RBC confirms two year flat line for province's economy

RBC Economics is holding to its forecast that Newfoundland and Labrador will go from leading the province in economic growth this year to trailing for at least two years.

RBC predicts resource megaprojects that will start in the next decade will renew optimism after 2010.

-srbp-

De-Hearn-iated news

Canada's adolescent government (it isn't newborn anymore) is taking action to protect the ocean environment.

Lawrence Cannon said so last Friday.

But the announcement doesn't even include a mention of the adolescent's fish minister, Loyola Hearn.

Very unusual, indeed, given that the money will likely mean a great deal to people in Newfoundland and Labrador.

-srbp-

The best of both worlds for NS

The Government of Canada and the Government of Nova Scotia today reached a deal to settle a dispute over the 2005 offshore equalization offset payments deal.

Under the deal, Nova Scotia will be able to chose either the O'Brien formula with a cap or the Equalization formula as it existed in 2005, whichever delivers more cash to the provincial government.

The agreement is similar in principle to an arrangement reached by the federal government and the Government of Newfoundland and Labrador in the early 1990s in order to maximize equalization and offsets available to the province.

Danny Williams dismissed the agreement as saying "yes to less."

He's wrong.

The ability to toggle back and forth between the two formulas means the Nova Scotia government can always choose the mechanism that will deliver the most cash. Under the federal 2007 budget, Nova Scotia would have been required to switch from the existing formula to the amended O'Brien arrangement with no ability to change, even if the original agreement proved more lucrative.

The agreement works to Nova Scotia's advantage since the province is not forecast to become a "have" province before the expiration of the deal and therefore qualifies for both equalization and the 2005 bonus payments. By contrast, Newfoundland and Labrador will cease to qualify for equalization - and by definition become a "have" province - within the next two years. That change is due entirely to the performance of the provincial economy, especially oil and gas deals signed long before Williams became premier.

The 2005 agreement delivered a single $2.0 billion advance payment. No additional money has been received since the original cheque, despite false claims by the province's finance minister that the current budget contains money from the 2005 offshore deal. The provincial government merely draws down against the advance each year based on a calculation of what the province is entitled to receive. The figures in the budget represent an accounting practice, not new money.

By contrast, in 2005 Williams did say yes to less than he had earlier requested. Williams' initial demand was for a payment from the federal government equal to all the provincial government's offshore revenues, paid over the life of offshore production. In today's terms and based on the provincial government's own figures, that demand would have been worth in excess of $16 billion for the Hebron project alone.

Williams settled for $2.0 billion in cash.

-srbp-

Coincidence?

On CBC radio this afternoon, provincial affairs reporter David Cochrane mentioned a possible increase in the size of the provincial cabinet and mentioned splitting the agriculture and forestry bits off the natural resources ministry. The reason given was that agriculture hasn't been getting the attention that it deserves.

Hmmm.

That wasn't in Charlene Johnson's briefing notes for her participation in a forum sponsored by the agriculture federation last Friday. Johnson, incidentally, is parliamentary secretary to the natural resources minister.

In fact, when asked about departmental configurations in a future cabinet, Johnson begged off the questions saying it was The Leader's prerogative.

The idea was introduced into the discussion by Simon Lono based on the observation that since minerals and oil had such attention in the administration, the other bits - like the trees, vegetables and cows - were being left behind. Lono made a straightforward and practical observation based on his own experience in government and the the idea met with some positive reaction among the handful of people attending the session. Sadly, no media were there to record it for posterity.

Now if David heard this idea long before last Friday, there's no doubt he'll flip an e-mail pretty quickly to sort it out. But, something says the idea wasn't in the idea pile at the Tory campaign bunker until after that Friday. Smart politician that she is, Johnson should have noticed the practical suggestion, the positive reaction and brought it back to the The Leader.

Poof, the day after the election, Cochrane is mentioning it as something he picked up.

Now, if David heard this idea after Friday - or if he got it from Charlene - maybe he should do some more asking.

Update: [12 Oct 07] Two e-mails, one from david Cochrane, shed some light on the original of creating - once again - a department of agriculture, likely coupled with forestry. Cochrane's comments were based on discussions going back well before the election. Another e-mail pointed out that the idea was floated at least as far back as January within the agriculture federation.

Interesting then, that the idea never turned up during the campaign, endorsed or even mentioned by Charlene Johnson, apparently, and not mentioned within the Progressive Conservative platform. Agriculture contributes significantly to the provincial economy and having it buried away inside natural resources hasn't given it the attention the sector deserves.

Let's see if the new cabinet structure includes a separate agriculture department and/or whether other departments mgiht be re-arranged to deal with other possible policy initiatives. in his comments on CBC radio, Cochrane suggested an increase in cabinet by one seat which would bring the total up to around 17 or 18. It will be interesting to see if that view holds or if - as Shawn Skinner suggested the same day - the new circumstances in the province warrant a change that might be wider in scope. There will be change; it's just a matter of how much.

A new department of Labrador development and aboriginal affairs? A new department of community development and culture?

-srbp-

Finish the drive in '65

But will we all be living in heaven by 2011?

The tale of the pollster tape

Res ipso loquitur.

	CRA (Aug 07)	Telelink (Sept 07)	Actual (Oct 07)
P.C. share of eligible vote	62%	42%	42%

Update: 10 Oct 07. Interestingly enough, the PC Party captured 58.55% of the votes cast in the last election with a 72.52% turnout of eligible voters. Do the math. It works out to 42% of eligible voters.

-srbp-

Election results: the past in the present

Surprise?

in some respects, yes.

The projections of 43 progressive Conservative seats seemed extraordinarily high, as did the popular vote projections.

Year	1966	1956	2007	1962
Percent	62.8	61.6	60.9	58.9

 

At the outset, though, everyone must start with the understanding that while the Tories hold nearly a record share of the popular vote, it came in an election with a near record low turnout of eligible voters. This point cannot be ignored. While our system allows such a result, we should be collectively concerned about why so many of our fellow citizens did not exercise their right to vote. Apathy and complacency have been tossed out as possible reasons, almost exclusively by the Progressive Conservatives and repeated by commentators who spent a lot of time traveling with the campaign. 

Outside of that tiny bubble of opinion, though, there is absolutely no insight into the views of nearly half the population. Some will casually dismiss those who did not vote this time. Others will talk for a while about changing the electoral system to something other than the winner-take-all system currently in place in each district.  Any words spent on reform are basically so much hot air, as will become plain below. Incumbents have no interest in electoral reform that might threaten their pre-eminence.

The Blue

For the Progressive Conservatives, the election reaps the rewards of a classic approach to politics:  with full coffers, spend it while you got it. That approach invariably works and it worked in spades in 2007. 

At least one commentator this evening referred to Danny Williams as an atypical politician.  He is not.  In fact, Danny Williams is a shrewd, capable and extremely aggressive leader in the tradition of Newfoundland politicians.

Williams has been compared to Smallwood and rightly so. Some may take that as a disparaging remark. Some old Tories likely wince at the comparison, but the hallmarks of Smallwoodism  - the cult of personality, the ruthless attack on any dissent, starving of opposition districts and overwhelming domination of cabinet and caucus by a single, single-minded personality - are hallmarks of the Williams approach. One can only stand in awe a politician who understands that and can capitalize on it so effectively.

The Red

For the Liberals, four years of indifference have reaped their own reward. The party is a ruin, with no district organizations in most places and a crushing debt. Whoever steps forward to lead the party will have a daunting task in front of him or her.

The Liberals elected in 2003 never got over the shock of being out of comfortable government jobs. They failed to make the mental adjustment to opposition;  they had not gotten past the simple understanding that their job as the Opposition was to develop a coherent set of alternative policies.

This should be no surprise of course, since the 2003 Liberals had campaigned on policy platforms essentially identical to those introduced by the Progressive Conservatives. Given the choice in 2003 between real Tories - nationalist to the core - and fake Tories, the people opted for the brand-name over the generic.

Try and slip a sheet of paper between the Liberal, New Democrat and Conservative parties on major issues such as the energy corporation, FPI or the province's financial position. Science cannot conceive of something so infinitesimally thin. Liberal Party policies, from the administration of the House of Assembly to the waste management plan to the poverty reduction strategy continued after 2003 or were introduced by the Williams based on the work already done.

One can hardly expect that the three Liberals and the one New Democrat in the legislature after this election will be any different tomorrow than they have been. If there are to be any new ideas on the province's political scene, it will surely have to come from somewhere other than the legislature. The ideas will have to come, as well, from someone other than the ones  - like John Efford or Danny Dumaresque or Walter Noel - suspected by some of eyeing the Liberal leader's job.

With the departure of Roger Grimes, the opposition Liberal caucus never took seriously to the business of organizing themselves as anything beyond a loose association of people scared of the government party, overawed by polls, and desperately afraid of the result which they inevitably received. In his concession speech, Gerry Reid seemed genuinely relieved of the burden he bravely shouldered, and shoulder it he did despite the onslaught of personal attacks waged on him from the Tories from time to time.  But listen to his words and one can see that he - and likely most of his caucus - had been psychologically defeated long before the writ dropped. They were simply going through the motions.

That said, there were a number of Liberal candidates who stood out for their abilities and for their promise. In any other situation, some might have succeeded.  At any time in our province's history, the next crop of politicians for any political party come out of defeated opposition candidates, Liberal or Conservative or New Democrat.  if that is indeed the case this time, we may see some bright spots in the future.

The Orange

The New Democrats attracted some talented people as well, but the party remains localized in St. John's.  The party remains incapable of developing a strategy for growth. Once again, the people of the province have seen its usual pattern of running names on ballots rather than focusing on seats where it might stand a chance of winning. As such the party will be doomed to be a marginal political force at best, no matter what patronizing praise its leader receives from the Premier.

The Future House and the future province

If the recent past is any indication, the legislature will slip increasingly into irrelevance.  The House will sit fewer days.  Bills will be passed with less and less debate. Three of the four opposition members are the same people who allowed the House to run as it has over the past four years, including agreeing in secret to the speedy passage of the Green bill in a manner that made the bill itself a mockery of its author's intentions. The public will know less and will have a weaker ability to discover anything.

With such a large caucus, Danny Williams may well be faced with a dilemma of political management unseen since the 1980s.  Brian Peckford's solution was to buy the co-operation of his caucus by giving them all extra stipends and positions as parliamentary secretaries. With a speaker, deputy speaker, chair of committees and government whip, there are only 39 left to accommodate.  A cabinet of 20 with a matching number of parliamentary secretaries will ensure that all stay nicely in line.  let's see if that is the solution which comes, if not this year, then in a few more.

In the estates, don't worry about the news media becoming the opposition.  Corporate concentration in some cases and political inclination in others will ensure that self-censorship will kill or weaken anything that appears critical long before it hits the page or the airwaves.  As anyone paying attention would have already seen since 2003, anything that does not conform to the official line is , by definition, critical and, therefore, bad.

And in cyberspace, things will likely carry on as usual. Some will view Bond Papers as partisan or personal.  If they do, they merely miss the point. It has always been about policy choices and alternative information.  And whether that goal has been met or not on occasion, that will remain the focus, for as long as it can be sustained.

Our descendents 40 years hence should not be able to look back on this time as we do to a time 40 years ago and wonder why no one pointed out the obvious alternatives to decisions taken in near unanimity.

The past is too much in our present to give anyone any comfort.

-srbp-

Danny's "mark your x" cheap shot

Couldn't get the Aliant link from the earlier post?

Well, here's the vid that backs it up.

Tory star chamber task force

Buried in the infamous Blue Book 2007 are a couple of peculiar references that are worthy of further inquiry.

First, in a section dedicated to strengthening the volunteer and not-for-profit sectors in the province, there's a promise to increase funding to the Community Services Council. It isn't clear why one not-for-profit in the province would be so favoured as to be singled out for specific mention in the Tory campaign manual.

Don't bother looking for the CSC annual report on line to see how much cash CSC gets currently. You won't find one there at all; there's just a list.

Second, there's a reference to continuing "to implement the recommendations of the task force on the not-for-profit sector."

What task force on the not-for-profit sector?

Try googling it.

You won't find a thing, except for the links to the PC Party website.

So when was this task force set up?

Who sat on it?

What did the task force report say?

Why has its very existence been kept secret?

-srbp-

A study in contrasts

So how come the Santa Claus crack made it into the Telegram, yet even though the Telly reporter was on the spot, the far more significant "idiot" remark didn't?

-srbp-

Mark your X for "idiot"

High campaigning in Bay of Islands.

Take a gander at this clip from NTV and listen carefully at the end.

Danny Williams encourages one disgruntled man in Bay of Islands to vote for "idiot" or "ed-iot", perhaps a disparaging reference to Liberal incumbent Ed Joyce who has been a thorn in Williams' side ever since he defeated Williams star candidate in 2003. Williams spent the last few hours of the 2007 campaign trying to defeat Joyce.

Maybe this is another one of Williams' weak efforts at humour by combining words like he did with NOIA and "annoying". For a guy who supposedly hates cheap, personal attacks, Williams shows a remarkable penchant for...well... cheap, personal attacks.

Mark your "x" for idiot

If the link on the word "clip" above doesn't work, click on the link above, follow the instructions and there it is.

Note: Some people are having trouble with the links. It opens in a separate browser or a popup. Check your settings. I'll see if I can embed the clip.

-srbp-

Vote Freely!

One of the more curious contributions to this election campaign has come from some blogging under the name I.P. Freely.

There has been a steady flow of videos, bumper stickers and bingo cards all taking pokes at politicians, but mostly at Danny Williams. Apparently, when you are the most popular guy around, you are also the easiest target.

Some of these have been quite clever and well done. The Hebron secret deal "'Danny and his chamber of secrets" looks like a political television spot, but without the better quality sound and video production qualities. Others, like the one about Danny putting oil in the ground, just head to nowhere funny or pointed.

As we draw down to the last few hours of the campaign, here are Freely's latest work samples.

First, there is the exhortation to vote freely. It's simple, funny and includes an inside reference to another recent video that's worth checking out as well for it's simple, funny message.

Second, there's a video that is equally simple but the impact comes entirely from the audio. While the slides and movie images scroll through a series of Tory promises, the audio is Danny Williams telling people what to do at the ballot with someone who breaks a promise. Some of the stuff produced in Ontario during its election campaign have had better production values, but in terms of bang for the buck, this sort of thing - having a leader speak eloquently against himself - creates a sort of jarring effect that is difficult to achieve. This sort of thing can only happen where the political leader takes positions based on something other than logic and consistency.

Cognitive dissonance.

Surrealism.

Thy name is Danny.

-srbp-

The projections, the polls and the political reporters

The political reporters

A panel of CBC reporters gave some interesting insights on a province-wide Morning Show this morning into the final days of the campaign and what may occur on Tuesday.

In particular, it was interesting to hear provincial affairs reporter David Cochrane's reporting of comments with the Progressive Conservative campaign on possible seat outcomes ranging from 38-39 seats for the ruling party to as many as 44. The Tories have been rightly trying to dampen sweep expectations since they know the whiff of overwhelming success doesn't give their own supporters motivation to turn out at the polls and may increase the motivation of others to vote.

Unfortunately, that also smacks into a problem with the core Danny Williams message for the past year or more, namely that he needs a strong mandate - read as many seats as humanly possible - in order to carry forward. The two things comes together nicely in the major Tory message of the past week and exemplified in the only new Progressive Conservative advertising released during that time. A radio spot, likely airing only in areas where the Tories are concerned to pull out votes, has Danny Williams stating emphatically that "we need a strong mandate."

Tory callers to open line radio shows have echoed Williams' messages of the need for political parties to earn a vote and one caller went so far as to express concern that voters may vote for a strong opposition - as opposed to a strong mandate for her favourite - to the extent that there might be a change in government. The chances of a Bob Rae surprise as in the Ontario 1990 election is remote but it may be revealing to see a staunch Tory supporter expressing that concern.

The projections and the polls

One of the few people talking openly of a potential sweep has been Don Mills of Corporate Research Associates (CRA). Mills' quarterly polling has fueled the opinion that Williams enjoys overwhelming popular support across the province. He's refined his seat projections in recent days, not based on polling research mind you but by gleaning some information from media reports. Mills now projects the Tories will win 43 or 44 seats.

bear in mind that, at best, Mills' numbers are simply a brute estimate of popular vote. They lack the necessary subtly of a properly constructed political poll that would allow someone to draw informed inferences. Indeed given that some of the more useful questions have tended to be the property of specific clients - like the Government of Newfoundland and Labrador - Mills' comments on issues such as voter satisfaction have sometimes proven to be misleading since his own research is inadequate. He can't or won't disclose client data, even though he knows what the results are and even where the results give a deeper and more detailed picture than the one painted by the three simple questions Mills discusses publicly.

Just to illustrate the extent to which Mill's number support a variety of potential outcomes in this election, remember that Mills is predicting a sweep or near sweep. His figure would give 91% of the seats in the legislature.

Let's look at the unadjusted CRA poll results and see what they tell us, potentially. By that, we mean we will look at what appears to be the raw percentages of the survey instead of the percentage of decided voters Mills uses.

Using that approach, what we see over the past year is a range of potential popular support for the Tories ranging from 53.2% in November 2006 to 62% in the most recent poll result.

Put that in perspective by looking at popular vote numbers during elections in Newfoundland and Labrador since Confederation. In the 1996 general election, the Liberals took 71% of the seats with 54.9% of the popular vote. In 1982, Brian Peckford won 85% of the seats in the legislature with 61% of the popular vote. Those are two of the largest majorities since the mid-1970s when the voting system changed away from having several candidates elected in a single district. In 2003, Danny Williams' Progressive Conservatives garnered 58.5% of the popular vote and won 34 seats, 77% of the legislature.

Eighty-five percent of the seats in the current legislature is 37 seats. Seventy-one percent would yield 31 seats. Even allowing for demographic changes within the province, including outmigration and internal migration, it seems highly unlikely that popular vote numbers in the historic ranges for an incumbent party would yield an increase in seats of seven to 30% more than the historic seats numbers from a given share of popular vote.

Winners and losers

Based on the apparent popular vote numbers from CRA and historic data, it would be reasonable to expect the Progressive Conservatives to be elected with a seat total upwards of 40. That's pretty much in the range expected in the so-called realistic projection some Tories mentioned by Cochrane said was their likely outcome.

By the same reckoning, Don Mills' seat count of 43 to 44 seats would be highly unlikely.

There are a number of factors that might influence the final outcome and, as with the publicly available polling, this post is as much an exercise in speculation as anything else. However, some things that can be said or issues to watch:

1. The Tories will likely win a second majority. An Ontario surprise would take something coming that no one has foreseen. That said, every seat below 40 undermines the "strong mandate" argument.
2. Labrador appears poised to go entirely for Liberals or New Democrats.
3. John Hickey's defeat in Labrador would be a major blow. Even if the Tories pick up Torngat Mountains, the loss of a cabinet minister from central Labrador is a significant setback for the incumbent administration's plans for Labrador development.
4. Potential big loser: CRA. Every seat below 44 for the Tories undermines CRA's rep. Ditto the bigger the gap between the vote results and CRA's last poll.
5. Will it have loopholes like the lobbyist legislation? Promised whistle-blower protection seems like a last minute effort to counteract a rep even Mark Critch could nail from Halifax. The lobbyist registration act from the first Williams administration has so many holes in it you can drive a fleet of cable truck's through it. Expect whistle-blower legislation that in effect makes to easier to identify and then fire the troublemakers.
6. Seats to watch:

- St. John's West and Conception Bay South. Strong candidates running against incumbents. Even if there isn't an upset in one of these seats, a strong showing by the Liberals will change the interpretation of St. John's as Tory country.

- Burin-Placentia West. The NDP seem to be running a strong campaign there, dropping the former national party leader in over the weekend.

- Labrador's four: How the four seats go will indicate a major political rift to be managed over the next four years, and possibly beyond.

- Isles of Notre Dame and Signal Hill-Quidi Vidi. The Tories are working to unseat the opposition party leaders. let's see if they can do it.

- Straits and White Bay North. Is anything going on with Trevor Taylor or are the hints of some local push-back just unsubstantiated rumour?

- Bay of Islands. Eddie Joyce is to Danny as Lynn Verge was to Clyde. Let's see if Ed can withstand the onslaught of the premier in the district on the last day of the campaign on top of the small-town petty politics that has been worked with the city council and chamber of commerce in Corner Brook.

Frozen space turds

This segment of a talk by Colonel Chris Hadfield covers the simple issue of how astronauts handle human waste in space.

You'll never look to the heavens again with the same sense of awe.

well, at least not without safety glasses.

-srbp-

A Bond Papers freebie

I knew Gerry and da boys were hard up, Trevor, but it's pretty bad when I gotta do the Liberal advance job just so I can kick the crap out of 'em on Tuesday.

The first 'Fun with Pictures' entry

The idea has been out there for a week.  We've had a hard time picking through the flood of responses but here's one that is surely going to be a top contender for the winning prize.

To avoid any repercussions to contest entrants, we'll be keeping their identities a secret, but to maximize your laughter, we'll be sharing the entrants creativity.

You can almost hear the guy saying telling Lorraine that the tyke's first words were "quite fwankwy".

Apparently he crawls, but only on a go forward basis.

Pretty soon he'll be shedding the pampers and doing his business on a go potty basis.

-srbp-

The past in our present, once again

Finance minister Tom Marshall today raised the spectre of 1933 and the collapse of Responsible Government in Newfoundland. He did so in the context of launching an attack on Liberal leader Gerry Reid based on Reid's comments in Labrador which Marshall took out of context. Marshall said the context was irrelevant, just saying the word bankruptcy was bad.

Marshall raises an interesting point for anyone looking at this campaign and wondering whether or not to vote, let alone decide which candidate to vote for. If the Telelink/NTV poll is any indication, that could be upwards of half the electorate.

The incumbent Tories make much of the supposedly poor financial state of the province in 2003. it was largely a fiction, as much as Marshall's claim that there was $305 million in the current budget from the 2005 offshore deal. That little myth has already been disposed of. There is no money in the budget from the 2005 deal; there is merely a set of numbers put on the paper to show the draw down on the cash advance. But this money has already been spent. it does not exist as new cash this year.

So what would it take to bankrupt the province? Let's take a look at two examples from the province's history when financial circumstances were indeed tight.

The 1933 Debacle

- $100 million in debt.

- $30 million in government revenue.

- $35 million gross domestic product.

- $3.5 million government budget shortfall.

A decade of political instability characterized as much as anything else by a remarkably familiar style of politics:

"Rival politicians … in the desire to secure election, were accustomed to make the wildest promises involving increased public expenditure in the constituency and the satisfaction of all the cherished desires of the inhabitants. The latter, as was natural, chose the candidate who promised them the most.

“…the electors in many cases preferred to vote for a candidate who was known to possess an aptitude for promoting his own interest at the public expense rather than for a man who disdained to adopt such a course.

“They argued that, if a man had proved himself capable of using his political opportunities to his personal advantage, he would be the better equipped to promote the advantage of his constituents; an honest man would only preach to them.”

Not a single provincial party in the current election is speaking of debt reduction. Rather there is talk of spending increases and, where anyone whispers the word, debt management. That is code for rolling over debt at cheaper interest rates or, as Danny Williams has said, actually borrowing more money on top of the $485 million in additional debt the government has incurred since 2003.

In 1933, the government debt was three times the size of the provincial economic output. The total government budget was slightly less than the economic output and the annual budget was short by $3.5 million or $10 percent of its total.

That was the state of the place when the legislature voted to accept an appoint commission government.

Using figures in Budget 2007, it would be virtually impossible to repeat that scenario in the current context even if every government for the next decade was completely insane. Canadian fiscal transfers would forestall bankruptcy or anything as dramatic as the 1933 situation and most likely action would be taken long before the provincial government put itself into the 1933 state again.

Just to put it in perspective consider that in order to come close to the 1933 mess, the provincial debt, on an accrual basis would have to reach upwards of $70 billion compared to the $11-12 billion currently. The annual provincial budget would have to reach spending of almost $20 billion annually, compared to the $22 billion current gross domestic product (approximate, using current dollars). The annual shortfall would have to be on the order of about $1.5 billion to $2.0 billion.

The early 1990s

- Provincial debt approaching $8.0 billion on an accrual basis, significant amounts held in high-priced foreign currencies.

- Provincial GDP of slightly more than $8.0 billion.

- Low oil prices. (US$8 in 1992 compared with forecasts of a decade earlier that oil would be well over $40 and may reach as high as $100)

- Low mineral prices (mineral prices are cyclical and are currently high)

- Declining fishery (followed by cod moratorium)

- Low Canadian dollar.

- Government spending on current account of $3.5 billion (approx.) with annual declines in revenue due to economic circumstances.

To match that situation, the provincial debt would have to reach the better part of $22 billion compared to the current $11-$12 billion. Government spending would run at about $9.0 to $10 billion, assuming that current account spending was about 43.75% of GDP and the annual deficit would be about $1.0 billion.

That situation is not as extreme as the 1933 scenario by any stretch. Mineral prices are cyclical and will likely drop in the next decade and remain low for a period. Likewise, and based on recent experience, oil prices may not continue at their current high levels. As for the fishery, its future economic performance is not guaranteed either, especially in light of global competition and declining resource in some sectors.

If we allow for energy corporation debt on existing projects of about $500 million (acquisition plus development costs, before revenue flows )and a Lower Churchill project of approximately $5.0 billion, the current provincial debt would reach about $17 billion.

As an aside, the Lower Churchill project website has now been taken over by NL Hydro. As a result background documents on the consultation process have vanished to dead links. Those dead links contained project cost estimates.

Taken altogether, the prospect of imminent bankruptcy for the province is remote. Even allowing for added debt over the next decade coupled with an economic downturn, it would almost impossible to conceive of a realistic scenario in which the 1933 situation recurred.

The situation in the early 1990s is not quite so remote but it would still take a concerted effort to undo the economic progress of the last 15 years.

The cost of developing the Lower Churchill and offshore projects would not decline significantly in the event of an economic downturn, for example, but resulting revenues would. As such it is possible to develop scenarios in which the provincial debt climbed to levels significantly above their current one, while at the same time, the size of the economy and resulting government revenues did not increase as dramatically or even declined.

Consider that Budget 2007 forecasts a decline in the provincial gross domestic product over the next three years while at the same time forecasting increases in government spending on the order of over nine percent in the same time frame.

This is a very rough comparison of two historic incidents with the current situation. No matter how one looks at it, the prospect of the province becoming bankrupt within the next decade is remote.

That's part of what makes Tom Marshall's comments odd. After all, if the provincial economy and government finances are so fragile that a mere $100 million of spending annually over a decade would break the treasury, his comments only raise questions about his own plans to borrow and spend considerably more than that in the same time frame.

-srbp-

Federal election in early December?

There are signs.

-srbp-

One to watch

They may have a small budget but the NDP campaign is innovative.

The NDP will be worth watching to see how effective it is.

One thing for sure: they have the best radio spots so far, bar none. Unfortunately, there's no link to the audio at time of writing. As one comes available, we'll supply it.

-srbp-

Fun with pictures, more fodder

From the PC party campaign website. 

Remember, photoshop if ya want, but these seem to be more likely candidates for witty captions.