Polling month starts in earnest: five of six announcements detail public spending

August is polling month for the provincial government’s pollster.  You can tell because on the first working day of the money, cash announcements and announcements of announcements flowed like water:

• a “celebration” of the first anniversary of interest free student loans;
• $22,000 for culture and heritage groups in the finance minister’s district (called a region so they can claim they don’t hand out cash based on political districts);
• $15,675 in money for sports in the Port au Port district;
• $10,000 for something called “regional games”, this time in the “central” region;
• More than $116,000 in job creation money for St. George’s-Stephenville East district;
• Notice that there’ll be a health funding announcement on Tuesday; and,

There were 12 announcements made on August second.  Two were public advisories and another four were media advisories, including warning of a media availability later on Monday and a funding announcement on Tuesday.  One of the dozen announcements covered the closure of the school for the deaf.

In other words, outside of the media and public routine announcements, the provincial government issued six news releases on Monday.

Five of them were about spending.

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The politics of financing post-secondary education in Newfoundland and Labrador

Nottawa lays it out very neatly:

It's a political masterstroke. Having already taken all the political credit for the revenue generated by his predecessors, Williams is now doing the same with expenditures of his successors. It's brilliant. Whether or not it's sustainable is another thing.

That would pretty much put post-secondary education financing in line with the rest of the current administration’s management of public money:  unsustainable.

Then again, nottawa sets out that sort of thing as well when he notes the costs in the policy re-announced today by the province’s education minister:

What is the point is that this announcement, at the time of its making, and on its one year anniversary is really not an "investment" of the "Williams Government" in any way shape or form. It's a commitment made on behalf of Williams' successor, the person who'll one day have to account for the cost of borrowing money at 4, 7, 8 or even 10% in order to lend it out to post-secondary students interest-free.

Evidently financial management and economics were not included in the curriculum at Darin King’s alma mater.

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Holyrood pollution and the Great White Whale

According to the Telegram, Holyrood town council is expected to vote this week to ask the provincial energy company and the provincial government to follow through on commitments to reduce emissions from the thermal generating plant at Holyrood.

The problem both for the town is that it is stuck accepting NALCOR’s own contradictory statements on Holyrood.

On the one hand you have the statement contained in the provincial energy plan.  Under that version, the company would either install scrubbers and precipitators to deal with emissions or  - as a NALCOR spokesperson told the Telegram - “displace existing fossil fuel generation at the Holyrood generating station.”

But as Bond Papers readers know, Holyrood will be a crucial part of the NALCOR system no matter what.  This is not an either/or proposition.  The scrubbers and precipitators will have to be installed.  Even if the heavens open, miracles happen and NALCOR builds the Lower Churchill anytime in the next two decades, NALCOR plans to keep Holyrood on stream.

You don’t just have to believe your old e-scribbler.  Here’s exactly how NALCOR described it:

It is important to consider that whichever expansion scenario occurs, an isolated Island electrical system or interconnected to the Lower Churchill via HVDC link, Holyrood will be an integral and vital component of the electrical system for decades to come. In the isolated case Holyrood will continue to be a generating station; in the interconnected scenario its three generating units will operate as synchronous condensers, providing system stability, inertia and voltage control.

Things don’t get any better, by the by, if you try and follow Calamity Kathy Dunderdale’s version of things.

What seems to be going on here is pretty simple.  NALCOR and the Premier are obsessed with a hydro megaproject that they just can’t build.  Everything else is being held hostage by that obsession.

For example, power from central Newfoundland can’t be used to replace Holyrood since the connection to the Avalon can’t bear the added load NALCOR won’t upgrade that transmission capacity unless the LC goes ahead.  At the same time, NALCOR won’t pursue alternative generation – like say wind power – because it is fixated on the Lower Churchill.  This sort of stuff is well laid out in the LC environmental review documents. 

And if that weren’t bad enough a decades old moratorium on small hydro projects remains in place. The 2007 energy plan committed government to lift it or keep it in place in 2009, the year they were supposed to start the Lower Churchill.

Guess what?

That decision is held up, as well, because the Great White Whale remains just out of Ahab’s grasp.

So if the Holyrood town council wants to get their local air improved, the first thing they need to do is toss aside the bumpf coming from the provincial government and NALCOR about the Lower Churchill.

Instead, they need to hold NALCOR to the statements in its 20 year capital plan.

And that means they need to come up with a timetable to install emission reduction equipment on the facility that NALCOR says will be a vital part of its system for decades to come.

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The July Drivers

Maybe you were one of the 11,472 visitors who hit 15,026 pages at Bond Papers during July.  If you were, odds are you enjoyed these, the 10 most popular pages from July, 2010:

1. General and master corporal face charges over relationship (so far out in front, it was in another month)
2. Five years of secret talks on the Lower Churchill:  the Dunderdale audio.  (The mainstream continues to ignore the big story but the public won’t)
3. Bristol collapses owing more than $6.0 million
4. And no fish swam (helped no doubt by a mention on the Fisheries Broadcast)
5. When will she get the flick?
6. HQ and NALCOR on same side in US transmission line play
7. Court docket now online
8. Scientists find new sea creatures near deepwater exploration sites
9. Telly web design sucks, kills RSS feed to popular content
10. There is a green hill (not so far away)

The number one story was a national story and involved illicit sex.  That’s two massive boosts for it right there.

Bur the surprise second is the story the mainstream media have completely ignored since it broke last September. They haven’t even mentioned it once, yet it is absolutely true and no one has even tried to refute it. Well, they may have ignored it but people are clearly very interested in finding out that Danny Williams spent five years secretly trying to sell Hydro-Quebec an ownership stake in the Lower Churchill, without any redress on the Churchill Falls contract.

In the end it was no sale and not for any other reason than they just weren’t that into him. They had other things to do. And everything else Danny’s uttered since last July on the Lower Churchill and Quebec is just plain ole bullshit.

Anyone who thinks fisheries policy isn’t interesting to people might want to take note of Number 4 on July’s hit parade. It’s all about fisheries policy. What’s even more remarkable is that it doesn’t endorse the bullshit – there’s that word again – that infests the Gus and Ryan show on commercial radio.

The court docket post remains popular, not to mention testimony to the number of lawyers who drop by Bond’s corner for a read and a larf.

The last post worth a special mention is the one about the Telegram’s site redesign.  There’s another post in the works on this but it’s on hold until the Telly crew manage to sort themselves out. Hint: a week is way too long to leave the blogs totally shagged up;  the positives on the new design are fast being overshadowed by the cock-ups.

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Quebec and Vermont to keep talking power

Quebec and Vermont have extended the July 31 deadline to reach a long-term power purchase agreement but officials quoted by Bloomberg are optimistic the two sides will reach a deal shortly.

The deal would see Vermont purchase 225 megawatts from Quebec from 2012 to 2038. When the two sides announced a tentative deal in March, they set 31 July as the deadline for the deal.

Vermont’s major electricity producer is looking at a long-term purchase to replace an existing one with Hydro-Quebec.  The state may also be in the market for additional power to replace generation at the 38 year old Yankee nuclear generator.

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Traffic Drivers, July 26- Jul 30

1. Bristol collapses owing more than $6.0 million.
2. Three on a match and then some: another failure of taxpayer cash give-away  policy.
3. Did he expense that?
4. The past in our digital present.
5. Game on! Feds and Quebec start talks on Gulf Accord.
6. Kremlinology 23:  a little something for everyone.
7. Court docket now online.
8. A view into the Afghan war.
9. Telly web design sucks, kills RRS feed to popular content. (A re-tweet really drove this one)
10. Drill baby, drill:  Dunderdale rebuffs Quebec concerns on border, oil spill response.

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iPhone mania (with picture)

A determined gaggle of iPhone devotees lined up in several places across Canada on Friday to get their latest fix.

This shot is outside the Apple store on Ste-Catherine in Montreal. They were there all day, lined up around the corner as well as at cell phone company outlets.

Did these phones come with the design flaw fixed for free?

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Sins of omission

“Five key bridges in the western portion of the T’Railway Provincial Park that closed in 2008 are now re-opened to park users. … [The five bridges are being ] replaced as a result of a $3.6 million allocation in Budget 2010: The Right Investments – For Our Children and Our Future.”

That’s part of the first paragraph of a happy-news release from the province’s environment.  It’s one of dozens issued every week in July as part of the happy-news offensive mounted by the provincial government in the run up to August’s scheduled polling by the provincial government pollster.

The release leaves out much relevant detail.

Not surprisingly, that detail is embarrassing to the provincial government and especially to the ever-embarrassing minister, Charlene Johnson.

For starters, the bridges in questions were all former railway bridges inherited by the provincial government in 1988 when the railway closed.  The provincial government took responsibility for the bridges but until 2008 – apparently  - did nothing with them.

No maintenance.

No repairs.

No inspections either, apparently.

At all.

That is until the federal government inspected a few that crossed over federally-monitored waterways.  They found a raft of them in what appeared to be perilous states of disrepair. 

In one case, one of the bridges had vanished entirely.  When inspectors showed up to take a lookee-look, they couldn’t find anything except the footings on either shore.

So basically this splendiferous investment of more than three and a half millions could have been avoided or at least spread out over time if someone – anyone – at any point along the way had decided to do some regular maintenance on the bridges.

Or even taken a peek at them once in a while.

Even an auditor general’s report in 2003 on inadequate inspection of road bridges seems to have prompted any action on the former railway bridges, the ones now used by pedestrians, snowmobilers and ATV operators.

None of this, by the by, stopped Johnson from claiming that her department prized public safety. As your humble e-scribbler noted at the time:

We understand the inconvenience of the closure of these structures; however, public safety has to be our number one priority," said Minister Johnson.

But...

Environment Minister Charlene Johnson said today the province does not conduct routine safety assessments of structures on the T’Railway, which is a provincial park.

“There’s no regular inspections, no,” Johnson said in response to questions from reporters.

That sort of bumbling is why some people find it odd that Charlene has adopted a tone of haughty arrogance when dealing with issues like the Abitibi expropriation fiasco or offshore oil.

That sort of bumbling is also likely why Charlene’s publicists decided to torque this release without any reference  whatsoever - an omission in other words - to the mess that started it all.

But all of it doesn’t explain the real sin of omission here:  namely the explanation of why the Premier keeps this minister in a job for which she is clearly unqualified and at which she has clearly been a disaster of BP proportions.

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Game on! Feds and Quebec start talks on Gulf Accord

The Government of Quebec and the federal government started talks recently aimed at achieving an agreement on revenue sharing for any oil and gas in the Gulf of St. Lawrence, Canadian Press reported.

Details about what the deal would entail, and when it would be implemented, remain vague. But [federal natural resources minister Christian] Paradis described the broad outlines while standing next to [Quebec natural resources minister Nathalie] Normandeau at an event earlier this week.

"We're talking about an administrative deal," he said.

"The goal is to create an office of hydrocarbons, as is the case in Nova Scotia and Newfoundland."

At the heart of the move is a potentially lucrative field known as Old Harry.  Believed to contain significant natural gas or oil reserves, the field lies across a boundary between Quebec and Newfoundland and Labrador proposed in 1964 but never accepted. 

Both Quebec and the Canada-Newfoundland and Labrador Offshore Petroleum Board have issued permits to Corridor Resources to explore Old Harry.

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Related:

• Jurisdiction dispute holding up oil exploration (January 2009)
• Corridor hits big gas (May 2010)
• There are gulfs and then there are oilspill gulfs (June 2010)
• Drill baby, drill: Dunderdale rebuffs Quebec concerns about border, offshore oil spills (July 2010)

Did he expense that?

Right on the heels of a new appointment for something called a “legislative assistant” comes a news release that tells us that Ed Buckingham  - member of the House of Assembly for St. John’s East - filled in for Charlene Johnson at an announcement in Burgeo.

This raises some interesting questions, not the least of which is who paid Ed’s costs.

You see they weren’t ministerial expenses so they don’t turn up on the periodic disclosure of expenses by cabinet ministers.

And they weren’t expenses in the House of Assembly because this is a government job.  Ed shouldn’t be expensing them in the legislature.

The department should be covering the bill.

But interestingly enough, they don’t have to disclose any of the costs for travel by this odd bird called the legislative assistant or even confirm what if any pay goes with the title unless someone goes through the exercise of submitting an access to information request.

Of course, you wouldn’t even think to do that because until the Paul Davis announcement, these little jobs flew under the radar screen.  Sort of like “don’t ask, don’t tell.”

Funny idea for a government that supposedly wants to be open, transparent and accountable.

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Kremlinology 23: a little something for everyone

Newbie member of the House of Assembly Paul Davis picked up a rather conspicuous new job on Tuesday.

He is the new legislative assistant for the municipal affairs department. 

Now this stands out for a bunch of reasons. 

First of all, this job doesn’t really exist, as such.  It’s one of those made-up jobs.  There are parliamentary secretaries as set down by the Parliamentary Secretaries Act. These people help ministers of large departments in what are effectively training positions for future cabinet ministers.

But legislative assistants?  They aren’t really mentioned.

That’s the second thing that makes this noticeable.  This appointment got a news release praising Davis to the hilt.  There’s no reference at all to what the job entails.

You might be surprised to find that Tracy Perry is the legislative assistant in InTRD.  She’s actually on the departmental website.  But there doesn’t seem to be a news release on her.

But what about Ed Buckingham, the guy representing St. John’s East?  Well, there is a single passing reference to him – by district, not name – as the legislative assistant for environment. Maybe he got punted from the job:  he isn’t on the departmental website any more.

Thirdly, this one stands out because of all the departments needing help, municipal affairs ain’t it. The department doesn’t generate much in the way of legislation so it’s pretty hard to imagine what Davis is going to be doing. Charlene could use Ed Buckingham to help her find where the boundary on her responsibilities are.  And if Ed had his turn at the assistant’s gig, then Davis’ police experience in finding things could come in handy for Charlene.

Fourthly, Davis’ appointment stands out because it is in a department where the minister is on the mend from a rather serious illness. Might that be the reason he is on the job now? If Whalen is still on the mend, then Davis might be able to take on some extra duties as a proto-minister without actually forcing a cabinet shuffle.

After all, a cabinet shuffle would be rather noticeable at this point.  Someone already pointed out that we are overdue for a Williams cabinet shuffle. Is this an effort to skate by?

Fifthly, Davis is rather junior to be getting a nice little plum.  He’s the last man in. Others – like say, political rainbow man Steve Kent -  have been around the House since 2007 doing little more than nursing their frustrated ambition.

Sixthly and perhaps most tellingly, Davis’ appointment draws attention to the number of people in Danny Williams’ caucus who are drawing extra pay.

There are 19 people in cabinet, four parliamentary secretaries (the maximum under the statute), one parliamentary assistant and at least two and maybe three of these strange birds called legislative assistants.*

Then there is the speaker, deputy speaker, chair of committees, deputy chair of committees, whip, caucus chair and the vice chair of the public accounts committee.

Altogether, that’s 33 people out of a 44 member caucus in a 48 seat legislature. In any normal legislature, that would be just about all the Tory caucus.  That’s about the same number of people drawing extras as we saw in the last days of Roger Grimes’ crowd and in the late 1980s as first Brian Peckford and then Tom Rideout staggered toward the end of the 1985 mandate.

In both instances, the parties had been in power for more than a decade. The extra pay helps to placate people who might never get a shot at cabinet in a caucus that might not get re-elected to government again.

In other cases, the extra pay is a way of keeping the peace among a restless and ambitious crew.  Politicians without much to do – and that would be most of the Tory caucus these days – have a disquieting tendency to spend their time brooding and plotting.  A few bucks can go a long way to distracting the potential revolutionaries from their course or co-opting a perceived rival.

But does any of that fit?

Maybe yes. 

Maybe no.

There’s more to the Davis announcement than the couple of paragraphs in the release. Sometimes with these things it takes a while for the story to emerge.

 

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*  There could be another one, by the by.  There’s also a passing reference to one for Joan Burke.  It's hard to tell if this is an elected member or – as would normally be the case – a reference to a political staffer called the legislative assistant.  The staffer is the one who helps the minister or house leader manage the administrative aspects of the House.

Bristol collapses owing more than $6.0 million

The unexpected collapse of regional marketing firm Bristol leaves a string of secured and unsecured debts totalling more than $6.0 million.

The company has unsecured debt of more than $3.2 million and secured debt of $2.8 million. The details are contained in documents filed in Moncton with the Office of the Superintendent of Bankruptcy and posted to the Chronicle Herald website.

Most of the creditors are media outlets the company had not paid for advertising placement. Bristol went into receivership owing NTV, Newfoundland and Labrador’s major private television broadcaster, more than $105,000, for example. Newspaper publisher TransContinental is owed more than $300,000 in various headings.

Other unsecured creditors include:

• the City of St. John’s, which is owed more than $27,000,
• the Progressive Conservative Party of Newfoundland and Labrador ($2,000),
• Fortis Properties ($104,056.60, possibly for rent for and renovations to its St. John’s offices), and
• Halifax Metro Centre ($83, 726.33),

Bristol also owes $1.7 million to the Bank of Nova Scotia and $1.125 million to Business development Canada.

Unpaid staff wages is over $229,000.

The bankruptcy filing lists more than $4.4 million in accounts receivable of which it expects to be able to recover $2.2 million. Total assets, including machinery, furnishings and securities totals $2,825,000.

That leaves $3,284,669.36 in debt that isn’t covered by any assets.

The Newfoundland and Labrador registry of Companies shows the following directors for Saga Investments, the holding company that owned Bristol:

• Rob Crosbie
• Richard Emberley
• Darell Fowlier [sic]
• Paul Kent
• Louis Leger
• Brian Mersereau
• Larry Nelson
• Noel Sampson

Some elements of Bristol date back over 30 years.  Bristol Communications began life as Saga Communications in 1976.  It changed its name to Bristol in 1992.

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The past in our digital present

What happened yesterday is a way of understanding what is happening today.

Here’s a macro retweet of @suenew – King’s professor Sue Newhook:

You can't understand new digital world without a grasp of history: invu with @stephenfry http://ow.ly/2gt2C

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Three-on-a-match and then some: another failure of taxpayer cash give-away policy

The list of failures is growing for the Williams administration give-aways of public money to businesses.

In late 2008, Progress Software received $325,000 in an interest free loan from the Williams administration.  The company was supposed to add 10 new software engineering positions to the company’s operation in St. John’s.

The company closed its St. John’s office less than 18 months later without adding any new employees.  NTV and the Telegram reported the story this month but neither version is available online.

According to the Telegram, the provincial government is looking for the money back.  The company has agreed to repay it but to date there’s no sign of any cash.

The story is all too familiar. 

In May, the Telegram reported that Kodiak received an $8.0 million interest free loan of taxpayer cash from the same government fund – the Business Attraction Fund -  to add 75 new positions at its boot-making factory in Harbour Grace.  Instead, the company slashed its workforce.

There’s no word on whether the provincial government has sought repayment of any of that money at all.

Bond Papers readers will recall SAC Manufacturing.  That company went belly up a mere four months after it received a total of $675,000 in taxpayer cash from the provincial government. 

According to the province’s auditor general, the money would likely have to be written off.  In late 2009, though, the provincial government’s audited financial statements still showed the shares in SAC manufacturing and in another failed company on its books as assets.  That fourth company – Consilient – figured prominently in an auditor general’s report criticising the way the Williams administration hands out business development cash.

Fortunately for taxpayers, sometimes these deals fall apart before the company gets the cash.Last month, taxpayers watched  - likely with jaws agape - as natural resources minister Kathy Dunderdale entertained a proposal from a bankrupt company seeking $52 million to take over the defunct paper mill at Grand Falls-Windsor.  Neither Dunderdale nor her officials seemed to know what was going on until the story broke about the bankruptcy and the company withdrew its offer.

The litany of failure stands in stark contrast to the 1995 EDGE program.  At a cost to date of $17 million, the program has produced between 1500 and 1600 jobs.

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A view into the afghan War

1.  A leaked document describing events at Combat Outpost Keating and Observation Post Fritschie is posted at the New York Times website. The Taliban attack occurred on 03 October 2009, opening at night with fire from a B-10 recoilless rifle.

2.  Part One of an interview conducted on 14 Oct 09 with a participant in the battle.

3.  Stills from COP Keating with some night vision footage at about 3:30 from the events on 03 Oct.

4.  Previous attacks on COP Keating turned up in a CBS News report on 05 Oct 09.

5. This video – labelled “Kamdesh Firefight 2010” -  appears to be an attack on COP Keating.

DFO doesn’t do research: the video proof

Here is proof from CTV that the Department of Fisheries and Oceans does not do fisheries research.

It is not like this story doesn’t have a number of angles that connect it to stories that are running locally like fisheries research, custodial management and deepwater oil drilling.

And that’s without even mentioning that – as CTV teases it up – this is about one of the most important marine biological discoveries in recent years  never mind that it happened offshore Newfoundland.

Have any local news outlets covered this story at all?  Maybe they have and your humble e-scribbler just missed the reports.

But if they haven’t covered it, you kinda wonder why not.

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9:35 AM Sunday Morning Update:  cbc.ca/nl has a story on the expedition  - finally - but the focus is on Memorial University.  There is no reference to any other participants in the scientific expedition even though it included participation from the Bedford Institute of Oceanography, the Spanish Institute of Oceanography, one other unidentified Canadian university and the Department of Fisheries and Oceans

The only reference to fisheries and oceans is the photo credit for one rather drab photo of a species of coral that the cutline identifies as being already known.

Here’s an example of the other photographs that DFO released [link to Montreal Gazette photo gallery] from the expedition.

Bond Papers brought you more detail on July 21.

Awesomeness Update:  CBC’s online story now includes Glenn Deir’s video report (last week’s Here and Now)  right at the start, embedded in the piece instead of off to one side.  The addition includes large colour photos from DFO’s handout set

This shows a few things, not the least of which is that your humble e-scribbler needs to find a better way to keep track of what is being broadcast locally.  The most important lesson though is that CBC’s website presence can really transform its coverage using both print (the web story text) and video (Glenn’s report) to something that is stunning to watch.  A rather bland still went up first but by Sunday evening, CBC had the piece in all its colourful glory.

Awesome!

Inaccurately accurate university enrolment trends

This past week, CBC Radio’s Morning Show interviewed Reeta Tremblay, Memorial University vice president (academic) about a Statistics Canada report on university enrolment for the period 2005-06 to 2008-09.

They did the interview – as host Jeff Gilhooley said in the introduction – based on CBC’s belief that enrolment was  going up.

Now where they got that idea is a mystery since the Statistics Canada figures – taken directly from enrolment figures at the province’s only university – have shown the trending consistently in every annual report they’ve delivered for the past three or four years. The trend is unmistakeable:  enrolment at Memorial University declined in the period.

In fact, the trending was so clear and undeniable that some of us wondered how the two foreign experts who delivered the report on Grenfell autonomy could have possible come up with their bullshit ideas about increasing enrolment when the trends (and the potential student population) were headed downward).

Turns out, those of us who questioned their report were right since even the Old Man himself had to abandon his 2007 election commitment in light of the facts.

But that’s another story.

The crowd at CBC must have been a bit surprised that Reeta Tremblay didn’t actually dispute the Statistics Canada numbers.  The CBC web story has a lede saying Tremblay contradicted Statistics Canada but the fact is she didn’t.  Tremblay just said that the more recent figure for 2009/10 would show a small increase in enrolment.

What Tremblay did do, though, is give credit to aggressive recruiting both at the graduate and undergraduate level for the change in direction. Where to begin untangling that foolishness?

Well, firstly, Tremblay might want to credit the recession with the uptick.  Once the rest of us see the full set of numbers, it might confirm a usual trend, namely that some people who get laid off go back to school. If there is an uptick in Memorial’s enrolment, the recession might have helped a wee bit.

Secondly, and more importantly, that increase in graduate enrolment actually is a mess in and of itself, as Reeta well knows.

Bond Papers readers will recall the sorry tale last March of grad studies dean Noreen Golfman trying desperately to paint lipstick on the pig of a problem she has with fellowships for her academic charges.

Beginning in the fall of 2010 – a period neither Reeta nor the crowd at Stats Can yet has figures for – new grad students won’t be getting any financial help from the university in the form of fellowships valued at $12,000 to $15,000.

The won’t be getting the cash because the senior administration at the university  - including coughreetacough – were forced to freeze the budget on financial assistance to masters and doctoral students in order to cope with a $2.0 million shortfall in the budget for that financial aid.

The budget is short because someone or some group of someones allowed grad school enrolment to balloon by 60% in a single year.  Interestingly that balloon came in the year Reeta cited as one that shows the university enrolment is up. 

But anyway, as your humble e-scribbler put it in March,

Freezing spending is not, as Golfman claimed, “sending the right signal about being fiscally responsible.” Rather it sends a signal that someone or some group of someones was so utterly incompetent that they let the situation develop in the first place. The university administration had to freeze the thing in place or face catastrophe.

Now this isn’t a big issue because you read it here.  It’s a big issue.  It’s such a big issue that…well… let’s let the head of the university professors association tell you, as he told people back in March:

"It means that it will be very difficult to attract graduate students to the university this coming year because when you're a graduate student you apply to different universities and see who is going to offer you the best package," [faculty association president Ross] Klein says. "It affects the stature of the university because the graduate programs are one of the things that raise the stature."

So while the issue about enrolment trends at the province’s only university may show an uptick in 2009/10, we do know that one of the causes for that increase produced a corresponding freeze in financial support for graduate students.

That is a much bigger story than the one CBC had.

And, in case, you missed it, the deeper story is a tale of managerial incompetence, not the rosy yarn of super-effective recruiting that the academic vice-president offered up to Jeff Gilhooley one morning last week.

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Traffic Drivers, July 19-23

1. There is a green hill (not so far away)
2. Telly web design sucks, kills RSS feed to popular content
3. Drill baby drill:  Dunderdale rebuffs Quebec concerns about border, offshore oil spills
4. Government website still POS
5. Scientists find new sea creatures near deep water oil exploration sites
6. New 500 MW intertie for NS and NB
7. The Irish Miracle
8. Forever blowing bubbles
9. Fragile economy – the Public Sector
10. Semrau guilty on one count, not guilty on others

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The Irish Miracle

From a Globe and Mail article on some of the human consequences of the Irish economic disaster:

After almost 20 years as Europe’s strongest economy, during which hundreds of thousands of Polish, British and North American immigrants flocked to Dublin for work, the Irish are once again a nation of emigrants. Moving abroad, a response to the economic calamities of the past 170 years, has once again become the way out of an impossible situation at home, and is creating a new Irish diaspora.

Statistics show that the shift from an immigrant-receiving population to a largely outgoing one began just as Ireland suffered the continent’s most precipitous economic collapse – a freefall that began with the collapse of a real-estate bubble, which in turn set off bank collapses and government-debt emergencies. The result has been double-digit unemployment.

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Telly web design sucks, kills RSS feed to popular content

While most readers here liked to click out to links at the Telegram,  the design geniuses at TransCon have decided they don’t need the traffic.

With the new sucky design for the Transcon websites in the province, they’ve eliminated the RSS feeds for columnists and blogs. As such, your humble e-scribbler can’t give you the easy links off to the latest content from Wangersky, Wakeham, Griffin or Meeker. The feed for news turns out to be the feed to local news only. 

Oh well.

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Offshore board releases complete #oilspill response plans

From the Canada-Newfoundland and Labrador Offshore Petroleum Board:

“The CNLOPB wishes to advise that Operator Oil Spill Response Plans will be available to the public upon request, and the plans will include oil spill trajectory model information and oil spill response management information that had previously been redacted.

Redaction of this information had been done based on advice given to staff, but the decision to release the information now is being made in the interest of the public’s right to know.

The CNLOPB committed to make Oil Spill Response Plans available to the pubic and to redact only the information that falls within a classification of being either personal, proprietary or security sensitive information.

Copies of the plans are available on request by e-mailing information@cnlopb.nl.ca”

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Drill, baby, drill: Dunderdale rebuffs Quebec concerns about border, offshore oil spills

In a letter to Quebec natural resources minister Nathalie Normandeau, Newfoundland and Labrador deputy premier Kathy Dunderdale said that the provincial government had no plans for a moratorium on oil drilling offshore and dismissed any question about the interprovincial border in the Gulf of St. Lawrence.

The Montreal Gazette reported Wednesday on the exchange of correspondence between the two ministers in a story that highlights the border dispute and its impact on oil exploration in the Gulf.

According to the Gazette, Normandeau wrote Dunderdale to ask what measures were contemplated in light of the disaster in the Gulf of Mexico.

Dunderdale replied that Newfoundland had adopted "new oversight measures," had no plans for a moratorium on offshore drilling, and noted Normandeau's reference to a " 'cross-border geological structure,' by which I assume you are referring to the Old Harry prospect."

There’s no clear indication when the letters flew back and forth but the provincial government’s position has been clear since the Deepwater Horizon rig exploded in late April.

Premier Danny Williams dismissed calls for an offshore drilling moratorium in early June.  As in his remarks in early May, Williams focused on three fields in the north Atlantic.  He ignored other areas including the Gulf of St. Lawrence where the Old Harry field promises to match or dwarf Hibernia in size.

Williams referred to meetings he held in Calgary with officials of two companies operating offshore Newfoundland and Labrador.  As CBC reported,

The premier said he's confident the companies are doing everything possible to prepare in case a similar situation ever happens off the province's shores.

"I also asked them to elaborate for me on what additional measures have been put in place and am actually in the process of preparing a list and would only be too delighted to provide a list of the safeguards that were in place and the additional safeguards that are being put in place," Williams said…

It was not clear from the context of his comments if he was meeting with them in his capacity as premier of the province or as their de facto partner in offshore oil development. In some respects that wouldn’t matter since under some conditions of the Hebron agreement, Williams is legally obliged to follow the position dictated by the oil companies to oppose any new regulations that would  - in the opinion of the oil companies – adversely affect Hebron development.

Corridor Resources holds exploration permits from Quebec and from the Canada-Newfoundland and Labrador Offshore Petroleum Board for the Old Harry field.  Work on the permits has been hampered by a dispute over the border between Quebec and Newfoundland and Labrador and by the absence of a jurisdiction arrangement between the Government of Quebec and the Government of Canada over the seabed resources in the Gulf.

While Danny Williams has been focusing his public comments on the distant offshore – and downplaying the implications as a result -  a spill from any future Old Harry development could have disastrous consequences.  This map, produced earlier this year, shows a map of the British Petroleum spill superimposed on Old Harry.

The dashed lines represent interprovincial boundaries but, for Newfoundland and Labrador,  only the one between the province and Nova Scotia is formally in place.  The boundary with Quebec shown in this map has never been formally adopted.

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Scientists find new sea creatures near deep water oil exploration sites

Scientists from the Department of Fisheries and Oceans, three Canadian universities and the Spanish Institute of Oceanography have discovered marine life previously unknown to science in international waters offshore Newfoundland.

The team has turned up two species of coral and six types of sponge living thousands of feet below the ocean surface.

The researchers are investigating 11 specific areas offshore that collectively cover  a portion of seabed  one and a half times the size of Prince Edward Island. The areas examined include Sable Gully, the Flemish Cap and the Orphan Knoll.

The Flemish Cap is a relatively shallow area and a well-known fishing ground. The Orphan Knoll is in much deeper water about 500 kilometres east of St. John’s.

Almost a dozen areas around the Flemish Cap and the Orphan Knoll received protections by the Northwest Atlantic Fisheries Organization after the United Nations passed a resolution on vulnerable marine ecosystems. Research from this trip will be used to determine if those protected areas need to be refined or expanded when they are reviewed next year, and could determine future fishing policy.

The Flemish Cap, marked in the picture below with a red “X”, and the Orphan Knoll, outlined with a red dashed line, are also prominent features adjacent to areas currently open to oil exploration.

The team is using remotely piloted vehicles as part of a 20 day expedition.  Some of the dives have been to depths of 3,000 metres.

Information collected during the expedition may help to understand temperature and chemical changes in the ocean over the course of the last 1,000 years.  Some of the corals found may live that long.

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Related: “Agency withholds key elements in plans for spills” Postmedia News, July 21, 2010

There is a green hill (not so far away)

So with Jay going over the hill in Ottawa, speculation is starting about who else is going to leave Stephen Harper’s fold before the next election.

But with an election expected in this province in October 2011 (barring any sudden developments), speculation is likely to start mounting about which of the local pile of politicians won’t be running again.

Just in the interests of getting the discussion started, here’s a list of some of the local Conservatives your humble e-scribbler expects to depart before the next provincial writ drops:

• Kathy Dunderdale
• Tom Marshall
• Dave Denine
• Diane Whelan
• Roger Fitzgerald

There are undoubtedly others, especially the ones relatively long in the tooth and up for a chunky pension.

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The Cutting EDGE

Introduced in 1995, the Economic Diversification and Growth Enterprises program – known as EDGE – is the most successful economic development program currently offered by the provincial government.

According to an article in the March 20 issue of the Telegram,

The province estimates that EDGE has created 1,500-1,600 jobs over the years. The government has forked out $17 million in rebates to employers under the program. Those rebates are linked to things like provincial income tax, payroll tax and corporate income tax.

Roughly 40 municipal governments also signed on to the EDGE scheme, providing their own tax relief to qualified companies.

Within the past five years alone, 30 companies have applied for support under the program and two thirds were accepted.

Compare that to the hand-out programs introduced under the current administration.  Of the $75 million budgeted over the past three years, the programs have only managed to give away $14 million;  of that amount $8.0 million went to a company that promised to increase its workforce but in the end cut jobs.

The provincial government is reviewing the EDGE program to see how it can be improved. Currently 69 companies hold EDGE status.  A further 54 held the status at one point but no longer qualify.

As the Telegram described the EDGE program:

To be eligible, a company must create and maintain 10 new permanent jobs in Newfoundland and Labrador and make a minimum capital investment of $300,000 or have incremental annual sales of $500,000.

Tax incentives are provided to EDGE-designated companies for a period of 10 or 15 years, followed by a five-year period of partial rebates.

Part of the program’s enduring success is the philosophy behind it. EDGE recognised the changed global economic circumstances and placed its greatest emphasis on encouraging the private sector to develop innovative, globally-competitive industries that could survive without extensive government cash support.

The background to the program is contained in a public consultation paper released in the summer of 1994.  The main sections of that document are reproduced below.  in light of the current government policy and the review of EDGE, it would be useful if more people in the province were aware of an economic development philosophy that continues to deliver strong results almost two decades after it first appeared.

Excerpts from: 

Attracting new business investment: a White Paper on proposed new legislation to promote economic diversification and growth enterprises in the province

(June 1994)

1.0  BACKGROUND

The Strategic Economic Plan for Newfoundland and Labrador, which was released in June of 1992, outlined the economic challenges facing the Province and charted new policy directions to guide economic development over the long term.

The Strategic Economic Plan noted in particular that the globalization of economic activity and the liberalization of world trade presents significant new export opportunities for manufactured goods and commercial services. Technological advances made in transportation and communications over the past decade, combined with the shift towards a more knowledge based world economy, have also reduced the relative importance placed on geographic location for many industries and firms, and this has created further opportunity for the development of new products and services. At the same time, however, these trends have brought increased international competition for economic activity, not only in the development of new products and services, but in respect of many of our existing industries as well.

These profound changes in global trade patterns, investment flows and technology constitute the driving force behind the fundamental economic restructuring that is now occurring in many countries. In an increasingly competitive and knowledge based world economy, it is clear that we can no longer rely on traditional approaches to attract new business investment and expand existing business enterprises. We will, out of necessity, have to become more outward looking in our approach to economic development and create an appropriate investment climate that supports international competitiveness.

It must also be recognized that the private sector is and will continue to be the engine of economic growth. This is a key principle embodied in the Strategic Economic Plan and reflects the reality that the private sector is the most effective vehicle through which lasting economic wealth and employment opportunities can be created for the people of this Province. It is the role of government in this context to create the economic climate in which private sector investment can occur and be successful.

2.0       GOAL

The goal of attracting new business investment as a means to create additional employment opportunity for the people of this Province is not a new concept. Indeed, various governmental incentive programs have met with measured degrees of success over time in this regard. However, the rapidly changing global marketplace and the province-wide impact on the economy resulting from the collapse of the groundfish fishery have heightened the need to significantly improve the attractiveness of the Province to the private sector as a place to invest and prosper. New business investment directed at economic diversification and general economic growth is not only an objective but an imperative at this juncture of the Province's history.

The Government of Newfoundland and Labrador intends to adopt bold and innovative measures to transform the Province into one of the most attractive locations - not only in Canada but in all of North America - for new business investment and to take aggressive new steps to market and promote the Province's strengths in this regard on a national and international basis.

The main elements of this new program will be reflected in legislation to be known as "An Act to Promote Economic Diversification and Growth Enterprises in the Province". This legislation will be presented to the House of Assembly for its consideration in the fall of 1994 and will provide an enhanced "business friendly" regime for new and expanding business enterprises in the Province.

3.0       SCOPE OF PROPOSED LEGISLATION

3.1      Eligibility

New business enterprises wishing to establish in the Province and existing businesses wishing to expand their enterprises will be eligible to receive a range of special business development incentives, provided that certain conditions are met. These will be in addition to any other incentives the enterprise may be eligible for under other assistance programs established to encourage business development in the Province.

To qualify for the special incentives, an enterprise must meet the following tests:

• The proposed new business activity must have the potential to bring substantial new or expanded business investment and employment to the Province.  Only those projects involving capital investments of at least $500,000 and having the potential to generate incremental annual sales of $1.0 million, as well as creating and maintaining at least 10 full time permanent jobs in the Province, may apply to Government for access to the special incentives.
• The proposed new business activity must be consistent with the objectives for economic development that are embodied in the Strategic Economic Plan.
• Reasonable assurances must be available to demonstrate that the proposed new business activity, in the absence of the special incentives, would not otherwise be pursued in the Province. This test is intended to ensure that incremental economic activity will be stimulated by the new incentives.
• The proposed new business activity must not be directly competitive with or have an adverse impact on the viability of other businesses already established in the Province.   This will ensure that existing business enterprises will not be placed at a competitive disadvantage relative to those companies and investors who are able to take advantage of the new incentives.
• The proposed new business activity must have the potential to generate substantial value-added economic benefit to the Province.

Both new businesses and existing businesses expanding their operations will be eligible for the special incentives. However, in the case of existing businesses, only those elements of a company's operation which are incremental to its existing scale of operation will be eligible for the incentives.

3.2      Review and Approval Process

Companies seeking the special incentives available through the new legislation will be required to provide documentation in the form of a comprehensive business plan to allow for a thorough assessment of its proposal. The specific requirements in this regard will be outlined fully in the legislation.

Particular attention will be given during the review process to the commercial viability of the proposed business activity over the long term. It is not the intent of the legislation to artificially support new industries or new business activity in the Province, but rather to attract and assist in the development of viable and sustainable economic enterprises and employment opportunities for the long term benefit of the people of this Province.

All applications received under the new legislation will be reviewed by a committee of Cabinet Ministers chaired by the Minister of Industry, Trade and Technology, with final decisions on eligibility to be made by Cabinet. Part of the process in making a determination as to whether or not the special incentives will be granted to a company will involve a public notice procedure whereby Government will invite interested parties to make submissions respecting all proposals received. This is intended to ensure that all proposals are available for public scrutiny in respect of their potential competitive impact on existing business enterprises and jobs. Appropriate steps will be taken to protect the proprietary and commercial interests of the company when this public notice procedure is invoked.

While all proposals made to Government under the new legislation will be thoroughly assessed to protect the general public interest, Government is committed to a timely review process such that potential investors are not unduly delayed in the implementation of their business plans. Once the committee of Cabinet Ministers is satisfied that it has all the information it considers necessary to properly evaluate a proposal, a decision will be rendered by Cabinet on acceptance or otherwise of a company's proposal within 60 days.

Successful companies will be expected to enter into a formal contract with Government in which the Province will guarantee the benefits provided in the new legislation and the company will bind itself to implement the business proposal as accepted by Government. Notification will subsequently be given to the House of Assembly of all such contracts entered into, and ongoing monitoring of their terms and conditions will be carried out by senior officials.

3.3      Incentives Available through the Legislation

3.3.1    Taxation Incentives

The private sector is presently faced with a relatively high burden of taxation which impedes new investment and the creation of new employment opportunities in the Province. While a number of significant changes to the existing business tax structure have been made by Government in a number of areas in recent years, the entire taxation regime requires further attention if it is to be used as a means of promoting the Province as a highly competitive location in which to do business. Accordingly, the following taxation incentives are proposed for those companies qualifying for assistance under the new legislation:

(i) A full tax free holiday for ten years in respect of provincial corporate income tax, the health and post-secondary education "payroll" tax, and retail sales tax.

(ii) Further relief in these specific tax areas for an additional five year period on a reduced scale, commencing in the first year at 80% of total taxes payable and declining by a factor of 20% each year thereafter.

Municipalities will also be given the necessary legislative authority to grant full property and business tax exemptions on the same basis as outlined in (i) and (ii) above with a majority vote of the respective municipal council. At present, municipalities do not have the legislative flexibility to offer tax relief to individual companies to the extent contemplated herein.

3.3.2    Productivity Incentive

All new and expanding business enterprises experience a significant "learning curve" during the formative years of their operation. Part of this process inevitably results in a productivity "loss" that is incurred by the company at all levels in the organization.

To offset part of this productivity "cost", the Province will provide financial assistance to new and expanding business enterprises in an amount of $2,000 for each full time job created in the Province during its initial five year operating period where the company employs a resident of the Province to permanently occupy the job from the time of its creation.

Appropriate provisions will be included in the legislation to protect the pubic interest in the event of failure by a company to fulfil the conditions upon which the productivity incentive has been granted.

3.3.3    Labour Relations Incentives

A new approach to labour-management relations is required to attract new investment and stimulate new business enterprises in the Province. Government remains fully committed to ensuring that adequate safeguards are in place to protect the legitimate interests of employees and unions. However, it is in the broader public interest to achieve this objective in a balanced manner that also assures those who wish to make new business investments and provide economic opportunity in the Province have a reasonable prospect of receiving an acceptable level of return on their investment without undue risk from uncertain labour relations conditions.

Pursuant to a commitment made in the Strategic Economic Plan, Government is presently developing a comprehensive consultation document which will address various concerns respecting the general labour relations regime in the Province. While the intent will be to develop consensus on changes necessary to make the general labour climate more favourable for all businesses, Government believes that extraordinary measures are required beyond this if new business   enterprises   are   to   be   stimulated   in   the   increasingly competitive global economy.

Government's proposal in this regard is to make available different Labour Relations Act provisions to new enterprises wishing to establish in the Province and to do so in a manner that will not affect the application of current labour legislation to existing businesses. As well, any existing business where a bargaining agent has been certified for the employees of that company prior to the time it wishes to expand and take advantage of the special incentives under the new legislation will not be eligible for the labour relations provisions of the legislation. Considerable difficulty from a number of perspectives would be encountered in applying two different labour relations regimes to a single business operation, as one firm could have two separate collective bargaining processes, labour contracts and wage rates applying to employees doing the same kind of work. Accordingly, the labour relations provisions of the new legislation will apply to new business start-ups only.

The main  features of the proposed  new labour relations provisions are as follows:

a.  All collective agreements entered into between a company and the bargaining agent for the employees will remain in force for a period of at least five years, unless the contract entered into between the Province and the company in respect of the business undertaking as a whole expires in a period of less than five years.

b.  In circumstances where a company and a bargaining agent engage in collective bargaining but are unable to reach a collective   agreement,   a   special   panel   consisting   of   a representative   appointed   by   each   of  the   parties   and   a chairperson appointed by the Minister of Employment and Labour Relations will establish a collective agreement by addressing those specific matters in dispute at the time the matter is referred to the panel.

c.  Where a company and a bargaining agent are unable to conclude a collective agreement and the matters in dispute are referred to a panel, the company will not be permitted to lock-out the employees and the employees will not be permitted to strike.

d.  A panel, in concluding a collective agreement, will take into account the following factors:

(i) the overall policy objective of the new legislation which is to create conditions favourable to the establishment of new businesses and the expansion of existing businesses in the Province (this factor will be given paramount consideration by the panel);

(ii) the effect of the agreement on the profitability of the business;

(iii) the terms and conditions of employment of employees in occupations in the same or similar businesses both within and outside the Province, with consideration to be given to geographic, industrial, economic, social and other variations that the panel considers relevant;

(iv) the need to establish terms and conditions of employment that are fair and reasonable in relation to the qualifications required, the work performed, the responsibility assumed and the nature of the service provided; and

(v)      the needs of the employer for qualified employees.

e.  An agreement concluded by a panel will be binding on all parties.

f.  The panel will be required to conclude an agreement no later than 90 days after disputes are referred to it for resolution.

g.  Every collective agreement entered into between a bargaining agent and a company, including an agreement concluded by a panel, will contain provisions:

(i) requiring the application of progressive work practices in the work place including the use of composite crews;

(ii) relating to wages and to wage increases of employees during the term of the agreement, but those increases will not be permitted to exceed the percentage rise in the consumer price index as reported by Statistics Canada for that area; and

(iii) respecting the final and binding resolution of disputes without work stoppage.
Notwithstanding the provisions outlined above, where a company and a bargaining agent both agree that it would not be in their collective interest to apply the labour relations provisions of the new legislation in its entirety or in part, then those provisions will not apply to the parties concerned. Similarly, in circumstances where a panel has concluded a collective agreement, the parties concerned may, where they mutually agree, vary any term or condition the panel has applied, provided that such agreement does not offend other applicable provisions of the new labour relations regime.

3.3.4    Access to Crown Land

Crown land that a company may require to implement its business plan as approved by Government will be leased to the company for a nominal sum of $1.00.

3.3.5    Appointment of a Facilitator

Upon the request of a company, Government may appoint a person, either from within or outside of Government, to assist the company in obtaining governmental permits, licenses, options for use of Crown assets, and any other authorizations that the company may be required to obtain in connection with its business. This will expedite the processing of all applications for regulatory approval of the business plan and thereby allow the business plan to be implemented in a timely manner. The responsibility for actual decision-making in these areas will, however, remain with the appropriate regulatory agency.

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New 500 MW intertie for NS and NB

New Brunswick Power and Nova Scotia Power are looking at the prospect of building a new 500 megawatt connection between the two provinces.

The Chronicle Herald estimated the connection would cost $200 million when they reported on the potential interconnection earlier in July.

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Forever blowing bubbles

We are in a bubble. I think we are in a protected bubble.

That’s Danny Williams making a few observations at the close of the most recent session of the provincial legislature.

It’s not the first time Williams talked about bubbles.  He said the same thing in October 2008 as the world headed into the worst recession since the Great Depression in the 1930s:

We now, for the first time in our lives, are in a bit of a financial bubble and that's a wonderful thing. We have that protection and the people of this province got the support of the provincial government

Williams even claimed during that call to a radio open line show that “[h]opefully our [budget] surpluses will continue, hopefully they'll get even larger, it will enable us to do the things that we've been doing. I mean this, for us this hasn't happened overnight. We've been preparing for this.”

Then the talk of surpluses and bubbles disappeared. 

You see, bubbles are wonderful things,  all pretty and shimmery in the sunlight.

But bubbles are flimsy and insubstantial.

Bubbles have a distressing tendency to burst.

And in the case of the Williams economic bubble, the whole thing burst quite spectacularly.  The provincial gross domestic product dropped 22% in 2009, or 10.2% in real terms as RBC assessed it. Deficit spending became the new order not just for the day but for the years to come and cabinet ministers openly admitted provincial government spending was unsustainable.

Now for those reasons alone it was nothing short of bizarre to see Williams return to the complete nonsense that somehow the province – let alone the provincial government – had emerged from the recession safely wrapped in some sort of bubble. It was even more bizarre to see Williams repeating this line:

However, when I look at what is happening here in Newfoundland and Labrador, the fact that we do have our debt reduced,…

It’s bizarre because it simply isn’t true.  The total public sector liabilities remain as high in 2009 as they were at just about any point in the last five years.  Even the net debt – government’s favourite misleading measure – increased as the 2009 cash shortfall sucked up a half billion dollars of cash the government had laying about and which had previously been used to offset government’s liabilities, even if only paper.

Williams went even beyond those crazy remarks, claiming that the previously unfunded pension liabilities had been addressed.  Of course, that isn’t correct either.  As Budget 2010 forecasts, the unfunded pension liabilities will increase in the current fiscal year just as the net debt will increase.

So aside from a decidedly unhealthy dose of self-delusion, it’s pretty hard to tell what the Premier was getting on with in the House of assembly only a month or so ago.

The prospect of a second and prolonged recession  - widely discussed for some weeks now – only makes the premier’s claims that much harder to fathom. If the United States economy slows down again, then the Newfoundland and Labrador economy will follow suit.  Williams’ own economic policies have seen to that.

If economist George Athanassakos turns out to be right, things in Newfoundland and Labrador could be even worse:

Economies are still extremely vulnerable to speculative bubbles and dips and increased volatility. The panic of 2008 and the subsequent rescue packages did not provide the necessary catharsis that recessions bring to economies. Demand for broader reforms has also waned as a result of the rescue of the economy from the panic of 2008. If this were not enough, economies have become addicted to low interest rates and to liquidity infusions.

Rather than being protected by a bubble, Newfoundland and Labrador may be more vulnerable to a second economic downturn than other parts of the western world. First of all, more and more of the local economy under the Williams administration is based on unsustainable public sector spending.*  Second of all, the metro St. John’s area housing explosion  - even as it subsides – has been built on public sector spending coupled with low interest rate policies. A second recession will likely kill both of those simultaneously.

Incidentally, the most recent figures from Statistics Canada suggest that the construction boom in Newfoundland and Labrador isn’t a commercial one. 

Investment in all categories of non-residential building construction peaked in mid to late 2008 and declined steadily in 2009 until it flattened for the past three quarters.  The pattern shows up in the total provincial number (the long red line on top) as well as in the St. John’s-only line (the blue long line with diamond shaped data points)

Even as spending on the Vale Long Harbour project, Hibernia South and Hebron ramp up in 2012, they won’t be able to offset a decline through all other sectors of the economy. And that’s even allowing that oil prices don’t drop thereby putting development of Hebron in some doubt.

The forest industry is a pale shadow of what it was even a half dozen years ago.  The fishery is mired in restructuring talks. In any event, the industry is woefully short of the capital investment needed to sustain itself let alone retool for global competition. Destroying Fishery Products International and selling off its most useful and lucrative assets will prove to be one of several catastrophic policy failures of the current administration.

Mining may be doing reasonably well in the year ahead, but a second global recession will also adversely affect commodity prices.  Even if oil prices remain at current levels, declining production over the next two to three years will reduce government revenues significantly.

Meanwhile, provincial government cash deficits in 2010 and again in 2011 would rapidly eat up whatever cash reserves are on hand. A significant economic downturn through the latter half of 2010 and into the 2011 election could force the government into a difficult financial position likely meaning spending cuts and wage freezes.

The province is not protected by a bubble.  It is subject to the same forces that affect the rest of the world. Far from insulating the provincial economy from global forces, government policy has left the province in a more precarious position than it has been in two decades.

That’s the thing about bubbles.  Like delusions, they have a tendency to burst in the most unsettling way imaginable.

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* The growth in the provincial public service in recent years is not just a relative growth owing to a decline in other sectors, like forestry. From labradore:

In the past decade, the absolute numbers of people in NL who work in the provincial public sector — the provincial civil service, public health care, social service, and education system, and public post-secondary education institutions — has increased by 35%.  Not only is that the largest increase, start to finish, of any of the ten provinces, for most of the decade, NL has topped the chart in terms of the growth rate. And, starting in 2006, that growth curve spiked steeply upwards, with annualized growth of up to seven percent per year, unmatched by any other province except, starting in the second half of 2008, Prince Edward Island. [Emphasis added]

Semrau guilty on one count; not guilty on all others

A Canadian Forces court martial found Captain Robert Semrau guilty of behaving in a cruel or disgraceful manner on Monday but found him not guilty second degree murder, attempted murder and negligent performance of a duty.

The infantry officer faced charges arising out of the death of a wounded insurgent in Afghanistan.

Under s. 93 of the National Defence Act, an individual “who behaves in a cruel or disgraceful manner is guilty of an offence and on conviction is liable to imprisonment for a term not exceeding five years or to less punishment.”

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Government website still POS

It’s July 19, 2010 and while the Department of Government Services has updated its website design, the whole thing is still aimed at browsers which no longer exist.

Now if you manage to find a browser that this antiquated website will recognise, stand by for an even bigger yuck.  The site was designed to work best with Internet Explorer 5.5 set to a screen resolution of 800 X 600.

Your humble e-scribbler last pointed this embarrassment out in July 2009.

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Fragile Economy – The Public Sector

Last week, labradore comments on the size of the provincial labour force occupied by the provincial government public sector.  He capped it off with a chart (below) showing a comparison for all 10 provinces over the past decade.

All this brings home one of the points made here earlier this year in a series of posts on the increasingly fragile state of the provincial economy. More the provincial economy is dependent on trade with a single market, namely the United States.  There are fewer private sector industries driving the economy and, at the same time, provincial government spending has assumed an increasingly large role in the economy as a whole.

If you extend the picture back over the three decades for which data is available, you can see both the persistent over-reliance in Newfoundland and Labrador on public sector labour compared to the situation in other provinces as well as the increase in the public sector labour force over the past three years.

These charts go a long way to demonstrating the extent to which popular perceptions of local prosperity  are entirely wrong.  Whatever is going on locally is most certainly not the result of private sector economic development.

Rather there are more public servants making more money, 20% more, in fact over the most recent four year contract.  Couple this with the dramatic increase in overall provincial government spending – upwards of 60% in four years – and the picture is unmistakeable.

Those who want to talk about prosperity in the province or those who want to celebrate the province’s “have” status would do well to look at the three provinces with the smallest proportion of their labour forces working for the provincial government.  It is no coincidence that those provinces with the strongest economies are also ones in which the public sector labour force is a relatively small proportion of the overall working population.

That doesn’t mean that public servants and public services are unimportant.  Rather, the situation in Newfoundland and Labrador demonstrates the extent to which successive provincial governments in Newfoundland and Labrador – but most particularly the current one – have failed to create the climate in the province for sustainable economic development let alone diversification of the local economy.

What makes the current administration stand out, though, is that increasing the role of the public sector in the economy, whether through NALCOR or through admittedly unsustainable growth in public spending, is openly stated as the goal.

The fact that observers outside the provincial government have repeatedly failed to notice that this is occurring is another matter.  No surprise, though, that if they cannot even correctly identify the trend to growing fragility, they may not pay any attention at all to the very serious implications from policies that promote the hollowing out of the province’s economic underpinnings.

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Success by the wrong measure

As you’ll discover fairly quickly in reading a Telegram story on class sizes, the idea of capping the number of students per class is aimed at improving student achievement:  more of them will pass;  they’ll get higher grades; that sort of thing.

In other words, by giving each classroom teacher fewer students to work with, you improve the chances that each student will do better in school.  You can measure that a number of ways, one of which would be the national testing administered in Grades Three, Six and Nine.

So it is more than a bit odd that the very first sentence in the story says this:

School enrolment numbers suggest the provincial government's plan to cap class sizes has been mostly successful.

The number of students in a school isn’t a measure of success for capping the size of classrooms.  It’s one of the things that can influence the outcome  - better performance by each student – and it is a factor that varies despite the efforts of school administrators.

After all, as the story acknowledges, “[f]rom June to September, for example, a lot of things can change, he said. Children can move away from a certain school or a certain area; children can move into an area.”

So this story doesn’t do anything but tell us all that the people working at school boards managed to put enough teachers in classrooms to hit a target ratio of students to teachers.

That’s nice but it doesn’t really mean they achieved the goal, which, you may recall, was about ensuring students did better in school.

Where’s the measure of that?

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