchy considering the
anchor of the party’s platform is Quebec sovereignty and the erosion
of Confederation.

“We should take a lesson from the Bloc in dedicated support for your
province. However, if the screw tightens where you’re looking to put
forward your separatist views, then government can’t give into those
wishes,” says Hearn.

If the Bloc and the Conservatives do find themselves in bed together
when Parliament reconvenes, Hearn says it would likely be done on an
issue-by-issue basis.

“We’re talking the same language — most of the time.”

Humber Valley Resort to go bankrupt

The company is blaming the provincial government.

They should be blaming someone else: Brian Dobbin.

When Dobbin took his leave, the company was in a financial mess -  insoluble mess - as it turns out. The wrong business model is the polite way someone described it.

Too bad.  The resort was a good idea.

Just that the execution sucked. 

Newfoundland and Labrador isn't a barren place to grow new ideas or significant industry, as Dobbin tried to whine when the Indey folded for the second time.

It's a barren place for piss-poor management;  the financial record on the resort speaks for itself.

And by the by, this makes Dobbin  - at the very least  - oh for two.

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Another Conservative Homer moment

A minority party backed by the Bloc Quebecois.

Which one?

The "Stephen Harper Conservative Government".

D'oh!

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They need a time out

There is a growing consensus that the current political crisis in Ottawa came from the Conservative Party's heavy-handed approach to government displayed in the mis-named financial update. 

Finance minister Jim Flaherty went beyond merely giving a report on the government's cash flows and the state of the Canadian economy to launch a much broader set of initiatives that would, among other things, ban strikes in the public service for several years.  There was no reason for such a draconian move but it was there.

What wasn't there was any sign of a stimulus package for the economy. To anyone listening to Flaherty's comments the words "stay the course" came to mind; but stay the course is hardly the option given both the serious downturn and the extent to which previous Conservative spending had decimated the public treasury. 

More than a decade of enormous surpluses produced by sound fiscal management had become piddling amounts that, in all likelihood would turn into deficits. 

The whole episode brought into the open once more concerns among Canadians that, when times turned tough, the ruling element within the party would head home to its ideological roots rather than display typically Canadian pragmatism.

On top of that, the crisis has shown up some of the fissures within the party rooted in the discomfort over Stephen Harper's autocratic style.

Clearly this is a party which has not only shown itself to be incapable of governing in a difficult period in a minority parliament.  This is a group which has manifest problems within its own ranks that need to be sorted. Dirty political tricks of the type the Conservatives used in their ruthless drive for power, hysterical rhetoric and churlish behaviour of the past few days merely remind Canadians of the controversy that continues to swirl around the Conservative Party of Canada.  A once proud and vital Canadian political force has been brought to a low not seen since the early 1990s. The party of Sir John A Macdonald and Brian Mulroney is now the party with nothing more to offer than reflexive Rovianisms.

Clearly, this is a party which needs a time out from government.

Better for them to take the time to fix their own problems and make an appeal to Canadians once again when they are ready to govern.

In the meantime, Canadian parliamentary democracy has offered a viable alternative to either more of a dysfunctional government or a second election in less than six months.  The Conservatives have tried to monger fear of separatism.  Aside from their baseless claims about senate seats and vetoes, the check against any notion that the country will fall apart rests in the elected members of parliament who would support a coalition government.

In particular, Canadians can rest assured that there is no one better in the next few months to ensure the unity of the country than Stephane Dion.  His record on separatism is clear.  He has found no need, in stark contrast to Mr. Harper, to try and curry favour with those who would see the federal government weakened to the point where the country ceases to function as surely as he we have seen him weaken the federal government's finances.

Time for the Conservatives to take a time out.

The only question is whether their current leader has the strength to face the House in a vote of confidence.  If he will not do that then surely he does not deserve the confidence of Canadians.

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How rigged was my rally? Stand up for Canada version

The federal Conservatives must be really running scared at the prospect of a coalition ousting them before Christmas.

You can tell because someone evidently connected to the Connies has a website announcing rallies to be held "coast to coast" to stand up for Canada.  The party that has spent more time than any part other than the Bloc sucking up to provincialists and separatists is suddenly wrapping itself in the flag.

Such hypocrisy is not going unnoticed.

Heck, these goomers can't even tell when there's a flag in the room or if there is a flag what it actually means.

But hey, at least there will be rallies for the country in every part of the country, right?

Not likely.

New Brunswick, Prince Edward Island and Newfoundland and Labrador are all missing from the rally list.

This whole sham rally thing is all too familiar for people in Newfoundland and Labrador. A "stand up for Newfoundland and Labrador rally".

They've seen it before, just like they've seen a lot of things done by the federal Conservatives that look very familiar.

It is a sensitive subject, comparing the two Conservative parties, as the Premier said in the House yesterday: "Don’t try and compare us to what the Harper government has done in Ottawa."

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Crude lower again; Williams worries about "overheating" local economy

West Texas Intermediate rose to US$47.26 in overnight trading according to bloomberg.com. It finished Tuesday in New York at US$46.96, the first time below US$47.00 since May 2005.  WTI is the futures price most often cited by news media.

80% of the world's light sweet crude - including Newfoundland and Labrador -  is measured against Brent a North Sea blend which typically trades below WTI.  It finished Tuesday trading at US$45.44, or about $56 (Canadian) with a 25% exchange rate.  Overnight it climbed to US$46.00.

OPEC will reportedly cut production at its next meeting looking to get oil towards OPEC's target price of US$70 a barrel.  So far, OPEC has proven to be spectacularly unsuccessful at controlling the world price of oil.

Attiyah reiterated that a price of under $70 a barrel was threatening to derail projects to boost oil and gas capacity. Oil has stayed below $70 since Nov. 5.

"My concern is that the oil price will go lower," Attiyah said. "And many projects will be delayed."

OPEC's most influential member, Saudi Arabia, said at the weekend that oil prices needed to return to $75 to keep the more expensive projects at the margins of world supply on track. Other OPEC members, such as Nigeria and Kuwait, have supported the Saudi view that $75 is fair to both consumers and producers.

Evidently OPEC hasn't been getting those memos that oil will return very shortly to the US$70 to 80 a barrel range or others that predict it will head back to US$100 a barrel sometime in 2009.

Meanwhile, in Newfoundland and Labrador, Premier Danny Williams told the legislature that his government would continue to do as it has been doing all along, using public money to stimulate the economy as long as it isn't to the point of overheating.

We are spending as much as we can to stimulate the economy without overheating the economy, and making sure that we get the best bang for our buck, and we will continue to do so.

Williams, who last week told reporters he is reading everything he can get his hands on in an effort to understand what is going on in the world, evidently forgot to read his own budget forecast.

Far from overheating, the 2008 budget forecast the economy would shrink by 2% in 2008.  This was a deliberate low-ball since private sector economists had instead forecast very modest growth of less than one percent.

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02 December 2008

Chevron delays '09 CAPEX plan

Chevron Corp is delaying release of its 2009 capital expenditure plans from December until January, citing significant changes in the marketplace.

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Dunderdale reveals IOCC capex decision

In the House of Assembly Tuesday, natural resources minister Kathy Dunderdale revealed that Ironore Company of Canada (IOCC) will be delaying Phase I and Phase II of its planned $500 million expansion program.

She gave no time frame for the delay.  IOCC announced the plan to increase output in early 2008 with a planned completion in 2011.

IOC informed me on Friday morning, Mr. Speaker, that they were going to delay Phase 1 and Phase 2 of their expansion program, that this would not have an impact on their permanent employees other than it might have an impact on overtime. The delay of the expansion is going to have an effect on services that they would have contracted to do pieces of work around that. It would have an impact on temporary workers who would be called upon to do that kind of work.

They did not provide to me at that time the numbers that were affected for potential people who would be involved in that contract. My main concern at that point in time, Mr. Speaker, was for the permanent employees of IOC, and I am glad to know that there will not be any layoffs of permanent employees at IOC at this time or in the short term.

IOCC's news release last Friday said only that the expansion project was under review.  it also said that no layoffs of permanent employees were under consideration.  It said nothing of temporary (non-permanent) employees.

Dunderdale described as "foolishness" questions from the opposition on the impact IOCC's decision would have on temporary employees and student employment.

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01 December 2008

Farting in their general direction

FrenchTauntIn the Monday Question Period, finance minister Jerome Kennedy seemed to be auditioning for a role in the off-off-off-Broadway production of Spam-a-lot.

The part?

The sarcastic, arrogant French knight from Monty Python and the Holy Grail. 

The following snip is at the end of series of questions in response to which Kennedy offered up  - for the most part - a raft of silly, partisan jabs but not much more. 

This bit is the especially silly part:

MR. KENNEDY: Mr. Speaker, I am not quite certain what the Leader of the Opposition refers to. Is she talking about retail sales or retail sales tax? Is she talking about revenues? Because last year, Mr. Speaker, the revenues in our Province broke down to - 61.8 per cent came from taxation, which included offshore oil royalties and mining royalties are 37 per cent of our revenues. There was investment; there were fees and fines, other provincial sources, and equalization and the transfers - the Canada social and health transfers.

So I am not quite certain what the hon. Leader of the Opposition is asking me, but if she asking me about retail sales, Mr. Speaker, it is expected that they will grow and they have grown 8.1 per cent, August of this year.

SOME HON. MEMBERS: Hear, hear!

MR. KENNEDY: Mr. Speaker, we have an actual increase in housing starts. The only province in this country right now, I think, that has an increase in housing starts. We are up to 220, 298 by September.

SOME HON. MEMBERS: Hear, hear!

MS JONES: Thank you, Mr. Speaker.

My next question is for the Minister of Natural Resources –

MR. KENNEDY: Give up, did you?

MS JONES: Oh, not by far.

You'd almost think that Kennedy was such a pompous ass merely as a means of covering up his own inability to grasp the demands of his job. 

More likely, the old boy is having a hard time coming to grips with the very serious financial mess coming next year.  That mess  - of course  - is something the Conception Bay Screamer won't be able to blame on the previous crowd since the crowd that created the upcoming problem are his colleagues around the cabinet table.

They are the ones who grossly overspent for the past three years and built their entire on spending plan on sources of cash which were, as Kennedy admits, beyond their control.

Sucks to be Jerome, evidently.  His little display in the House was a tell of the pressures he is evidently under. Gigantic pressures.  The kind of pressures that make the fictitious deficit from 2004 look like a dream compared to the real deficit coming next year, even after they've trimmed and shuffled and borrowed.

But since it will be the ordinary blokes in the province who will have to pay the price for other people's folly, Jerome's evident discomfort would be so cool if only it wasn't going to hurt us.

Ron Stoppable was a genius.

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How NOT to get into cabinet

While sources told CBC News that MPs have been calling the premier to talk about the battle brewing in Ottawa and to get his opinion, a spokesperson for the premier's office said his government wouldn't be commenting on a constitutional issue.

Be the Liberal member(s) of parliament who couldn't fart without getting marching orders from "their premier".

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Connies start to unravel

The coalition is ready to get down to work but it isn't in office yet.

There are a few hurdles to overcome.

Still, the fact that the opposition parties have been able to cement an agreement that would provide stable, progressive government for the country at a time of economic turmoil is a testament to the good will and the vision of the men and women elected just this past fall to the House of Commons.

They stand, as such, in stark contrast, to the federal Conservatives who have worked diligently over the past five years or so to foster every form of division within Canadian politics.

The signs of stress are showing in the Connie camp.

Their sock puppets and other assorted plants turned up on talk radio on Monday spouting the standard talking points.  Too bad they were all out of date and too bad that the efforts to open cracks or sow seeds of doubt aren't taking.

But what with all the back-pedaling and the fulminating against an approach Stephen Harper himself tried but couldn't deliver, you know the Conservatives didn't figure on this response to their miserable economic "update". 

A mystery web site pushing John Baird as an alternative is likely to open up any cracks inside the Conservatives. There's another one promoting Jim Prentice for the job once Harper is gone. Now it doesn't matter if this is a Conservative inside job or a pair of sites by Liberal or New Democrat operatives.

Either way it spells problems for the rank and file and hence for the Conservatives.  They've held on this long by tight internal discipline. These sites and the whole pressure of the gaffe from last week might be enough to distract the Conservatives.

Another sign of the problems within the federal Conservatives - or maybe a new problem would be the better term - can be found in the skullduggery of taping an opposition caucus meeting.  It's just another distasteful episode from a party that has, in cases like Grewahl, shown itself able to stoop pretty low in the quest for power. The NDP have called the Mounties but even if nothing comes of it, the whole episode just reminds Canadians of what kind of ethics the current federal government believes in.

No one supporting the coalition should count any chickens before they are hatched.  Now that they are in power the Conservatives will do just about anything to keep their fingers on the levers.  They've shown the depths they will sink to already.

But in the meantime, just watch the signs as they unravel.  They might just be in the early stages of spin from which they cannot recover.

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Exercise your franchise: Pick a coalition cabinet

18 Liberals.

6 New Democrats.

You guess 'em.  Bonus if you can suggest the portfolios. The links above take you to the current caucus for each party.

Leave a comment to make your guess. [Note:  for this contest, we'll relax the rules on anony-comments.  Of course, if you want to collect the prize, you'll have to come out of the cyber closet at some point so we can wing your winnings to your mailbox via Canada Post.]

Almost immediate update, but with goodies attached:  An inveterate e-mailer reminded your humble e-scribbler that it's a good idea to offer prizes.

Well, okay. 

Sound suggestion.

Good idea.

The person who comes closest to the actual coalition cabinet (names only) will be the proud recipient of a new-design Bond Papers coffee mug (suitable for java or your spare change) and a Clyde Wells lapel button for your collection of campaign memorabilia.

 

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The constitutional background to the current situation

FOR IMMEDIATE RELEASE            

November 28, 2008

Eugene Forsey on Dissolutions, Coalitions and Minority Government

Ompah, Ontario – “If Eugene Forsey were alive today, the democratic options open to Parliamentarians in the upcoming confidence vote would be much clearer,” says Helen Forsey, daughter of the late Senator and constitutional expert.

“My father would be telling politicians and media alike that there is no need for a fresh election, and no need either for any formal coalition of opposition parties to replace the Conservative government if it is defeated in the House.”

She cites the straightforward explanation of the process given in her father’s popular reference book, “How Canadians Govern Themselves”, published by the Library of Parliament and now in its 6th edition.

If a Cabinet is defeated in the House of Commons on a motion of censure or want of confidence, the Cabinet must either resign (the Governor General will then ask the leader of the Opposition to form a new Cabinet) or ask for a dissolution of Parliament and a fresh election... If a minority government is defeated on a motion of want of confidence very early in the first session of a new Parliament, and there is a reasonable possibility that a government of another party can be formed and get the support of the House of Commons, then the Governor General could refuse a dissolution."  

Forsey is concerned that a lack of understanding of the constitutional options could lead to costly and undemocratic decisions that would seriously undermine Canadian democracy. “There’s a lot of confusion and misinformation in the public discussions around the expected vote on the ‘financial update’ package,” she says. “If we assume that a defeat in the House will automatically trigger an election, that gives the government a great big stick with which to beat the opposition and the electorate into submission. That’s what happened last time, and we mustn’t let it happen again.”

Even knowing that the Governor General can refuse to dissolve the new Parliament and ask the Leader of the Opposition to form a government, there is still a mistaken belief that this would require a formal coalition, she says. “Canadians must not allow this democratic opportunity for an alternative government to slip away just because no coalition emerges. Ordinary minority governments can work perfectly well if they respect the spirit of cooperation and openness Canadians want and need in these challenging times.”

For more information, please see attached backgrounders, and contact: 

Helen Forsey, Ompah, Ontario (613) 479-2453 (home office); hforsey@magma.ca (until December 15th,2008),         hlforsey@sympatico.ca (after December 15th, 2008)

John Whyte, Law Foundation of Saskatchewan Professor, College of Law, University of      Saskatchewan, Regina, (306) 966-5606; (home 306-757-9775), john.whyte@usask.ca

Donald Wright, Dept. of Political Science, University of New Brunswick, Fredericton, NB, E3B 5A3, (506) 458-7494, wrightd@unb.ca

Backgrounders

A.  Minority government – no need for a coalition!

There is suddenly much talk of a possible coalition of opposition parties, and the impression being given is that without such a coalition, a defeat of the Harper government would “force an election”. As the late Senator and constitutional expert Eugene Forsey and the entire history of Parliamentary Cabinet government make clear, this is simply not true, and it is vitally important to get rid of that mistaken assumption. Canadians must not allow our current opportunity for a change of government to slip away because no coalition emerges.

1. We don't need a coalition; regular minority government represents a simple and totally viable alternative. Common or garden minority government could work just fine, as it has lots of times in the past. The largest opposition party would form a cabinet, and introduce legislation deliberately designed to gain the necessary support from the House. This would involve consultation, discussion, co-operation, on each bill or policy, but it would not require any formal agreement among the parties. Whenever the parties holding the balance of power wanted changes to the proposals, they would negotiate with the (new, more co-operative) governing party so as to get something they could all at least live with. One example is the way the NDP won important concessions from the Paul Martin minority government on a number of issues.

2. Regular minority government could happen immediately; a coalition would take time. We almost certainly don't have the time right now to achieve the kind of formal agreement a coalition represents. Coalitions involve complex negotiations and delicate balancing which can be very challenging and time-consuming. They can also be internally divisive, at least temporarily, within the parties themselves. With a potential confidence motion coming before the House immediately, it is not realistic to ask three very different parties to slap something together in just three days. 

3. A formal coalition among the three parties currently in opposition in our Parliament would have serious structural drawbacks. The differences among the parties on some issues are enormous, and each party is apt (quite rightly) to be vigilant about not compromising its basic principles and identity.  Moreover, a coalition usually involves a cabinet that includes members of two or more parties, and the issues around who gets which positions could easily scuttle the whole thing. Even if a formal coalition were agreed to initially, the price each party would have to pay might soon become too high for many of its MPs (eg. if the Bloc demanded to be put in charge of federal-provincial relations, this would certainly be too much for many federalists in the other parties.)

4. A formal coalition might well be less stable than a regular minority government. Under current conditions - given the particular parties involved and the issues we are facing - a coalition could easily fall apart, which would leave a very bad taste in people's mouths and make further co-operation considerably more difficult. (In a regular minority situation, the parties can fail to agree on a piece of non-essential legislation without incurring any serious repercussions at all.)

To sum up, a coalition might be great, but it would have its drawbacks as well. What we absolutely do need now is an alternative to the current regime, a more co-operative and democratic minority government which would consider the input of the other parties in developing legislation and policies that could win the support of a majority of MPs. No coalition is needed for this – it is simply the way minority governments have always tried to work, before bullying and bluffing became a shameful new norm.

B.  An election if necessary – But not necessarily an election! Eugene Forsey explains constitutional options

By Helen Forsey

After our costly and frustrating October 2008 trip to the polls, Canadians are once again being held hostage to the notion that a government can never be defeated in the House of Commons without triggering an election. If Eugene Forsey were still alive, we would know that the weapon being held to our heads is only a toy gun.

The late Senator Forsey was widely recognized and respected as an expert on Canada’s constitution. Whenever political dilemmas loomed or processes needed clarifying, politicians, media and citizens alike sought his lively and learned counsel. Today, with our country again facing the uncertainties of a minority government, a multi-party opposition and difficult times ahead, his input is urgently needed.

The first thing he would point out in our current situation is that our Constitution provides safeguards against a series of unnecessary elections. One of those safeguards is the right of the Governor-General, in certain circumstances, to refuse a government’s advice to dissolve Parliament and instead to call on another party in the existing House of Commons to try governing.

If the Canadian public, the politicians and the media had understood this vital element of our Constitution and invoked it early in the last Parliament, things could have unfolded very differently from what they did. The opposition parties could have voted together against the government on one of its confidence motions and defeated it. At that point the Governor-General, rather than automatically granting a dissolution and plunging us into an early election, could have called on the Leader of the Opposition to form a cabinet and try to get the support of the House to govern. If the new government had then developed its legislative and budgetary measures in ways that would gain majority approval by our elected representatives, the 39th Parliament could have got on with its work, and quite possibly worked very well.

But nobody, from the Governor-General to the opposition politicians to the media to the general public, seemed to realize that this was an option! Now, after all the hassle and expense of the recent election, we’re back in essentially the same place. And the minute the PM decides that this new Parliament also “isn’t working” as he wants it to, it could happen again - unless we start understanding and implementing the options our Constitution provides.

“If [a government] loses its majority support in the House of Commons, it must either make way for a government of the opposite party or call a fresh election,” states Eugene Forsey in “How Canadians Govern Themselves”, his now-classic popular reference book published by the Library of Parliament. “In Canada, the government and the House of Commons cannot be at odds for more than a few weeks at a time. If they differ on any matter of importance, then, promptly, there is either a new government of a new House of Commons.”

Contrast this clear either-or alternative with the false assumption that if the Commons doesn’t agree to the government’s program, there has to be a fresh election. “The Canadian Constitution very sensibly allows governments to appeal from Parliament to the people when the public interest so requires,” Forsey explained. “But it does not follow that it provides no means of protecting fundamental democratic rights against abuse of these powers. It does; and the means is the reserve power of the Crown as guardian of the Constitution.”

My father defended those “reserve powers” as a pillar of our democracy. His PhD thesis on the royal power of dissolution of Parliament documented the constitutional precedents and the logic behind them, and demolished the popular but mistaken theory “that the Crown is just a rubber stamp for Cabinet, or that if it isn’t, it ought to be.” In particular cases, he argued, the power of the Crown to refuse a dissolution may be all that stands in the way of a government “spanking the electorate into submission” by repeatedly forcing them back to the polls.

“Unquestionably, the [reserve] power exists,” he wrote, citing the instances of its use and the wide range of constitutional authorities and politicians who upheld its propriety. “Unquestionably also, it is a power to be exercised only in very special circumstances: ordinarily the Crown must follow the advice of the cabinet. But many people feel that there must be no exceptions whatsoever. Is this in fact a safe doctrine?”

One of the scenarios he used to make his case against the “rubber stamp” theory starts with a familiar situation. “Suppose the government gets a dissolution, and no one gets a clear majority,” he wrote. “The government retains office and meets the new Parliament - as it has a perfect right to do - hoping to pick up enough votes to keep it in power. But the new Parliament defeats it. It declines to resign; governments don’t automatically resign on defeat. Instead, it asks for a second dissolution, and upon a further defeat in the ensuing Parliament, a third, and so on, until the electors give in or revolt. Is the Governor-General bound to acquiesce in this game of constitutional ping-pong from electorate to Parliament, from Parliament to electorate again, back and forth interminably?”

In 1926, Mackenzie King accused Parliament of having “ceased to be in a position to make a satisfactory decision” about who should govern. In 2008, Stephen Harper blamed a “dysfunctional” Parliament that “wasn’t working”. Both meant the same thing: a Parliament which failed to do what they wanted it to do. And for both men, the prescription was also the same: get a willing Governor-General to dissolve the unsatisfactory Parliament and bring on another election.

Forsey called this “a ‘heads I win, tails you lose’ theory of the Constitution. It bears not the faintest resemblance to parliamentary government,” he said. “Yet on the rubber stamp theory of the Crown’s powers there is no escape from it, no protection against the Cabinet dictatorship it would rivet upon the country.”

“It is the rubber stamp theory which is undemocratic,” he concluded. “It makes existing governments irremovable except by their own consent. Such a doctrine is a travesty of democracy. It delivers every Opposition gagged and bound into the hands of any jack-in-office. The jack-in-office may loosen the gag and the ropes - [perhaps] so much that we don’t realize they’re there. But he can tighten them again whenever he pleases, and as tight as he pleases. This is not democracy. It is despotism; more or less benevolent, perhaps, for the moment, but despotism none the less.”

The antidote is an understanding of the reserve power of the Crown to refuse a dissolution, and the political will to demand that it be used when necessary.

All this is not to say that it would be simple for the Crown to refuse her cabinet’s advice. As Eugene Forsey noted, a Governor-General would rightly be reluctant to do so without excellent reasons, and without a new cabinet willing to accept the responsibility. The reserve power on dissolution comes into play only in exceptional circumstances – when the latest election is still relatively recent, no great new issue of public policy has arisen in the interim, and the makeup of the new Parliament provides the practical possibility of an alternative government.

But the fact that the reserve power exists is one key to counteracting the paralyzing sense of helplessness that has turned so many Canadians off politics. It means we can choose to move from frustration and wishful thinking to the practical possibility of the opposition – a majority in this new Parliament as in the last - forming a government. The various parties would have to set partisan selfishness aside, but there would be no need for a formal coalition, just enough cooperation for each bill to pass. That, after all, is how responsible minority government works.

Democratic alternatives become real options when we understand and insist on the constitutional principles surrounding dissolution. Whether or not we like a particular government, having those options is essential to maintaining our democracy. We need not be hamstrung by the constant fear of another election. We must shake off our ignorance of the constitution and use the tools it offers to make our parliamentary system work for us.

Writer Helen Forsey is a daughter of the late Senator Eugene Forsey. She is currently working on a book about his legacy to Canadians.

Reference material:

Forsey, Eugene A., Freedom and Order, McClelland and Stewart, Toronto, 1974. See especially: “The Crown and the Constitution” (pp. 34-50), “Mr. King and Parliamentary Government” (pp. 87-109), and “The Problem of Minority Government in Canada” (pp. 109-123.)

Forsey, Eugene A., How Canadians Govern Themselves, Library of Parliament, 6th edition 2005. See especially pp. 28-29.

Forsey, Eugene A., A Life on the Fringe, Oxford University Press, Toronto, 1990. See especially pp. 102-108.

Evatt, H. V. and Eugene A. Forsey, Evatt and Forsey on the Reserve Powers, Legal Books, Sydney, 1990. This volume includes the entire text of Forsey’s The Royal Power of Dissolution of Parliament in the British Commonwealth, with his new Introduction, “The Present Position of the Reserve Powers of the Crown”.

We would most likely have been spared both this latest election and the continuing curse of a Harper government. Our current affliction is largely due to our collective political ignorance, exploited and manipulated by the Powers That Be to create the “learned helplessness” so evident now in our battered and bruised electorate.

The specifics will depend on how the situation unfolds, but the deciding factor will be the opposition’s collective willingness to

call Harper’s bluff early in the new session. Backed by informed public pressure, they should defeat him in the House as soon as he starts pushing his reactionary policies, and demand the chance to govern sensibly and co-operatively in his place.

If the opposition lacks the gumption to do this, or if the Governor-General simply knuckles under and grants Harper another dissolution, the public outcry should be so loud that Eugene Forsey will rise from his grave to join us.

Harper’s minority Conservatives spent their first term in office demonstrating their contempt for the people and their representatives. They systematically sabotaged the work of multi-party committees, used Orders-in-Council to avoid Commons debate and defy the law, and took the art of parliamentary bullying to new heights by declaring every government bill a matter of confidence, daring MPs to defeat it.

On the “rubber stamp” theory, any such defeat in the House would automatically trigger a new election, something opposition politicians are generally reluctant – for good reasons and bad – to provoke. Whether or not Harper knew that premise was false, he was certainly willing to bet it wouldn’t be challenged. Sadly, he was right. The opposition parties mouthed their platitudes but never mentioned any constitutional alternative. While they played dead, Harper was able to keep pushing through his appalling legislation and stay in office till the time of his choosing.

************************************

My father was writing in 1953, but more than half a century later Canadians are again being held hostage to the false notion that a government can never be defeated in the House of Commons without triggering an election.

After our recent futile trip to the polls, we are a country massively frustrated and disillusioned with our own politics. Our alienation is due to many elements – our continuing enslavement to the “first-past-the-post” electoral model, short-sighted partisan vote-grabbing among rival opposition parties, macho posturing and point-scoring that freezes out more collaborative approaches or dismisses them as “weak”.

Although he died in 1991, his writings continue to provide detailed analysis and guidance on how our sophisticated system of Parliamentary government works.

our vast ignorance of our own Constitution, particularly the sophisticated safeguards it offers against abuse. One of those safeguards is the right of the Governor-General, in certain circumstances, to refuse to dissolve Parliament and instead to call on another party in the existing House of Commons to try governing. If the public, the politicians and the media had understood this vital element of our Constitution and invoked it early in the last parliament, things would have unfolded very differently.

It is high time the politicians, the media, and the public at large were reminded that this is not the case.

that our Constitution provides options.

Harper’s bullying tactics depend on the continuing ignorance and docility of the opposition, the media and civil society – an ignorance regularly fertilized with forkfuls of bullshit from politicians and the media.

One example - out of many - was a recent statement by CBC Radio News that Harper’s technique of declaring every Commons vote a matter of confidence forces the opposition to either “support the government, force an election, or not vote at all.” It is precisely this widespread but false belief that reduces the opposition majority to a state of helpless frustration and allows the government to walk all over us.

“One of the biggest threats to parliamentary democracy in Canada,” he wrote, “is the dogma that any government, regardless of circumstances, always has a dissolution in its pocket; that an appeal to the people is always proper.”

    CBC news writers and announcers apparently share this mistaken assumption with the various politicians who believe themselves caught on the horns of a near-impossible dilemma.

The two recent examples below are both from radio, as I seldom watch television); any slight variance from the actual text would be because I simply grabbed a pencil and took hurried notes as I listened:

1) a reference to Mr. Harper's technique of declaring every Commons vote a matter of confidence, "forcing the Opposition to either support the government, force an election, or not vote at all" (The World at Six, October 15th, 2008) and

2) a report on Mr. Dion's reaction to the Speech from the Throne, in which he "said his party won't force an election over [a Throne Speech] too vague and too bland to be offensive" (The World at Six, November 19th, 2008)

    Please understand that I am not singling out the CBC in this matter; indeed, politicians and public officials, other media, academics and the general public are being contacted as well. The matter is urgent, since the new Parliament is already sitting, and crucial decisions over the coming months will depend on whether or not this error is corrected.

“Triggering elections” - Eugene Forsey says: “Hold on – that’s not necessary!”

C. Eugene Forsey on Dissolutions, Coalitions and Minority Government

Ompah, Ontario – “If Eugene Forsey were alive today, the democratic options open to Parliamentarians in the upcoming confidence vote would be much clearer,” says Helen Forsey, daughter of the late Senator and constitutional expert.

“My father would be telling politicians and media alike that there is no need for a fresh election, and no need either for any formal coalition of opposition parties to replace the Conservative government if it is defeated in the House.”

She cites the straightforward explanation of the process given in her father’s popular reference book, “How Canadians Govern Themselves”, published by the Library of Parliament and now in its 6th edition.

If a Cabinet is defeated in the House of Commons on a motion of censure or want of confidence, the Cabinet must either resign (the Governor General will then ask the leader of the Opposition to form a new Cabinet) or ask for a dissolution of Parliament and a fresh election... If a minority government is defeated on a motion of want of confidence very early in the first session of a new Parliament, and there is a reasonable possibility that a government of another party can be formed and get the support of the House of Commons, then the Governor General could refuse a dissolution."  

Forsey is concerned that a lack of understanding of the constitutional options could lead to costly and undemocratic decisions that would seriously undermine Canadian democracy. “There’s a lot of confusion and misinformation in the public discussions around the expected vote on the ‘financial update’ package,” she says. “If we assume that a defeat in the House will automatically trigger an election, that gives the government a great big stick with which to beat the opposition and the electorate into submission. That’s what happened last time, and we mustn’t let it happen again.”

Even knowing that the Governor General can refuse to dissolve the new Parliament and ask the Leader of the Opposition to form a government, there is still a mistaken belief that this would require a formal coalition, she says. “Canadians must not allow this democratic opportunity for an alternative government to slip away just because no coalition emerges. Ordinary minority governments can work perfectly well if they respect the spirit of cooperation and openness Canadians want and need in these challenging times.”

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cropped-cba-banner[6]

Harper's 2004 letter to the GG: full text

Posted at Bond Papers last Friday:

"Taking power without an election."

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30 November 2008

Round 2: Vote Now. Bond Papers: Best Political Blog

After the Round One run-offs, the final voting has begun.

Bond Papers is in contention for Best Political Blog in Canada up against the likes of Conservative heavyweight small dead animals, Calgarygrit, Molly's Blog, and nunc scio

This is it.  The big vote off.

To vote for Bond Papers and earn the undying appreciation of one humble e-scribbler just click the beaver.

cropped-cba-banner

The Gin and Tonic Biographer

Controversy helps sells books.

Janice Wells has certainly had her fair share of controversy in the first few weeks her book on former Premier Frank Moores has been in the bookstore.

First, it was her contention that Frank Moores had erred in walking away from a deal on Labrador hydro power that would have turned over 800 megawatts to the province.

In an interview with CBC radio's Jeff Gilhooley, Wells admitted she didn't know too much about the mega- or kilo-wattage involved.  On reading the brief two page account in her book it quickly becomes clear she didn't know too much else about the context of the discussion beyond perhaps what Frank himself had told her during one of her interviews with him.

She even starts out the section by referring to it as a previously unknown deal.  That despite a paper written for the Young royal commission - and cited here several times before - which includes a fairly detailed discussion of it. Wells does not make it clear whether the 800 megawatts was Churchill Falls power - which would have been deliverable immediately - or contingent on the Lower Churchill being developed.

Wells doesn't make it clear because, apparently she does not know.  yet nothing stopped her from claiming it to be a great tragedy to have scuttled the deal base on Brian Peckford's objections.  Wells even goes so far as to get Wade Locke to work up an estimated value for the power.

Lack of accurate and adequate information did not stop Wells from leaping to an unsubstantiated conclusion when it suited her purpose.

Odd then that she tries to suggest that Canadian journalists  have it wrong when they linked Frank to the Airbus scandal based on testimony and documentary evidence.  The trigger for Wells' comments is a criticism of the portions of her book on Airbus which ignore anything that does not present Moores in a favourable light. 

Wells admits she is not an investigative reporter.  That is painfully obvious.  She admits she has advanced an Airbus theory with no evidence.  That, too, is obvious.

Her job, says Wells, is to present a fair and balanced view of Moores.

That is not so obvious.

What Wells has done in her book on Moores is presented an account based primarily on her three days of interviews with Moores, bolstered by some other interviews. It is not really a biography as we might expect a bit of critical commentary based on research. Such a work need not condemn the subject;  it could be quite favourable and Moores deserves favourable treatment. However, in the arms-length attitude between subject and writer some credibility attaches to the writer's conclusions. 

What we have in Wells' book is the gin and tonic biographer at work.  It presents neither a fair nor balanced view and the research for the book appears to be extremely light.  Hers is a fawning account which raises Moores up in places by  tearing down others, or, in others,  attributing to Moores their ideas. She knows the meaning of proof and hard evidence, apparently, since she avoids both.

Frank Moores deserves a genuinely fair, accurate and well-researched account of his time as premier.

Janice Wells hasn't provided it.

The controversies, however, should help move a few books in the Christmas rush.

-srbp-

29 November 2008

Maybe Santa will bring them...

Financial reports on a string of by-elections, the last provincial general election and annual contribution reports for the three political parties in the province haven't been posted to the Elections Newfoundland and Labrador website.

In fact, the data is almost two full years out of date.

We were promised them for the fall.

The again, we were promised lots of things by provincial politicians now safely ensconced in power - and in writing too - that never came to be.

Perhaps the financial reports are someone's list for Santa.

-srbp-

He didn't even say good bye...

but at least PAP's domain wasn't taken over by a porn site.

Lazarus Update [2130 hrs]:  And then just like that - and completely without explanation - PAP is back.

-srbp-

Taking power without an election

Okay.


So like no panic in Ottawa.


No stains on the Stanfields in the PMO.


Delaying not one but two confidence votes is a gigantic tell that the federal Conservatives badly miscalculated.


But there's another tell:  the whole set of media talking points that focus on "taking power without an election."


You know the Connies are jammed up when they slag others for using something out of their own playbook. Through the magic of the Bond Papers Time machine, we bring you, Stephen Harper attempting to take power without an election:
September 9, 2004

Her Excellency the Right Honourable Adrienne Clarkson,
C.C., C.M.M., C.O.M., C.D.
Governor General
Rideau Hall
1 Sussex Drive
Ottawa, Ontario K1A 0A1

Excellency,

As leaders of the opposition parties, we are well aware that, given the Liberal minority government, you could be asked by the Prime Minister todissolve the 38th Parliament at any time should the House of Commons fail to support some part of the government’s program.

We respectfully point out that the opposition parties, who together constitute a majority in the House, have been in close consultation. We believe that, should a request for dissolution arise this should give you cause, as constitutional practice has determined, to consult the opposition leaders and consider all of your options before exercising your constitutional authority.

Your attention to this matter is appreciated.

Sincerely,

Hon. Stephen Harper, P.C., M.P.
Leader of the Opposition
Leader of the Conservative Party of Canada

Gilles Duceppe, M.P.
Leader of the Bloc Quebecois

Jack Layton, M.P.
Leader of the New Democratic Party



-srbp-

28 November 2008

Naughty bloggers

Some politicians don't like bloggers.  Doesn't matter what country or language or the political stripe.

Some don't like them because bloggers expose the politician's foibles.  The latest example of that is a Belgian politician in a story related by Neville Hobson.

In another thread of criticism we find the likes of  Hazel Blears, communities secretary in Gordon Brown's Labour government who warned that:

"Unless and until political blogging 'adds value' to our political culture, by allowing new and disparate voices, ideas and legitimate protest and challenge, and until the mainstream media reports politics in a calmer, more responsible manner, it will continue to fuel a culture of cynicism and pessimism."

Blears was looking to explain why the public are becoming increasingly disinterested in politics or, at the very list why participation is in decline.  She chose a couple of targets - not politicians themselves - but tore a strip from bloggers in particular.

In the process Blears merely displayed her profound ignorance.  Blogging involves new and disparate voices, ideas, legitimate protest and, most of all, a challenge to whatever is the orthodoxy of the moment. That's exactly what some politicians find distressing - the challenge to their line.  In Blears case, she singled out Guido Fawkes, a Conservative.  Conservatives detest Liberal blogs and Liberals blogs of the Conservative variety.  The only common thread is that the blog challenges their pronouncements and, as Fawkes has done, exposes misstatement, dodging hypocrisy and in some instances wrong doing.

In the spirit of these political alarums against blogs, Bond Papers joins with our Belgian blogging brethren by including a new animation in the right hand margin.

Reading Bond Papers could lead you to form opinions that differ from the pap you usually hear and read.

Don't say that you haven't been warned.

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No one saw this coming.

Yeah, right.

From the Iron Ore  Company of Canada's news release:

IOC responding to the steel industry slowdown


(Canada) Sept-Îles, Labrador City, November 28, 2008 – Global iron ore demand has reduced as a result of the slowdown in the steel industry and the global financial crisis.

A range of measures are being introduced by Governments around the world to stimulate their economies, and we expect that iron ore demand will improve in the medium term.

With this in mind, IOC has announced to employees and its community that it is taking prudent action to respond to reduced demand for our products.

IOC is making the following decisions in the interests of our people, our communities and the Company:

  • The shutdown of one of our six pellet machines for an essential maintenance rebuild and a second pellet machine rebuild will follow sequentially.
  • All production, except for the Mine, some rail and shipping from the Terminal in Sept-Îles, is planned to be suspended for a four week shutdown period in July 2009, during which time most employees would take their vacation.
  • A review of our expansion programs.
  • No layoffs of permanent employees are being contemplated at this time.

Take note especially of the third bullet:  "A review of our expansion programs". 

Rio Tinto's entire global operation is currently reviewing operations and capital expenditure commitments.  IOCC is no exception.

-srbp-

No more midwives and a raft of busy work in front of NL legislature

Take a look below and you'll see the bills on the government order paper for the fall sitting.

Looks like a lot of stuff.

But looking more closely and you can see an unbelievably light sitting.  Now that's amazing- appalling to some - considering this is coming from a government that has been over a year in office on its second mandate and that hasn't sat in the legislature since last spring.

The current administration is planning to repeal a $4000 award for students pursuing pre-doctoral studies in history and political science.  Not replace.  Repeal. The award was established in 1968 to honour jack Pickersgill, one of the architects of Confederation and for many years the province's cabinet representative in Ottawa.

They will repeal - not replace - an act aimed at controlling venereal disease, another allowing midwifery, and two acts separately to repeal the agreement transferring the old Labrador Linerboard Mill to Abitibi.

Most of the agenda is routine and in many cases the repeal of spent statutes, like the ones related to Labrador Linerboard could have taken rolled into one omnibus bill.  In the case of the Linerboard bills, they should have been repealed when the Stephenville mill closed two years ago on Danny Williams' first watch! Likewise, The school boards association act ought to have been repealed when the school boards were abolished by the current administration in favour of the entirely unwieldy school districts.

All these repeals are only separated out into individual bills in order to make it look like more is being done than actually is.

As for the repeal of health statues, that would normally be done by replacing them with another.  A new midwifery act - long overdue in the province - would have a clause at the end getting rid of the old one. Instead, midwives are no more. At one point there was an implementation committee to oversee the introduction of new legislation but clearly that is now dead but as minutes from a 2007 meeting attest, government has been headed down the road of abolishing midwives for some time.

Repealing the statute aimed at combating venereal disease makes no sense on the face of it.  Perhaps there is good reason but there is nothing government has said so far - it has said nothing at all - which suggests that venereal disease is no longer an issue in the province.

This list of bills is a sign the current administration, after only five years in office, has run out of whatever ideas it had.

-srbp-

  • An Act To Amend The Provincial Court Act, 1991 (Bill 50) [
  • An Act To Remove Anomalies And Errors In The Statute Law. (Bill 53) [Routine piece of legislation that fixes misplaced punctuation among other things]
  • An Act Respecting The Practice Of Dentistry. (Bill 61)
  • An Act To Repeal The Venereal Disease Prevention Act. (Bill 58)
  • An Act To Repeal The Private Homes For Special Care Allowances Act. (Bill 57)
  • An Act To Repeal The Midwifery Act. (Bill 56)
  • An Act To Repeal The Homes For Special Care Act. (Bill 55)
  • An Act To Repeal The School Boards’ Association Act. (Bill 54)
  • An Act To Amend The Student Financial Assistance Act No.2 (Bill 52)
  • An Act To Amend The Mineral Act. (Bill 62)
  • An Act To Amend The Forestry Act, No.2. (Bill 65)
  • An Act To Amend The Rooms Act. (Bill 64)
  • An Act To Amend The Management of Information Act. (Bill 63)
  • An Act Respecting Fire Protection Services in the Province. (Bill 60)
  • An Act To Provide For The Organization and Administration of Emergency Services in the Province. (Bill 59)
  • An Act To Amend The Highway Traffic Act. (Bill 66)
  • An Act To Amend The Securities Act. (Bill 49)
  • An Act Respecting Certified Management Accountants. (Bill 51)
  • An Act To Repeal The Pickersgill Fellowship Act, Bill 4
  • An Act To Repeal The Memorial University Foundation Act, Bill 42
  • An Act To Repeal The Labrador Linerboard Limited Agreement Act, 1979, Bill 47.
  • An Act To Repeal The Labrador Linerboard Limited Agreement (Amendment Act), 1979, Bill 48.
  • An Act To Repeal The Newfoundland And Labrador Computer Services Limited Amendment Act, Bill 46.
  • An Act To Amend The Real Estate Trading Act, Bill 39.
  • An Act To Repeal The Corporations Guarantees Act, Bill 43.
  • An Act To Repeal The Certified Public Accountants Act, Bill 44.
  • An Act To Repeal The Chartered Accountants And Certified Public Accountants Merger Act, Bill 45.
  • An Act To Amend The Income Tax Act, 2000 And To Repeal The Financial Corporations Capital Tax Act, Bill 38.
  • An Act To Amend The Arts Council Act. (Bill 40)

27 November 2008

That's gotta hurt, privilege version

Government House leader Joan Burke raised a question of privilege in the legislature on Tuesday over comments made by opposition leader Yvonne Jones after the chair of the House management committee - Provincial Conservative member and Speaker - Roger Fitzgerald voted with the other Conservative members of the commission to vote money for the two other parties but deny the Liberals.

Fitzgerald offered no reason for his vote leaving most people to believe he was just following the lead from the government benches.

Burke was stupid to raise the petty partisan issue of the money vote again, let alone ensure the issue got dealt with on Wednesday with opposition house leader Kelvin Parsons giving a pointed one hour speech against the question of privilege.

Fitzgerald ruled against Burke on Thursday.

Maybe he saved Burke's bacon by killing the issue.  Maybe he was jammed up with the argument Parsons presented.

Either way, it must have stung both Burke and Fitzgerald when he ruled against the government.

-srbp-

26 November 2008

Reality would be nice for a change

From the House of Assembly:

PREMIER WILLIAMS: Thank you, Mr. Speaker.

In all fairness to the hon. Leader of the Opposition, she wasn’t there in the scrum yesterday when I indicated exactly what the government’s position was, but I am at a loss to understand - in a situation where CUPE have already accepted what is considered to be a very, very generous wage package of eight, four, four and four over four years, which is front-end loaded, which compounds outs to be 21.5 per cent, we have now seen that PSAC, the public service union, has accepted 6.8 per cent over four years, the Prime Minister of the country, who has referred to the present economic situation as a dangerous situation, and he has also referred, after the G-20 meetings, to it as a near-depression possible situation, and just this afternoon we heard the Opposition House Leader refer to it as a crisis – under those circumstances I am at a loss to understand why I would be considered to be threatening unions when I am indicating to them that if, in fact, the prophecies of the Prime Minister, or even the Opposition House Leader, actually come true and we end up in a depression or a near-depression situation, why they would not take a 21.5 per cent offer right now, when they can have it and when they can get it, rather than in a situation when we are forced to choose between health services or education services or drugs, and not be able to give them that offer.

That was a dose of reality, it was recognition of a very difficult world situation right now, and it was an opportunity, I think, to be frank and open and honest with the people of the Province.

Okay.  Let's have a little dose of reality.

It's not like the 21% comes in the first year of any deal, even if signed tomorrow, retroactive to the first of April.

Only 8% is retroactive.

So if all the public sector unions signed a deal today, the only thing they would be guaranteed getting is 8% more this year.

After all, by the Premier's own words:

the statement that I made very clearly said that if oil stays at the price that it is today we would have no choice than to not offer that same wage package under those circumstances because we would be facing multiple deficits of several hundred million dollars every year starting next year.

The awkward grammar of that sentence notwithstanding, it's pretty clear the Premier is saying that after this year there is no guarantee of anything since large public sector deficits would mean the provincial government wouldn't be able to honour wage increases of the kind being offered today when it supposedly has the cash.

But does it have the cash this year even though the Premier put it this way in the legislature:

We will have a good year this year. I indicated yesterday, just outside this House, that we will, in fact, exceed our surplus this year, even if the price of oil is at $50.

The answer is yes, but they will do it by running a deficit and borrowing hundreds of millions of dollars, just as the budget planned to do all along. Incidentally, at US$50 a barrel the provincial deficit would likely be more than $478 million this year.

The problem next year is that the budget deficit next would be even larger than the one likely in this year if you assumed oil at .

Remember that when the Premier talks surplus he's talking accrual accounting.  You have to subtract $360 million in imaginary money to get a sense of the real number.  What we are using here is the budget as presented in the House, which uses a modified cash basis of accounting.

Let's hold all things as they are in the current budget.  Now that's a bit artificial since even this year mineral revenues are dropping and just about every category of revenue should be taking a dip in the second half of the year.  What with the Premier threatening possible wage freezes, cuts or rollbacks or anything but the happy increases promised before, he's likely sending a huge chill across consumer confidence.  So it's artificial but let's focus on oil to illustrate the scope of the government's problem.

Given:

1.  Price = US$50 per barrel.

2.  Exchange rate = 25%.  That's actually higher than the rate I used before.

3.  Annual oil production = 105 million barrels

Therefore:

4.    Provincial oil royalty = $1.115 billion.

That's $600 million less than this year's starting point in the budget and, as you are now tired of hearing, the original budget projected a cash shortfall of $414 million plus an additional round of "off book" borrowing of $380 million.

Does anybody really think the provincial government could offer any wage increases with a deficit of $1.3 billion? 

Of course not.

Plus they know the Premier's wages versus social programs dichotomy is entirely false since the largest chunk of program spending is wages. 

All the Premier has succeeded in doing the past couple of days is further eroding public confidence in the local economy and the provincial government's ability to ride out the financial crisis the Premier likes to talk about to claim. 

Well, that is talk about when he doesn't want to forecast doom in order to frighten people as part of his brilliant negotiating strategy.

What we end up with isn't a dose of reality.

We just get someone shaking the magic eight ball again.

-srbp-

Rio Tinto to release results of OPEX/CAPEX review earlier than planned

In the wake of the end of talks by BHP to take over Rio Tinto, the latter is reviewing the books to reassure the marketplace despite the company's $42 billion debt load.

The capital expenditure (capex) and operating expenditure (opex) reviews were slated for release in February 2009, but it now appears Rio will release the results earlier.

In the wake of the BHP pull-out, BHP's stock has risen while Rio has dropped about 34% in value.

Rio Tinto owns a 59% interest in the Ironore Company of Canada (IOCC).

Now word thus far on what if any impact the Rio capex review will have on IOCC's planned three phase expansion at its western Labrador operations.

The expansion was recently cited by Memorial University economist Wade Locke as evidence supporting his projection that markets will recover relatively quickly and return to pre-collapse conditions based on "the fundamentals":

In historical terms, commodity prices are still strong, he explained, and there are positive signs everywhere. He singled out the confidence shown by the Iron Ore Company of Canada in Labrador West, where a major expansion is planned.

"That should tell you everything you need to know. That company believes the future is bright for them and they're increasing their capacity now to take advantage of an improving situation in the future," he said.

Locke made his comments last weekend. News of Rio's capex review came in mid October.  BHP withdrew its offer before Locke's comments appeared in The Telegram.

In early November, Locke hinted at an unidentified major development coming in Labrador.

-srbp-

25 November 2008

Three guys and a magic eight ball

The Premier's first scrum of the new House of Assembly session yielded a huge number of interesting points.  CBC has posted it for your viewing pleasure.

1. Back to the future.  There are echoes in this scrum of the infamous January 5 massacre in which the Premier unilaterally froze public sector wages in response to a largely overblown warning of imminent financial collapse. [Update:  "Premier vows public sector wage freeze". 05 January 2004.]

Most media outlets are going to focus on the possibility that government would abandoned its own wage hikes in the public sector if things got bad enough. CBC did already.  Ditto voice of the cabinet minister and NTV.

It's right there in front of your face and there is immediate news value in the conflict.  Remember what makes news?  Money, power and conflict for three and when you get into this sort of thing - a Premier warning public sector unions actively involved in collective bargaining that he might just yank back his own offer -  you bring together a nice package.  Hence this sort of quote is pure gold:

"You know if we get into several-hundred-million-dollar deficits, then that makes the whole question of collective bargaining a big issue," he said, answering reporters' questions after the first day of the fall session of the House of Assembly.

[Update:  This is not the first time the Premier has used a message about government finances to threaten unions.  He did it in late October with the nurses.  Meanwhile, go back and check the scrums and news reports when this massive wage hike was introduced or when the nurses asked for more cash.  How many times did the Premier and the finance minister talk about being able to handle the 20% wage hike they imposed?  Did they ever mention the possibility that they might not be able to manage it?]

2.  The Big Picture stuff is done.  That's almost a direct quote and no one should miss putting that fact together with the public sector bargaining threat noted above.  By Big Picture, the Premier clearly means revenue and spending projections for next year and looking out two to three years.  The only stuff left to do is the actual departmental allocations and the traveling farce called "consultations".

By Big Picture, you have to understand that all the numbers thrown around by the Premier aren't just ones he pulled out of his ear.  These are the numbers the provincial government is working with for its projections.

3.  What's the big thing about reading?  Danny Williams likes to mention that he is reading stuff, although he is never clear what he reads.  He said "books" in the scrum - economics books to be specific - and then switched to journal articles and magazines and anything else he could lay his hands on. 

Sarah Palin talked about reading too, at least until reporters started asking her what she read.  How long before someone actually asks the Prem for some specifics on what he reads?

4.  No coincidence at all.  Remember the comment here about the overwhelming similarity between Wade Locke comments and those of the Premier and his newly minted finance minister?  Apparently no coincidence at all since the Premier admitted that economists from the university are on the Hill consulting.

At some point, reporters will have to clarify Locke's relationship with the provincial government.

5.  "No one could foresee what was happening here."   No one foresaw the drop in oil prices according to the Premier. He is evidently not reading the right things

6.  PIRA.  That would be the PIRA Energy Group, a consulting firm to the international stars. Their prediction in July was that oil prices would drop, but remain above US$100 a barrel based on "strong medium-term oil market supply/demand fundamentals."

7.  Production.  Count how many times the Premier mentions oil production, the possibility of increased production over projections and the importance of oil production levels  - conservative estimates according to the Premier - to the government budget. 

We know the provincial government has built its entire financial plan on oil revenues.  It's a house of cards, as the current economic crisis shows.

The budget was based on anticipated oil production in 2008 of 120 million barrels. Statistics from the Canada-Newfoundland and Labrador Offshore Petroleum Board show that oil production this year has averaged 10.3 million barrels per month and is therefore on track to deliver total annual production in this fiscal year of 123.6 million barrels. 

The highest offshore oil production level was last year when it hit 134 million.  In order to get the higher production the Premier keeps talking about - and therefore equal last year's record  - there'd have to be about oil would have to average over 12 million barrels per month in the last six months of the year.

Next year, production is expected to fall by 15% and that would give 2009 annual production of about 105 million barrels.

Remember those numbers.  We'll use them again in a minute.

8.  There's a notional surplus... The provincial budget projection was for a $544 million surplus.  That's presumably on an accrual basis. The same figures turn up in the Dominion Bond Rating Service assessment. Here's the thing:  it includes $360 million in completely fictitious money from the 2005 federal transfer deal that has already been received and spent.

9.  and a cash deficit.  Every time someone says the province is on track to meet budget targets, people in the province should worry.  We've covered this dozens of times at Bond Papers because on a cash basis, budget targets means $794 million in new borrowing.

Based on the new numbers, we can revise our calculations from October slightly.

Over the first half of the year, let's assume oil averaged about $120 a barrel.  That's a figure the Premier has tossed out and it's a little higher than the $115 Wade Locke mentioned.  That gives about $1.26 billion in oil royalties in the first half of the year.

In the second half of the year,  we can safely assume oil at an average of CDN$72 (US$60 + 20% dollar premium) and CDN$87 (US$72.5 + 20% dollar premium) for the purposes of our calculations.  We can also anticipate that other revenue sources (taxation etc) are not going to outperform original projections by any great amount. If they were looking that good, the Premier wouldn't hesitate to use them to bolster public confidence.

On that basis, the provincial budget would come up - respectively  - $478 million and $320 million short.  Compared to the projected $794 million shortfall that's not a big amount.  Spending restraint and a little extra cash here and there could balance the books on a cash basis. 

Don't count on that, at least if the last two fiscal years are anything to go by. 

10.   Then there's next year.  If we hold the budget exactly as it is this year  - anticipated spending and revenue - and vary only oil, we can get a sense of how big a financial problem the provincial government has helped create.

Oil production is expected to come in at about 105 million barrels in 2009.  Peg oil pessimistically at CDN$72 (US$60 + 20% premium) a barrel and you get oil revenues about $500 million less than this year's estimate.

That projected $794 million deficit (cash basis) this year becomes $1.294 billion in the red next year.   Unlike previous years where the trend was positive and the budget figures were low-balled, odds are much higher that the low-balls turn out to be dead-on if not downright pollyannaish optimistic.

If AbitibiBowater closes its mill in Grand Falls-Windsor, and mineral prices fall off, that deficit number would get bigger not smaller. As well, the prospect that Rio Tinto might adjust its capital expenditure plans next year could reduce some anticipated activity in Labrador west.  All of that is just a local manifestation of the recession expected in the United States and Canada, our major trading partners.

Bottom line:  we aren't protected by some magic bubble. These are rough calculations, to be sure and the figures aren't readily available to allow a more accurate and detailed assessment.  At the same time, the people who do have that information aren't sharing the accurate assessments.  The Premier's scrum on Tuesday covered such wide territory that one could easily imagine the finance department is relying on three guys and a magic eight ball for its planning.

Thankfully that isn't the case, at least based on the well-earned reputation of the finance department officials for deadly accurate forecasting and sound budget management. That's pretty close to what PriceWaterHouseCoopers said in their financial assessment in late 2003.  Then again that was before the current crowd took over. Things haven't been quite as accurate or as clear since then.

Let's just pray that the future as suggested by the calculations here doesn't turn out to be as bad as it looks.  If the current political crowd took credit for the boom delivered by things beyond their control - like oil prices - they can hardly expect people to think that a major fiscal problem in government isn't also theirs to own.

-srbp-

24 November 2008

Government spending news roundup

1.  The Canadian Centre for Policy Alternatives predicts the federal budget deficit might hit $27 billion in 2009 and nearly double that the year after.

The report re-estimates the federal fiscal picture for four economic scenarios — each more pessimistic than the last — under existing tax and spending policies.

  • The first scenario, in which the economy slows but avoids a recession, yields a deficit of $7 billion in 2009-10 and $5.4 billion in 2010-11.
  • The second, involving a mild recession in 2009, yields deficits of $12.6 billion in 2009-10 and $20.5 billion in 2010-11.
  • The third, involving a deeper recession, yields a deficit of $19 billion in 2009-10 and $31.3 billion in 2010-11.
  • The fourth, involving a major recession and slower recovery, yields a deficit of $27.9 billion in 2009-10 and $46.8 billion in 2010-11.

2.  British Columbia will post a $450 million surplus this year, down from $1.0 billion projected at the start of the current fiscal year. That news in the latest budget update from finance minister Colin Hansen.

3.  Federal finance minister Jim Flaherty is planning to rush public works spending in the coming budget as a way of stimulating the economy.

-srbp-