Equalization: some thoughts and background

Since Equalization is back on the national agenda, it's useful to review what's been said before.

At the outset, let's make one thing clear: the position taken by Premier Danny Williams has been predictably devoid of many facts. In place of facts, we have seen hyperbole and other forms of exaggeration akin to what we saw in the previous offshore transfer discussions.

It's hard to have a sensible public discussion of such an important issue if the guy right at the top spends more time spinning both his wheels and the perspective on the issue.

Let's see if we can correct that with some facts and some contrary opinion:

1. Bond Papers summary of some points in the Expert Panel report. This focuses on a couple of the aspects related to Newfoundland and Labrador. Most importantly, though, the post contains links to the original Expert Panel report. Take the time to check that out. It's in plain English so most people should be able to grasp the issues, the analysis and the recommendations.

2. A comparison of Danny Williams' idea of including all resource revenues in entitlement calculations and the version proposed initially by Stephen Harper, backed by former finance minister Loyola Sullivan [left]. This is one of the most significant aspects of the entire discussion yet it is also one completely ignored by local news media.

3. War of the Pee. One of your humble e-scribbler's favourite titles, which plays on the title of classic treatise on guerrilla war as well as Premier Williams' apparent penchant for urinating on people's shoes. Big plus: links to a raft of other posts on Equalization. There's also a reference to the problem John Crosbie highlighted recently, although Crosbie discusses the problem with Danny's approach in a far more eloquent way than we did here at Bond Papers.

Hunter-gatherers support dismemberment

Since the fish union now backs breaking up Fishery Products International and selling off the bits and pieces to the highest bidders, there's nothing to stop the company from being dismantled.

The hypocrisy in Earle McCurdy's comments should be obvious; his union has had a hand in bringing about the chaos, controversy, disorder and poor results FPI has seen since the board of directors changes in 2001.

Of course, going back to May of 2006, McCurdy has been in favour of dismantling FPI.

NL productivity up; oil a major driver

A new Statistics Canada report on labour productivity shows Newfoundland and Labrador's productivity grew at twice the national rate between 1997 and 2005.

The story is covered by the Globe. As the Globe explains:

Labour productivity, measured as the amount of gross domestic product in constant dollars per hour worked, is considered an underpinning of a prosperous economy, which should bode well for Canada's most eastern province.

The Globe story opens with a quote from Jerry Byrne, president of D.F. Barnes, a company that has prospered in recent years in the offshore oil supply sector.

Since leading a 2002 management buyout of the 74-year-old company, Mr. Byrne has guided it to a 30-fold increase in annual revenue in just four years -- and he expects to hit a threshold of about 50 times 2002 revenue some time in the next year.

At the same time, the story also quotes Trevor Adey, president of high-tech firm Consilient. Adey notes that the gains from the oil sector haven't necessarily filtered down in a province where workers are still leaving in large numbers to find work elsewhere. Adey's right, of course. The oil and gas sector is such a capital intensive business that the apparent good news in the labour productivity numbers masks productivity shortcomings in other sectors of the economy.

That said, Byrne's success at D.F. Barnes is indeed remarkable. It has come about through some smart deal-making and a good measure of competence and ability. Local offshore companies have been known to compete successfully around the globe based on their experience in local offshore and Barnes is certainly one of the prime examples of successful local entrepreneurship.

Unfortunately, local companies have to look overseas for work these days. They had been planning on the Hebron project but that project has now been shelved indefinitely.

At the same time, though, D.F. Barnes has had its share of financial help from the provincial government.

In June, Byrne announced a major contract for launch and recovery systems for remotely-operated vehicle. The work is being done through a Barnes subsidiary, Orphan Industries.

In December, 2006 - six months after the launch and recovery system contract was announced - the provincial government provided Orphan with $970,000 "to expand the manufacturing facilities of Orphan Industries Limited to become the preferred supplier of Launch and Recovery Systems (LARS)."

Notice that the provincial government release doesn't mention D.F. Barnes once and - very unusually - doesn't include a quote from the company.

Nope.

It just has comments from Kevin O'Brien, the logo guy the business minister, and Kathy Dunderdale, the Premier's natural resources minister.

Harper moving on fiscal imbalance

Radio Canada is reporting that the plan will include half of natural resources in Equalization calculation. Newfoundland and Labrador premier Danny Williams wanted all resource revenues included.

Ottawa will also boost transfer for post-secondary education and infrastructure, according to Radio Canada. The federal Conservatives will reduce federal taxes, as well, thereby opening up room for provinces to increase their rates of taxation. The Conservatives will also introduce a bill in parliament to limit federal spending power. Each of these elements has been discussed for months.

This news comes in advance of a meeting of provincial premiers, scheduled for February 7 to discuss Equalization, among other things.

Quebec will receive $2.0 billion according to la presse.

Williams criticized on Hickey; story goes national

Canadian Press is running this story which includes criticism of Premier Danny Williams' decision to keep John Hickey in cabinet despite word today that the Royal Newfoundland Constabulary has launched a criminal investigation into allegations Hickey and another Progressive Conservative member of the House of Assembly double-billed the legislature for expenses.

The CP is running across the country.

Williams' decision flouts centuries of parliamentary tradition designed to preserve the integrity of government while avoiding tainting or appearing to taint the police investigation. The Canadian press story includes several recent examples of the principle followed by Canadian governments, until now in Newfoundland and Labrador.

In a related comment, Williams [right] this weekend called the speaker of the legislature the head of a division or department of government. Williams' faulty constitutional knowledge was displayed on NTV's Issues and Answers, a 30 minute interview show airing Sundays.

Chief electoral officer told by whom?

Provincial chief electoral officer Chuck Furey said today he's been advised other members of the House of Assembly will vacating their seats before the scheduled October general election.

Who told Furey?

Why would the CEO know this information under any circumstances?

According to vocm.com, Furey also said he did not know if the Premier would change electoral boundaries based on the recent boundary commission report. Maybe VOCM misquoted him because surely Furey knows - as a former member of the legislature and former cabinet minister - that such a decision is not made by the Premier, anyway.

Williams cabinet minister, MHA under CID probe

The Royal Newfoundland Constabulary confirmed today that allegations of double-billing against John Hickey and Kathy Goudie have been referred to the Criminal Investigation Division (CID).

Premier Danny Williams relieved Hickey of his cabinet responsibilities, but re-appointed him days later, characterising both Hickey and Goudie as victims of incompetent House of Assembly administration.

The allegations from the province's auditor general involve 58 incidents of double-billing expense claims.

UPDATE: Williams says nothing new in RNC announcement, Hickey will stay.

UPDATE: Telegram editorial criticizes Hickey decision.

Oil, gas news

1. Refineries planned for East Coast. Bond readers heard this already. They've also heard about the prospects the Irving refinery and gas plant planned for Saint John will make it harder for other refinery proposals, especially for green-field sites. Expansion at Come by Chance is not inherently as risky.

2. Natural gas drilling on downturn. Warmer weather and lower prices blamed.

3. Husky criticizes Alberta infrastructure, earns government rebuke.

4. Venezuela expands petro-influence in Central America. New refinery for Nicaragua; expansion of existing natural gas pipeline under discussion. (from platts.com)

5. Gulf of Mexico grows. Government and majors still wrangling over money but exploration set to expand in American backyard.

Devil in polling details for Williams

The Telegram obtained the most recent Corporate Research Associates (CRA) polling results (December 2006) and the numbers don't look good for government.

According to the Telegram, employment was the number one issue facing the province according to respondents. Concern about employment was highest outside the metro St. John's area.

And residents are becoming less enamoured of the Williams administration’s job-creation record, CRA found.

Only 33 per cent of respondents were completely (two per cent) or mostly (31 per cent) satisfied.

The majority — 62 per cent — were completely (18 per cent) or mostly (44 per cent) dissatisfied.

CRA reported that overall satisfaction levels remained high.

Second economist criticizes government money for Alcan

The article is in French, but you will get the point fairly quickly.

A package of incentives worth $337,000 per job, for a total value of $3.0 billion over 30 years (if my French holds up.

The deal to support Alcan's operations in Saguenay-Lac-Saint-Jean includes a guaranteed price on 225 megawatts of power, to be supplied by projects such as the one begun last week on the Rupert river.

Seven pillars

1. Dick Cheney's 1999 speech to the Institute of Petroleum. Some look on this for portents of Bush II policy in the Middle East. Others will see an overview of the challenges in the petroleum industry globally. This copy of the speech is on a site discussing the concept of peak oil. Poke around and you'll find other articles worthy of your time.

2. The challenge of deepwater drilling. From South Africa comes this Reuters piece on exploration and production in the Gulf of Mexico.

3. Profit drops expected for oil industry. From the International Herald Tribune, a look at the impact falling oil prices may have on the companies that take the risks of drilling in the expensive new frontiers.

This is one of the reasons why some analysts considered the Hebron failure such a massive giveaway; it's been a painful lesson for those who misuse Newfoundland and Labrador history by talking about some economic development projects as "giveaways". Sometimes a loss comes from failing to reach an agreement at an opportune time.

It will be much harder to strike a lucrative deal when oil prices are relatively low or appear to be low.

4. Local fall-out from Hebron failure? Rutter posts a drop in revenue and sheds its interest in DORIS.

5. At least no one dies from local talk radio. [Via Drudge]

6. Chavez takes them out, well, sort of.

7. ConocoPhillips holds S& P rating, but the company is buying back about US$1.0 billion of its own stock in the wake of disappointing earnings in the last quarter of 2006. Conoco's other problems - coupled with the complete uncertainty of dealing with the Williams administration - may lead it away from its earlier interest in Grand Banks gas fields. Husky has also shelved its plans for White Rose gas pending release of the province's energy plan and natural gas royalty regime, already a decade in development.

For a reminder of previous comment on the way oil companies look at the world, check this critique of an old Telegram editorial. Oil companies will take risks, but evidently are looking anywhere but Newfoundland and Labrador where there seems to be no certainty of anything when it comes to government revenue demands.

John Crosbie is right.

There's a reason Danny spends so much time in Florida

Is this what our energy plan will consist of?

Is this the next call if more of Danny's backbenchers are accused of double-billing taxpayers for lunch and dinner?

These are just light-hearted questions to help pass the weekend.

Iceland shows us how it's done!

A humourous take on the local world.

1. Codfish killed by sulpher pollution?

2. U Iceland research budget tripled. Sounds great until you read the story and see that the increase is US$8.9 million each year.

Sounds wonderful until you check closer to home. According to the most recent inventory, Memorial University attracts about $90 million in research every year including $4.0 million from the province (despite our massive debt burden).

But here's something even more interesting: out of that $90 million, about $50 million comes in various forms from the federal government.

Oh yeah. We can learn a lot from Iceland.

3. Every job is important. But this looks a bit like Small Town News of the finest kind.

4. Until no fish swim. Icelandic researchers "finally" find a school of capelin. Now the race is on to issue "temporary" fishing quotas.

5. And we bitch about how hard it is to find a pineapple and starfruit at the local Dominion. Icelanders pay 62% more for groceries than the European Union average.

6. Next we'll hear about the need to develop a local psychic hotline industry.

All of which is proof once again that when they aren't creating yet another blog on which to promise great things to come that either never come or aren't so great, some people spend way too much time surfing the Internet without understanding what it is they find there.

Tory website vanishes

With all the problems in his administration, maybe Danny Williams just can't get in there and find the reason why his party's website has been down.

Lord knows nothing can happen without his express approval, so maybe he just has too much on his plate to debug the html.

The site's been down for days.

As of noon on Saturday, it's still not loading.

Hmmmmmm, as Watton would say.

What Harper got in writing

At the upcoming first ministers meeting, expect to hear the Premier of Newfoundland and Labrador talk a lot about what he got in writing from Steve Harper.

What you won't hear the diminutive, dyspeptic Dannyboy say is what Harper got in writing from him:

The Government of Newfoundland and Labrador is advocating...(3) comprehensive revenue coverage (which would include, in full, all renewable and non-renewable natural resources)... [Emphasis added]

Don't expect Williams to head for the parapets in defence of that one; which of course makes John Crosbie's observations all the more prescient.

Adios Jim-bo

Jim Hodder announced his resignation from the House of Assembly today, for health reasons.

He becomes the third Tory to pull pin in little over a month, thereby forcing Premier Danny Williams to call no fewer than three by-elections by the middle of March.

Other names are due to come just as they will for the Liberals too. The thing is it is so strange for a first-term party fresh off years on the opposition benches to suffer attrition at such a rate. Including the three already declared, Bond Papers has about another seven names who either won't run again or who are in danger of losing their seats for one reason of another.

A year ago that list of Tories dead or on life support was completely blank.

Hodder deserves a proper send-off, for this is second retirement from politics.

Hodder was first elected in 1975 as a Liberal, crossed the floor in the 1980s to sit with the Conservatives and subsequently served in Peckford's cabinet. After resigning from politics in the 1990s he ran again after a brief absence and was re-elected.

For those who read this far, here's a bonus question for 10 points:

What other current member of the provincial legislature with a career profile very similar to Hodder's is also looking at resigning from the legislature?

This other Liberal cum Tory from the Class of 1975 is planning to run against Scott Simms [Right, not exactly as illustrated].

Hint: unlike Hodder, this re-tread made it to cabinet again.

And this just in...

Generalissimo Francisco Franco is still dead.

Really old people who watched Saturday Night Live from episode one will get the joke.

To be sure, vocm.com does report tons of useful information daily and a couple of weekends ago they outed a major story.

This one just struck the funny bone.

Lono nominated

At least two Liberals in the federal riding of St. John's North read that and fainted.

They should read this instead.

Good on ya, buddy.

The two Liberals will have to wait to faint at the other nomination.

Danny Williams: Public Enemy Number One

Ok.

So the headline on John Crosbie's latest column might be a bit overdone, calling Newfoundland and Labrador's dyspeptic first minister the greatest current threat to national unity.

Crosbie's observation are still spot on, as the audio of his interview with CBC's Jeff Gilhooley.

Lono, at Offal News, has a good take on it, as well.

The age of persuasion

Around this neck of the woods, Thursdays at noon are the time when things go mostly quiet and we flip on CBC Radio One.

That's the time for "O'Reilly and The Age of Persuasion", ad man Terry O'Reilly's look at his business.

There's no way to describe the show and goodness knows the CBC website for the thing would definitely not lead you to suspect you will be getting a half hour that provokes and entertains while it educates.

That's okay.

There's a blog, but it really isn't very exciting.

That's okay, too.

Over at the website for O'Reilly's agency - Pirate Radio and TV - you will get every conceivable indication of just exactly how creative and possibly insane O'Reilly and company are. Pirate does its own work but it also subcontracts production for other agencies.

This is the Internet presence of a truly inventive bunch of people. Click on "Reels" in the top menu and you get samples of their work.

Like the Irving Mainway radio spots for Target that - if memory serves - won an award the first time they aired. O'Reilly directed them. They are actually a variation on a concept originally used for Labatt in another market to push its bedrock line, Blue. The Labatt concept involved having an actor making calls at random to unsuspecting businesses - out of the blue, get it? - with a simple but potentially funny scenario. The whole thing dependend very much on getting the right person on the other end of the phone but odds are good that with a few calls, you could wind up with 30 seconds or so of radio that truly stands out from the clutter.

In the Irving spots, the calls were to people who had won an item in a Mainway contest. They worked really well the first time they aired, since it was hysterical listening to some guy answer questions about winning a bottle of juice as if it were a million bucks. He's humouring this over-the-top chick making the call. However, by the second or third season, the whole thing got tired.

There are some devastatingly funny radio spots for everything from the Toronto Symphony Orchestra to a Toronto car dealership. None of it - absolutely none of it - is conventional.

Is there talent enough to do this kind of creative work around here?

You betcha.

The challenge is finding the clients willing to go with it.