Money helps

Advertising and even public relations have a reputation for costing big bucks.

While most times that doesn't have to be true, there are times when money makes all the difference.

Take the Sony campaign for its new high-definition LCD television, Bravia. Sony gained attention with an expensive campaign built around the use of coloured balls as a way of showing the sharp picture and dynamic, brilliant colours its new television displays. Here's the copy from the website:

When you're introducing the next generation of television, you want to make an impact - but that doesn't mean you have to shout at the top of your voice. And it doesn't mean you have to be predictable. To announce the arrival of the BRAVIA LCD and 3LCD range, we wanted to get across a simple message - that the colour you'll see on these screens will be 'like no other'.

Sending 250,000 multi-coloured 'superballs' bouncing down the streets of San Francisco may seem the strangest way to do this, but that's exactly what Danish director Nicolai Fuglsig did for the BRAVIA commercial in July this year [2005]. San Franciscans have seen some unusual things in their time, but even this gave them something to talk about. And we've got the feeling that this commercial is going to do exactly the same thing.

The result was this:



Flip to the Bravia site linked above and you can find the thing in high definition versions as well. There is also some back story on making the long version of the spot.

This year's spot is equally stunning. Rather than balls, Sony's ad company took over an abandoned block of council flats in Glasgow and used pyrotechnics and 70,000 litres of paint to create an equally awesome minute-and-a-bit.

Again, take a look at the high-def version as well as the five minute background piece at the bravia-advert.com site. It's worth the trip especially to appreciate the sound of the paint falling at the end, like rain.

In the meantime here's a version on youtube.com:




What these spots do is use a very expensive set-up to tell a very specific story. But the whole thing fits together as a package that matches perfectly with Sony's brand, with it's reputation for superlative quality.

Advertising doesn't have to be expensive, but sometimes - as in this case - it is the only way to do the job - like the product and the company - like no other.

Our place in Canada

The Fraser Institute report issued on Wednesday contains food for thought.

Bond Papers already noted the information on the share of provincial revenue that is transferred from the federal government. The earlier post contains links to the news release and the report in pdf format.

The report contains a table comparing Employment Insurance (EI) contributions to benefits paid, by province for Fiscal Year 2003. Newfoundland and Labrador generated $233, 000, 000 in contributions.

However, recipients claimed $752, 000, 000 in benefits that year. The total included $540, 000, 000 in regular EI benefits and $212, 000, 000 in special benefits. The latter category includes maternity and parental benefits, compassionate benefits and benefits paid to fisheries workers.

All four Atlantic provinces received more in EI benefits than in contributions generated, but Newfoundland and Labrador was by far the leader. The total (benefits less contributions) for the three Maritime provinces combined was $483, 000, 000.

In some respects, the low level of contribution in Newfoundland and Labrador reflects the relatively low average per capita income. In 2005, the average per capita income was $25, 872 in the province.

Face-slapping and eye poking

Shawn Skinner, parliamentary assistant to Premier Danny Williams and lately the premier's chief translator told a radio audience in St. John's this morning that Premier Williams apologized if people in Quebec took offence at his remarks but the remarks stand.

Several weeks ago, Williams said that Canada should invest in his Lower Churchill project rather than Quebec because of Quebec's volatile political situation.

The comments caused a political storm in the Quebec National Assembly. It appears Williams and Quebec Premier Jean Charest discussed the comments during Charest recent trip to St. John's to attend a funeral.

Skinner told the province-wide radio audience Williams is standing by his assessment and referred to two referenda on separation as evidence of Quebec's unstable politics.

Skinner's comments are an effort to handle the fall-out from a Radio-Canada story headlined "Danny Williams fait volte-face" [Danny Williams does about-face].

Despite Skinner's best efforts to further inflame the political relationship between Quebec and Newfoundland and Labrador, there is no mistaking Williams' comments now both in French and English:

"If there was ever an opportunity for two premiers who are friends ... and have a mutual respect for each other to accomplish this particular deal, it will be myself and Jean Charest," Williams said.

"And I'm now saying, 'Quebec, work with us on this,' " Williams said.

Being a fan of classic slapstick, Jean Charest is reportedly holding his hand between his eyes to stop the next eye poke.

-srbp-

Haec tibi dona fero

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

- Danny Williams, April 2001, acceptance speech on winning

the Progressive Conservative Party leadership

Few people likely noticed those words when Danny Williams uttered them. That is, no one noticed them buried away as they word in a very long-winded speech.

Few people likely understood the meaning of them and certainly, when Bond Papers posted them a short while ago, quite a few readers e-mailed to question either the accuracy of the quote or the meaning.

Rest assured the quote is entirely accurate and Danny Williams' meaning - both then and as his consistent actions have shown - could not be more plain.

As much as Danny Williams likes to talk about developing a province which is self-reliant, economically self-sufficient and of making the people of the province masters of their own destiny, his actions have consisted of a relentless pursuit of increased federal transfer payments to the Government of Newfoundland and Labrador.

His first, and so far only, major political success was in securing an offshore revenue deal with Ottawa. However, the January 2005 deal was not based on increasing the provincial government's revenues from offshore oil and gas. Rather it was, from the outset, an effort to increase the amount of federal tax dollars pouring into the Newfoundland and Labrador treasury.

Never mind that Williams claimed Ottawa was receiving royalties from oil development offshore Newfoundland and Labrador. Never mind that some people still believe that falsehood and that Williams has repeated it as recently as this past weekend. The truth of the matter is contained in the 2005 agreement itself:

2. This document reflects an understanding between the Government of Canada and the Government of Newfoundland and Labrador that:

Newfoundland and Labrador already receives and will continue to receive 100 per cent of offshore resource revenues as if these resources were on land;

Danny Williams political career has been a single-minded pursuit of getting his country to do more.

The reality of Newfoundland and Labrador's fiscal situation is clearly shown in a report released Wednesday by the Fraser Institute. The report proposes a change in taxation, but in the opening section, the report's authors show the relative position of the positions when it comes to percentage of government revenues derived from federal transfers.

In Fiscal Year 2005, the Government of Newfoundland and Labrador received 42% of its total revenue from federal government hand-outs, up from 40% the previous fiscal year.¹ This is the highest in the country. Four other provinces - Manitoba, Nova Scotia, Prince Edward Island and New Brunswick receive between 30% and 39% of annual revenues from Ottawa. The other provinces receive between 10.4% (Alberta) and 17.9% (Saskatchewan).

That needs to be put in a proper perspective. In 1991 - in the depths of a recession and on the eve of the cod collapse - the provincial government received 44.6% of total revenue from Ottawa. Two years later, the figure was 46%.

However, by Fiscal Year 2004, the relative portion of the provincial government revenue from federal transfers had declined to 33%. This was a result of both changes to federal transfers and improvements in the Newfoundland and Labrador economy, most notably in oil production. Equalization, the ultimate federal hand-out had declined by 2004 to 20% of total revenue from an average of 30% in the decade before.

By the same token, in the past two years, federal transfers generally have increased in part as a result of decisions taken by the former Paul Martin administration. However, the share for Newfoundland and Labrador has been relatively small. The major increase - over $300 million in FY 2005 - has resulted solely the 2005 offshore agreement.

In some measure, Danny Williams weekend tirade reflects his concern that the federal government will undermine his deliberate policy of increasing provincial dependence on federal transfers. Danny Williams singular accomplishment in the past three years has to restore the provincial government to a fiscal position within Canada it has not seen since the darkest days of the 1990-era recession.

Successive provincial governments in Newfoundland and Labrador have sought and end to most transfers, particularly Equalization. Dependence on federal transfers severely limits the provincial government's ability to develop the economy, reduces its capacity to provide services and generally undermines its political authority within its own jurisdiction. Former federal cabinet minister John Crosbie could tell Brian Peckford and Clyde Wells to stop biting the hand that fed their administrations solely because it was true. His hand did feed them.

Brian Peckford's goal in pursuing offshore resource jurisdiction was an end to that ignominy. He first used the term "masters of our own destiny" and when he said it, the objective was clear. He may have failed to gain jurisdiction, however the Atlantic Accord (1985) provided the provincial government with all the management and revenue tools to use oil and gas as an economic engine for the government and for the province.

Similarly, Clyde Wells' Strategic Economic Plan and government spending reforms were aimed at economic self-sufficiency. Wells implemented, among other things, a series of measures that reduced the provincial debt and steadily reduced the percentage of debt held in volatile foreign currencies. By 2003, and despite the Tobin misadventure, the Williams administration inherited a provincial government that was substantially better off than it had been at any point in the preceding decade and a half.

The Fraser Institute report contains simple information that makes the current situation plain. In a mere three years, Danny Williams has managed to unravel the steady progress to genuine self-reliance of a decade and a half. He has restored Newfoundland and Labrador to a position of fiscal dependence on the Government of Canada not seen in over a decade.

Not contented with this accomplishment, Williams is now seeking to increase federal transfers to Newfoundland and Labrador, already the highest in the country as a percent of provincial revenue. If his Labrador hydro venture succeeds, Williams will either double the provincial accrual debt load or, through federal loan guarantees, increase dependence on Ottawa by an unprecedented order of magnitude.

Few people will likely miss the meaning of Danny Williams' words in the future as easily as the did in 2001.

____________________________

¹ The Fraser Institute report shows the figure as 58.7%. This includes the $2.0 billion one time transfer under the January 2005 agreement. The figure given above is obtained by re-calculating the percentage without the advance offshore payment.

Reckoning correctly

The Globe and Mail editorial today correctly assesses the situation in Newfoundland and Labrador.

It's time for the Premier to stop acting as if everyone were out to cheat his province and to look for genuine solutions to the offshore dispute, to equalization reform and to other issues too important to be used as demagogic fodder.

Tough words but true ones.

Read the whole editorial. It explains succinctly why it is going to take more than a blue version of the province's name surmounted by three deely boppers to undo the negative branding the Premier has already given the province.

Sure Danny's Pitcher Plants worship various parts of the Premier's anatomy and prove their devotion in their daily calls to local open line shows. But there's a huge difference between people who get their ideas delivered from Danny's publicity machine and the enterprising men and women of the province trying to do business with the rest of the world despite the steady stream of Dan-trums.

Oh yes, and having heard the politically ambitious Kevin O'Brien fall over himself talking about brands and logos, it is possible to conclude only that O'Brien doesn't known logo-arse from his brand-elbow.

Logo = image; O'Brien got that far. Brand = reputation.

Sadly for all of us, it's the Premier's reputation - and hence the province brand - that sucks in far too many quarters where it counts.

If that wasn't enough, anyone who heard O'Brien on Wednesday's version of Open Line found a guy who likely has covetous eyes for Danny's job compare Newfoundlanders and Labradorians to a bunch of company employees.

Does that mean the Minister thinks we are all a bunch of poorly educated children working in an Asian sweatshop? We can just imagine what O'Brien is telling the companies he is trying to lure here, let alone what companies they are.

It almost goes without saying, of course, that Kevin also needs a course in Democracy 101.

But that's another story.

Equalization, the offshore deals and the current racket

As noted here a few days ago, there are some blogs that veritably scream for comment largely because of the inanity of the rants they offer. Earlier today we labeled one of them for what it is: bullshit.

Well, the bullshit continues.

In this instance, the comments under review come from Roger Grimes' former senior policy advisor as she continues her own Danny-esque rantings on topics she appears to have some difficulty with. She apparently doesn't understand the issues yet she feels obliged to comment. Hence, the comments fit the textbook definition of bullshit.

The topic du jour is Equalization and the offshore deals signed in 2005 by the federal government with Newfoundland and Labrador and Nova Scotia. Now, Equalization is a complex enough issue to explain to people who have no previous experience with federal-provincial fiscal relations. We've taken a crack at it around here and hopefully Bond Papers has been able to pierce enough of the gloom so readers can grasp what is currently going on.

However, when one sees said former senior policy advisor to a provincial premier shag it up royally, we can start to understand, at the very least, how a provincial administration can get so sadly off the rails. But that is another story.

Just listening to Rodney MacDonald being interviewed by Don Newman - he is the Premier of Nova Scotia - he actually does not know that the accords are included in equalization.

Let's just leave aside the first point, namely that this sentence tells us that Don Newman is the premier of Nova Scotia.

Let's also look past the confused construction that makes it unclear who doesn't know what...at least in the context of that sentence.

Instead, let's just look at the last six words: "the accords are included in Equalization."

The simple fact is, they aren't.

The offshore oil and gas management and royalty agreements between the federal government and the provincial governments in Nova Scotia and Newfoundland and Labrador are not part of the Equalization program.

Both the Nova Scotia agreement in 1985 and the Real Atlantic Accord (1985) contain bilateral transfer payment agreements between Ottawa and the two provinces that are designed to replace declines in Equalization payments resulting from increased oil and gas revenues to the provinces.

But they aren't Equalization and they aren't included in Equalization.

Danny Williams' weekend tantrum is actually just a recycling of an old tantrum from June when the O'Brien panel issued its report.

Williams subsequently claimed he had gotten the panel chairman to to admit that the panel couldn't change Equalization. Big score, there, Danny, bye. That's like getting deputy premier Tom Rideout (right) to admit he's not an 80-year-old Tasmanian eel fisherman.

He isn't.

The panel couldn't.

Everyone knew that.

But to get back to the point, though, this little Dan-trum is about more than the blisteringly obvious point that Williams is posturing for his by-election campaign and that he doesn't have anything to offer the electorate but hot air, flop sweat, a dozen "quite franklys" and a lecture on the price of pride.

Yes, the low-rent imitation of Winston Churchill is just participating in the ongoing first ministers' battle with Ottawa to extort more money from the Prime Minister. We discussed this back in January, under what turned out to be an apt title: "Gimme your lunch money, dork".

If you doubt that all the Premiers are part of an on-going struggle to get cash from Ottawa, just look at comments on Tuesday from Saskatchewan premier Lorne Calvert. Apparently he sees Danny as an ally. Of course he does. Calvert wants the same kind of side-deal on transfers Newfoundland and Nova Scotia enjoy.

If that doesn't convince you, consider an October 14 piece in the Toronto Star.

After a lull of a few months, the federal-provincial fiscal war is about to heat up again and enter a new phase.

The first phase, earlier this year, was fought mainly among the provinces, with the have-nots (all but Ontario and Alberta) against the haves.

At issue was essentially the definition of the "fiscal imbalance" in Canada: is it vertical (between Ottawa and the provinces) or horizontal (between provinces)?

Ontario Premier Dalton McGuinty - a vertical imbalance guy - said the federal government should enhance payments to all the provinces rather than pour money into the equalization program, which just benefits the have-nots.

He was pilloried for this by the have-not premiers; one even suggested McGuinty was being "anti-Canadian."

But the have-nots also fought among themselves, as those with oil and gas reserves took on the others over whether revenues from non-renewable resources should be included in the equalization formula.

In the end, the premiers basically agreed to disagree at their annual meeting in July, and the issue was punted to Prime Minister Stephen Harper for a decision.

For those of us who saw that story before the Dan-trum in Gander, and who understand the issues involved in Equalization and the offshore offset deals, we can understand why Nova Scotia premier Rodney Macdonald isn't issuing any ultimata to Ottawa.

He doesn't have to. There's plenty of discussion underway and planned and there is plenty of time to work out a deal among all the provinces and the federal government on Equalization. After all, this really isn't something the federal government can impose on the provinces, as much as any given prime minister at any point in time might like to, given the political extortion artists and bully-boys that sometimes get elected as provincial first ministers.

What's more, the newly elected premier of Nova Scotia - Rodney Macdonald - seems to understand the issues. Don Newman - the CBC newsworld guy - does too, no doubt.

Rodney also understands that everything else is, well, bullshit.

On bullshit

American philosopher Harry Frankfurt (left) wrote a scholarly essay several years ago on the subject of bullshit. Frankfurt noted that while it was so prevalent in society no one seems to have spent any time trying to figure out what it is and what it appears to be increasing over time.

Bullshit is unavoidable whenever circumstances require someone to talk without knowing what he is talking about.

Amen Brother Harry.

For the record:

1. It has been claimed publicly that our oil and gas is not included in Equalization.

2. Of course it is, as the talk show maven admits on her own rant-pile blog, now she has had the chance to scramble around and look up the facts or clarify her remarks. This wouldn't be the first time she has stated something categorically and then acknowledged later that she knew the difference between what she said and what the facts were.

3. Offshore oil and gas is considered as a category all on its own. 100% of the amount is included in the Equalization calculation and is then offset by the Atlantic Accord and the January 2005 deal.

4. Oil and gas revenues in other provinces are assessed differently. One of the consequences of that approach is that the different rates of taxation or rental applied to those revenues is used to determine the national rate for the purposes of figuring out how much of a top-up provinces get.

5. To cut a long story short, this leads to one of the problems in the existing formula whereby a province that undertaxes its resources gets penalized in the calculation and the province that over taxes gets a perverse bonus. The Equalization entitlement is based not the actual rate but on the estimated national average rate. One of the more interesting recommendations of the O'Brien panel was that Equalization be calculated based on actual revenues, not estimates.

6. As for excluding 50% of hydro revenues - for example - as recommended by the O'Brien panel, we have an interesting suggestion worthy of thought. The approach would provide fairness and consistency across the country and eliminate as much as possible the patchwork of special deals that benefit one province but not another in essentially the same circumstance. Some of those adjustments, as in the 1982 change affecting Upper Churchill revenues, work to Newfoundland and Labrador's benefit. Under no circumstances should we dismiss out of hand a potential change that would accomplish the same purpose or that would level the playing field for all provinces.

7. One of the impacts of including all revenue sources for provinces is that it encourages provinces to be more responsible in their spending. On the face of it, there is no reason for any province to get the ability to earn revenue from any resource, spend the revenue and then receive transfers from Ottawa as well.

8. Newfoundland and Labrador remains one of the few if not the only jurisdictions with non-renewable resources that has not created some sort of fund to bank a portion of the revenue from resource exploitation for longer-term benefit. The province hasn't been in that situation because it has been shafted by some foreign exploiter. That's a convenient excuse used by some current and former provincial politicians to excuse their decisions. The current situation in this province just reflects the sort of attitude that Newfoundland and Labrador does not need to be self-reliant in the true sense of the word. We need to extort more cash from Canada either as reparations - in the case of the pseudo-nationalists and those in the province who regard us as being nothing more than dumb newfs - or, as in the case of Danny Williams, as some matter of inherent entitlement.

Ask not what you can do for your country, indeed.

No matter how you slice it, there is no question that Harry Frankfurt got it right:

One of the most salient aspects of our public discourse is the prevalence of bullshit.

Some Equalization background

The weekend tirade launched by Danny Williams against Stephen Harper - over something that doesn't exist yet - served as a reminder that the vast majority of people have absolutely no idea what Equalization is all about.

They couldn't explain offshore revenues to you if you put a gun to their heads.

In some instances they just tune out when the pols start hammering each other. As the radio call-in shows demonstrated on Monday, though, the Premier's ability to stimulate his Pitcher Plants - Danny's version of astroturf - remains undiminished.

Also undiminished is his willingness to mislead and misrepresent a complex subject, reducing into an emotional issue that some people continue to be deluded into accepting at face value.

On top of all that, the level of sheer ignorance on ths basic issues is staggering. On Night Line, one self-proclaimed "researcher" claimed that oil revenues from this province's offshore are not included in Equalization calculations at all.

Now that is just simply nonsense. Sadly it is typical of the nonsense - simple factual mistakes a grade schooler wouldn't make - this maven of the Open Line spouts. Sadly, misrepresentation is the stock in trade of a certain type of politician too.

Following are some links to previous Bond Papers on Equalization.

The first one - "Equalization for beginners" - explains the system in as simple a way as possible.

The second one - "Equalization: the experts report; the Premier reacts" - is a bit more detailed and summarizes some of the changes to Equalization proposed by a federally-appointed commission.

A couple of recommendations leap out in October as they did in June.

First of all, the panel recommended basing Equalization on actual revenues instead of projections. This would actually work well for Newfoundland and Labrador. All too often over the past decade and more we have found ourselves paying the feds back when their Equalization calculations underestimated how well the economy would do. This is one way to eliminate that problem of constantly having to pay out real cash in real clawbacks.

Second of all, the panel recommended inclusion of all resource revenues but only at the rate of 50% of revenues.

This has a couple of advantages for Newfoundland and Labrador. Right off the bat it hides 50% of all resource revenues from Equalization. Our offshore deals cover the other 50% of oil and gas cash.

Then, you have to realise it represents a compromise position. It's even a compromise between the position Danny Williams proposed last January to make the Equalization calculations - all revenue for all provinces - and the position Danny's own finance minister endorsed - all provinces, no non-renewable resources. Here's another post - "Equalization changes: Williams and Harper/Sullivan compared" - that looks more closely at the confusion within the provincial government on the Equalization file.

Overall though, the January 2005 offshore revenue deal should cover the 50% of oil revenue that isn't excluded from Equalization. Even if you realize that hydro-electric energy would be included in Equalization under those proposals as a renewable resource, Newfoundland and Labrador would enjoy a bonus it doesn't get today, namely hiding 50% of revenues from Equalization. Right now 100% is counted.

Still wondering what all this has to do with offshore revenues? Here's a link that will get you, ultimately, to a longer discussion paper on Danny Williams original offshore deal proposals.

Danny Williams: The Star Trek response

Danny Williams told us all over the weekend that he had signed a bad deal.

Of course, that isn't literally what Danny Williams said in his attack on Prime Minister Stephen Harper.

But implicitly, the Premier's latest tantrum is based on his own admission that his 2005 agreement with the Government of Canada did not provide the Equalization offset he claimed.

There's no other way to explain his apparent concern that federal handouts related to oil revenues to the Government of Newfoundland and Labrador would drop under an Equalization scheme the Prime Minister is supposedly going to implement.

The January 2005 deal was supposed to hide offshore oil revenues from Equalization. Otherwise, as oil revenues increased, the provincial government transfer from Ottawa - Equalization would drop.

Williams knew full well the range of possible changes to Equalization so his deal should have been bullet proof. Williams knew Stephen Harper's plan plus he knew the positions being taken by various provinces. Even if he couldn't tell exactly what would come out of the Equalization review, he certainly knew the best case and worst case positions.

And hey, this isn't something he can fob off to naivety. Danny was in this up to his arm pits from the start and kept total control of the negotiations right up until he ordered Loyola Sullivan to sign the deal.

Williams' concern this week that the province would lose money in changes to Equalization are proof that his 2005 deal was bad. It was bad because it didn't protect the offsets from known and anticipated changes to the Equalization formula.

It's that simple.

To make matters worse, though, Danny Williams now seems to be trying to get Stephen Harper to endorse Equalization changes Danny Williams himself didn't even support in his now-famous letter to the federal party leaders.

Danny Williams proposed that Equalization be calculated using all provinces and including all provincial revenues. He didn't want to hide anything from Equalization.

That's right.

It's hard to avoid the conclusion that Danny Williams is so keen to fight anyone that Danny Williams in October 2006 is willing to fight Danny Williams from January 2006.

And by extension, since - by his own admission - Danny is willing to fight anyone who has acted against the best interests of the province, he should he lambasting himself and the deal he signed in January 2005.

After all, by his own admission this weekend, Danny Williams signed a bad deal with the federal government.

Egad.

Suddenly I feel like Captain Kirk dealing with errant computers like Nomad and M-5.

Danny and the Moe Howard School of Diplomacy

[original 15 Oct 06; Updated 160800NDT Oct 06]

So much for kissing and make up with the federal government.

Offal News has as good a take on the weekend events at the provincial Tory convention as you will find.

No small irony that a guy who only five years ago made fun of the provincial Liberal government fighting with the federal Liberal government is now in a situation where he is fighting with everyone, big or small, Tory or heretic.

[Photo: Premier Danny Williams and finance minister Loyola Sullivan plan their next war with Ottawa in advance of the 2007 provincial general election. Not exactly as illustrated]

This is the New Approach, for sure.

Meanwhile, Canadian Press has reported on the weekend events (see below). For some reason, CP did not get any quotes on the Slander in Gander donnybrook from deputy premier Tom Rideout [Photo, right, exactly as illustrated]

Question: Is this the first time Premier Danny Williams has taken it upon himself to tell what went on in a private meeting only for us to discover later that what Danny said and what actually happened were two entirely different things?

Update: Here's the answer to the question. Danny Williams claimed Stephen Harper was prepared to consider so-called fallow field legislation for the offshore. Williams is looking for the legal power to force development of offshore fields. He raised the idea after failing to achieve a deal on Hebron.

CBC Radio is reporting this morning a statement from the Prime Minister's Office which rejects the idea. The PM never agreed to consider or think about it apparently. Take note of the reference in the CBC story to contracts fairly negotiated or something along those lines.

This seems like an oblique reference to the issues of bad faith bargaining raised here about Danny Williams' approach to negotiations with the oil companies. Steve doesn't likely read the Bond Papers, but he seems to be talking about the same issue and heading to the same conclusion about Danny.



Williams takes aim at Ottawa in drive for re election in Newfoundland
The Canadian Press
Oct 15, 2006

By Tara Brautigam

GANDER, N.L. (CP) _ Newfoundland Premier Danny Williams hopes to capitalize on a growing standoff with Ottawa in his quest for province-wide dominance in next year's provincial election.

Williams rallied his party at a weekend Progressive Conservative convention in Gander, with a fiery speech that drew a deep line between himself and Prime Minister Stephen Harper.

The premier warned Saturday night that he would urge Newfoundlanders to vote against Harper in the next future federal election if the province loses out in a revised equalization formula.

Hours earlier, Williams and Harper met in an effort to resolve their differences over several thorny issues, including a revised equalization formula. But their discussion about equalization only further chilled relations between the two Tory leaders.

The meeting was "heated,"' one of the premier's staffers said Sunday. [Ed note: This likely means the Premier was shouting, as he is wont to do, while the other person is being calm and professional.]

Williams has made a political career of fighting the federal government.

In December 2004, he pulled down the Canadian flags from provincial buildings during talks for a revamped Atlantic Accord to give Newfoundland full protection against equalization clawbacks on offshore royalties.

In early January, the flags went back up, and an agreement was reached after marathon talks in Ottawa a month later.

"Fighting the enormous resources of the federal government and achieving a new deal on the Atlantic Accord is not easy, but that doesn't mean it's impossible,"' Williams told about 600 supporters Saturday, indicating he would step up his battle against Ottawa before his re-election campaign.

"Stay tuned, you might be into round two before this one is all over."'

Williams also warned the party not to take the Oct. 9, 2007 election for granted, a message echoed by party president John Babb.

"A quick clean sweep? Who knows?"' Babb said. "But from our point of view, we're not making any predictions."

The Progressive Conservatives can make big gains in the next election, observers say.

At least two polls this year suggested Williams enjoyed an approval rating above 70 per cent, despite a government spending scandal that led to the resignation of Ed Byrne, one of his top cabinet ministers, in June.

But the Liberals have slammed Williams for neglecting rural Newfoundland and Labrador, areas beset by waves of residents moving to Alberta for work because of mass layoffs from the forestry and fisheries industries.

Currently there are 35 Progressive Conservatives in the provincial legislature, 11 Liberal members and one New Democrat.

A byelection has been called for Nov. 1 to fill a vacant seat in the Signal Hill-Quidi Vidi riding in St. John's, where high profile criminal lawyer Jerome Kennedy will run for the Tories against NDP Leader Lorraine Michael.

The Liberals are not running a candidate.

-srbp-

Saying it doesn't make it so

From Premier Danny Williams and his energy minister comes a news release taking issue with federal government forecasts of energy supply and demand in Canada.

The Natural Resources Canada (NRCAN) report omits reference to certain projects in Newfoundland and Labrador and adds to recent assessments that Newfoundland and Labrador is fast slipping behind the competition on everything from offshore oil and gas to the Lower Churchill project.

The Williams release is long and verbose, repeating his previous statements that all is well and looking good here.

A closer examination suggests otherwise. Simply put: NRCAN's projections are accurate in some areas and bizarrely out of date in others given the report was released last week. As for Premier Williams, saying things here in Newfoundland and Labrador are rosy in a windy news release does not make it so.

Take, for example, the Lower Churchill project which Williams touts as being "among the best undeveloped hydroelectric projects in North America, and yet it is completely discounted in the report."

The operative word is undeveloped. Hydro Quebec for example is considerably farther ahead of Williams in getting hydro projects into development.

As NRCAN puts it,

The reference case includes a number of hydro projects: in Quebec, large projects together with small facilities will add almost 2,000 MW of hydro capacity by 2009, at which time another 800 MW will be added to capacity elsewhere in Canada, principally in Manitoba. La Romaine with a capacity of 1,500 MW, will be in service in 2018. The Revelstoke and Mica projects in BC, with a combined capacity of 950 MW, will be in service between 2013 and 2015.

The Lower Churchill Falls proposal in Newfoundland and Labrador, and the Conawapa project in Manitoba were not included. These projects are not sufficiently well advanced into the planning stage to make an informed judgment on their capacity and timing. [Emphasis added]

NRCAN got it right. Williams is just talking but his talk simply can't erase the reality that Hydro Quebec is well advanced in developing its projects. Williams' Lower Churchill option hasn't even gotten to the point where costs have been accurately projected. Nor has Williams determined how he will finance a project estimated to cost an amount equal to the current provincial accrual debt load.

Williams mentions a second oil refinery for the province and a liquefied natural gas terminal which is under consideration. Unfortunately for the Premier, the second refinery remains an outside chance given competition from a recently-announced refinery in New Brunswick.

Similarly, the LNG terminal remains a paper project and is years away from development, if it is developed at all. Irving is already building an LNG terminal at Saint John processing imported natural gas for export to the American market.

As for local gas development, both technical issues and the long-awaited provincial gas royalty regime will determine whether gas might be developed or if it will go into the same holding tank alongside Hebron. Energy minister Kathy Dunderdale is quoted in the release as highlighting uncertainty in American natural gas imports. Apparently, she missed developments in the Gulf of Mexico which will see the development of gas reserves that are about two thirds the size of the entire reserves offshore Newfoundland and Labrador.

Interestingly, the provincial government release does not take issue with NRCAN's forecast that sees Hebron coming on stream in 2011. That would have occurred if negotiations had ended successfully in April. As it stands, there are no signs of talks resuming within the next three to five years if at all. Even if, by some chance, talks resume and there is a deal within the next 12 months, Hebron could not meet the 2011 first-oil target assumed by NRCAN.

No 'ead on a pike

Not surprisingly, Ward Pike has taken some exception to a post a couple of days ago that drew attention to his observations on Rick Mercer. The kind of exception where maybe a head on a pole might be the only remedy.

Sadly for Ward, that will not be happening.

Now to be sure, let's make it clear: Pike is neither an anti-Semite or a homophobe.

The original version of his post on Rick Mercer (since re-written) appeared to be supporting comments that were anti-Semitic or homophobic, even if indirectly. Apparently, Mercer and the rest of the media which is, according to Pike either Liberal-dominated or Liberal-controlled, had no business criticizing what Pike called "Conservative values".

Go back and read Mercer's post and draw your own conclusions. More than a few have read both Mercer's comments and Pike's and drawn the conclusion we drew at Bond Papers.

Pike's e-mails made it pretty clear he thought it foul to point out that he appeared to be condoning anti-Semitism, even indirectly.

Apparently, though, the whole thing had nothing do with his writing. Indeed his revised post makes it Ward still doesn't get the point. Rather, the whole thing is part of some giant conspiracy. Mercer is part of the conspiracy to criticize Conservative values and, well at Bond Papers, we were obviously part of the big Liberal plot too. The revised post at Venison Tickle just change the nature of the plot to being "Leftist and Liberal".

Same plot.

New name.

Still no evidence it exists.

To cut a long post really short, let's just remind everyone that Ward Pike isn't an anti-Semite nor is he a homophobe.

But, even after three or four e-mails and the revised post about Rick Mercer, our original conclusion stands: the inanity of his post speaks for itself.

A little knowledge

[Updated 12 Oct 06; new introduction. Typos corrected

Andy Wells will be attending his first offshore board meeting tomorrow, as Wells appears to have advised local news media. Many people will be watching to see how things go.

One of the major decisions to be taken is on the development application amendment by the Hibernia partners to bring onstream 300 million barrels in the Hibernia South structures. It isn't known if that item is on the agenda for the Friday meeting or if it will be deferred for another few weeks.

The provincial government appears to be of the view that this should be a separate development with its own royalty and benefits agreement. Wells may simply stake that out as his position.

On the face of it, though, the proposal falls within the existing rules that would see the new fields brought online within the context of the original Hibernia agreement. Some recent projections have Hibernia reaching payout around 2011 which would move the provincial royalties to 30% from its existing level of around 5%. Adding the 300 million barrels to the old agreement would prolong the period in which Newfoundland and Labrador receives the second tier (30%) royalties. Until very recently, most informed opinion held that Hibernia would never see payout.

Treating Hibernia South as a new project would delay bringing the oil onstream owing to the need to negotiate royalties and benefits. If additional costs of development are added - like forcing a floating or fixed production system versus the proposal for tie-backs to the existing gravity-base structure - then the provincial government would receive relatively low royalties for a longer period before achieving the bonus of payout.

If the negotiation wound up like Hebron, there'd be no development. All of that even assumes that the oil companies would not challenge any effort to treat Hibernia South as a new project when, by all indications, it is properly viewed as an extension of the existing project.

Let's see what happens over the next few months.]
Over at the Independent, they are in the third week of a series on the terms of union between Newfoundland and Labrador and Canada.

This week the topic was oil and gas, but unfortunately John Crosbie - one of the architects of the real Atlantic Accord, 1985 one - was not there.

As a result, St. John's mayor Andy Wells got to dominate the panel with some input from Indy publisher Brian Dobbin and former Premier Roger Grimes. Unfortunately, the transcript of the session - edited and abbreviated down to about a half page and buried on page 14 of the print edition - isn't online.

You can get the front page story that appears to combine raportage with editorial commentary with a whole bunch of things that weren't in the transcript at all. If you check the transcript - as printed - the largest number of comments besides Wells' come from local writer Ray Guy. His comical, sarcastic interventions are worth reading; too bad there is no video of the session available.

Wells' comments are interesting on a number of levels, not the least of which is the recent flap over Premier Danny Williams efforts to install Wells as chairman and chief executive officer of the board that regulates the offshore oil and gas industry. That's the Canada-Newfoundland and Labrador offshore Petroleum Board or C-NLOPB.

"The C-NLOPB is an important agency in terms of trying to advocate for industry in this province," he [Wells] says.

Now that comment isn't in the transcript and of course it must be noted that the board isn't an advocacy body at all. C-NLOPB is explicitly established as the regulatory authority for the offshore oil and gas industry. Nevertheless, Wells made it clear he would prefer to see a situation in which the provincial government "would control the board" as Wells put it in the transcript. Right now, the board operates at arms length from both the federal and provincial governments.

Wells' comments on the board as presented in the transcript don't say anything like what is contained in the front pager linked above. They are infinitely more curious since Wells appears to offer a couple of contradictory points of view.

For example, Wells said in the transcript:

...The problem I've got with it is not particular to the board (C-NLOPB), it's with all regulatory agencies, it's that the regulators become the regulated. And I'm not saying they're wining and dining and handing out cheques to people, just, psychologically, the regulators become too close to the people under regulation....

If you look at the act, there's a section in there about security of supply, and once again Canadian, the national security of supply is guaranteed, not infringed on, that as far as I'm concerned, the feds should just back away and let us run it [the offshore], like Alberta runs it....They're [the federal government is] determined to keep control...

...the model for the way we handle our industry is indeed the way the Norwegians do it...but we're screwed by the federal government...

Now this could be a case of Wells having a little knowledge; it could be a case where he is working - as he apparently told the Indy - to get up to speed on the board and the issues. Of course, while he is quoted as saying words to that effect in the front-page story, Wells' comments on the board both in the transcript and with other interviews suggest he has his mind pretty much settled.

Nevertheless, it is important to realize that the key to the Norwegian model is that the policy, taxation and regulatory functions are distinct and separate. The function of the Norwegian regulatory is to enforce the laws set by the Norwegian parliament.

In that respect, the existing structure of the C-NLOPB is exactly the same as the Norwegian model. Both federal and provincial environmental and occupational health and safety laws apply.

There has been a problem with several federal agencies exerting separate authority over the offshore for things like environmental and shipping regulation, but within the past two years, both the federal and provincial governments on the one hand and their joint agency C-NLOPB - on the other have taken steps to reduce the regulatory overlap and establish the offshore board as the single point of contact for offshore regulation.

If Wells' comments are taken at face value, though, he is proposing something that is diametrically opposite to the Norwegian approach.

As well, the St. John's mayor seems to have missed the sections of the Atlantic Accord (1985) that provide significant control to the provincial energy minister at a times when national and regional supply are secured. Wells also misses the fairly simple point that when it comes to issues such as revenue-setting and provincial benefits - policy and taxation - the provincial government has exclusive right to determine them, exactly as in Norway. It's exactly the same in Alberta. In practice, the difference between the existing management regime and one in which the provincial government had sole legislative authority over offshore oil and gas is hardly worth noticing.

It only gets mentioned by people with their own political agendas backed by precious little concrete evidence.

Wells seems to believe that both the oil industry and the federal government are "screwing" Newfoundland and Labrador, to use a phrase Wells himself used in the session. There isn't any evidence of that, particularly on the front page story where Wells is quoted as saying "... (The companies) don't want the province to have representatives in there, on the board -— companies want to get, and keep the upper hand."

Wells should know that appointments to the board are solely the responsibility of the federal and provincial governments. Each appoints three people and the board chairman and chief executive officer is appointed jointly.

Neither order of government can veto the appointment of the other and there is no ability of the oil and gas industry - either overtly or covertly - to keep provincial representatives from sitting on the board. Wells should know that since there are likely more than a few industry representatives who would have worked strenuously to keep Wells off the board - if they could.

But since the provincial cabinet alone appointed Wells, there was no way anyone - not the federal government, not the industry - could keep any provincial cabinet from exercising its legal authority.

But lookit: if that is what Andy Wells actually said about the industry, the board and provincial government appointments, then Wells clearly doesn't know what he is talking about.

As for the fallowfield issue, it apparently never got mentioned by the Indy panel. That is, it never got mentioned unless Wells was criticizing the federal government for refusing to implement legislation giving Danny Williams the power to force the Hebron field into development on his terms.

Even there, though, the province can make changes to offshore regulations and licensing in co-operation with the federal government. Just understand, though, that there is no stomach in Ottawa for any kind of legal hammers aimed specifically at one or another of the oil companies.

The rules need to be clear and they need to be fairly and consistently applied to everyone.

Simply put, the "feds" - as some sort of mythical foreign bogeyman - aren't out to screw us.

That said, the screws are usually put to "us" very effectively by our own people who use a little information to fuel their own personal agendas. That's something we should be watching for in the weeks and months ahead.

Only in Newfoundland and Labrador...

would a Premier spend well over $1.0 million of scarce taxpayers dollars to convince the people of the province that they are all vegetation.

He must think we are putzs.

If you don't believe it, check your mailboxes. Tens of thousands in mailing costs, not counting the graphic design costs and the printing of the high-gloss, full-colour piece called simply "The Pitcher Plant".

If you don't believe it, watch the NTV Evening News, where a 30 second block of airtime can cost at least $1,000 per.

Then watch as the same video airs twice in the space of a minute and a half and at least one other time in the first half hour of the show.

Thousands upon thousands of dollars spent each evening.

On sentence fragments.

To convince us that we are a plant that is found here.

And here alone.

Even though.

That.

isn't.

true.

On any level.

Only in Newfoundland and Labrador.

So it's okay to be an anti-Semite, Ward?

Or maybe you just share the anti-homosexual views of Darrel Reid and James Dobson.

Anyway.

Some time ago, Bond Papers established a policy of not directing free traffic to some websites. Frankly, some of them didn't deserve the attention they were getting.

But a post on Venison Tickle, a blog that purports to offer "outside the box thinking" is worth exposing to a national audience.

Seems the author - Ward Pike - has a problem with Rick Mercer's latest rant that, among other things, draws attention to some questionable comments by Rona Ambrose's newbie chief of staff and some of his associates on both Jews and homosexuals. The shorter video version is at cbc.ca.

Pike suggests, among other things, that Mercer's rant is part of the Liberal bias in Canadian media. As Pike puts it:

You see so many anti-Conservative party of Canada rants, it makes you want to "de-tune" or "tune out" man. This constant desensitizing to the Liberal plot to vilify and sensationalize any Conservative value with comments like "are you or have you ever been near a homosexual" no longer serve to marginalize the CPC but instead serve to show the majority of voters how weak and pathetic the Liberals and their cronies, like Rick Mercer, have become.

Having trotted out the old Connie conspiracy theory about media bias, Pike ends up with this gem:

I realize that heavily left-biased programming (er... thinking) fits in well with the vast majority on the CBC payroll (I hesitate to use the word workers, as I have seen people work, worked myself...and I have been to the CBC)...but it doesn't jive with today's actual grip on reality.

Grip on reality? Anti-semitism is real, as in okay?

Conservative values? That includes anti-semitism. I know Conservatives who'd disagree on that one, even though they'd readily admit Conservative values don't include supporting freedom of choice in everything from a woman's control of her body to sexual expression.

At this point, I tried several different ways of summarizing Pike's position and pointing out the obvious factual, logical, historical and ethical problems with it.

But frankly, it's hard to top the sheer inanity of Ward's own words.

Instead, let's just let Pike speak for himself.

That still doesn't explain Harbour Breton

Okay, Danny.

You're right.

It was politically naive to have pledged you wouldn't let the Abitibi mill at Stephenville close.

That still doesn't explain your similar pledge to the people of Harbour Breton.

Or the people of Goose Bay.

For that matter, it doesn't explain your threats to expropriate property.

Since you haven't expropriated the property - in fact you have subsidized Abitibi's other operations instead - it's hard to see how "myself and my government have done everything we can to try and save it, including stepping up significantly in order to save that mill, and I can't do any more than that...".

There's something insincere in Danny's mea culpa.

Abitibi cuts; Danny pays subsidies

Abitibi Consolidated announced on Tuesday that the company was closing lumber mills and laying off 700 workers in order to staunch the bleeding to its bottom line caused by slackening demand, a higher Canadian dollar and rising energy costs.

The cuts, to Abitibi's Quebec lumbering operations, will see four mills close. The American news organization Bloomberg attributes the Abitibi cuts to slowdowns in the American home construction and renovation market.

Last week, natural resources minister Kathy Dunderdale announced the provincial government would subsidize power rates to the major industrial power users on the island portion of the province. Dunderdale described the CDN$10 million subsidy as a payment representing the portion of the Rate Stabilization Plan owed by the now-defunct Abitibi mill at Stephenville.

Curiously, the amount of the annual subsidy is the same as the total amount Danny Williams previously offered to Abitibi in order to keep the Stephenville mill open. Bond Papers previously established that Williams' original subsidy represented up to $3.0 million more than the Stepehenville mill generated in tax revenue for the provincial government.

The current subsidy represents a complete loss to the treasury since the remaining mills have not increased output to replace the production at the Stephenville mill.

The new subsidy effectively reduces power costs to the two remaining paper mills, one at Grand Falls-Windsor and the other at Corner Brook. The province's news release did not clearly indicate the duration of the subsidy.

Kruger's Corner Brook Pulp and Paper employs 1300 people in its harvesting, papermaking and power generation facilities. Abitibi's Grand Falls-Windsor plant employs 490. The government subsidy amounts to $5, 586.60 per employee.

If I had a million dollars...

of public money to spend, you can rest assured it would not have been wasted on an over-hyped tourism wordmark.

Nope.

Especially when it is being touted as a "brand" and business minister Kevin O'Brien - the guy responsible for selling the thing - can't tell the difference between a brand and a logo. Open Line host Randy Simms raised that point with O'Brien, who proclaimed his own extensive business background, and while O'Brien said he knew the difference, his comments demonstrated he didn't have a clue.

If I had a million bucks of public money, I'd spend it to promote breastfeeding in Newfoundland and Labrador. There is a public shame that groups interested in promoting child health have had to go public on their own to raise this important health issue.

As the CBC news story linked above states:

Doctors agree that breastfeeding is the best way to protect newborns from early childhood disease, because mother's milk contains antibodies that help babies fight infections.

About 63% of new mothers in Newfoundland and Labrador begin breastfeeding, compared to 85% nationally. The real test is how many are still breastfeeding when their babies are six months old.

According to the Breastfeeding Coalition of Newfoundland and Labrador:

In Newfoundland and Labrador, there has been an increase in the initiation of breastfeeding over the past 20 years. In 1983, 31.9% of women initiated breastfeeding (11) with 62.7% of women initiating breastfeeding in 2003. (12) However, 62.7% is the lowest initiation rate among the provinces and territories in Canada. Furthermore, the duration rate at 6 months is 27.5 % at 6 months, with 11.1% exclusively breastfeeding at 6 months. These statistics tell us that we are living in a culture where breastfeeding is not the norm.

Fewer than half the women who start breastfeeding are still nourishing their children that way six months later and only 11% are breastfeeding exclusively.

A simple campaign to promote breastfeeding would hardly cost $1.0 million. But even if it wound up costing the government twice that amount, the long-term health benefits to the people of the province would vastly outweigh the expenditure. (Left - poster from a breastfeeding campaign featuring television celebrity Lucy Lawless)

Curious refinery logic

CBC radio snagged Brian Dalton, spokesperson for the group studying the possibility of building a second refinery in Placentia Bay.

He was asked to comment on the prospects that the Irving's announcement of a second refinery at Saint John hurt the potential Dalton's team would go ahead with their project.

[Dalton] said Saint John and Placentia Bay - the site of North Atlantic Refining's operation in Come By Chance and the prospective site for its plans - are the top two ports on the continent for refining traffic.

"You can look in Europe, you can look all along the Eastern Seaboard of North America...these two sites just stand out," Dalton told CBC News.

That's another one of those "Huh?" moments. The ones where you look at the words and develop that face like a dog hearing a noise he can't quite figure out.

The site isn't the driver. It's the cost and the potential to return the money invested.

Dalton didn't speak to that point, nor did he speak to the fact that event Irving's are trying to find funding partners.

Like Dalton's group, which has practically no experience in refinery construction and operations.
But plenty of experience bankrolling projects.

Hmmm.

At Bond Papers, we'll stick to our contention that Irving put a major dent in prospects for a second refinery in this province when they announced a second refinery for the New Brunswick port city.

We'll even add to that.

The chances are much higher now that the overseas investors Dalton and Altius Minerals has lined up will be looking hard at going into business with the Irving's in New Brunswick rather than sinking their billions into a greenfield project in Newfoundland and Labrador.

For some, it's youtube.com.

For others, it's despair.com

Like towniebastard.