Freedom From Information: who paid for the junket?

The Premier and natural resources minister took a trip to Qatar and London, England last June.

They held meetings in London with an international energy consultant before heading off to Qatar for a graduation ceremony at the College of the North Atlantic’s campus there. 

While in the Middle East, they also shilled for a failing refinery project:

“Part of what we are doing over here,” natural resources minister Kathy Dunderdale told The Telegram, “ is looking for new investments and we'll be promoting the refinery in terms of attracting a partner, so hopefully this project's going to continue”.

They held meetings the very same day the refinery proponents sought bankruptcy protection.

The Qatar portion of the trip lasted three days. The news release still carries the browser banner for Sport Newfoundland and Labrador six months after the event.

So how much did the trip cost the taxpayers?  Not as much as you might expect.

According to the claims reports released December 22 by the provincial government, natural resources minister Kathy Dunderdale got all the way to Qatar via London and back for a mere $17.70 in travel costs.  She billed $1,106.34 in accommodations and $327.02 in meals.

The Premier must have used the same magic carpet, since the transportation cost for his portion of the junket was a mere $210.02.  He must have travelled in the first class portion of the carpet. His accommodations cost $1,129.66 and his meal charges were $148.45.

Now without even knowing for sure, it’s a safe bet that two adults can’t get all the way from St. John’s to the Middle East and back for less than 300 bucks, as these claims would suggest.

And lest you think something is moved around in the claims and the travel bill is buried in the room charges, consider that Qatari hotel rooms don’t appear to come so cheap that a few nights in Doha and maybe one in London would come in at around $1,200 bucks unless one was living extremely frugally.

Now maybe the minister and the premier were guests of the College of the North Atlantic and had access to some sort of VIP guest suites in Doha.  Maybe they were the guests of the local government. Still, even with that, the travel costs should be higher if the provincial government picked up the portion that involved the meetings in London.

Clearly, the actual costs of the trip and the expense claims don’t add up; and if the minister and premier had their bills paid by a third party, the public has a right to know who footed the bill.

So how much did this junket really cost and who paid for it?

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Freedom From Information: Ministerial claims now on line

Just before Christmas, the provincial government released a batch of expense claims for provincial cabinet ministers in a policy supposedly aimed at fulfilling the government’s commitment to transparency.

The claims reports will be issued twice, yearly, covering six months of the calendar year. (January to June and July to December) As such, the reports don’t match the government’s own fiscal reporting year (April to March) and they only cover claims paid during the period. Any claims made in December 2008, for example, won’t be included unless they were paid before the report was issued before month-end. As such, any claims made for December won’t be revealed to the public until June 2009.

The government accounting system is much more flexible than this and would easily allow government to report on the quarterly basis already used by the federal government for its proactive disclosure. The feds also reveal any contracts let by departments on a quarterly basis and include expense claims for senior political staff. The federal reports thus provide considerably more disclosure and are considerably more transparent than the provincial ones.

Any more detailed information on the claims would require an access to information act request with all the associated fees and charges, delays and censoring. As your humble e-scribbler discovered last year, Executive Council is so vigorous in discouraging requests for information that it doesn’t even apply its own policies as posted on the government website.

Informal requests are non-existent - at least when it comes to the central hub controlling government information - and the office will only start processing a request once a form has been completed and a fee submitted. That isn’t what the policy states:

Before you make a request using the legislation, you may wish to try other, informal means to obtain the records you are seeking. Contact the public body (Access and Privacy Coordinators) which you believe has the records. Often, you can get the information you want in this informal way, without using the legislation. This route will often be faster for you and less expensive for public bodies to administer.

This new expense claim disclosure policy is a baby step in the right direction but there’s a long way to go before people who believe in government transparency and in access to information will stop referring to current provincial government policy as freedom from information rather than freedom of information.

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On the street

One of the little treats to be found at the New York Times online is Bill Cunningham’s “On the street” slideshow.  The Times’ octogenarian photographer combines his clear-eyed stills with glorious commentary in his own voice, unscripted.  The subject matter is whatever Cunningham happened to notice in his travels about town on his bicycle.

In the midst of a newspaper and website that is an intellectual multi-course feast, Cunningham’s work is a small confection to cleanse the palate. Don’t make the mistake of treating it as something to be easily discounted, though.  “On the street” is able to hold its own with the rest of the paper for its visuals, if nothing else.

This week’s treat – called Frosted – focuses on the sights along Fifth Avenue.  Cunningham documents the people on the street but spends the most time describing in wonderful detail the store windows.  His accent is charming, as he says Car-teer repeatedly instead of Cartier (Car-tee-ay), without the least bit of self-consciousness at his butchering the name of one of the finest jewellery stores in the world.

There are others that focus on fashion and footwear but each week, you can never be sure of what will appear.  All are tackled, however, with Bill Cunningham’s enthusiasm for the city in which he lives.

Check it out.

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The Queen’s Christmas Speech, 2008

Happy Holidays!

To all Bond Papers readers:

May you enjoy peace, prosperity and the continued love of your friends and family today and through the year.

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Erasing the distinction, to our detriment

Used to be, not so long ago, that public servants were different from political staff.

The distinction was important as one served to keep a check on the other.

No longer.

According to CBC News, the premier has appointed a top “aide” – a term normally used to refer to political staff – as deputy minister of natural resources, a position at the top leadership level of the public service.

The distinction between the top echelons of the public service  - typically non-partisan permanent employees of government - and the political staff took a while to erase but in the decade since Brian Tobin really started to undermine the difference, the two have now fused together. 

The damage to government and the public service has yet to be calculated.

In some respects though we can already see it.

Only last spring,  Tom Rideout resigned in a dispute within cabinet over road work for his district.  The premier admitted that a senior member of his political staff oversaw the allocation of spending, ostensibly to ensure it was done fairly.  of course, the result was anything but  fair and impartial according to a set of standards applied transparently and equitably to all cases, irrespective of partisan, political considerations.

Not a single news outlet in the province reported that road paving was decided by political staff.

Instead, they parroted the premier’s characterisation of the situation as “normal” even though it was  - quite obviously - far from that.

Is it any wonder that government here and elsewhere continues to be unaccountable, when even news organizations that are usually pretty careful about their use of language can’t get the rights of things?

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Blind obedience to authority

Researchers at a California university repeated the famous 1961 Milgram experiment on authority.

They got the same result.

“Although one must be cautious when making the leap from laboratory studies to complex social behaviours such as genocide, understanding the social psychological factors that contribute to people acting in unexpected and unsettling ways is important,” [the researcher] wrote.

There’s a fairly lengthy – but readable summary of another researcher’s commentary on repeating the experiments as well as the article from American Psychologist in which Jerry Burger reports on his work.

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Missing bits

From a CBC story in which, among other things, Danny Williams brushes off the NAFTA issue in the Abitibi repo job:

The Newfoundland and Labrador's expropriation does not include the mill itself, although the government will take over a hydroelectric power plant at Star Lake, which sells power to the provincial grid. The government has said it will compensate AbitibiBowater for the Star Lake plant.

People should read more.

The expropriation bill seized all hydro assets AbitibiBowater held in central Newfoundland but they went beyond that.

They seized hydro assets  - way more than Star Lake - belonging to other companies and those companies are named in the expropriation bill:

• Fortis (Exploits River Hydro Partnership involves Central Newfoundland Energy, a subsidiary of Fortis Generation)
• Clarica Life Insurance (now owned by Sun Life)
• Enel North America

All have likely lawyered up pretty tight.  An e-mail inquiry by your humble e-scribbler to Sun Life netted a nil response.  The company’s public affairs department wouldn’t even confirm what involvement the company had in the hydro project in the first place.  As dumb as that kind of response is, that’s how you can tell the lawyers are on the job and bums are really tight:  a company won’t even confirm information that is currently in the public domain. 

There was no hope they’d offer any remarks on the substance of the dispute.

But seriously, people should read more and maybe pursue a bit more of these stories.

Like how does Beth Marshall’s husband Stan, Stan the Fortis Man feel about Danny frigging over his investments? Stan’s been known to have a blunt opinion or two.

Like is Enel – or any other company partnered with Newfoundland and Labrador Hydro – reconsidering its investment based on the expropriation? 

Or has anything been expropriated beyond the Abitibi bits, which would be contrary to the law, and which would have the effect of strengthening Abitibi’s case that the expropriation was discriminatory?

Or have they really all lawyered up, which is a sign of a much bigger dispute and much bigger problem than you’d think if you got all your news from, say voice of the cabinet minister.

Maybe if Lorraine Michael and others hadn’t been so flattered that Danny had deigned to let them in on such historic action – “socialist” action, as Lorraine proudly declared it in the legislature – that they turned off their brains, they might have noticed the sweeping nature of the expropriation bits of the bill. 

Nope.  If people paid attention to some of the details other stories might emerge, one’s that have more to do with the current issue than the pap being spewed from all manner of organs and orifices.

Like for instance, they might have found the inadvertent humour in this comment from the Premier:

"You know I'm a lawyer of over 30 years, so blowhard, five-page letters that get sent to everybody in the country mean nothing to me. I know the law."

Sometimes the five page blows only get sent to one party, but the point is still the same.  Knowing the law is something else though.

And that’s where people might want to separate the bluster from the evidence.  You see, for all the praise he gives himself, Danny Williams record in court  - with decisions rendered by judges  - isn’t that good.  Well, not if the two prominent cases that have been adjudicated in the past five years are to be considered. 

In Henley v. Cable Atlantic, the Premier lost badly in a case he didn’t have to even fight.  He elected to dispute a contract with a guy hired to help with the sale of his old cable company to Rogers. The guy  eventually got paid in full but not until Danny Williams shelled out for expensive lawyers to fight the case  - in a losing cause – through two Ontario courts. The bill at the end must have been double what it would have been if Williams hadn’t been so bloody minded at the start.  SO if the guy is will to waste his own cash on a loser, imagine what he’d do when he was playing with other peoples’ money.

Enter Ruelokke v. Newfoundland and Labrador, in which the provincial government – in a brief that surely was approved by the province’s top legal beagle if not written by him – argued that a clause that said the final decision by an appeal tribunal was binding on the parties actually meant that none of it could be reviewed by a court.

That got laughed out of court just on the English comprehension alone.  The rest of the evidence was an unflattering portrait of an administration that was all over the map when it came to the whole business of finding a boss to run the offshore regulatory board.

Then there’s the 2005 offshore deal in which the government started out looking for a federal transfer that doubled offshore revenues forever.

They settled for $2.0 billion in cash.

Then there’s the Hebron deal.  it could be worth $10, $20 or $28 billion depending on which hyper-inflated estimate you wanted to take at the announcement. (Yes, they settled for two billion in cash on the other one)   Guaranteed flat 1% royalties up front for the companies, a higher royalty rate tied to the price of oil (above an amount it flows;  below – nothing),  a give away of historic proportions on the construction side, a deal in which the companies  - alone - have a decade to decide whether or not to build the project.

You get the point.

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Condie and Hillary are listening too.

Great horny toads!

A couple  of weeks ago, Danny Williams claimed that president-elect Barack Obama was copying the Williams formula for economic success:

“You know what I like the most is Barack Obama is listening to what we're doing here,” Mr. Williams said during question period to roars of applause from his Conservative caucus.

Okay, in the looney tunes world of Newfoundland and Labrador politics – and that was one of the more delusional claims from the crowd currently running this place – things may be about to a get a bit more zany for Danny and the rest of the repo crew owing to its recent adventure in central Newfoundland. 

That would be zany in a bad way.

You see, they’ve managed to make it onto the radar screen at Foggy Bottom but not in a way that anyone really wants, especially when that radar screen sits in Newfoundland and Labrador’s largest overseas trading partner. forbes.com has the story.

Yes, Yosemite Dan has managed to wield the expropriation bill pretty much like the two-by-four between the eyes of the camel:

"We are concerned that this action could negatively affect Canada's investment climate," the State Department said in a statement. "We are always concerned whenever U.S. companies operating overseas encounter difficulties, whether commercial or legal, and we are following closely the action that the provincial government appears to have taken in this case."

The department also said it was asking Canadian federal officials for "more information about the provincial government's explicit legislative statement that it was expropriating certain of its rights and assets without compensation."

Not surprisingly, AbitibiBowater’s shares rose dramatically in trading on news that AB had some really powerful friends in really high places.  There’s nothing like to get American attention than dealing with American companies in a heavy-handed way like say you might see in Venezuela. 

Add in the current climate south of the border, the climate that questions the value of the North American Free Trade Agreement for the United States and you can see the recipe for the expropriation bill becoming a major irritant in trade between Canada and the United States.

Of course, that’s what you get when you act without thinking.

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Frontier to buy out Aurora Energy

Frontier announced Monday it will buy up the remaining common shares in Aurora Energy that Frontier doesn’t already own.  Aurora’s share prices have dropped like a stone in recent weeks.

Aurora’s main asset is uranium in central Labrador.

In light of some comments made in the legislature recently, someone at Aurora might want to reconsider titling the page of their website “Our Assets”:

In reading the documents that have been accumulated by the government as they brought themselves to the point of writing this bill, it surprised me to read some documents – I don’t suppose it surprised me, but it upsets me to read some documents in which, for example, Abitibi-Consolidated has been claiming ownership of the land and ownership of the water. No, they never owned it. They had a lease that allowed them to use it and the lease was renewed, but it is not ownership.

Whose assets are they again?

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The opposite of sober second thought

Jack Layton paid a visit to confer with his provincial counterpart, Danny Williams on Monday. He also dropped in on Lorraine Michael, leader of the New Democratic Party in Newfoundland and Labrador, which, in practice is really just a subset of the Provincial Conservatives.

You can hear the clacking of the keyboards already at the suggestion Conservatives and New Democrats are really just the same creature.

But for those of you who aren’t just reflexively ignoring this, consider that Danny and Jack (and Lorraine) are on the same wavelength when it comes to AbitibiBowater, for example.  Smack those evil companies around.  All good populist nonsense.

Jack hates the senate, the chamber of sober second thought and just last week, the Provincial Conservatives, the local Liberals and the lone New Democrat in the House of Assembly joined together to show their considered opposition to thoughtfulness.

They all worked together to ram through the expropriation bill, based on nothing more than a hasty briefing from the government side.  The only piece of legislation that passed the House in the past decade with fewer words and less consideration was the one that set the legal framework for what became the House of Assembly spending scandal.  No measure of experience gave anyone concerns about a rush job on what the Premier himself described from the outset as unprecedented legislation.

If you really want to see the complete lack of thought involved, go no further than to read the speeches made by the natural resources minister, opposition leader Yvonne Jones and the New Democrat’s Lorraine Michael.

Lorraine’s comments are as good an example of what happened last week.  Let’s take a look at them.

What we have before us today is an opportunity to do something that is precedent setting because finally lands that had been ours and had been given away are back – the potential is to have them back in our hands where they belong, in the hands of the people of this Province. It shows what can happen when we have control over what we own.

The lands never left the province.  They were never taken away.  AbitibiBowater held licenses to use the resources and they have always been, ultimately under the control of the legislature.

So it is absolutely essential I think, that we take the time today to make sure that the decisions we make and the papers that we approve are to the best possible benefit of the people in this Province and that we make sure there are no loopholes that somebody can go through so that it will not work. This has to work. So, while there is urgency about what we have to do today, we also have to take those urgent steps with caution as well. We have had a discussion, all three parties together, obviously the government with the members of the Opposition parties and we will get time to step out of the Chamber and do some thinking and do some consultations that we have to do so that we can, when we do finally enter into full discussion on the floor, have as much information and thinking that we can put in before we do that.

How odd then that Lorraine and the rest of her colleagues – at least on the opposition side were prepared to endorse the bill after only a few minutes of notice that it even existed. The time she referred to in that quote was merely the hour or so it took from the time she said those words in response to the Premier’s ministerial statement until she came back later that same day to ram the bill through all three stages of debate. 

How fast?

Let Lorraine tell you herself from later in the short debate on the bill:

That is what struck me as I have been reading some of the documents. This has been quite a day today, because this was presented to us at 12:45 this afternoon and now it is not even 5:00 o’clock and we have been through briefings, we have started the debate here in the House, et cetera. It has all happened pretty fast, so it has been a pretty quick crash course that we have been involved in.

What consultations took place in that time, let alone what thinking?

The answer is none.

And to really drive the point home, Lorraine bitched just the same week about not having enough time to consider another bill which had been presented with far more warning and which had no less significant implications. She proposed no amendments, took no action to amend the portions of the bill she claimed to have had concerns about.

But back to the expropriation bill.  Lorraine adds some information:

In reading the documents that have been accumulated by the government as they brought themselves to the point of writing this bill, it surprised me to read some documents – I don’t suppose it surprised me, but it upsets me to read some documents in which, for example, Abitibi-Consolidated has been claiming ownership of the land and ownership of the water. No, they never owned it. They had a lease that allowed them to use it and the lease was renewed, but it is not ownership.

At no point did it occur to her that she was receiving a briefing from only one party to a dispute.  More importantly, at no point did she see fit to ask that those documents she mentioned be tabled.  The rest of us are not allowed to see the justification presented for this hasty piece of legislation.

Now we had a corporation in Abitibi-Price who I do not think recognized its privilege. It was a corporation who had the cheapest fibre. They really had a cheap wood. They had the cheapest power and they did no investing in the mill. This is a fact.

Abitibi-Price?  Some of the documents she read must have been old.  As for the rest, it is true in some respects but Lorraine ought to have read the forestry report released in November by the same government that introduced the expropriation bill.  That report shows the current state of the two mills still existing in the province; it is not the one presented by someone with a few minutes of looking over carefully selected information from the bill’s proponents.

Both mills are old and require capital. The Corner Brook mill has received significant capital investment in recent years, with a rebuild of PM 7 in 2000 and installation of a co‐generation facility in 2003. However, neither of the other two machines in the mill has had significant capital investment since the mid‐1980’s. In Grand Falls, neither machine has received a significant capital investment since the mid‐1980’s.

Of the five machines operating as the time of writing, five are ranked in the fourth quartile of paper machine productivity by RISI. On labour productivity, RISI data indicates that the Corner Brook mill performs in the third quartile, while the Grand Falls mill ranks last among the 44 newsprint mills analysed. (We note, however, that recent changes and cost reduction efforts in Grand Falls may have improved performance somewhat, though we do not have access to more recent RISI data to confirm this possibility.)

However, on a positive note, the Grand Falls mill ranks in the second quartile and the Corner Brook mill ranks in the third quartile on total delivered cost per finished tonne of product. These rankings clearly reflect the beneficial impact of the access to very low cost, hydroelectricity enjoyed by both mills. Indeed, the Grand Falls mill is more than completely self‐sufficient in energy and sells approximately 45 MW (slightly more than 40% of total generating capacity owned by ABH and partners) to the Island grid….

The condition is not merely the result of neglect and indifference as suggested by the government, but of the cumulative effect of many circumstances. It is the result of a new paper machine for Grand Falls being diverted to Stephenville.  It is the result of that same machine being taken from the province rather than moved to Grand Falls to replace a unit first installed in 1926. The current administration has not explained how that occurred and it will not, so long as it can count on the unquestioning support of the legislature.

The Premier has referred to the wood room at Grand Falls. Had Lorraine Michael read the November report (in the hands of government since early 2008) she would have seen a recommendation to eliminate the wood room altogether. The consultant’s report, had it been implemented might well have provided a way of lowering costs at the Grand Falls mill and thereby allowing it to continue operating.

The expropriation bill killed that chance. Had Michael and others read the consultant’s report they might also have noticed something about the hydroelectric assets expropriated by the bill they were speeding through the legislature:

The terms and conditions of the power purchase and sale agreements between ABH/CBPPL and NLH are private, commercially confidential arrangements. As a result it has been impossible for us to quantify precisely the economic benefit to the Grand Falls mill of the surplus power generating capacity in which the company has an interest.

However, even if one assumed the sale and purchase prices for electricity exchanges between Abitibi and NLH were exactly equal, it is apparent that the cost of power consumed at the mill would be very low – at or near the marginal cost of generating a unit of hydroelectricity. At published rates ($48/MWh), the power consumed by the mill could be assigned a hypothetical value of $27 ‐ $29 million, while the surplus power sold by ABH to NLH could hypothetically be valued in the range of $18 ‐ $20 million. Therefore, if one assumed an internal cost of power to the mill of say $1.50/MWh (roughly $1 million), the total hypothetical economic value of the power generating capacity to the Grand Falls mill could be in the range of $45 ‐ $50 million, subject to adjustments to account for the partnership interests of other parties in some of the generating assets.

In the face of current market and industry conditions, this is a significant contributor to the viability of the Grand Falls mill. [Emphasis added]

None of that stopped Lorraine from ending with a flourish based as much on wishful thinking as anything else:

How do we diversify the economy using these resources so that in the future we do not have a situation again where one industry stops and a town could be faced with disaster? The other challenge, too, is even if the town continues with a pulp and paper mill, which is a possibility, probably not with the same building that is there, but a pulp and paper mill, then how to do that in a sustainable way so that the day will not come when that ever has to be closed down the road.

So, we are taking a big step here today, but it is the first step. I really encourage the government to continue the process of consultation that it started today. We had a very collaborative effort happen here in this House today, the second time this year by the way; two good collaborative efforts in 2008, the energy bill and now Bill 75.

I thank the Premier for the way in which he worked with us today. I thank the Minister of Natural Resources. It is a pleasure to be part of what we are doing here.

Thank you very much, Mr. Speaker.

At this point – at the end – we finally discover what consultation she meant at the start.  Consultation with the opposition;  by that, of course, she meant, showing them a few sheets of paper and giving the chance to support the government motion.

In the future  - perhaps a few months or even a few years - someone will look back on this time and wonder how such steps could be taken.  They wonder how the Churchill Falls deal could have be done, with the concurrence of all members of the legislature.

In the energy bill and now the expropriation bill – as exemplified by Lorraine Michael’s comments - they have a very simple answer. No one bothered to think.

Perhaps it’s time to reopen the Legislative Council.

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18 more appointed to Antechamber to the Kingdom of Heaven

So much for senate reform.

Sure the federal Conservatives said they wouldn’t do it, but what else is new?

Mike Duffy, Pamela Wallin and Fabian Manning are among the 18 new senators.

Will Fabe resign to run against Scott Andrews or can Scott breathe a sigh of relief?

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The power for good or evil

As Daniel Veniez writes in the Globe, provincial government’s have all the power needed to sort out the country’s forest industry:

Mr. Williams says his government has full legislative authority to expropriate AbitibiBowater's assets in Newfoundland and Labrador. He's absolutely right about that.

In a 2007 dispute with the Quebec government, cutting rights attached to two sawmills derailed a $285-million deal to sell Domtar's lumber assets to Conifex Inc. This required the transfer of cutting rights for three sawmills. Quebec's natural resources minister threatened to deny the transfer if Conifex did not rehire 445 laid off sawmill workers, saying cutting rights revert to the province with an ownership change. He was right about that, too. The deal didn't happen.

In British Columbia, the former NDP government used its legislative authority to dictate where sawmills would be located as a job creation measure. It had very little to do with the economics of running a business. That led to uneconomic mills being forced to operate. And that meant that they were gradually run into the ground. Popular politics for sure, but devastating policy.

In the local case, the Abitibi expropriation pretty much gives the lie to claims that the provincial government doesn’t control it resources.  It also makes a mockery of the claim from the tinfoil hat brigade about Confederation.  Their high commander was on CBC Radio just the other week describing an elaborate conspiracy that never existed to do things that never happened.  Only in Canada would such stuff make the airwaves as a credible contribution to a discussion of a major turning point in our history.

But that’s just digression.

Closer to home, the Abitibi expropriation has attracted a whole bunch of wild cheering but, as is plainly evident, the staunchest of the Premier’s staunch supporters have no idea what has gone on or why it has gone on.

They don’t need to think, apparently, since that would be bad.

The sort of grandstanding exemplified by the expropriation bill – done with all the requisite high drama and the now typical lack of concrete information is all popular politics.

Popular politics, yes.

But devastating public policy.

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Something’s missing: Powers, Hydro, Danny, Abitibi and The Globe

Tim Powers is a well-known Conservative activist who, in his work-a-day, is a professional lobbyist.  As we’ve noted in this space before, he’s a smart guy and Newfoundland and Labrador Hydro was well advised to retain his services to help deal with the federal government on Lower Churchill and the national electricity grid.

According to the lobbyist registry in Ottawa, Powers is still lobbying for Hydro, which is, it should be said, a provincial Crown corporation controlled entirely by the provincial government.  It is no more arms length from cabinet and the Premier’s Office than the natural resources ministry.

The lobbyist registration was just renewed a couple of months ago so it is pretty fresh and there’s no indication it has been suddenly cancelled.

That’s a good point to bear in mind when you read Tim’s comments over the past week on the AbitibiBowater expropriation.  Aside from anything else, he writes a regular blog over at the Globe and Mail.

Over the past week, Globe online readers have been getting comments like this, for example:

History provides a great guide into Newfoundland and this Premier's disdain for broken contracts, apparent or otherwise. Was anyone paying attention to the battle between Ottawa and Newfoundland over the Atlantic Accord?

Perhaps one of the reasons Newfoundland is now a "have" province because she does not sit quietly by and accept that a company can abandon its responsibilities regardless of global circumstances.

For those of us who were paying attention back in 2004/05, we know that there were no broken contracts involved, apparent or otherwise.  And that second bit really doesn’t make any sense since there is no evidence that the company involved- AbitibiBowater – has abandoned any responsibilities.  It’s decided to shut an expensive mill in the midst of global recession and in the face of tough financial times within the company. The mill has been operating for 103 years, with Abitibi running the thing since the 1970s.

That all might be a matter for debate for some people but there a subtext to this that just can’t be ignored and that has to do with the relationship between Powers, Hydro and Danny Williams.

The expropriations involved in last Tuesday’s sudden move by the provincial government involved hydroelectric generation.  The new custodian of those assets is the province’s energy corporation  - NACLOR - and its subsidiary, Newfoundland and Labrador Hydro. 

Subsidiary isn’t the right word, really.  The whole thing is so tightly interconnected, the directorates so tightly interlocked, that it is hard to distinguish one bit of NALCO Reborn form another unless you are a lawyer.  It’s so closely tied to the provincial cabinet that Danny Williams habitually makes all the major announcements for the company. This is not like a Norwegian Crown corporation; it’s more like a Nigerian one for the level of direction it receives from the political end.

At no point, does the Globe point out the connections and Powers doesn’t either, at least not as far as your humble e-scribbler can see.

And just so there’s no mistaking the role Powers’ client is playing in this whole expropriation, let us look no further than the words of Danny Williams himself.

The Premier said it in his statement announcing the unprecedented expropriation:

The Provincial Government will also be taking control of the power plants of Abitibi as without these power plants the hydro power would be wasted. Nalcor Energy will now manage this asset.

The Premier expanded on the point during Question Period the same day:

The Premier:  A good question, Your Honour.

The way that this has been constructed, I indicated in my remarks that the assets, particularly the water assets, would be managed by Nalcor Energy, because obviously Nalcor Energy are now the parent company of Newfoundland and Labrador Hydro, so our expertise lies at Newfoundland and Labrador Hydro. They would be, obviously, the appropriate ones to move in and to oversee the water assets particularly and then also to work in partnership with Fortis and Enel on the two partnerships that are on the river. The assets themselves actually revert to the Crown, so the Crown, the Government of Newfoundland and Labrador, is actually standing behind this, so we would basically be repatriating our water rights and also repatriating our land and timber rights back to the Province.

If, at some point in time, on a go-forward basis, then for purposes of the efficient operation and management of the hydro assets, for want of a better term, then, in fact, an arrangement would be done with Nalcor, but the ultimate liability and the ultimate responsibility very clearly rests with the Government of Newfoundland and Labrador.

Something’s been missing this week from the Globe and Mail:  it’s the disclosure of this apparent conflict of interest.

-srbp-

Breaking: AB closes Grand Falls woods operations

CBC News is reporting that AbitibiBowater unexpectedly shut its woods operations in central Newfoundland this morning.

Undoubtedly this is related to the expropriation earlier this week by the provincial government of all hydroelectric assets accompanied by the cancellation of the mill’s timber licenses.

Some are characterising this as “retaliation” for the expropriation.

More likely, it is a refusal by the company to accept any temporary access to the woods which would – in itself – accept the expropriation and cancellation as legal.

Don’t be surprised if the mill closes this week with the company saying it has neither power or feedstock for the mill.

Update:  Canadian Press has a little bit of detail in front of a huge recitation of the story thus far.

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Weekend reading: unilateral action edition

1.  Telegram editor Russell Wangersky’s Saturday column in which he suggests the court action over the government’s expropriation of assets belonging to AbitibiBowater, Fortis, CHI, Inc and Sun Life could get “tangly.”

Interpretation is always in the eye of the beholder, and in this case, the final beholder is likely to be a very senior judge.

If AbitibiBowater goes to court, it will be the nuanced interpretation - probably of the original lease document from 1905 and other similarly dated material - that will decide the day.

The province has already signalled it will argue that AbitibiBowater broke its lease by announcing the closure of the mill.

AbitibiBowater, if it fights, will argue that, if any leases have been broken, they've been broken by the province.

All in all, there's only one thing for certain: it's bound to be rich fodder for lawyers and more than enough paper for all.

Wangersky’s right.  AbitibiBowater was already suing the provincial government over another unilateral change to leases, this time from 2002/2003.  That lawsuit was settled – without costs –entirely arbitrarily by the provincial government.  It included a line in the expropriation bill which quashes the suit.

Period.

What exactly would stop the provincial government from doing that again, with respect to any other lawsuit it doesn’t like?

The are plenty of aspects to this expropriation bill which make it far more complex than the claim that it was merely about trees and water.

2.  Financial Post editor Terence Corcoran who highlights a few other issues worth pondering:

The union and the government appear to have misjudged the company’s intentions, or they are playing hard ball to force the company do what it does not want to do.

It’s a dangerous game for Mr. Williams. Newfoundland isn’t exactly a fiscal powerhouse. Its latest financial update shows that if the price of oil is at $60 a barrel, the province “could be facing a deficit of several hundred million dollars next year, and could potentially be facing deficits in the years to come.”

At the same time, the province is paying lavish wage increases to unionized civil servants of 20% over four years. This is a formula for fiscal disaster down the road. And if the province also has to pay out big dollars to settle a NAFTA case, along with suffering a hit to its reputation as the Venezuela of the North, the outlook is even bleaker.

3.  The Telegram editorial on another unilateral action, this time by the provincial cabinet to replace appointees to the Memorial University board of regents with a raft of new faces.  The one thing the new faces have in common:  they are all close partisan and personal associates of cabinet ministers. They join another batch of appointees, all of whom have impeccable Provincial Conservative credentials. They will follow orders.

One of the regents the government removed, Mary Broderick, was on her way to a Board of Regents meeting when her cellphone rang and she was dismissed.

Wonder of wonders, Broderick was vice-chair of the board, and also sat on an ad-hoc committee of the board that was examining the government’s last gerrymandering attempt. When in doubt, fire them out.

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What would the Kingfish do?

Apparently, the only difference between Louisiana and Newfoundland is that they elected Huey Long once.

Stark willie update:  An astute reader sends this e-mail correction:

That’s actually the second difference. The first being that the folks in Louisiana aren’t stunned enough to celebrate “Mardi Gras” in October.

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Abitibi’s letter to Danny

Here’s the shorthand:

“Dear Danny: F.O.A.D. Strong letter to follow. Love (not really), Dave.”

This one ain’t over by a long shot.

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Incidental documentation:  CBC story here.  pdf of letter (the real one) here.

Incidental thought:  Let’s see those high-priced pieces of legal advice the Expropriator got before he launched his venture.  Yes.  Yes.  Don’t bother reminding everyone that he’s made wild claims before about having advice or support or promises or commitments.  The evidence to support the claims never, ever shows up because it never existed in the first place.

Fantasy Island

Delusional or in hyper-torque mode?

Either way, provincial finance minister Jerome Kennedy is living on Fantasy Island if he thinks the rate of in-migration is a sign that this “demonstrates the confidence that individuals have in Newfoundland and Labrador, our strong economic position, and in making it their home.”

The change is only two tenths of one percent.  That’s hardly a stampede.  That’s hardly the sign of people building makeshift rafts to scramble to Nirvana or the New Jerusalem.

That’s hardly the sign of an economy that is growing,  even by the hyper-optimistic provincial government estimate of 2%, compared to the almost 10% growth of 2007.

Nope, it’s a sign that things are shutting down everywhere else.

The big hat tip on this one goes to labradore. Incidentally, you can find a taste of WJM’s stuff in his own commentary on Jerome’s news release.  He started analysing the demographic trends a while ago and concluded that the changing population follows a pattern.  Right before a major recession elsewhere, there’s a blackflow in the pipeline of people leaving the province for greener pastures elsewhere. Those would be the people with a relatively weak social and economic attachment to their new home who decide to weather the coming rough economic times living with Mom and Dad.

He predicted the pattern long before the current recession hit.  Like clockwork, the numbers held, just as Kennedy trumpets:  “For four of the last five quarters blah blah blah”.

Jerome just got the reason wrong.

Badly wrong.

That would normally be okay, but there are consequences.  You see, too many locals are being duped into believing Jerome is right on this sort of stuff.

When the truth hits, it may well be very painful.  Just ask the people living in the region governed by Big Tory Graham Letto.  The guy who ran as a Provincial Conservative in 2003 followed the line set by his political buddies about us living in a bubble. Even though this newfangled Internet contraption has been in that part of the woods for a while – it’s facetious people he said pre-empting the e-mails – Graham decided it was better to spout the talking points than, say, think for himself.  Hence his astonishment when – as anyone else could have told him – IOCC decided to delay the expansion that had been fuelling his little economic boom.

Boom.

Bust.

Letto’s cheesy smile sure won’t make the sting of that one go away, just like Jerome’s new release won’t be any help come next spring when Jerome’s got to sort out a difficult year in his budget.

As for the backflow, it will last as long as the recession lasts and then those people will head back to where the real work is.

You see, that’s because there has never been an economic development Plan A for the current crowd, let alone a Plan B or even a Plan C that some are now praying for.  They’ve just been making it up as they went along.

-srbp-

Expect more of this

The political fallout of losing Abitibi’s Stephenville mill was soaked up by the giant Alberta job sponge.

Well, that sponge is now being wrung out by the global economic downturn and the workers are heading back home.  They’re heading back home to places like Labrador West where slowdowns and project suspensions are the new norm.

People in Grand Falls might be cheering at the thought they somehow managed to wreak vengeance on Abitibi.

But what are they going to go for a job come March?

It won’t be Fort Mac.

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