Sound familiar?

A bunch of politicians accused of living high on the public hog and getting into an argument about what the rules permit.

From Guido Fawkes:

Guido has been shouting about the Green Book Rule changes which came into force on April Fools Day - and politicians really do take us for fools. To stop all the rule breaking by MPs they came up with a clever solution. Scrap the rules!

Meanwhile, there is a hunt on for the person who leaked information on the story to the papers.

The Mother of Parliaments might wind up following the path taken in the Bow-Wow Parliament once the whole thing explodes.

We could loan them a Chief Justice who could sort the mess out quite nicely.

In the meantime, it might be interesting to find out if any of their cash from their spending scandal had been directed to paying party campaign expenses as has been the case here, albeit something the ruling party isn’t at all interested to see investigated with the same judicial vigour.

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First oil and a new discovery

Chevron announced two milestones this week.

On Wednesday, the company achieved first oil on the  Tahiti field in the Gulf Of Mexico. production is expected to 125,000 barrels per day of oil and 70 million cubic feet of natural gas by the end of the year.

The Tahiti production platform, left, is located 305 kilometres south of New Orleans and sits in 1250 metres of water.

On Friday, Chevron announced it had struck oil in a well drilled offshore Congo.

Moho Nord Marine-4 was drilled to a total depth of 13,907 feet (4,239 meters) and proved a 535 foot (163 meter) column of high-quality oil flowing at 8,100 barrels per day.

The discovery follows two previous successful exploration wells, Moho Nord Marine-1 and 2, drilled in the permit area in 2007, and the positive appraisal well Moho Nord Marine-3 in 2008.

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There’s more to this than a few seals

Given the origins of and the scope of the trade talks starting between Canada and the European Union, Danny Williams’ refusal to participate is even more bizarre than it first appeared.

Whatever is going on with the government party and its supporters – including voice of the cabinet minister crowd who seem obsessed with clubbing seals these days - it ain’t really about seals.

The provincial government seems intent on ignoring both the reality of the province’s dependence on trade with the United States and the growing concerns about American trade protectionism. Of the $13-plus billion in exports to the top 10 trading partners for the province, the United States consumed $10 billion or 77%.  The U.S. accounts for 70% of all Newfoundland and Labrador international exports.

This, from the Economist, says much:

You can see why Canada would want to lessen its dependence on America, which bought 75.5% of its exported goods last year and provided 63.4% of its imported ones. Yanked into recession by America, Canada worries that trade will suffer from protectionism (in the form of new Buy American provisions and country-of-origin labelling requirements on farm products) and Washington’s moves to toughen up border security.

The deal could open new markets for Canadian exports of agricultural, fish and forestry products in addition to fish, aerospace, automotive and other exports. 

The Government of Newfoundland and Labrador is refusing to participate in the talks as part of the Canadian delegation.  The Premier claims it is because he doesn’t trust the Prime Minister to look after the province’s concerns about European opposition to the seal hunt, the push for custodial management of fisheries outside the 200 mile Canadian exclusive economic zone and impact of a EU shrimp tariff on Newfoundland and Labrador shrimp exports.

Since all those things are on the table plus a great deal more directly affecting the future of the provincial economy, it’s bizarre that the provincial government would leave all those issues entirely in the hands of someone they supposedly don’t trust.

Bizarre indeed.

 

 

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What makes news? (Small Town News edition)

People wonder what it takes to get a story in the conventional media.

Virtually every public relations practitioner will be asked -  at least one thousand times over the course of a career - “what makes news?”

The conventional answers are sex, drugs, power, conflict/controversy, novelty, celebrity, bad weather and money.  There a bunch more but those will do for what we are talking about.

On top of that you have to add proximity.  Local news outlets usually don’t cover something that happened outside their area.  A car accident might make the news where it happened but it likely won’t be covered in the same state or province, let alone the same country.

All that is what makes it so bizarre to find that voice of the cabinet minister is pushing a story about some online “newspaper” in Thunder Bay, Ontario that carried an editorial/ news story praising Danny Williams.
Actually “online” is less accurate a term than “obscure”, at least for people who don’t live in Thunder Bay.  In fact, for most of us, Thunder Bay conjures up nothing more  edifying than that old joke about the only types of people who ever came out of Thunder Bay, one of which was a hockey player.

So somehow, the powers that be over at the province’s major radio outlet have determined that people across the province should be aware of the fact that one guy in Thunder Bay who runs a website has positive feelings about Danny Williams.

Whoopeee ding.

Now what are the odds, do you think, that the Saskatchewan equivalent of VOCM will run a story:  “PEI blogger lauds Brad Wall”.

Or maybe CHUM will carry word that “Antigonish e-mail whiz loves Dalton!”

And even to put it in a closer context – one assumes – might we expect British Columbia’s radio news giants to be heralding the online musings of NLPress about Gordon Campbell?

Somehow none of that seems even remotely likely.  Then again, it’s highly unusual for a news outlet to so favour the regime du jour in its programming that it can become known as “voice of the cabinet minister” and no one misses the joke. 

After all, are the guys running major news outlets anywhere else in the country so chummy with the local Power that Is that they take up a sea on the government’s oil and gas company board?  Highly unlikely.

But don’t take the word of a mere humble e-scribbler.  Just check the registry of companies and see who is sitting next to John Ottenheimer, Ken Marshall, Ed Martin and Glen Roebothan on the NALCOR Oil and Gas Co. board.

In pondering the curiosity of all this, we should not forget, of course, that the government’s polling firm will be in the field within the next day or so collecting their quarterly results.

Everyone knows this, including the crowd over at the Great Oracle of the Valley. They know full well that starting next week their call-in shows will be festooned with Tory politicians heralding the glories of their administration led by the Absolutely Splendiferous You Know Who. They’ve already started practicing in the House of Assembly, as labradore has noted. 

Even Hisself – who just launched a tirade about Steve Harper – will turn up at least once.  Last time he did one of the on air types asked Hisself about this poll goosing stuff. The Premier noted that the government pollster had started in the field the previous weekend and that, if he wanted to goose a poll, he’d have started the week before the polling started.

Which of course, he had already done last time.

And which of course he is doing yet again. 

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How to tell when your position is wrong

When you are a political leader and your comments show you to be so far out of touch with the best interest of your province such that Stephen Harper looks sensible in comparison, then you know something is wrong.

Seriously wrong.

Like there’s a giant fireball in the sky above the place you’re heading and you can’t understand why all these cars are going the other way wrong.

Like you and a bunch of your drunken teenage friends go camping at Crystal Lake and you start making out with your girlfriend alone in a tent in the middle of the night and wonder where that machete came from sticking through the tent top wrong.

Topic:  the annual seal hunt, also known as March Madness (in this case in May) or as it has become, the platform by which every “C” list celebrity or celebrity wannabe seeks the public spotlight once again.

Issue:  The European Union voted to ban imports of seal products.

The Stephen Harper Comment: "If we were to make our trade relations with the European Union about only the sealing issue, we will never have any trading relations with the European Union because as we know this is a disagreement of long-standing," [Prime Minister Stephen] Harper said at a news conference.

The Danny Williams Comment:   "You know he's prepared to sacrifice Newfoundland and Labrador's interest in the interests of other issues for Canadians. And I think that's just dead wrong and it shows what this guy is all about," [Newfoundland and Labrador Premier Danny Williams said].

Okay.

According to the provincial government’s own fact sheet,  “the sealing industry is worth $55 million” to the provincial economy. That was a figure for 2006.

In that same year, Newfoundland and Labrador did more than 10 times as much business with Germany and the United Kingdom combined as the total value of the seal fishery.

In 2006, exporters from Newfoundland and Labrador sold a heckuva lot more than seal pelts to European Union countries.  At that value, they shipped a heckuva lot more to European countries than the seal products they may have shipped through them.

In 2008, Germany alone accounted for $1.02 billion of Newfoundland and Labrador’s exports. According to CBC, total Canadian seal exports to the EU last year amounted to a measly $5.5 million.  That’s all Canada, not just Newfoundland and Labrador.

Get the idea?

Now just think – for one teensy second – about the implication of Danny Williams’ comment.  Apparently, the only issue of any consequence here for Danny Williams is the seal hunt and 10 times as much trade between our province and Europe and the chance to sort out some of the grievances doesn’t matter one jot or tittle.

Lest you think this remark is out of context consider that the provincial government earlier this year turned down the chance to work with an international trade mission aimed at increasing trade with European countries.

Why?

Because of the seal hunt, among a couple of other issues which would have been better addressed at the table rather than far away from it .Actually, if you follow the links you’ll see another classic Williams administration constantly-shifting-position, but let’s just go with the “No seal hunt, no play” position.

If there’s logic in the provincial government’s argument – as enunciated by Danny Williams  - it sure isn’t obvious. Apparently, the economic benefit to the provincial economy of increased trade with the Europeans isn’t something the provincial ministry could be bothered with. 

At this point, it’s hard to see how the provincial government is protecting provincial interests by launching into another tirade with anyone over seals when seals are only a tiny fraction of the overall provincial economic picture involved.

But seriously:

How can you tell your political position is crap?

When Stephen Harper sounds reasonable in comparison.

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Updated – added sentences giving value  of seal exports to EU last year, according to CBC story.

Indy going under

Apparently, it has nothing to do with anything other than the trends in the market.

People don’t read newspapers evidently, especially ones that are following a fairly conventional advertising revenue approach.  As we know from the local experience even getting a massive weekly infusion of government cash doesn’t help.

Before the newspaper types get all incensed, your humble e-scribbler doesn’t think that newspapers are really going to die.  There’s a place for them in the news world of the future.

What needs to change is the information delivery model and the revenue model.

People just aren’t reading the conventional papers like they used to do, and as a consequence, the revenue is drying up from advertisers. 

Take a look across the United States and you will see bastions of the newspaper world  from Boston to San Francisco struggling to keep alive.

That’s a clue.

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The Value of an Oxford education

"You see what's happening in countries like Denmark with the whale slaughters. We see other parts of the world where kangaroos are being culled by the hundreds of thousands, and yet they're after the seal harvest here in Newfoundland and Labrador," [Premier Danny Williams] said.

"So Europeans should have a good, hard look at themselves."

Europe = Denmark.

Okay.

Europe = Kangaroos.

Huh?

Evidently Williams didn’t read geography at  Oxford.

For the record, here’s Europe (the bit in yellow) and the place where kangaroos come from (Australia, shown in red). 

Not the same thing.

Kangaroos are found only in Australia.  There are no kangaroos in Europe, except in zoos but people aren’t allowed to bash them.

Your humble e-scribbler did not attend Oxford.

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Hebron deal: fixed research and development, backed by Province

What natural resources minister Kathy Dunderdale said in March 2007 about the offshore regulatory board’s regulations for research and development spending:

“The board is only requiring these operators to spend in this province in accordance with what has been the average and accepted norms in the industry elsewhere.”

What she signed in August 2008:

5.9 (D)

The Proponents shall seek Board approval of its plan to invest a fixed amount of one hundred twenty million dollars ($120,000,000) in Research and Development during the life of the Hebron Project, and the Province shall advise the Board of its full support for such Research and Development plan as described in (A), (B) and (C) above as the entire amount of the Proponents’ Research and Development obligations in respect of the Hebron Project.

What she said in February 2009, when the oil companies lost their last bid to appeal the offshore board’s research and development rules:

“The Provincial Government has taken major steps to strengthen R&D planning and capacity in the province through initiatives outlined in our Energy Plan as well as through the creation of the Newfoundland and Labrador Research and Development Council,” said the Honourable Kathy Dunderdale, Minister of Natural Resources. “The R&D guidelines complement these major initiatives.”

Maybe Kathy hadn’t read that thing she signed in 2008 since the fixed amount she agreed to back, is less than the offshore board’s r&d regulations would require.

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Kick-back? Did he really say kick-back?

From an international news story on the European Union seal ban, comes this curious phrase from provincial fish minister Tom Hedderson:

“This certainly is a serious kick-back,…”.

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And they’re off…

to a bad start in Nova Scotia.

Well, bad start if you are Premier Rodney MacDonald trying to explain that a budget which is in the red is supposedly in the black but only if a piece of legislation was changed to allow the government to divert cash from debt reduction to program spending.

How much the budget is out of whack depends on who is doing the math, apparently, but there’s no doubt the government budget bill  brought in spending higher than revenues.

That alls sounds rather odd in a province where the government has flatly rejected any balanced budget commitments, let alone mandating it in law.  They’ve even rejected investing massive gobs of cash flowing from offshore oil prices, preferring instead to save them up – temporarily – to cover deficits in at least the next two fiscal years.

How much cash?

$1.8 billion, apparently, of which $1.3 billion will cover the overspending in the current fiscal year.

Nova Scotians, meanwhile, will head to the polls June 9 to elect a new government.  The opposition teamed up to defeat MacDonald’s minority Tory government on a confidence vote on the budget measures.

The opposition parties can’t promise they wouldn’t also bring in a deficit budget if they win the election.

The stakes are high, though with all three parties apparently polling around the same numbers.  As some astute Nova Scotian observers have pointed out in the past, the New Democrats may have a tougher time of things than it appears since their votes appear clustered in several areas and are therefore considered “less efficient” when it comes to winning seats across the province.

Sign of the high stakes came early with the release in early April by an unnamed Liberal campaign worker of a photograph of New Democrat candidate, actress Lenore Zann. The photo shows Zann topless and comes from her appearance on the cable show The L Word.

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Related:  Issues, via Canadian Press

Live-blogging a trial

Anyone interested in the trial of Ottawa mayor Larry O’Brien on charges he conspired to keep an opponent out of the last mayoral race can follow the thing via twitter, e-mail, text message or someone’s live-blogging, thanks to a court ruling.

Judge J. Douglas Cunningham accepted an application by the Ottawa Citizen,  but  -oddly enough - rejected an application by CBC that would have allowed streaming of live audio and video.

The broadcaster offered no explanation of why it waited until the last moment to bring a motion in a trial it has known about for 14 months and did not even meet the minimum of 15 days notice for such motions.

The ruling is the first in the country, apparently. Cunningham also warned that his ruling applied only to this trial.  He said other concerns might be raised in a jury trial about such open communication.

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Hebron deal: Big Oil’s new L’il Buddy

A curious extract from the financial agreement that was part of the Hebron development deal:

5.1 Support of Province.

The Province shall, on the request of the Proponents:

(A) assist and support each of the Proponents in seeking modifications for federal fiscal enhancements to the extent that such enhancements do not, in the opinion of the Province, have a negative financial impact on the Province, or where such enhancements do have a negative financial impact, they have been offset to the satisfaction of the Province by the Proponents;

(B) use all reasonable efforts to assist the Proponents in securing commitments from Canada and municipal governments in the Province regarding the legal and regulatory framework applicable to a Development Project; and

(C) support the efforts of the Proponents in responding to any future legislative and regulatory changes that may be proposed by Canada or a municipal government in the Province that might adversely affect any Development Project, provided such action does not negatively impact the Province or require the Province to take any legislative or regulatory action respecting municipalities.

Talk about your little gem of a concession to the oil companies.

This section commits the provincial to support any or all of the proponents on any action taken by the Government of Canada that “might adversely affect any” development project on any of the lands covered by the agreement.

What might we be talking about here?

Well, it’s pretty wide open. If you look up the definition of “Development Project” in the agreement you’ll see it’s broad enough to cover every aspect of the project from start to finish, including environmental considerations. If the proponents think the idea is bad, then the province is obliged to help out. It doesn’t have an option; if the proponents ask, the “Province shall.”

And before you note the little provisos there about the Province and the conditions under which it doesn’t have to lend support, bear in mind that the definition of the Province in the agreement is also pretty tight and tidy:

“Province" means the Province of Newfoundland and Labrador, Her Majesty the Queen in Right of the Province of Newfoundland and Labrador, or the geographical territory of the Province of Newfoundland and Labrador, as the context may require.

Now this gets even more squirrely when you consider that the provincial government co-manages the offshore with the federal government through the Canada-Newfoundland and Labrador Offshore Petroleum Board. The sort of regulatory changes we are talking here are ones that are most likely to come through the offshore board.

Environmental regulations, shipping regulations, changes to safety requirements, that sort of thing: all covered through federal legislation since the offshore is legally in federal jurisdiction.

Even fallow field is covered by this provision. If a future federal government wanted to change land tenure in such a way that it would affect lands covered by Hebron, the provincial government would likely be obliged to toe Big Oil’s line. If the proposed federal regulatory “enhancements” actually worked out well for the provincial government, the Proponents can cut a side deal under this clause to secure their support to fight the “enhancements”.

Not a bad little clause.

Well, not bad for the oil companies, anyway.

This provision is even more squirrely because the provincial government – through the minister of natural resources (Kathy Dunderdale) and the provincial representatives on the offshore regulatory board – will not only carry on all this lobbying at the behest of and on behalf of Big Oil in the first place, they can do it from behind closed doors.

There isn’t a single clause there that would oblige the provincial government to disclose its lobbying on behalf of the oil companies; no disclosure to the public and indeed no disclosure to anyone.

Seems like a pretty big conflict of interest, but not one that should come as any surprise given that government’s policy is to be both a regulator and an operator simultaneously.

That’s pretty much the definition of conflict of interest as we’ve discussed here before, particularly when the talks broke off in 2006. We also raised the issue given the Premier’s curious claim after the recent helicopter crash that – despite the fairly obvious – the provincial government didn’t have a regulatory role in the offshore.

It also shouldn’t come as a surprise given that the Hebron deal sets the local research and development below the levels set by the offshore regulator. Government accepted that low amount - and the pledge to back Big Oil - after the offshore board won a court case against Big Oil over just those sorts of levies set retroactively by the offshore board. Next time out, Kathy Dunderdale or her successor will be working to make sure the regulatory changes don’t get out of the board in the first place.

All of that pales in comparison to the clause in a fiscal deal that obliges the provincial government to back the oil companies whenever the companies ask.

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Best kept secret: musician/composer edition

Keith Power.

Originally from da Goulds, now making a living in California writing music for movies, video games and television.

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CAE buys xwave defence unit

News release issued Friday, May 1, 2009:

CAE and Bell Aliant Regional Communications Income Fund ("Bell Aliant") today announced that CAE’s acquisition of Bell Aliant’s Defence, Security and Aerospace (DSA) business unit, operated by the xwave division of Bell Aliant Regional Communications, Limited Partnership, has been completed.

xwave’s DSA division supplies real-time software and systems for simulation, training, defence, and integrated lifecycle information management for the aerospace and defence industries. The division employs approximately 200 people in Ottawa, Ontario; Halifax, Nova Scotia; and Esquimalt, British Columbia.

Background:  August 2008

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Cuts not growth on air force agenda

Via David Pugliese, the air force is considering options to cut upwards of $123 million from next year’s budget.
Expanding search and rescue helicopter services isn’t an option.

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Smelter talk more like smegma talk

Last October a federal briefing note prepared for incoming natural resources minister Lisa Raitt listed an aluminum smelter in Labrador as one of 14 projects expected to be announced within six months.

Unfortunately for the people writing the briefing notes, the proponents – Rio Tinto Alcan – were busily chopping production globally in response to the economic meltdown.

The briefing note story is in the Saturday Telegram along with some choice recent history of the smelter story.  It isn’t on line.

As the Telly notes, the Premier traveled to Brazil in late 2007 to pitch the smelter idea to vale Inco. 

A year later the government’s favourite economist was touting the idea of an imminent announcement of what – as we told you at the time – was supposed to be an aluminum smelter. 

The project would, as the Telly quotes Wade Locke, “make the earlier start of the project [Lower Churchill] more viable and …act more like a loan guarantee for the Lower Churchill that will allow them easier access to capital.”

Nice thought, that, except that reality was intruding on the fantasy even as the words were being uttered or the briefing notes being drafted. Major aluminum producers were busily shedding capacity through the fall of 2008 and early winter of 2009 as demand plummeted.

The problem for Australian-based Rio Tinto was a bit larger.  The miner completed its purchase of Alcan in late 2008 and took on responsibility for the company’s $40 billion net debt problem, as a result.

Plans to shed some assets melted in mid October. Since then the company has announced plans to chop 14,000 jobs globally – 12.5% of its workforce – and has slowed production by as much as 22% in some aspects of aluminum production. In February, Rio Tinto announced a deal with Chi Nalco, a state-owned enterprise, to allow the Chinese to farm into several existing Rio ventures, including bauxite and aluminum projects in the Pacific.

The company’s capex plan for 2009-2010 reduces expenditures in 2009 by 50% and sets the level for 2010 at sustainment.  in other words, for the next two years the company is not anticipating any significant capital expenditure.  On top of that, the company has already reduced production  especially in some its high-cost operations.

The Chinese deal suggests not only that the company is welcoming some fresh cash into the system but also is gearing to take advantage of growth in the Chinese market using facilities that are closer to the market than Labrador. 

For those who don’t know, Labrador is pretty much as far from China as one can get.  All the raw materials for a smelter would have to be imported and the power would have to be sold at incredibly low prices – well below current market rates in Labrador – in order to offset the production and shipping costs. That’s almost identical in concept to the Smallwood-era phosphorous plant at Long Harbour.  The project was only viable because of its low energy costs (initially the same rate as sales to Hydro Quebec from Churchill Falls) and its proximity to its major market in the United Kingdom.

Similar aluminum projects in Iceland involved selling power at half the rate for other commercial users.

The Quebec government provides massive subsidies to its aluminum industry but that hasn’t stopped recent shutdowns and layoffs.

The idea of establishing an aluminum smelter in Labrador dates back to the 1950s.

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There’s a reason…

people call her Blunderdale.

Deputy premier Kathy Dunderdale has taken to answering opposition questions with an odd air of arrogance about her.  She tries to taunt and put down the questioner in a way that…well.. doesn’t work.

Some people can carry on arrogantly and get away with it  - sort of - because their abilities are far above that of others. Maybe their response is so witty that you just don’t see the arrogant jab.

Dunderdale ain’t one of those people by a long stretch.

MS DUNDERDALE: Thank you, Mr. Speaker.

Mr. Speaker, I am going to divulge the name of his source. It is the Leader of the Opposition, and I gave her that information in Estimates, earlier this week, that these actions had been taken. We told her that the report had been received, although I had not been briefed at this point in time.

She was responding to a question by the opposition house leader about an audit into the local chicken marketing board.

Problem for Dunderdale was Kelvin Parsons could simply rebut her asinine comment:

MR. KELVIN PARSONS: Thank you, Mr. Speaker.

The minister must surely have a problem with timelines because she did her Estimates on Monday night of this week with the Leader of the Opposition. My questions were asked in this House of the minister last December. That is the source to which I refer, that told us there was indeed a forensic audit being done, which you denied at the time and you said you would check it out and get back, which the minister failed to do, and has not done now until it was taken out of her and pried out of her in the Estimates Committees again.

Mr. Speaker, the people who contacted our office certainly believe - and this was back in December - the people who contacted our office and provided the information back in December had very good information that there were financial irregularities. These people made significant allegations.

I ask the minister: Can you confirm that anyone in your office was, in fact, dismissed as a result of what happened involving this matter?

Now this is not the first time Dunderdale has had a problem disclosing things factually in the House of Assembly.  She got into serious trouble in late December 2006 when she wound up misleading the House – and by extension everyone else in the province – about details surrounding a public tendering controversy that had led ultimately to cabinet firing one of their political appointees:  Joan Cleary.

So serious did Dunderdale Blunder that her boss had to slam the House closed noticeably early to avoid everyone realising what had happened and calling for the head of one his most faithful lapdogs.

Then there’s the time last December when she couldn’t accurately recall what she’d said the week before.

First Danny Williams appointed Tom Rideout to run the place on all those occasions when DW is not around.

Tom left.

Then he picked Kathy Dunderdale to be his Number Two.

Does anyone else see a pattern here?

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What got up Tom’s nose?

From the Thursday session of the provincial legislature, this odd response by fish minister Tom Hedderson to a question by opposition house leader Kelvin Parsons.

Simply put, the comment that he wasn’t in the House at 5:00 Pm was a useless taunt best ignored.  By answering as he did, Hedderson only raised more questions about what the personal business was;  that’s not a prurient interest.  It’s a natural reaction when someone gets upset to wonder why.  When he refers to "”a personal thing” there’s logically going to be more curiosity.

MR. KELVIN PARSONS: Thank you, Mr. Speaker.

My next question is for the Minister of Fisheries and Aquaculture.

Mr. Speaker, there is a growing concern in the fishing industry that a dispute regarding prices for lobsters and crab could threaten both industries this coming season. The minister, in fact, was supposed to speak on The Fisheries Broadcast yesterday to address this issue, but apparently he says he was in the House until 5:00 p.m.  [Italics added:  here’s where the little jab occurred]

I ask the minister: Is the crab and lobster fishing industry in jeopardy, and what is government, particularly your department, doing to assist in finding some solutions?

AN HON. MEMBER: (Inaudible).

MR. KELVIN PARSONS: He was not here at 5:00 p.m.

MR. SPEAKER: Order, please!

The hon. the Minister of Fisheries and Aquaculture.

SOME HON. MEMBERS: Hear, hear!

MR. HEDDERSON: Mr. Speaker, again, I take a little bit exception. I was here until 4:45 p.m., by the time I got back to my office it was well past 5:00 p.m., plus I had a personal thing that I had to address after the House yesterday, which is of no business to him. So I will bring it up. Like I said, if you are going to go there, I will go there as well. My business is my business and when I can share it I will, but I am telling you right now is that you have gone over the line on that one. Absolutely! I say too, not the first time, and I am getting kind of tired of it. I am getting a little bit tired of it.

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Expropriation has financial impacts on NL-based Fortis

From Fortis Inc’s first quarter financial statements, issued Thursday comes an indication of the wider impact Bill 75 has had.

Bear in mind the bill expropriated the assets of several companies besides Abitibi, including the Exploits Partnership which was owned 51% by Fortis Properties.

From the Critical Accounting Estimates section:

Exploits Partnership

Following the announcement by Abitibi of its intention to close its Grand Falls-Windsor newsprint mill on March 31, 2009, the Government of Newfoundland and Labrador expropriated most of the Newfoundland-based assets of Abitibi. The expropriated assets included the hydroelectric generating facility assets of the Exploits Partnership. The Exploits Partnership is owned 51 per cent by Fortis Properties and 49 per cent by Abitibi.

The Exploits Partnership had previously incurred a term loan from several lenders to finance its assets. As at December 31, 2008, approximately $61 million remained outstanding under this term loan. The term loan is withoutrecourse to Fortis or Abitibi, as partners of the Exploits Partnership, and is secured by both the hydroelectric generating assets and related agreements regarding rights to operate and sell power to Newfoundland Hydro during the term of the loan. Although the expropriation has caused the Exploits Partnership to default on the term loan, to date the lenders have not demanded accelerated repayment of the term loan. The Exploits Partnership made the scheduled term loan payment for the quarter ended March 31, 2009. As at March 31, 2009, the balance outstanding under the term loan was approximately $60 million. [bold added]

The generation and sale of electricity by the Exploits Partnership continued in the normal course until the newsprint mill closed on February 12, 2009, up to which point Newfoundland Hydro paid the Exploits Partnership for the energy produced on the same basis as the pre-expropriation power purchase agreement. Payment for all energy delivered since February 13, 2009 is currently outstanding from the Government of Newfoundland and Labrador pending resolution of expropriation matters. The day-to-day operations of the hydroelectric generating facilities have been assumed by Nalcor Energy, a crown corporation, as the agent for the Government of Newfoundland and Labrador with respect to this matter.

On March 24, 2009, the Government of Newfoundland and Labrador announced that Abitibi had discontinued discussions with Nalcor Energy regarding compensation for the expropriated assets. Abitibi, which was incorporated in the US, has also indicated that it intends to challenge the expropriation of its assets and seek compensation through the North American Free Trade Agreement.

Historically, the financial statements of the Exploits Partnership were consolidated in the financial statements of Fortis. Pending resolution of the above matters, deferred financing costs of $2 million and utility capital assets of $61 million related to the Exploits Partnership were reclassified to other assets and the $61 million term loan was reclassified as current on the consolidated balance sheet of Fortis as at December 31, 2008.

During the quarter, the combination of uncertainty created by the expropriation and the loss of control over cash flows of the Exploits Partnership has required Fortis to commence reporting its investment in theExploits Partnership using the equity method of accounting, effective February 13, 2009. Consequently, the assets and liabilities of the Exploits Partnership are no longer consolidated in the accounts of Fortis. Equity earnings recognized during the first quarter of 2009 were equivalent to the amount that would have been recognized in the absence of the expropriation. This approach is consistent with the public statement of the Government of Newfoundland and Labrador that it is not its intention to adversely affect the business interests of lenders or independent partners of Abitibi.

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Williams offers to subsidize AbitibiBowater

No matter how you slice this, any severance pay going to former AbitibiBowater employees in Newfoundland and Labrador will come out of taxpayers’ pockets.

"Any cheque that is going to be passed over to Abitibi in compensation for the assets that basically have been expropriated through legislation will have to take into consideration severance…”

Williams said it could mean the government cutting a big cheque to AbitibiBowater, and the company uses that money to pay the severance, or the government could deduct the value of the severance payments from the compensation and then send that money directly to the employees.

Two questions:

1.  Why are taxpayers going to be on the hook for something the company would or should have been paying anyway?

2.  If that’s the case, why doesn’t the government just cough up the cash and then sort it out with AB later on, rather than leave the workers hanging?

BTW, the CBC story that extract comes from got its headline all wrong.  There’s no ultimatum involved at all. 

AbitibiBowater chief executive David Paterson is likely rubbing his hands together in glee since now he won’t have to worry about paying out severance to the local workers.  Danny’s gonna pick up the tab for him.

At the same time, the government’s energy monopoly gets the assets at a cut rate with none of the power being earmarked for industry in central Newfoundland.

AB wins.

Nalco wins.

Who loses?

Just think about it for a second.

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