The day of reckoning

News reports are that the Premier is calling on federal members of parliament to vote against the federal budget, regardless of what they would do in concert with their caucus.

Hardly surprising, that news, given that the partisan plants were out in force today issuing the call and at least one source of constancy for the Premier even generated a little graphic to illustrate the point.

So which of the federal members is indebted to danny Williams for their seat?

One.

Two.

Three.

Three’s a no-brainer since he’s been lined up with the premier since his days as a provincial member of the legislature.  On top of that his party is already committed to voting down the budget.

But One and Two?

Their debt is being called due, with interest.

Will they pay up?

Stay tuned.

-srbp-

The scrum, raw

From the cbc.ca/nl website, the raw video of the Premier’s Tuesday scrum.

Two things to note:

1.  CBC’s David Cochrane is persistent in asking the Premier to explain in simple terms what the problem is.  Time and again he pokes and probes with straight-forward questions.

2.  Cochrane doesn’t get a clear answer either because the Premier isn’t interested in giving one or he couldn’t give one.

-srbp-

De-spinning the New Family Feud newser

Q:  When did Premier Danny Williams announce that Newfoundland and Labrador was a have province and  - by definition – wouldn’t be receiving Equalization any more?

03 November 2008.  Bond Papers de-spun the scrum two days later.

Q: When did the provincial government decide to opt for the O’Brien formula and start receiving Equalization again?

Well, that isn’t clear, but on November 3 the Premier told reporters that the provincial government was looking hard at it.  He said a decision didn’t have to be made until March 2009.  The Premier confirmed in his Tuesday night scrum that the province had already decided to opt to start receiving Equalization again this fiscal year, something that hadn’t been reported publicly thus far.

Q:  When did the provincial government learn that the feds were planning to cap growth in the Equalization program to keep the costs under control?

03 November 2008, if not earlier:

In today's meeting, Flaherty will reveal the Conservatives' plan to place a limit on what Ottawa sends to poorer provinces under one of its key revenue-sharing measures, the $13.6 billion equalization program.

Q:  Which provinces are affected by the cap?

Any that receive Equalization.  Ontario will be capped just the same as all the rest, including Newfoundland and Labrador, if Newfoundland and Labrador opts to start receiving Equalization again. That’s the money the Premier mentioned in his scrum. Quebec will reportedly lose approximately the same amount.

Q.  What does the Equalization formula now provide as reported by VOCM legislative reporter Cheryl Gullage?

100% exclusion of non-renewable resources from Equalization calculations.

Q.  What was the ABC campaign – better known as the Family Feud  - all about?

The federal Conservatives promised to exclude 100% of non-renewable resource revenues from Equalization calculations but they didn’t put that in place initially.  Williams went on the war path over the issue promising to work for Stephen Harper’s defeat.

Q.  How big will the provincial government’s deficit be next year?

Even before now, it was pretty clear the provincial government would be short upwards of $1.5 billion in cash based on reduced commodity prices if spending remained where it was in 2008. A cash surplus this year  - of maybe 500 to 700 million - may have helped defray that somewhat but a deficit of $500 million on a cash basis – the largest in the province’s history – was a likely figure given some spending cuts and some borrowing.

Q.  So what’s the fuss?

The Pattern of blaming someone else. It’s a stock provincial government approach.

In this case, the provincial government is in a financial bind largely due to its overspending of the past two or three years based on unreliable income.  They were warned repeatedly by the province’s auditor general. The government made spending commitments – including 20% wage increases for public sector workers  - that it may not be able to afford.

Spending cuts will have to come to keep the deficit from ballooning to unmanageable proportions.

Far better politically to blame that on someone else for provincial government problems. The facts of the situation likely won’t matter since they likely won’t be reported in the conventional media, at least if the past is any guide.

Beyond that, five years of conditioning the public might pay off.  Some initial comments – like from provincial labour leader Lana  Payne – would suggest that some knees are already jerking across the province even before the full story showed up anywhere.

Speedy Gonzales Update:  The Premier turned up on CTV apparently to make sure everyone got the story the Feud was back on:

Williams made the comments on CTV Newsnet Tuesday evening. He says the federal budget will cost his province $1.5 billion in equalization over three years because of changes in the formula used to make the payments.

"In an economy the size of Newfoundland and Labrador, at a time when they are spending a lot of money on stimulus, it seems like an attempt to basically cripple this province," Williams said. "In a time of economic downturn, I'm at a loss at why (Harper) would do it.

Words matter.

The economy of Newfoundland and Labrador is running at something on the order of $25 billion annually.  The $1.5 billion noted here – over three years – is a drop in the bucket compared to the $75 billion the provincial economy would produce in the same time frame.

A change to Equalization doesn’t cut anything from the economy per se;  it just affects provincial government spending. 

And a half billion dollars is a lot of money to a government staring at a record deficit even assuming they had somehow completely forgotten they were told about the cap last November.

Yep.

The Pattern repeats.

The Morning After Update:  Just how confusing could the Premier’s middle-of-the-night rant be?  Read CBC’s version which is short on details but long on the nasty, vindictive – and inexplicably angry  - language the Premier apparently used.

The iPod People update:  Listen to the really short clip on the CBC website. It includes the Premier’s comment that the Equalization changes will affect Newfoundland and Labrador.  Apparently, they’ll have a “pretty crippling effect in the sense we’ll survive it.”

“Pretty crippling effect in the sense we’ll survive it.”

That’s exactly what he said.

Go figure.

 

-srbp-

War gilt

What better way to invest your cash than buying up bonds that helped finance the British during the Great War but which still pay dividends twice a year.

That would be the 1914-1918 war.

In 1917, the British government issued bonds  - known as gilt for the gold edging - at 5% interest. The bonds had no maturity date. 

At least, one investor has been buying them up as a hedge against deflation. The bond issue, currently valued at US$2.9 billion, is unlikely to be redeemed and individual bonds currently trade for less than one pound sterling.

Aside from the curiosity of the notion of 90 year old bonds that are still paying out, this story is interesting for Newfoundlanders and Labradorians for another reason. 

The war bonds originally carried an interest rate of 5% but this was lowered – unilaterally – by the British government in 1931/32 to 3.5% during the early years of the Great Depression.  At around the same time, Newfoundland was struggling under its own crushing debt.

The debt was incurred partially to fund the war and partially to finance a disastrous railway spur line project in the early years of the 20th century.  In any event, Newfoundland was discouraged by the British from unilaterally reducing the interest on its debt since to do so – the British argued – would call into question the financial integrity of the empire.

-srbp-

Freedom from Information: Memorial University joins the government secrecy cult

Two years later after first receiving an access to information request, Memorial University and its lawyers are still mounting arguments to justify keeping information from an applicant for access, even though the arguments they make are contradicted by the very legislation they cite.

It’s like the Executive Council’s attempts to hide public opinion polls even though the polls were clearly earmarked for disclosure in the law.

You can read the full account in the most recent decision of the information commissioner. The commissioner was clearly attempting to persevere in the face of absurdity and does a fairly good, if lengthy, job of demolishing the ludicrous position advanced by the university’s lawyers.

What’s noteworthy in this case is the extreme length to which Memorial University went to deny access.

In some instances, Memorial University and its lawyers attempted to reinvent the plain English meaning of the province’s access to information law.  If taken to its logical conclusion in one portion of its argument, Memorial University would withhold information on an applicant from the applicant himself or herself on the grounds that it was personal information and could not be disclosed.

In doing so, Memorial’s lawyers constructed an argument based on case law from another province  where the legislation does not provide that…wait for it…the privacy provisions don’t apply when the information is about the applicant.  A section of the legislation designed specifically to avoid absurdity was turned – by Memorial’s desire to hide information – into the very absurdity itself.

Memorial has also redacted Dr. Panjabi’s [the applicant] name in several places. Memorial argues that the right of an individual to his or her own personal information is not absolute where the release of information would reveal the personal information of another individual. However, there are two separate provisions (one being section 30(2)(a) and the other being section 3) in the ATIPPA that clearly provide an individual the right to access his or her own personal information. While there may conceivably be circumstances where one’s personal information may reveal information which must be protected under another exception, I believe these circumstances are not present in the case at hand.While the right of an individual to his or her own personal information may not be absolute, given the stated purpose of the ATIPPA, it will only be in exceptional circumstances where this right will be restricted. Thus, it is clear to me that in relation to the Katz Report, Dr. Panjabi is entitled to see all instances where her name appears, unless there are clear reasons why it must be withheld under an exception in the ATIPPA.

Further, Memorial has also redacted the names of administrators, professors and employees of Memorial. Section 30(2)(f) states that the prohibition of disclosure of personal information does not apply where “the information is about a third party’s position, functions or remuneration as an officer, employee or member of a public body or as a member of a minister’s staff.” Therefore it is clear that to the extent that these people are named in connection with their position and functions as employees of Memorial, section 30(1) is not applicable and they should be released. For example, where the names appear in the context of actions undertaken by these employees in the normal course of their duties, they should be released.

In another glaring instance, the university refused to explain the basis for claiming solicitor client privilege for a redaction which did not involve – on the face of it according to the decision report – the university’s legal counsel.( paragraph 59)

I note here that in April of 2008 an official with this Office sought clarification on this issue. In an e-mail dated 25 April 2008, Memorial’s designated representative on this file was asked to clarify Memorial’s use of section 21(b). There was no response to this e-mail. In a letter dated 5 May 2008 to this same representative, the official with this Office again referred to the April e-mail. Again, no clarification was provided by Memorial. I note as well that in its submission the only reference that Memorial made to section 21 was in relation to its response to Dr. Panjabi’s initial request: “Some information was redacted pursuant to s. 21, on the basis that the exemption for solicitor client privilege was engaged.” Memorial provided no reference to, nor any evidence in support of, its use of section 21(b). As such, Memorial has failed to meet its burden of proof as mandated by section 64 of the ATIPPA. As I said in my Report A-2008-012, “…if the head of a public body cannot satisfy the Commissioner (or the Court, on an appeal) that its decision is the right one, then that decision will not be upheld. It is therefore critical to the proper operation of the Act that a public body put sufficient effort into articulating the reasons for its decisions.” Based on the above, it is obvious that Memorial did not put sufficient effort into justifying its use of section 21(b).

The claim is one thing; the repeated refusal to respond to the information commissioner’s request for explanation is incomprehensible. 

Well, incomprehensible or arrogant;  take your pick.

The secrecy virus has now infected the university.

-srbp-

AG quietly starts offshore board audit

Officials of the province’s auditor general have started their audit of the Canada-Newfoundland and Labrador Offshore Petroleum Board, the spokesperson for the board confirmed for Bond Papers.

The audit began earlier this month.

The board is the joint federal provincial body that regulates the province’s offshore oil and gas industry.  Last year, the board issued invitations to both the federal and provincial auditors general to conduct audits;  only the provincial auditor accepted.

In the letter, chairman and chief executive officer Max Ruelokke notes that the board is concerned about "recent comments in the media concerning its finances which may be construed to imply some impropriety in the Board's finances."

That would be comments by Noseworthy, who is no stranger to making unsubstantiated accusations.

Auditor general John Noseworthy decided last year to audit the board, despite the fact that his office had never listed the board as an entity subject to audit.  Noseworthy claimed to have legal advice supporting his new position.  The legal opinion has never been made public.

The board refused the request indicating that  - as a joint federal-provincial body – the board should be audit by both federal and provincial auditors.

This did not satisfy Noseworthy who issued a special report accusing the board of breaking the province’s Auditor General Act.

Noseworthy made reference to the special report in his annual report for the year ending March 31, 2008.  However, Noseworthy neglected to note in the report that the dispute had been resolved and his office was now conducting the audit.

-srbp-

Related:

“No access restriction: offshore board”

“NL AG hoist by own petard of misleading statements”

How Icelandic are we: Coalition government collapses in face of crisis

The Icelandic coalition government unravelled on Monday after the latest in a series of public demonstrations prompted the country’s commerce minister to resign.

Prime Minister Geir Haarde tendered his resignation after trying to reform a coalition. Elections were scheduled for May.

The protests this past weekend were relatively peaceful (left). Other recent protests ended with police, arrests and tear gas.

The whole thing is reminiscent of the situation in Newfoundland 75 years ago.

In the midst of a financial crisis,  workers in St. John’s stormed the country’s parliament and besieged the prime minister, Sir Richard Squires.

Within three months, Squires was out.

A new administration formed under Frederick Alderdice following a general election which Alderdice fought on the pledge to consider placing under the government in the hands of a British-appointed commission.

In 1934, the country’s legislature voted to suspend the country’s constitution as a means of staving off bankruptcy. The government was administered by a commission comprising six commissioners appointed by the United Kingdom.

Responsible government was restored in 1949.

-srbp-

10 years to turn around: Newfoundland and Labrador oil royalties

Oil started flowing from the Newfoundland and Labrador offshore a little over a decade ago but in that short time, provincial oil royalties have propelled the provincial government unprecedented financial wealth.

The royalties are set by the provincial government under the 1985 Atlantic Accord.

The table at left comes directly from the auditor general’s annual report for the fiscal year 2007 (ending 31 March 2008). 

Note that the auditor general consistently misreports the fiscal year and this can lead to considerable confusion.

The year called 2003 in the table is actually 2002;  the auditor general labels the year by the calendar year in which it ends, not begins.  Thus, the auditor general writes FY 2002 as “2003” since the end of the year is March 31 2003 

The noticeable jump in royalties from Hibernia show the impact of skyrocketing crude oil prices coupled with the escalating percentage royalty applied to the project before payout. 

Hibernia still hasn’t paid out, that is, the initial costs haven’t been recovered, but between 2004 and 2005 – actually 2003 and 2004 - royalties doubled.

That same approach applied to each of the other two projects currently in production.  In those projects, the high price of crude oil allowed the operators to recover development costs in two to three years.

The trebling of royalties in 2006 (actually 2005) from Terra Nova and the astounding jump at White Rose in 2008 (actually 2007) are entirely due to the combined impact of the royalty regimes negotiated before calendar year 2003 and historically high crude oil prices.

In order to correct this confusing date labels and to give you another visual of the royalties, the chart at right shows the royalties by project for each fiscal year (correctly labelled).

The projected cumulative royalties for the current fiscal year will be over $2.2 billion, up from the more than $1.7 billion collected in 2007.

However, lower oil prices and lower production puts likely oil royalties for 2009 at a level only slightly higher than what Terra Nova itself contributed in 2007.

That should give a sense of the fiscal problem facing the provincial government.  As noted here before, though, that’s a problem entirely of its own making.  The provincial government has consistently boosted spending to meet the astronomically high revenues.

-srbp-

Freedom from Information: myth used as excuse by information commissioner

When the province’s information commissioner backed the Executive Council’s refusal to release information last week, his decision was based in part on a piece of popular mythology about the province’s open records laws.

Here’s the fantasy section from the report:

However, the request, as it stands, involves a considerable volume of material, and according to the estimation provided, there is no way the Department could possibly respond to the request within the legislated timelines, even allowing for the allotment of extra staff and the 30 day extension of time permitted by section 16 of the ATIPPA.

The time limit referred to there is the time limit under section 11 that says a public body has 30 days in which to respond to the request.  The myth is that this means the record(s) must be released within 30 days from the date it is received. Section 16 – also cited – allows for an extension of another 30 days.

What the information commissioner missed in that decision is section 12 which states what the response must contain.

Under the province’s access laws, the public body has 30 days to tell someone requesting information whether or not they will get the information and if some or all of it will be missing, the public body must state why. 

There can be an extension beyond 30 days for a couple of pretty obvious and understandable reasons.  Let’s say there are a huge number of records that can’t be searched or examined within 30 days.  The public body can have more than 30 days to make that preliminary search of the files.  By the same token if the records relate to a third party that might have some concern about disclosure – personal information of sensitive business information – the law allows for an extension so the third party can have a chance to review the request as it relates to that party.

At no point does the act state that the public body must also disclose all the records it will release within 30 or even 60 days.

In fact, there isn’t a time limit anywhere in the act that requires the entire request be turned over within a set period of time.

The reason is simple:  sometimes requests are complicated and they may take a load of time.  Since the goal of the legislation is to make release of information the default setting, no one wanted to create a silly set of rules no one could possibly meet.

That’s why there’s a point in the first post on this access decision that if the department had started to release information  - as it could easily have done – then the person making the request would have been a fool to complain it wasn’t done within a set period of time.  Getting a package of some documents within 60 days or even a chunk within six months is a lot better than a refusal to disclose anything and the use of invented excuses for not complying with the request and with the law.

So why does this silly statement appear in the information commissioner’s decision?  Well, it might be he didn’t get the chance to go look at what the actual legislation said. It also might be that he has worked all this time under a completely false understanding of the law.  Don’t be surprised;  it does happen and people aren’t perfect.  Besides plenty of people who ought to know better insist this 30 days thing is real. They’d be astonished to find it’s as real as Sasquatch.

One thin is certain:  the information commissioner is wrong on this point just as he was wrong about the nature of the request in the first place.

What this decision does – as bad as it is – is support a government department which did not show much sign of wanting to comply with the law and release the information in whole or in part. They hunted for excuses and ultimately, the information commissioner backed them up. It happens much more than people realise.

Since the original post, your humble e-scribbler got an e-mail from the person who made the request. We’ll bring you more detail on it in the near future.  There’s much more to the story than meets the eye.

-srbp-

No word on Long Harbour smelter

Vale Inco had until Thursday to submit its plans for the smelter at Long Harbour.

No word from the provincial natural resources department or Vale Inco on whether or not the company met the target.

-srbp-

The joy of giving

The new chair of the board of governors at College of the North Atlantic – headquarters in Stephenville – just happens to be the top contributor to the past two election campaigns of Joan Burke, education minister and member of the provincial legislature for Stephenville.

There’s a story on the front page of the Saturday Telegram.

Appalachia Distributing – the company listed as making the donations - has a record of political giving:

Year	Party	Candidate	Annual/ Election	Amount
1998	Liberal		Annual	450.00
1999	Liberal		Annual	450.00
	PC	Leonard Muise	Election	150.00
2000	Liberal		Annual	450.00
2001	Liberal		Annual	450.00
2003	Liberal	Gerald Smith	Election	170.00
	PC	Joan Burke	Election	1,000.00
	PC	Joan Burke	Election	192.50
	PC	Jim Hodder	Election	200.00
2004	PC		Annual	375.00

The Telegram also reports election contributions for 2007 - $1,000 to Joan Burke’s campaign - but those still aren’t available on the provincial elections office website.

Government corporate registry records show the company was dissolved in 2005 and revived a year later. The corporate registry lists Appalachia Distributing Limited with two directors, Terrence Styles and Darlene Styles.

That makes the political giving totals (including the grand listed by the Telly for 2007) as follows:

Liberal (ended 2003) : $1,560.00

PC (1999, 2003-current) $2,577.50

-srbp-

Pull the other one, Jerome

About half through finance minister Jerome Kennedy’s scrum on Friday something very interesting happened.

Jerome scratched his nose.

It’s interesting because it is the only time he made any big hand gestures within the camera shot during the entire scrum.  His hands come up a bit during some sections but this one really leaps out if one watches the whole scrum from start to finish.

It’s interesting because he scratched his nose right after an exchange with reporters about how the province’s financial state might make it impossible for government to deliver nurses a very generous wage offer since, as Kennedy put it, there are “unknowns and variables” that will affect government’s financial position.

In fact he scratches his nose right before he says “unknowns and variables.”

It’s interesting because scratching your nose is usually taken as a sign of discomfort, a sign that what was said is not accurate or true.  In extreme cases, scratching ones nose is a sign of deception.

The nurses and government have been at logger-heads for most of the past year.  The government insists that there will be no discussion on salaries;  it’s the 20% offered or nothing else. 

Listen to the scrum.  You have to go a ways before that becomes clear but under relentless questioning from CBC’s David Cochrane Kennedy makes it plain that the only issue government is really hung up about is cash.  The rest of it is something they are willing to talk about but nothing more. 

This isn’t negotiation by any stretch of anyone’s imagination or even a serious effort to get the nurses back to the bargaining table.  If it was, Kennedy and his boss wouldn’t have been throwing threats around since before Christmas.  Now the last threat – to take the 20% off the table after December 31st – turned out to be a gigantic bluff.  The nurses pulled the other one and found out there were bells on it.

The latest threat is to come back and take the offer or else, the or else part in this case being having a settlement imposed on nurses.

From the nurses perspective, of course, it doesn’t take too much imagination to see that there’s precious little difference between swallowing the 20% and everything else in government’s position  along with it or having rammed Danny and Jerome ram it down their collective throats as if they were AbitibiBowater. 

No difference, no gain.  No gain – even if only in face saving – and there is no chance of averting a strike.  Nurses have been down this road before.  A decade ago they hounded Brian Tobin during the winter election until Brian made a deal to get them off his back.  From the nurses’ standpoint, he didn’t deliver so they went on strike.

He legislated them back to work.

The opposition Provincial Conservatives had a field day in the legislature that spring raising questions about recruitment and retention and pattern bargaining.

Sounds awfully familiar, doesn’t it?

Kennedy pulled his nose because what he is saying makes no sense and he knows it. 

In addition to the December 31st cut-off being a big bluff, the whole threat to the nurses lacks in credibility.  If they might not get anything beyond eight percent in the first year because of the uncertain economic times, then it stands to reason that the other unions might have to give up their cash as well.  Kennedy says no;  the government has guaranteed their money despite the economic circumstances.

CBC’s David Cochrane does a good job of poking at that one and Kennedy squirms in discomfort at the fairly obvious logical problem with the government position. He gets to the point in the scrum where – having drawn a bunch of lines in the sand of his own - Kennedy accuses nurses union president Debbie Forward of drawing lines in the sand.  Again, Cochrane points that out in the preface to one of his questions. 

Kennedy’s conundrum on the nurses is that obvious.

His fiscal one will become more obvious the closer we all get to budget day.  On the one hand, Kennedy needs to convince nurses there are hard economic times and therefore they should take the government offer now rather than risk losing all that money.

On the other hand, you have government and its supporters - Kennedy, Shawn Skinner, Paul Oram, government pollster Don Mills and government economic consultant and Wade Locke – all talking about how wonderful the future will be. The two things can’t live in the same space just as the 31st of December can’t be a deadline and then not a deadline, the 20% can be guaranteed but not guaranteed or the government be willing to talk but only if there is no talk and the nurses accept whole the government’s position as dictated.

The last government crew that messed with nurses wound up starting their long political death spiral in the fight. The only difference is that then the government started out with a credible financial argument to back their position.

Jerome hasn’t even got that.

All he’s got is his nose to pull.

Sounds pretty impotent.

-srbp-

Don’t blame me, redux

Your humble e-scribbler cannot be blamed for voting into office the obviously incompetent twillicks who will drop this country into such massive deficits over the next two years.

It will take years to dig the country out of the fiscal mess just like it took years the last time.

-srbp-

Shovel-ready indeed

If ever there was a shovel-ready project crying out for federal infrastructure spending in the midst of this global economic meltdown, it would be the international tourist attraction that could be built in Newfoundland and Labrador.

The attractions in this cross between Ripley’s, Believe or Not! and Madam Toussaud’s would surely be the raft of colourful characters who are the province’s  public figures.

There is the politician who welcomed the Juno awards to Newfoundland and Labrador on a cold day in January by giving new meaning to the term rhinestone cowboy.

There is the former politician who, 30 years ago this year, was found by a judicial inquiry to have been one of two people responsible for leaking confidential police reports into a fire to some of the leading journalists and editors of the day rather than return the obviously illicit documents to the police.

This former cabinet minister, fittingly 30 years later the host of an afternoon yak-fest for the radio station known colloquially as voice of the cabinet minister, finds no problem, for example,  in offering opinions on the appropriate sentence for another former politician even though the court case is not done.  At the same time, he will chastise those who would call his afternoon radio show and mention the name of a prominent figure or well-known business or organization about which they may have an opinion.

We will not repeat in detail there number of times this fellow speaks of events when he was in cabinet as though he was not there at the time.

Then there is the other voice of the common, man, who now finds himself the host of another radio show at the same station.  He long ago reached conclusions on the Churchill Falls deal long ago, most of them being based on commonly held but often-times unfounded ideas, yet recently gushed about the marvellous book he was reading on the subject.

Said book was written in the mid-1970s.

The centrepiece of this new Mecca would surely be the House of Assembly, the legislature of this place. Roger Fitzgerald, the speaker of the local parliament, answered questions this week about inappropriate payments made to local politicians. The questions came after the auditor general’s latest annual report provided an update on the whole business.

Fitzgerald straight-facedly told reporters that he had a legal opinion that the legislature could not recover money identified as spent inappropriately by province’s auditor general since the money was spent under the rules at the time.

"It was common practice for members to submit claims like donations and in some cases, maybe liquor purchases depending on what it was for," Fitzgerald said.

"I don't think members should have to repay those particular expenses. If they did, they should've been told at the beginning that it was not an acceptable practice."

Never mind the number of current politicians who insisted there were no rules at the time. Never mind, either, that, as Fitzgerald well knows, the people he thinks now should have been doing the telling were the ones who set the rules that said the inappropriate spending was okay in the first place.

The inappropriate spending included public money handed out as donations to all and sundry, as well as purchases of alcohol and double-billings of expenses.

Fitzgerald is one of the few current or former members of the legislature who is paying back some of cash. (He spent only 33 bucks on booze) The $17,942 in public he gave as donations isn’t part of the amount being repaid.  Nor will virtually all the rest of them be required to repay the public for much beyond the double-billings even though in some cases they handed out as much as half the money in their expense allowances in a way labelled inappropriate by both the auditor general and the chief justice of the Supreme Court’s Trial Division.

It’s not like they don’t have the power to order a repayment of the whole shooting match or, in lieu of that, to seize property and other assets owned or controlled by the current and former members to satisfy the debt.

After all, only one day before the House closed last fall, the legislature seized assets of a host of Italian, Newfoundland, mainland-Canadian and American businesses.  They quashed a court case and ordered no compensation for it. They did it based on no other foundation other than that  - legally – they could do so by majority vote.

Such joys may only be found in the notion of parliamentary sovereignty:  the members of the legislature set the rules.

How can it be that the all-powerful are struck suddenly impotent?

Surely it wasn’t a legal opinion that flies in the face of the legal opinion the members themselves rendered last December.

Perhaps we could hand out shovels to the visitors at our new attraction and let them dig about until they come up with the answer themselves.

We won’t need to give Roger and the rest of his political friends a spade.

Nope.

He’s already been shovelling it enough this week for the lot of them.

-srbp-

Lacking Ig-magination in shadow cabinet making

The guy from Nova Scotia gets the oil and gas portfolio, even though his province doesn’t produce a gigantic slice of the country’s light, sweet crude.

The guy from the province that does, gets fish.

Again.

Go figure.

For a recycled idea, the only thing fitting is a recycled critique:

But for far too long, Newfoundland and Labrador has been politically regarded as the home of fish and whine.

Count up the number of times fisheries and oceans in any party has gone to a Newfoundlander since 1949 either as minister or as an opposition critic. You'll quickly get the point.

…

Second, there is an even greater conflict created by putting in charge of fisheries (or acting as the critic) any politician from a province where the fishery is less a business than a Frankenstein exercise in social engineering.

The tinfoil hat brigade, the anti-Confederate sasquatch hunters will leap forward to blame the evil machinations of "Ottawa" for the plight of the local industry.  The sad reality is that the current mess is entirely the construction of the political, social and business interests of Newfoundland and Labrador, over successive generations, who have forestalled, undermined and otherwise opposed any real and positive reform.

In Newfoundland and Labrador, the fishery is a cult.  As with any cult, it has its high priests who will rush to the temple altar - in this case the local open line shows and fisheries broadcast - to declare any reformer as a traitor, as a heretic.  It is an inbred cult where satisfaction comes from shagging your own.  Onlookers are distracted from the spectacle by the claim that outsiders have covetous designs on the defiled or that foreigners need to be driven from what is left of the sanctuary.

Now don’t misunderstand.

Gerry’s a fine enough fellow even if – in his asinine crusade against Marine Atlantic – he forgets that this province is already connected to the rest of the country via a land link.   Hint:  Ask Todd about this mysterious place called Labrador.

Once again, we can only be underwhelmed by the potential for change represented by the Liberal’s latest shadow cabinet.

-srbp-

The fault, dear Wade…

Wade Locke doesn’t like a story in the Thursday Telegram. He dislikes it so much he called a local radio talk show to set the record straight.

Locke didn’t accuse the reporter of misquoting him in exactly those words, but he did end the conversation with the radio host by suggesting that maybe his comments were deliberately misrepresented.

Locke said something along the lines that he couldn’t imagine anyone reading the comments and coming to the conclusion he was suggesting the economy might be headed for disaster.

Locke went out of his way in the Open Line call to repeat phrases along the lines of “the future is bright” and “the future is rosy.”

The root of the issue is in comments Locke made for a news release from the Atlantic Provinces Economic Council. The headline on the story by Peter Walsh reads “N.L. economy facing disaster: experts”. The rest of the story summaries the comments from Locke and fellow economist Scott Lynch.

Here’s exactly what APEC attributed to Locke before getting into the specific suggestions Locke and Lynch had for the federal government’s budget:

Depressed commodity prices continuing throughout the year and longer would have a disastrous impact for Newfoundland and Labrador from a fiscal perspective and for the continuation and expansion of major resource projects within the province. A continuation of the existing tight credit market conditions will adversely impact small export firms and fishing enterprises and will be felt disproportionately in rural parts of the province.

If the U.S. economy continues to lose jobs as it did last quarter, then real GDP would decrease by 5% on an annual basis, which would produce a significant deep and prolonged recession. Forecasts of U.S. growth at -2.5 to -3% with recovery in late 2009 assumes that the Obama stimulus package removes deflationary expectations and returns the economy to its trend growth rate. For this optimistic scenario (successful stimulus and late 2009 recovery) Canada could experience a 1 to 2.5% decrease in real GDP, with the earliest recovery in September/October.

However, should the U.S. recession reflect the 5% decline in real GDP then Canada, as a small open economy, will follow the U.S. and be faced with a significant period of rising unemployment and declining economic activity, with recovery occurring in 2010. If, on the other hand, the recession in the U.S. is closer to the pessimistic scenario, then this may produce a decoupling of the Canadian/U.S. trade relationship and in that case, predicting possible outcomes becomes very murky.

It’s hard to imagine anyone reading that and not coming to the conclusion the boys were suggesting there could be disaster out there.

In fact, that’s exactly what Locke said in the very first sentence:

Depressed commodity prices continuing throughout the year and longer would have a disastrous impact for Newfoundland and Labrador from a fiscal perspective and for the continuation and expansion of major resource projects within the province.

Locke’s problem likely isn’t with the Telegram, Peter Walsh – who wrote the story – or indeed with APEC.

Rather his problem is that his APEC stuff wasn’t on the same page as the line being pumped by Locke and the provincial government before Christmas. The government crew have been in lock-step with one of their favourite outside consultants on this economic bubble thingy since the get go.

They were matching up word-for-word before Christmas and Locke this morning and the APEC suggestions sounded almost like a replay of what the Premier delivered to the feds last week. [edited to clean up the sentence jumble; link added to Premier's comments.]

Number One thingy: reform employment insurance to give people more money for longer.

Number Two thingy: Build ships and dole out the money so Newfoundland shipyards can get the work.

Number Three thingy: Lower Churchill. Never mind that the thing is shaky, let’s get people out there cutting brush and doing stuff of some possible, theoretical kind.

The odd thing is that Locke’s APEC assessment is actually closer to the truth than anything else. If commodity prices stay down for the rest of this year, into next year and maybe a few years after that, then there will be disaster.

But it won’t be a disaster necessarily for Newfoundland and Labrador, as in the province. It will be a disaster for Newfoundland and Labrador, the provincial government.

There’s a difference even if some people tend to forget that in these “l’etat c’est moi” days. That’s not to say there won’t be problems in some sectors of the local economy. Tight credit is going to force the fishing industry to sort itself out once and for all. Lower prices for minerals will mean that mines will shut down for periods and lay people off.

And let’s not forget that a slow down in Alberta will mean that remittance workers will either roost here and agitate for government help or leave altogether, permanently.

But still, there are mines that will be working away. There’s a new project coming for Long Harbour and the oil industry will continue to do very well, despite lower prices and reduced production. After 2009, production will pick up again. If we look farther out, then Hebron will come along.

The disaster Locke noted in his very first sentence for APEC (unless APEC misquoted him terribly) is really one for the provincial government’s treasury. Their disaster is entirely self-made. They boosted spending based solely on highly unreliable commodity prices and foolish predictions of ever higher or constantly high prices. They did very little to pay down public debt (accumulated borrowings) or sock away money in a rainy day fund. The provincial government also committed to a raft of borrowing to support the oil plays.

That put the provincial finance minister looking at 2009 with a shortfall of over a billion dollars in cash and demands for higher spending. Downturns in the market put extra costs in there to cover pension shortfalls. The 21% wage increase promise looked great politically but it was way beyond the rate of inflation even in the headiest of commodity price days over the past couple of years.

That sounds pretty much like a disaster to anyone who cares to take a look at it either from an economic or public policy standpoint.

It’s hard to imagine anyone could look at that and not see the disaster waiting to happen. Now the disaster doesn’t have to happen if the government shifts its policy direction in a number of significant ways.

That would require people in power to look at the world as it is and take appropriate action. But if think we live in a bubble, you’d be almost guaranteed to head down the wrong track.

You’d keep smiling all the way to disaster.

And it would be your own fault.

-srbp-

He lost on Jeopardy, baby

Coming in second on Jeopardy is nothing to be ashamed of, there buddy.

Good on you.

To mark the occasion, here’s an song written 20 years ago by Weird Al that seems to fit.

Offshore royalty audits “Behind, big time”: Dunderdale

In July 2006 when Danny Williams accused ExxonMobil of denying the provincial government access to the books for the Hibernia project there was a lot more to the story either than what he said or than just his fit of pique at the failure of talks to develop Hebron.

Williams put it in another context altogether at the time, claiming the company had reneged on a commitment to “audit process to validate statements by the company that the Hibernia project was not meeting the owners’ expectations.”

As it turns out, the reality – revealed almost three years later by the province’s auditor general in his annual report for 2007 (year ending 31 March 2008) -  is that the provincial government was and is behind in its own audits of offshore oils project reports:

… At October 2008 [sic], there were 87 annual royalty and eligible project cost submissions made by project
owners for which the Department has not started any audit work. No royalty or eligible project cost audits have been conducted on the Terra Nova or White Rose projects since production started in 2002 and 2005 respectively.

On top of that the department’s audit manual was approved in 2000 but hasn’t been updated in the intervening seven years.

The auditor general also revealed that the department had quietly dropped its 2006 demand for access to the Hibernia books claiming they could adequately assess the issues without the company’s documents.

Each of the 15 companies operating offshore are required to file monthly and yearly operating reports with the provincial government.  They must also file an audited financial report annually on project costs.  All these are used to calculate royalties paid to the provincial government’s royalties and benefits division of the natural resources department.

The majority of the outstanding audits, shown in the chart at left taken from the auditor general’s report,  are for the period after 2003.

In early 2006  - the year Williams made his accusations against ExxonMobil and the year before the one audited by Noseworthy – then natural resources minister Ed Byrne told a House of Assembly committee that his department was experiencing staff problems in the division of his department responsible for the royalty and cost audits. 

MR. E. BYRNE: Difficult not only to attract, difficult to maintain. A lot of this, too, is part and parcel of the energy policy review that is ongoing and the dedicated resources we put to that. Within the Department of Natural Resources, the energy division is most challenged, more than any other division within the department, on not only recruiting but maintaining.

We had senior petroleum auditors who left for double the salary. We recently had an ADM who took a job in Calgary. I do not know what his salary was or what he was offered. He was making a competitive salary here, but it was a significant offer. Those are issues that the deputy and government struggle with everyday. Anyway, that is part and parcel of the change in direction there.

Within the local oil patch the migration of senior, experienced public servants to the private sector caused a great deal of chatter.

The problem hasn’t gone away.  Last May, natural resources minister Kathy Dunderdale told the House of Assembly’s Resources Committee that there had been a number of vacancies in the audit division and that the department was hiring outside contractors to take up the slack. She said the audits were “Behind, big time.”

The department’s deputy minister  - Chris Kieley - told the committee:

For those three projects [Hibernia, Terra Nova and White Rose], and with the increased activity, every year we are doing audits but, because of the turnover in staff, because of the resources that were assigned to that particular piece in previous years, the audits were behind; so, this past year and the year before we have made a particular effort to get those audits up to date and we have used outside assistance through auditing firms to help us do some of those audits. So, we have a combination now of outside accounting firms helping us get the audits up to date and we have our own staff working on the audits as well. We are working on a number of different audits now with all our projects at this point.

Kieley also insisted in May that

“[w]e are within the timelines prescribed by legislation (inaudible) the Hibernia royalty contract, but we are behind and we are putting extra effort into this whole piece to get caught up. When I say behind, we have not lost any ability to audit these. What we are saying is that we would like to get them up to a closer time frame.”

Auditor General John Noseworthy noted in his report that the Hibernia audits completed had revealed $8.66 million owed to the provincial government.  In her testimony to the resource committee, natural resources minister Kathy Dunderdale insisted, however,  that “there has been nothing earth-shattering that we have come across to this point.”  The completed audits done in May 2008 are almost identical to the ones listed as finished by the auditor general in his report.

Noseworthy also noted that the department had committed to completing all outstanding audits by 2010. At the same time, though noted that even the 2008 schedule was off, largely due to staffing problems within the natural resources department.

In 2008, the work plan was amended to move 2400 hours of work scheduled for White Rose to 2009 as a result of audit work done for Hebron.  As of October 2008 – half way through the fiscal year - an external contract for an auditor had not be let for 2008.

The 2008 audit plan was based on 1400 hours for four staff positions supposed to be filled by the start of the fiscal year.  By October 2008, one position was still vacant.  Another was filled in July and only two of the original four planned were in place in April 2008. Associate deputy minister Pierre Tobin gave the resource committee a different version at the committee hearings in May.  Rather than disclose that two audit positions were vacant, he left the committee with the impression the division was “almost fully staffed”:

That would be, in the past year, a number of auditors, but those positions have since been filled for the most part. There would also have been a couple of development officers and a couple of economists. We are almost fully staffed, particularly in the royalty audit section. We are down one person out of upwards to a dozen, I guess; we are doing really well there. [Emphasis added]

-srbp-

But will Charest expropriate?

Alcan closes a smelter and slashes production in the latest round of cuts and adjustments:

• A further six per cent reduction in aluminium production, bringing the total reduction to approximately 11 per cent, and close to six per cent reduction in alumina production
• Reduction in global workforce by approximately 1100 roles (300 contractors and 800 employee roles)
• Substantial cost reduction programmes in Rio Tinto Alcan facilities worldwide
• Permanent closure of Beauharnois smelter in Quebec, Canada
• Production at Vaudreuil alumina refinery in Canada to be temporarily curtailed by 400,000 tonnes
• Expected sale of interest in Alcan Ningxia joint venture in China
• As previously announced, the anticipated ending of smelting operations at Anglesey Aluminium joint venture in the United Kingdom in September 2009 when the current power contract expires. The impact on production and headcount is included in these figures.

-srbp-

Euphonium!

In the musical prelude at the inauguration, musicians would recognise the strains of Ralph Vaughan Williams English Folk Song Suite.

Seems a bit of an odd choice for an American ceremony until you realise the thing is full of beautiful euphonium lines.

WTF  you are undoubtedly thinking.  Who cares about that?

That starts to make more sense when you realise that the director of the United States Marine Band, “The President’s Own”, is the former principal euphonium player with the band.

We.

Are.

Everywhere.

-srbp-