Outside the box: up the harbour and down the shore

Remember March?

Yeah the month, not the former ombudsman who could apparently travel in Newfoundland and make phone calls from Nova Scotia simultaneously.

March: just a few short months ago when Danny had the Lieutenant Governor read a Throne Speech so fulsome with its praise for our Glorious Golden Boy and his Golden Achievements that everything in Newfoundland and Labrador would soon be leafed, paved, lacquered, glazed and otherwise covered in the most precious of metals.

Yeah, well now its June.

Forget the Gold crap.

These days, the Premier is feeling a bit beleaguered, at least if a piece that aired recently on CBC is anything to go by.

The piece is a solid, straight-up reporting that looks at the issue of the Premier's election promise of "jobs, jobs, jobs" with what has actually been going on.

The Premier's own take on things doesn't really have an evident shred of optimism. Rather the Premier appeared to be speaking defensively: gimme credit for saving the place from imminent bankruptcy. We have things going on that no one can control. In the meantime we are working on planning to plant seeds for future growth.

Interestingly enough, the province was never facing imminent bankruptcy - that was the Premier's fiction. The other factors he mentioned were specific to the issues facing some companies in the fishery alone. The same factors - like Chinese competition and high exchange rates - don't affect other economic initiatives or don't affect other industries in the same way.

The segments with the Premier were an interesting clue to Danny Williams' current state of mind. If March was manic, then June is borderline depressive.

The whole thing reminded me of a piece I wrote in late 2003 or early 2004 for the Sunday Independent about the Premier's "jobs, jobs, jobs" agenda. At the time, no one knew how Williams would run a government. People were looking ahead with a sense of curiosity at what the New Approach would actually look like.

What was pretty clear in 2003 was the province could get out of its budget woes with some careful planning and with the continued economic growth coming from the offshore and Voisey's Bay. We all knew that growth was coming. Danny knew it too and that's why he ran the election on the up-note of growth.

What no one knew was that oil would hit US$70 a barrel and the cash would be pouring in at a rate no one in the province had ever seen before. That allowed Danny Williams to avoid making a whole bunch of good decisions and to crank up spending to unprecedented and, and in light of the economic slowdowns, likely unsustainable heights.

These days, though, there is no mistaking the point that the provincial government is in a hard spot. There are some factors in the economy that are beyond Williams' control. The stuff that is within his purview either foundered for one reason or another or simply have never existed.

And that goes to the core point of this piece from shortly after the 2003 election: government needs to focus on what government does.

In largest measure, since 2003 Danny Williams has focused his considerable talents in areas where, as Premier, he simply can't have an impact. He has been trying to run in the business sector rather than applying his managerial skills to running a government that will in turn create an environment where the private sector will develop the economy.

If he wanted to create jobs, he should have stayed in the private sector and put together the deals to create jobs and generate wealth. Instead, we have wound up with a mismatch between Danny Williams' considerable skills and the challenges at hand.

Worse still, the centralising tendency of government bureaucracy merely reinforces the most pernicious attributes of Williams' own hands-on leadership style. This has slowed down government's processes such that many policies are done one at a time rather than in parallel. Government has slowed to the point where it has taken three full years to get even the vaguest idea of some policy areas - like widening Hydro's mandate - and others, like the role and impact of the Business department or Danny Williams' own economic development seeds still haven't been seen at all.

When Danny Williams said his government has been pre-occupied with other things besides economic development, he was telling the truth. That situation is the problem and there is no sign it is being overcome or changed.

Running government is like drinking from a four-inch fire hose. The most important thing for an incoming administration is having a way of figuring out how much to drink so it can avoid getting drowned. An incoming administration has a list of the things it definitely wants to accomplish and sets to work on them right away. For everything else there is a framework that identifies what is important, what is not important and gives a guide that helps triage the stuff that pops up along the way.

In a sense, we are looking at a Premier and a government, three years into its mandate, that is increasingly being driven on some major issues instead of doing the driving. It's a variation on the idea discussed in another "Outside the Box" column from early 2004. Back then, it looked like those columns were just penetrating insights into the flipping obvious. In hindsight, the observations seemed to be all too relevant.

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Up the harbour and down the shore

If Danny Williams wants to solve the government deficit problem by producing new jobs, as he said he would, he will have to create something between 50, 000 and 100, 000 new jobs in the province over the next eight years.

To put that in perspective, there are about 219, 000 full-time equivalent jobs in the province today according to the Economics and Statistics branch of the provincial government. Since 1996, the economy produced about 31, 000 new jobs. To meet his commitments, Danny Williams will have to produce twice or three times as many jobs in the next eight years as the province could create in the past eight.

And he will have to do that while providing increased health services to an ageing population, providing education, services, roads, water and sewer and all the other things people expect from the provincial government. And he can'’t lay off government employees or increase the deficit.

Sounds impossible?

It is. Just look at our collective experience in the province and you can see why making promises like "Jobs, Jobs, Jobs" is nothing short of silly. Politicians seem to forget that whenever government tries to create jobs, it fails and fails miserably.

Stupidity, someone once said, is doing the same thing over and over and hoping for a different outcome. To stop being stupid, politicians need to focus not on creating jobs - something they can'’t do - and focus on politics, something they can do.

That'’s why, a decade ago, the provincial government decided to get out of the job-making business. It decided the best it could do is creating a climate where entrepreneurs - – people with ideas - – could focus on making jobs that last. There was a bit more to it, though. The regional economic boards were supposed to be a way to let people in the different areas of the province decide for themselves what they would do to develop their local economy.

The boards were also part of a wider move toward more regional control over a number of things, including health care and education. After all, politics is about who decides. In a province as big as this one, with a very small population, the "who" who decides often shouldn't be someone hundreds or thousands of kilometres from the issue. One major problem is that it has been hard to wrestle power out of the hands of bureaucrats and politicians in St. John's who want to keep deciding just about everything, right down to who can and cannot ride the local school bus.

But the logic remains. Take Eastport, for example, or other areas of the province where local fishermen have had a greater say in how the resources they depend on are managed. They make sensible decisions based on science, their own knowledge and their own interests. They virtually eliminate poaching. They close fishing in areas where it needs to be closed and develop new ways to improve the price they get for their product.

Maybe it is time to take these ideas a step farther and create a form of regional government that promotes economic development and administers health care, municipal services, education and even social welfare programs. New regional councils, elected regularly, would sort out local priorities and make decisions on that basis. The provincial government can look after setting broad strategic goals, much like the federal government set down basic principles for Medicare and then lets the provinces actually deliver the services. But the decisions on where hospitals go, or indeed if a new hospital is actually the best way to deliver health care in that particular region are left to the people who will be directly affected.

Transferring power for some decisions from St. John's to new regional governments wouldn't be a magical solution to job creation or anything else. It also won't guarantee equal success everywhere. What it will do is involve more people in deciding what the future will look like in Newfoundland and Labrador. In an odd way, a new approach of regional government - a county system - might help people realise that the issues up the harbour are much the same as the ones down the shore or in the four distinct regions of Labrador.

For the provincial government, those politicians can look at projects like Voisey's Bay or the offshore for the government revenues they generate, rather than the number of jobs. The deficit problem might just get sorted out by thinking outside the box for a change.

Equalization: the Experts Report; Williams reacts

Some months ago, we predicted a war among the province's over Equalization reform.

There have been some skirmishes as the forces gathered, most notably Ralph Klein's ludicrous claim that if Ottawa touched Alberta's natural resource revenues, then Alberta would leave the Equalization program. The only thing this bluster demonstrated was that Klein has no idea how Equalization works.

A few more shots were fired Monday with the release of the report by the Expert Panel on Equalization and Territorial Financing. Premier Danny Williams doesn't like the report at all, claiming Newfoundland and Labrador would lose $200 million annually in Equalization payments.

In an effort to discredit the report before Newfoundlanders and Labradorians had a chance to read it, Williams described the report as having "Ralph Goodale's fingerprints all over it". He called the report nonsense, and true to form, some commentators are backing Williams with nothing more than Williams condemnation.

Still, Williams insisted he was confident that Prime Minister Stephen Harper would do the right thing and not implement the report. He gave no reasons to justify his optimism.

The panel on Equalization and Territorial financing, appointed in 2005, comprised five experts in federal provincial fiscal relations. It was chaired by Al O'Brien, the former deputy finance minister in Alberta and included Fred Gorbet (Strategy Solutions), Robert Lacroix (CIRANO), Elizabeth Parr-Johnson (Parr Johnson Consultants) and Mike Percy (U of A Business School).

Their report is a comprehensive survey of the current issues in Equalization and includes recommendations based on almost two years of consultations. There is a simple description of the Equalization system itself and the basic objectives of the program. If nothing else, the comprehensive nature of the report reflects the considerable abilities and varied perspectives of the five panelists who authored it.

The Government of Newfoundland and Labrador did not make a submission to the panel during its consultations. New Brunswick and Saskatchewan did.

In the section on resources, the panel recommended two things in particular that are of interest to Newfoundland and Labrador.

First, the panel recommended using actual revenues to calculate entitlements, as opposed to the current estimating system. This creates a problem since it penalizes provinces who actually collect royalties below the national average and rewards those provinces taxing above the average.

Second, the panel recommended shielding half of resource revenues from the calculations, irrespective of whether those resources are renewable (like hydro power) or non-renewable (such as oil and gas). This was felt to be an acceptable compromise between total inclusion which was seen as not giving provinces benefit of the resource development and the unfairness of full exclusion which would create a situation in which some provinces had considerable revenues that were not being taken into consideration when calculating entitlements.

There are two specific sections of the report that will affect Newfoundland and Labrador. First, the panel recommends the inclusion of all resource revenues (renewable and non-renewable). There is also a specific recommendation on hydroelectric revenues which would collapse the existing approach into one using the actual revenues. The rationale is excerpted below.

13. All resource revenues should be treated in the same way.

The Panel sees no reason to distinguish between different types of resource revenues. Therefore, the treatment of all resource revenues should be the same whether those revenues arise from oil and gas, onshore or offshore resources, forestry, potash, other minerals, or hydroelectricity.

The measurement of fiscal capacity related to hydroelectricity deserves special mention. In most cases, provinces with substantial hydroelectricity resources have chosen to develop and distribute those resources through Crown corporations. For the most part, provinces have also chosen to provide electricity to their residents at low prices rather than charge full prices. Instead of capturing economic rent and generating government revenues, they give their residents the direct benefit of lower-priced electricity.

Under the current [Representative Tax System] RTS approach, a portion of provincial revenues from hydroelectricity is counted in one tax base (the water rentals base), while a portion of the profits of Crown corporations paid to provincial governments is considered in the same way as profits of private corporations. Some have suggested that this approach underestimates the revenue-generating capacity of provinces in cases where they charge less than the full economic value of the electricity.

The Panel considered a number of options for the treatment of hydroelectricity in the Equalization formula. Consistent with its position that all resource revenues should be treated in the same way, the current water power rentals base should be folded into a single resource revenue base and measured by actual revenues. In addition, the Panel recommends that the remittances from Crown corporations involved in resource extraction and development, including hydroelectricity Crown corporations, should be included as part of a province‚’s resource revenues and not as business income.

It is unclear what impact this change will have on Newfoundland and Labrador in the current situation or in a situation involving theLowerr Churchill development. Certainly the use of actual revenues, as opposed to estimates, eliminates the problem identified and resolved in the 1982 federal-provincial agreement on Upper Churchill revenues.

Second, the panel included a specific recommendation dealing with the offshore transfer agreements with Newfoundland and Labrador and Nova Scotia in 2005. There is also a sample calculation of how the cap would work. This is worth quoting in its entirety so there can be no confusion.

14. A cap should be implemented to ensure that, as a result of Equalization, no receiving province ends up with a fiscal capacity higher than that of the lowest non-receiving province.

Consistent with the Panel'’s principles, Equalization should provide equity among provinces. However, it should not result in less wealthy provinces having a greater fiscal capacity than provinces that do not receive Equalization.

The Panel'’s recommendations for including 50 percent of resource revenues in the Equalization formula will benefit receiving provinces with resource revenues. However, in some scenarios, a receiving province like British Columbia, Newfoundland and Labrador, or Saskatchewan could end up with a higher fiscal capacity after Equalization than a non-receiving province like Ontario. That runs counter to a fundamental principle of equity that should underlie any changes to the Equalization program.

Consequently, the Panel recommends that a fiscal capacity cap be implemented. To determine a province'’s post-Equalization fiscal capacity and whether or not it is entitled to Equalization, the Panel's view is that 100 percent of a province'’s resource revenues should be included in calculating a province'’s fiscal capacity for the purposes of the cap. If a province'’s resulting fiscal capacity is higher than that of the lowest non-receiving province, then its entitlement to Equalization would be capped. While some might suggest that less than 100 percent of resource revenues should be included in the cap for a variety of reasons, in the absence of reliable and comparable information, the Panel'’s view is that including 100 percent of resource revenues in determining a province'’s fiscal capacity for purposes of calculating the cap is appropriate.

The Panel understands that implementation of its recommended cap is complicated by the existence of separate Offshore Accords for Newfoundland and Labrador and Nova Scotia. In the case of Nova Scotia, its fiscal capacity continues to be lower than the lowest non-receiving province, so the cap does not apply. But in the case of Newfoundland and Labrador, the combination of resource developments in the province along with the Panel'’s proposed revisions to the Equalization formula mean that Newfoundland and Labrador'’s fiscal capacity (including own-source revenues, payments from Offshore Accords and Equalization) is expected to be higher than the lowest non-receiving province.

In the Panel'’s view, this contradicts a fundamental principle. It is not within the Panel'’s mandate to suggest that the Offshore Accords should be changed. However, we believe that the principle should be upheld. If Newfoundland and Labrador'’s fiscal capacity after Equalization is higher than the lowest non-receiving province, the cap should apply regardless of the Offshore Accords and the province should not receive Equalization payments that put them above the cap. The Panel understands that, under their 2005 Accord, Newfoundland and Labrador is protected from losses in Equalization payments. It'’s up to the federal government to determine how this should be resolved. In the Panel'’s view, the principles of Equalization should not be compromised nor should the Equalization program be adjusted to accommodate the Offshore Accords.

Would this approach cause a reduction in Newfoundland and Labrador's Equalization entitlements? The answer is almost certainly yes in the medium-term, once the Equalization system's transitional provisions come into force. Newfoundland and Labrador's entitlement in the next two to three years will decline in any event as its own source revenues grow from offshore oil, mining and other growth in the economy. This would likely amount to $100 to $200 million annually over the same time frame noted by Premier Williams on Monday, even without the expert panel's recommendations being implemented.

However, as the expert panel notes throughout the report, Equalization is supposed to decline as a province's own-source revenue grows and ultimately surpasses the national average to receive the federal transfer.

This notion is one of the fundamental premises contained in the 1985 Atlantic Accord and, to a large measure reaffirmed by the temporary nature of the transfers envisioned by the 2005 offshore accord. Premier Williams is simply wrong when he claims that there was a flaw in the 1985 accord on Equalization or that the accord was subsequently misapplied. He has been wrong before and the admission of one of his fundamental misrepresentations - that the province actually lost oil and gas revenues - is contained in the opening clause of the 2005 offshore deal.

There is no surprise that the Accord offsets were included in this panel report. The Bond Papers noted January 2006 that it would be difficult to keep these Equalization-related payments off the table.

As well, Bond Papers noted in February 2006 that Danny Williams proposed a different approach to Equalization in late 2005 that was at odds with the Harper proposal to remove non-renewable resources from the calculation of entitlements.

In his letter to federal party leaders, Williams proposed that Equalization be based on a formula which includes all provincial sources of revenue in calculating per capita fiscal capacity based on a 10 province standard. As a result, Alberta's economic performance would produce a significant cash result for this province. Williams also proposed that debt servicing costs be considered when calculating entitlements.

There is no explanation as to why Premier Williams appears to have abandoned his own proposal which are essentially similar to the recommendation of the expert panel to include all resource revenues.

Good governance: goose and gander

The Canada-Newfoundland and Labrador Offshore Petroleum Board regulates the offshore oil and gas industry. The senior administrative position is chairman and chief executive officer.

The provincial government is refusing to issue an order in council appointing a new chairman and CEO arguing that the positions should be slit as a matter of "good corporate governance." A panel appointed under the legislation governing the offshore board recommended the appointment of a single individual to the combined position but added a recommendation that both the feds and the province consider splitting the job. The key thing to bear in mind is that the panel performed its function and, as the legislation provides, its appointment is binding on both the Government of Canada and the Government of Newfoundland and Labrador.

The Board of Commissioners of Public Utilities, commonly called the public utilities board regulates a variety of activities in the province including electricity prices.

The House of Assembly just passed legislation establishing that the senior administrative position at the PUB will be a chairman and chief executive officer. "The chairperson shall be the chief executive officer of the board and shall have full authority for the overall operation, management and financial administration of the board."

So why is it good governance to split the job at one regulatory board but combine the two jobs of chairman and chief executive officer at another?

Doug House's speech

For some reason the abstract of a speech given recently by Doug House has attracted some attention. The speech itself isn't available online, but an abstract - a summary - is to be found at Simon Fraser University's Centre for Coastal Studies.

I say "for some reason" since, on the face of it, this paper did little more than describe the reality of the province currently. It's hard to imagine what is controversial or contentious about saying that "the current government finds itself under enormous pressure to prop up hurting communities, households and individuals through make-work, income support and the further overexploitation of endangered fish stocks. This vies with and threatens to undermine genuine efforts at rural industrial diversification from both government and community-based agencies."

Is this not the case? Is the Williams government not under pressure to provide make-work projects and income support?

Since people might be interested in what Doug has to say about other subjects, check out the rest of the Simon Fraser Centre's studies on oil and gas, coastal societies and similar topics. You'll find that back in 2000, Doug and a number of others with great experience in the local offshore oil sector discussed events in Newfoundland and Labrador over the past 25 years.

In the meantime, here's the abstract of House's latest speech. See if you find anything problematic or controversial in it.

Update: An alert reader noted in an e-mail that the St. John's Census Metropolitan Area accounts for about 35% of the population and holds about 34% of the seats in the House of Assembly.

The knowledgeable correspondent notes that as such "rural" parts of the province don't hold a preponderance of seats in the provincial legislature that is in any ways out of whack with the population and the allotment of seats.

Maybe the issue for House isn't with the preponderance of seats but rather that the demands for various government supports works against other efforts at economic development and diversification. That's the last sentence of the abstract in slightly different words.

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Oil, Fish and Social Change in Newfoundland and Labrador:
Lessons for British Columbia

Wednesday January 11, 2006

4:00 PM, Halpern Centre, Simon Fraser University

Abstract

During the past 20 years, the economy and society of Newfoundland and Labrador have been undergoing significant change. Oil, which has earlier been conceptualized as a "strong staple," has been in the ascendancy; while fish, a "weak staple," has been in decline. The places where the production of these two staples is centred have also changed significantly. Although exploration and production take place hundreds of kilometres offshore, oil company operations, most service and supply activities, research and development, education and training, and the public sector management and administration of this new industry occur almost exclusively within St. John'’s and the surrounding north east Avalon region of the province. The oil industry has also been a major catalyst for the growth of a marine technology cluster in St. John'’s, which also benefits from having Memorial University, the College of the North Atlantic, significant physical infrastructure, an airport, a harbour and the seat of government all located within a few square kilometres. Wealth, employment and population are becoming ever-more concentrated in this region.

At the same time, the decline in groundfish stocks, concern about shellfish stocks, and cut-backs to Employment Insurance payments for plant workers (but not fishers) have undermined the economic base of many fishing communities, the traditional outports of coastal Newfoundland and Labrador. People are leaving the outports, not just for mainland Canada but also for St. John'’s and the larger regional resource and service towns. Newfoundland and Labrador is rapidly becoming urbanized. Even the province'’s vibrant cultural industries - —music, drama, literature, film - —although drawing on a somewhat romanticized rural past are, with some notable exceptions, based in and contribute to the further growth of the city. More tourists flock to George Street than to Gros Morne or Twillingate.

What does all this mean for government decision-making and policy? Given the preponderance of rural seats in the legislature, the rhetoric continues to favour rural development. Although committed in principle to "real" economic growth in rural areas through better management of the fisheries and longterm industrial diversification, the current government finds itself under enormous pressure to prop up hurting communities, households and individuals through make-work, income support and the further overexploitation of endangered fish stocks. This vies with and threatens to undermine genuine efforts at rural industrial diversification from both government and community-based agencies.

Check out the Chicks

The Dixie Chicks new CD is great, and picks up on the spat from Natalie maines criticism of George Bush.

A good take on the PMO/news gallery flap

For those tripping over from RGL's latest ad hominem dodge, try this post on for size, from a fellow who styles himself Townie Bastard.

it's as simple and succinct a comment on the matter I have seen.

CNLOPB ups estimates of offshore gas and oil reserves

The federal-provincial board regulating the oil and gas industry offshore Newfoundland and Labrador today released revised estimates of the proven and probable reserves at two of the offshore fields that increase the total by about 700 million barrels.

The Canada-Newfoundland and Labrador Offshore Petroleum Board now estimates that Hibernia holds 1.244 billion barrels of oil, an increase of 379 million barrels. Hebron Ben Nevis now stands at 731 million barrels. That is 317 million barrels more than previously estimated.

Natural gas estimates for the offshore also increased. There are now estimated to be 10.234 trillion cubic feet of natural gas and 478 million barrels of natural gas liquids.

Among other implications, this means that the failed Hebron deal was likely worth twice as much to Newfoundland and Labrador as previously thought. Talks collapsed in early April over the provincial government's insistence on a 4.9% equity stake in the operating consortium and its rejection of $500 million in construction phase tax concessions.

Estimates in April were that the provincial government would have received over $10 billion in royalties and other income during the production phase of the project in addition to a considerable portion of the $3.0 to $5.0 billion to be spent in the construction phase.

It isn't clear if that revenue projection was based on the low-range estimate of Hebron at 400 million barrels or the upper part of the range - now confirmed - at over 700 million barrels. If the projection was based on the lower reserve estimate, then it would be safe to nearly double the provincial government revenue; that would have made provincial government revenues almost $20 billion, which is double the provincial accrual debt and approximately the same size as the annual gross domestic product. The tax concessions seem even more puny now than they did before.

The provincial revenue estimate apparently also did not include the 0.858 Tcf of natural gas or the 60 million barrels of natural gas liquids also present in the Hebron complex.

Placentia Bay no place for a tired ship's pilot

According to NTV News, the Atlantic Pilotage Authority (APA) is blaming crew fatigue for the accident that sent one of its two small boats (Left. Photo: APA) in Placentia Bay part way up the rocks on Buffett Island on Monday, injuring one crew member and causing an unspecified amount of damage to the $3.0 million aluminum hulled boat.

The APA pilots guide tankers laden with Iraqi and Grand Banks crude up the bay to moorings at the Come by Chance oil refinery or the Whiffen Head transshipment terminal. The picture at right shows the bows of Canship Ugland's tanker M.V. Mattea. (Photo: Canship Ugland)

Placentia Bay is no desolate place. There are bird colonies, rich fishing grounds and a host of other sensitive wildlife in the bay. A recent report supporting the establishment of an improved regional management system for the bay noted it is the most likely spot in Canada for a major oil spill.

So here's the thing: if the guys piloting their own small boat were so tired they put her up on the rocks on what appears to have been a calm, clear day, what's to prevent them from nodding off when they are guiding one of the tankers into or out of such a sensitive marine environment?

No one else seems to be thinking about that.

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Personal note: As indicated earlier my mother's family comes from Harbour Buffett, the harbour to which the wracked-up APA pilot boat was towed. She's a Collett and her father's family can trace back to Thomas who arrived in Buffett in the early 19th century. On her mother's side, the Marshall have an equally old - if not older - history in Newfoundland.

According to NTV, the guy who did the towing was named Stan Hollett. Stan is no relation to your humble e-scribbler, at least not for about five or six generations, but my mother recalled him from Buffett before the community was resettled. He apparently moved back some years ago and lives there pretty much year round. In itself, Stan's story is worth further investigation as is the history of the old community. It is picturesque, close to rich fishing grounds and once was a fairly prosperous little town.

In this instance, thankfully Stan and another fisherman were nearby to lend assistance to the APA. Otherwise this might have been a tragedy.

Another take on fastballs to the side of the head

Over at the blogspot site offalnews, Lono is feeling a bit smug.

He contends that Danny Williams "fastball to the side of John Risley's head comment is evidence that his comment about FPI is now proven. Essentially, Lono contends that John Risley should just have smiled quietly and gone on about FPI business rather than point out the obvious that Danny Williams changes to Fishery Products International's board and management won't have much of an impact other than drive up the company's costs.

He [Risley] stated the obvious truth: that these Act amendments are effectively meaningless. But now he's now left the door open for government to claim company resistance and impose real draconian measures. These comments can come back to haunt him.

The lesson here is that public communications is partly theatre and the players are actors on a public stage; play your role to best advantage to your side. If you respect the Fourth Wall, you can use it to your advantage to further your goals.

If you insist on breaching it you do so at your peril.

Here at Bond, there's a quandry. On the one hand Lono is dead right. On the other hand, we can also see an argument that Risley is merely belling the William's administration cat.

What will make the difference in these two interpretations is whether or not Danny Williams actually can take stronger measures against FPI without in the process either incurring legal challenges from the company or, worse still, cementing in place a reputation for being as anti-business and anti-investment as any political leader north of the Panama Canal.

Around here, the guess is that Williams and Risley are playing chicken and that this little tiff is just two capable leaders playing some game of "Mine is still bigger." It creates an interesting display for the on-lookers but ultimately it doesn't move FPI any closer to resolving its issues. Williams reaction is proof that Lono is right: i.e. that Risley was inviting a comment. What it doesn't show - yet(?) - is that Williams can actually fire a fastball at Risley's head and avoid a ricochet that will deliver a pretty solid smack to his own goolies in the process.

If you put your gear on the table and start passing out the hammers, at some point someone's tackle is gonna take a hard blow.

Update: John Risley did another interview today, this time an extended one-on-one with Fred Hutton at NTV for the supperhour news. He made a number of comments about how he personally and the current shareholders and directors of FPI have been vilified.

this little exchange with the Premier is likely to go on for a few days. Time will tell whether there is a big hammer the government will drop of if FPI has called the Premier's bluff on legislative changes to FPI.

Belling the cat

John Risley stated the obvious, namely that the government's changes to the Fishery Products International legislation won't have any significant impact on the direction the company will be taking.

Fish minister Tom Rideout (Left. Photo: CBC) couldn't say anything to contradict Risley because Risley is right. The section of the legislation dealing with how many board members FPI must have was stuck in there as a distraction from the real point of the bill. Rideout and Premier Danny Williams spent a lot of time talking about "fettering" the supposedly evil John Risley and another board member named George Armoyan.

For his part, Williams went so far as to brand Risley and Armoyan as being "hostile" to the best interests of Newfoundland and Labrador. In responding to Risley's comments Williams did his best to ramp up the trash talk, but ultimately he didn't say anything that was either relevant or convincing. Yep, as much as Williams tried to sound un-pussy-like, there's no question the noise we heard all through the little television clip was the dingling of the bell John Risley hung around the Premier's neck.

Now if Risley pointed out that Williams' legislation was really aimed at making it easier to break up FPI and sell off the bits - exactly the opposite of Williams' claims - then the noise would be a gonging so loud even the Premier's best jock bullshit trash talk wouldn't drown out the din.

Buffett back in the news

My mother comes from Harbour Buffett, resettled in the 1960s but once a prosperous fishing community on Long Island in Placentia Bay.

She was a bit surprised to hear this morning that a pilot boat had grounded on Buffett Island yesterday.

You can find some information and photographs about Buffett here at the Memorial University Maritime History Archive. The names and some of the people are all ones I recognized although I have no memories of Buffett myself. Masters, Butler, Wareham, Marshall, Upshall, Tulk, Hann and of course Collett, my mother's crowd.

Opposition Notes

Liberals: The party brass have anointed interim leader Gerry Reid as the new permanent leader.

Did Gerry have to pay the $10K required of Jim Bennett? Something tells me he didn't. In the meantime, check out the assessment at offalnews. I'd add to Lono's list that Gerry needs to punt Kel Parsons into the great beyond, but I doubt that will happen.

This is LCD politics at its finest. That's lowest common denominator, meaning that Reid is the guy who will make no changes to anything thereby making the entire caucus happy.

This sorry situation virtually guarantees the party will be lucky to hang on to four seats after the next election and many candidates will lose their deposits.

New Democrats: Lorraine Michael wins in as big a majority as can be imagined against a single opponent.

Jack Layton demonstrated this weekend that while he can sing, he does not have the grace and poise to learn how to pronounce the losing candidate's name properly.

Outgoing Dipper boss Jack Harris has been so cozy with his old law partner Danny Williams we may well see Harris' long-rumoured appoint coming through soon to something.

Given Jack's position lately, it was funny to hear him talk of presenting the Dippers as a "Principled Opposition". The party thus far has been neither principled nor has it offered much opposition. On two major pieces of legislation this past sitting, Jack Harris and Randy Collins voted to hand Danny Williams carte blanche to spend public money without any means of accountability. So much for principle, opposition or democracy for that matter.

Maybe the party will change its name to The New Party.

PJ Jazzy Jan

Alright, since none of you appear to be trivia nerds, here's the answer to the question about CTV reporter Janis Mackey Frayer's first television gig.

With a degree in international relations and French, CTV's journalist in Kandahar (Left. Photo: ctv.ca), started life on the Canadian cable channel YTV.


Under the name PJ Jazzy Jan (Right), she worked as a "Program Jockey" or PJ who filled the same role as a video jockey (VJ) on Much.





Janis carries on the fine tradition established by Canada's own J.D. Roberts (Left. Photo: ericaehm.com). J.D started life as a VJ on Much in the 1980s.


Today, John Roberts (Right. Photo: cnn.com) is a senior correspondent with CNN and was touted for a while as a potential replacement for Dan Rather on the CBS evening news.

So who did Workman piss off?

[Update. Original posting 26 May 2006]

In shuffling its overseas scribblers, CBC is sending Paul Workman to Kandahar for a year.

A year.

That is twice the deployment length of a Canadian soldier.

In Kandahar.

After spending a decade years in Paris, Paul's gonna have to do some serious attitude adjusting.

I mean this one is surely on the top CBC reporting gigs just like Alert is at the top of the list of places where Canadian Forces members are climbing over each other to get to.

Workman's replacement is Adrienne Arsenault who is heading to Paris having spent some time in the Middle East.

Nice reward.

Over at CTV, their reporter - Janis Mackey Frayer - in Kandahar did a stint in the Middle East. A bit less of an adjustment, to be sure.

(Friday trivia aside: Anyone remember Janis' early national TV gig? Her bio at the CTV site doesn't make mention of it.)

So inquiring minds will now be wondering:

who'd Paul piss off or otherwise annoy?

Update [27 May]: A couple of e-mails pointed out that this decision reflects a strong commitment by the Mother Corp to cover an important Canadian story.

Yep it does. It is also a marked difference between now and 13 years ago when the CBC sent its Moscow correspondent to cover Chechnya - alongside every other news outfit on the planet - rather than send anyone at all to cover Canadians in Somalia.

CBC's decision to send Workman out in the land of Caine and Connery also reflects a competitive issue - which I hinted at - what with CTV having a presence in theatre already and having deployed both Lisa LaFlamme and Janis to the country for some time. CBC's coverage has been good but sending in Workman reflects a commitment of resources.

Still, though, it's gotta be tough to go from Paris for 10 years (albeit with overseas stints every once in a while) to living 24/7 in Kandahar.

No answers so far on the Janis Friday trivia question. What did this international relations and French language graduate do as her first gig in television?

Must be an English thing

Long-time readers of these e-scribbles will know that your not-so-humble scribbler is known to play the euphonium once in a while.

Before the format change, there was a link to euphonium.net, a site maintained by Steven Mead, a professional euphonium player in England. Any resemblance to yours truly is accidental, although he is a dead ringer for a cousin of mine.

All this is an excuse to post the picture at left, which is of a euphonium, specifically a Boosey & Hawkes model.

In the 33 years I have been torturing others playing, I have never seen the euphonium associated with anything even vaguely suggestive, let alone erotic.

I venture that my relatives who played generations before I was even on the planet never saw the horn as arousing in any way. They missed the obvious pun.

Popular culture reinforces that. Trumpets. Saxophones. Drums. Guitars. All manner of instruments and musicians seem to be associated with sex and sexiness in some way.

But not the lowly tenor tuba.

Until now.

This picture must have originated in England where the euphonium is popular.

So for a Friday afternoon in May, this is a post in a lighter mood.

Completely blind dorks Purists will note this lovely young woman is not holding the instrument correctly.

Every activity includes that sort.

Like the accountants at a party who listened as a fellow told an off-colour joke, the thrust of which involved the rhythmic movement of hips accompanied by chanting "nickel-dime-quarter-buck." The frustrated character in the joke tosses out the chant in favour of "dollar forty, dollar forty, dollar forty".

The guy telling the joke said "dollar thirty-five, dollar thirty-five, dollar thirty-five" at the punch line.

The accountants corrected his math and then laughed.

Ah well. It takes all sorts.

In the meantime, I'll just admire the raven-haired lovely, noting, of course that her embouchure is not bad and her fingers are in the right position.

Harper wants to be mayor of Vancouver

Apparently controlling street racing in a major Canadian city is the next big thing for Stephen Harper to tackle.

Stephen is the Prime Minister of Canada. If he wants to be Mayor of Vancouver or Premier of British Columbia he should quit and run for the job.

Talk about the federal government intruding on an area of provincial jurisdiction...

FPI not alone: Sanford affected by high dollar

New Zealand fishing company Sanford has been affected by the relatively high New Zealand dollar as well as international competition.

How the company is dealing with the situation is contained in the 2005 annual report, and in a story from the New Zealand Herald.

Sanford has also looked at innovative information management approaches to help reduce costs, control inventory and generate more revenue.

To listen to people in Newfoundland and Labrador, Fishery Products International is the victim of some plot.

Others, like federal fisheries minister Loyola Hearn subscribe to the view that there are no deep-seated problems in the fishery. There are just some difficulties with some companies which will be sorted out in due time.

Both are delusional, of course, albeit in different ways.

In the meantime, look at the fishery globally and then take another look at FPI and the local industry.

The bumpf that comes out of meetings like the one Wednesday just isn't as comforting any more, is it?

Another Sanford tidbit: closing areas of the offshore to trawling

Catch a Newfoundland and Labrador fishing enterprise taking this kind of stand on the environment:

The seafood industry announced today a proposal to close off Benthic Protection Areas (BPAs) to bottom trawl fishing, said the managing director of Sanford Limited, Eric Barratt. Mr Barratt was speaking on behalf of the New Zealand companies involved in deepwater bottom trawling. "This is by far the largest total closure to bottom trawl fishing within an EEZ [exclusive economic zone] ever undertaken in the world."

FPI viewed from down under

Sanford is an international fisheries business based in New Zealand. The company holds about 14.97% of FPI's outstanding shares.

In the ongoing political bumpf about Fishery Products International, people keep forgetting the presence of Sanford in the shareholder pool as well as the place its managing director, Eric Barratt, holds on the FPI board.

Purely for the sake of information, here's the FPI section from Sanford's 2005 annual report. Note two things in particular. First, the major shareholders cannot support the share price in the marketplace by increasing their investment because of the limitations in the FPI Act. After all, a good way of showing confidence in the company's medium- to long-term viability is for the major shareholders to increase their holdings.

Second, note reference to the problems Sanford is experiencing in its own primary division. What FPI is experiencing is a global problem and the problem is one best solved by the business owners, not government bureaucrats and politicians.

Check out the annual report, as well, for a discussion of Sanford's investment in Chinese processing. As a successful publicly-traded company, Sanford has been able to grow and diversify over the years. It does so as a New Zealand enterprise and a large part of its success must surely be attributable to the absence of the level of paranoia and political interference that is currently plaguing the Newfoundland and Labrador fishery.

The section of the Sanford annual report reproduced below might just provoke consideration in some minds that maybe investors were attracted to FPI in 2001 not because they could break it up and destroy the company, but because they saw greater potential in what the company could become. The post-2001 FPI leadership may well have made some mistakes, but since 2003 FPI has experienced a level of political interference in its business that would have it difficult for any leadership team to operate successfully.

As a successful, diversified private sector company, Sanford offers a good model for FPI. Unfortunately, in the Wednesday Great Gab-fest, few people floated the idea that maybe - just maybe - the way to move the fishery in the province from its current state to one of a successful locally-dominated industry would be to get guys like Premier Danny Williams, Tom Rideout and Loyola Hearn out of the process.

Instead, the three politicians seem hell-bent on doing the opposite, and in the event will be repeating the same fundamental mistake of virtually every government in this province since 1949.

With rare exceptions, Newfoundland and Labrador politicians are pathologically incapable of make sound business decisions. That is because, collectively, they cannot be interested in anything beyond their political personal survival. The election in October 2007 will be ever-present in the minds of Williams, Rideout and their fellows in the months ahead. As a result, the fundamental needs of the fishing industry will go untended as their political needs take precedence over all else.

What might the assembled throng have concluded if, for once, they took a look at the local fishery from another perspective, perhaps the perspective from down under?

Extract from the Sanford 2005 annual report:

In Canada income trusts dispose of their surplus operating cash flow usually on a monthly basis and the income trust holder is required to account for the income tax on that return. In the normal equity market there is no ability to pay imputed dividends so the income trust structure provides a more tax advantageous situation compared to equity investment. Over the past three years there have been many Canadian companies that have converted all or parts of their business into income trusts.

FPI proceeded on the basis that it would convert its mainly United States-based marketing and added-value business(Ocean Cuisine International) into a Canadian-based income trust and float income trust units for 40% of the business and retain ownership of the remaining 60%. The Government of Newfoundland and Labrador believed that such a float required their approval. Although the company did not believe that to be the case it sought the provincial government'’s approval. This process took over 12 months by which time the Canadian federal government'’s review of the tax status had been announced and a float was no longer viable.

Part of the proceeds of the float would have been used to repay some of the debt in the FPI primary fishing business. This business is suffering in much the same way as our fishing business. The increased value of the Canadian dollar compared to the United States dollar is threatening the viability of their operations.

Two fish processing plants have had to be closed down and written off in the past 12 months. With the poor underlying primary division results, the write-off of two plants and the write-off of the not insubstantial costs of preparing for the income trust, the Company results have been poor. As a consequence, the limited share trading that has taken place has seen the share price fall to a low of C$4.11 but which has since been trading at C$5 per share. The existing four major shareholder groups are prevented from purchasing additional shares and supporting the share price because they are up against the provincial government legislation restricting ownership to a maximum of 15%.

While the Ocean Cuisine operation has been expanding and has good prospects for the future, the FPI Directors are focused on actively restructuring the business and believe that with a net asset backing per share of C$11.00 per share that further value can be gained from Sanford'’s investment.

The Directors decided to write down Sanford'’s investment by NZ$2.2m as an expense in the current period. The shares are now valued at C$7 in our books which the Directors believe to be a fair value. Both Sanford and Ocean Cuisine continue to benefit from our marketing arrangement which has seen further growth in our trading business.

Status quo not an option: Williams

Predictably, Premier Danny Williams thinks huge progress was made at yesterday's summit/town hall/audience on the fishery.

This sort of meeting usually ends a process, capping off months if not years of private discussion, wrangling and hopefully agreement. If you're the guy calling the meeting at the start of the process, then you are usually either trying to pull a fast one or setting yourself up for a huge fall.

So what is the consensus coming from the meetings? Why that there is plenty of agreement on things that amount to PIFOs: penetrating insights into the obvious.

Take a gander at the CBC News story on the Big Meeting:

Premier Danny Williams says there was a consensus at Wednesday's fisheries summit that the industry is not in a complete crisis, but it does need major restructuring.

Knock me over with a feather. We need to restructure the fishery? Geez, these guys accomplished a lot in 11 hours of meetings at taxpayer expense.

"We have acknowledged collectively that status quo in the fishery in Newfoundland and Labrador is not an option," said Williams.

Yet more rocket scientist conclusions. This is like acknowledging that the sun came up this morning.

The premier said there was an agreement among participants that everyone has to do a better job of selling fish product on the international market and the size of the industry needs to be concentrated, with fewer plants and workers.

Now tell me you heard that conclusion somewhere before: fewer people need to be involved in the Newfoundland and Labrador fishery. This is pure gold. No one said anything like this before.

Yesterday's meeting did produce what some might consider an odd meeting of the minds. Earle McCurdy, head of the hunter-gatherers' guild, and Danny Williams, local corporatist political supremo, are in complete agreement on the need to take control of Fishery Product's marketing arm, possibly as a Crown corporation. The two guys who bitch about other people wanting to break up FPI are in fact the guys wanting to pull off the smash and grab.

Meanwhile, Fish, Food and Allied Workers union president Earle McCurdy said he is supportive of the premier's idea to create an industry co-op to take over the profitable marketing division of Fishery Products International.

There didn't appear to be much support for this sort of idea from anyone actually involved in marketing seafood, but that doesn't matter.

What matters is that the Big Giant Meeting with the Big Giant Head of Newfoundland and Labrador produced amazing results never before seen on the planet.

The official news release said so, in pre-approved, vacuous terms of bureaucrats and dissembling politicians.

Loyola Hearn trumpeted his government's capital gains tax break for fishermen as a way of helping with the crisis. Earle McCurdy wanted to see government money spent on his members. Ditto fish processors looking for cash to bail them out.

Yep all remarkably new and special and splendiferous.

And if you want to know how much wasn't accomplished yesterday?

Look at how hard the Premier and all his posse are trying to convince you that they split the fisheries atom over the course of 11 hours at a ritzy hotel. It's sadly very much the norm for Danny Williams: big flash; no delivery.

Too bad that status quo was not an option.