NALCO buys pot from Leprechaun, has one year to find black gold

The provincial government’s energy corporation will spend at least $20 million over the next year to drill exploration wells on three licenses near Parsons Pond.  The wells must be drilled within the next 12 months or so or the licenses will revert to the Crown.

NALCOR Energy acquired a 67% interest in the venture for slightly more than CDN$500,000; that represents about 85% of the interest previously held by Calgary-based Leprechaun Resources. The remainder is split among a group of small private sector companies:  Leprechaun Resources, Deer Lake Oil and Gas, InvestCan and Vulcan Minerals.  The only changes in the interests held by each company appears to be with the Leprechaun portion.

Leprechaun tried to raise capital for the venture last year through a public share offering.  Evidently that offering didn’t attract as much attention as expected. It appears that the provincial government’s energy corporation stepped in to salvage the project. 

Vulcan and InvestCan are also partnered on a separate venture in the Bay St. George region.  The drilling program on the Robinsons No. 1 is planned to finish this year at at depth of 3600 metres.  Earlier this year, Vulcan drilled two wells in the shallow Flat Bay deposit, both of which showed oil.

In mid July 2009, the provincial environment department notified Leprechaun that its application for an access road at Parsons Pond would require an Environmental Preview Report.

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Devil in the details Update: From Moira Baird’s excellent Telegram story:

1. Expiry date on the existing licenses:  February 1, 2010. That’s two tight a time frame to get three holes spudded and assessed.

2.  Drilling as early as September:  Using what rig?  If NALCO doesn’t have one already lined up and on site, they will have to bring one in from as far away as Alberta or the Gulf Of Mexico.  Good luck with that.  The best prospect would be to use the rig Vulcasn currently is using on Robinsons No. 1.  Availability late fall or early winter.

3.  Friends in high places:  NALCO’s Jim Keating on the possibility of getting an extension on the licenses:  “I believe, if required, we'll be able to seek an extension for the licences to make sure that ... we optimize the best results for the people of the province and our partners.”

Can you say “unfair advantage”, boys and girls?

4. Which other companies:  “[NALCO boss Ed] Martin said Nalcor has been assessing the west coast for the past two years and had also been approached by some of the exploration companies.”

Okay.  Which ones and for what properties?

We know about Leprechaun, which has former cabinet minister Paul Shelley in key positions.  How about Deer Lake Oil and Gas with former Peckford aide Cabot Martin at the helm?

Those would be the most likely choices and they might also explain why Leprechaun effectively got what looks more like a government bailout than a farm-in. 

After all, if Leprechaun had the cash to do the drilling program, it wouldn’t have sold out to NALCO or anyone else.  And if all Leprechaun had needed was an easy extension of the license to get the job done, they also wouldn’t have sold out such a large stake to NALCO.

Nope, license extensions are only easy if you’ve got connections and NALCO is connected all the way to the top.

5.  Pull the other one:  $14 million out of a total of $20 million?  The drilling program was estimated to cost $26 million, not 14.  Where’d the rest of the cost go?

Counterpointing

Of course pumping out a raft of good news, even if it is recycled for the most part, does help to offset the latest employment figures.

There are over 6,000 not working in July 2009 in Newfoundland and Labrador who were working full-time in the same month last year.  There are actually 7200 fewer full-time workers year over year but a slight gain in part-time employment shaved a bit off the net employment picture.

You won’t see much reporting of the jobs stats in Newfoundland and Labrador, but you will see plenty of space given to the “joy, joy” stuff.

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You know its polling season

1.  An announcement about fibre-optic something or other.

2.  An announcement about energy something or other.

3.  Money for road paving, announced again and again.

There must be some really intense concern on the 8th that the public mood needs a lot of extra help to be happy for the pollsters this summer.

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The longest, slowest good-bye in political history

For those who don’t know, the Council of the Federation isn’t another Star Trek convention.  It’s the new name for the meetings where all Canadian premiers get together and talk about stuff.

Only a few years ago it was one of the most important thing on the go, at least for one premier.

Now, suddenly, things like protecting the environment, fixing employment insurance and rebuilding the economy are not so important. Some unspecified office business is.

Maybe this is another step in the long, slow, good-bye announced in 2006.

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Pork appointment at PUB

Another one of the Tory faithful has gone to his reward as a full-time commissioner of public utilities.

Jim Oxford will start work on September 9th.

Regular readers will note that just before the last provincial election the governing Conservatives announced a public competition for both the chair and commissioners jobs.  They collected a few resumes but then scrapped the whole idea shortly afterward.

The Public Service Commission, the crowd that supposedly ran the competition, refused to provide any substantive information to your humble e-scribbler when he inquired about the whole mess last year. They would confirm a competition had started but beyond that, there was nothing but stony silence.

The absence of a genuinely impartial process for selecting commissioners might be the reason why the minister making Oxford’s appointment had to go to the lengths of pointing out that the public utilities board is an independent body.

Either that or Tom Marshall was sensitive to the fact that Oxford was not only a career public servant in Mount Pearl but the guy who managed the Tory party finances since the year A.D. Naught. 

Oxford joins Andy Wells, the chairman appointed last year.

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Real Leaders Shovel It, apparently

There’s been a silly exchange of letters to the editor the past couple of weeks between a fellow named Matthew Pike and the John Hickey.  Hickey took time out from shovelling pavement to shovelling something else in response to a letter from Pike.

The whole thing is silly because Pike started out by kicking Hickey over the foolish government position on the Goose Bay airbase.  It’s pretty silly for Pike to try and hold Hickey to account for a position which  is based on holding John Hickey’s federal political buddies to a promise anyone with half a clue knew was total bullshit when it was uttered.  Hickey campaigned for the federal Connies a couple of times  while the federal Connies were running hard on the bullshit promise of a battalion of soldiers for Goose Bay. Now he is slagging them off for not delivering.  Pike was poking Hickey for supposedly not doing more to push for bullshit.

Anyway, the exchange got sillier considering that the best come-back Hickey could toss at Pike is that Pike is a staffer at the provincial Liberal Party office.  Maybe he is.  Maybe he isn’t.  It’s really irrelevant given the inherent foolishness of Hickey’s position on Goose Bay.  That’s also really not much of a point coming from a cabinet minister in a party which relies so heavily on plants in the media. 

Enter Shannon Tobin. 

Tobin decided to dip his oar into the exchange this week in a letter the editor thankfully decided to leave off the newspapers website.  He didn’t point out the obvious.  Instead he decided to back Hickey.  After starting out with a couple of paragraphs based entirely on Pike’s employment status, Tobin drops this wet kiss:

Now I am proud to state that I support the Progressive Conservative party of Newfoundland and Labrador mainly because I know that the PC party has and continues to show a lot more respect towards Labrador than the Liberals ever did.

After accusing someone else of partisanship, Tobin tosses his own partisan affiliation on the table in such glowing – and entirely irrelevant - terms.  The rest of the letter continues the unqualified partisan praise for Hickey  - nothing on the Goose Bay base issue itself, by the by  - before finishing with the assurance from Tobin that  “the view from Lake Melville with John Hickey as our MHA is a bright and magnificent one.”

Takogo kak Hickey:  There’s something about a man in hard hat and safety vest, apparently.  In a letter to The Labradorian, Shannon Tobin credits Hickey with bringing benefits to central Labrador: “… including the fact that we finally will have some  much needed pavement placed on the TLH…it is quite clear that John Hickey is a real leader and there isn’t any need for a change.”

Tobin’s letter is such an over-the-top love letter to John Hickey’s political backside one can easily conclude one of two things:  either Tobin is applying for a job in Hickey’s office via The Labradorian.  Or he’s been applying already but has had no luck in the hunt for Hickey-related work thus far. 

Now of course, there’s no reason to doubt Tobin’s sincerity. He likely believes every partisan word of what he wrote  but, in the ordinary course, one does not usually see even the most blind of congenitally blind partisans weighing in to an essentially trivial bun fight between two other partisans unless there is something else going on.

About the only thing Tobin wrote which likely reflected the views of the majority came in his second sentence:  “I am a little displeased that some would take advantage of this option [writing a letter to the editor] for seemingly political motives.” 

They likely find letters like Tobin’s more than a little displeasing.

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Only NL GM dealer affected by cuts closes doors

Clarenville’s Decker Motors is the only General Motors dealership in Newfoundland and Labrador affected by the company’s cuts to dealerships.

The company closed its doors last week after 47 years in business.

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What we pay him the big bucks for…

Labrador affairs minister John Hickey vows to pave roads in Labrador s’posin’ he’s got to do it himself, one shovel full at a time.

Many people wonder what Hickey does in his portfolio.

Now they know.

Nit-picky Update:  Okay.  So he writes letters to the editor of the local weekly too.

And issues inadvertently funny “news” releases.

Oh yeah…and he once sued former Premier Roger Grimes for defamation for something Danny Williams actually said.

Whatever happened to that law suit anyway?

 

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How Irish we aren’t: airline version

So how come, with news of a new airline serving St. John’s, none of the locals have suggested trying to bring Ryanair to Newfoundland?

Stranded passengers.

Shagged-up check-in that causes some serious security issues.

An airline boss who muses about cutting the number of lavatories per aircraft to one AND charging to use it, or about imposing a fat tax on passengers and then basically tells disgruntled passengers to feck off.

For a crowd that spend most of their time bitching about travel to and from the island, Ryanair and Michael O’Leary would seem the perfect match.

 

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Dear Krista…

It’s pronounced “aitch”.

Not “hay-tch”.

Once is fine, but hearing it every time the term “H1N1” turns up in a newscast the mispronunciation grates on the nerves.

Just thought we’d sort that out before someone slips minestrone into a script.

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Canadian Press and CBC desperately need online fact checker

Someone needs to start doing some fact checking on stories posted on CBC’s web site.

A Canadian Press story on a Russian Proton K rocket contains this claim:

The Proton-K re-entry was reminiscent of a 2005 incident, when a U.S. military rocket splashed down in the vicinity of the Hibernia oil platform, on Newfoundland's Grand Banks, shortly after its launch from Florida.

The planned launch of the Titan IV B-30 rocket prompted Premier Danny Williams to order an evacuation of several offshore-oil platforms.

But the order was soon rescinded when American air force officials assured Ottawa the risks were small and the rocket would be destroyed if it veered off course.

None of it happened.

1.  Danny Williams didn’t order an evacuation of rigs – he doesn’t have the legal authority.

2.  Danny didn’t rescind the order not only because he didn’t give it  in the first place but because the evacuation  - or more accurately, a removal of non-essential personnel - went ahead. 

3.  The assurances from American authorities were the same all the way through the sorry-assed episode. The government reaction went through a few permutations mostly as people stopped making asses of themselves in public but nothing the Americans said produced any changes in the provincial government reaction.

4.  The Titan didn’t “splash down”.  The booster section broke up as it returned to Earth, as predicted. 

5.  The thing also wasn’t near the Hibernia rig unless more than 100 kilometres away is “near”.

Seriously, people.  This stuff happened within the past five years.  The facts are readily accessible on line.  It’s astonishing that CP would cock it up that badly and CBC would let the cock-up stand.

CP and CBC need a fact checker.

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The junk science of ink blots

If some psychologists are worried that knowledge of the Rorschach test posted to the Internet has invalidated the ink blots as a diagnostic tool, then perhaps they might consider the entire test to be useless as a diagnostic tool in the first place.

After all, based on that little bit of psycho-logic, the test was invalidated from the moment the first book on Rorschach appeared in the first library.

Moreover, the test was rendered invalid in its application to the millions of people who have gone through psychology courses that discussed the whole concept of figuring out personality through what people say in response to blotches on bits of paper.

And of course, that also would mean the test would be automatically invalidated for use on anyone who has previously been “tested” using Rorschach or a similar method.

Rather than jumping all over some Canadian doctor who posted information on Wikipedia, all those psychologists who are getting their knickers in proverbial knots might just consider that their own argument suggests that their much-praised “test” is perhaps a bit more like phrenology than they’d care to admit.

In other words, Rorschach might just be utterly useless - at best  - or junk science at worst.   It would be far more like divination than diagnosis and definitely heading for the realm of intellectual fraud.

And all of that is derived from the argument advanced by the people supposedly defending Rorschach's method.

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Historically challenged

Having the provincial government eliminate interest charges on provincial student loans is considered an ”unprecedented” initiative by…umm…the provincial government.

Students can borrow government-guaranteed money to finance their education.  That would run to the tens of thousands these days, but not having to pay any interest on that loan is considered something worth heralding from the roof-tops as a feat unequalled anywhere in the civilized universe.

But it wasn’t that long ago that going to university in Newfoundland and Labrador didn’t require any borrowing at all.

The former students writing this sort of knob-polish evidently aren’t history grads.

Either that or they are the people who teach google use over in InTRD.

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Waiting for the news release…

when Newfoundland and Labrador’s population drops by one half of one percent would be like waiting for government to lower gas prices by half a cent.

Not gonna happen.

But government will raise prices by a little more than a quarter of a cent. Such is the sensitivity of the government gas pricing fixing scheme when the prices aren’t in the consumer interest.

And cabinet ministers will issue news releases when the population estimates go up by a comparably small amount.  Last summer, then-finance minister Tom Marshall issued a news release heralding a growth in population of a mere 171 people.

Thus far, not a peep on an estimated population drop of  264.

That could be because the growth in population – triggered as it was by the recession – could now turn once more in population decline as the western world comes out of a recession.

And while the current administration likes to claim credit for things they didn’t do – oil revenues and  increased population for two examples – they seldom like to take responsibility for stuff they do.

Funny that, iddn’t it?

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Lemme get this straight…

The guy who liked to recycle expense claims (in one case three times) and who serves in an administration renowned for recycling announcements (in some cases as many as eight times) is criticising another politician for supposedly recycling announcements.

Oh yeah and to make it even funnier, this same guy campaigned not once but twice for the guys he now criticises and he’d-a-been out there a third and fourth time if his boss hadn’t told him he couldn’t.

Can you say “credibility gap”,  boys and girls?

Maybe he’d have been waving around a signed contract for the feds to help pave the Trans-Labrador Highway.

Speaking of HMV, where exactly is that lawsuit against Roger Grimes, John Hickey?  If memory serves, Hickey was suing Grimes for something Danny Williams actually said.

Now there’s a brilliant law suit for you.

By the by,  who is stunneder in that case:  the guy who gave the advice to sue or the guy who took it and wound up paying the bill out of his own pocket?

Tough call.

Oh yes, and this latest release recycling news release is itself recycled.

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Random thoughts - squirrels

“Squirrels are the Devil’s oven mitts.”

That quote turns up in The Book of General Ignorance a marvelous collection of trivia, facts and myth busting that goes nicely with The Origins of the Specious.

It’s attributed to Miss Piggy  but there’s no sign of it anywhere on the Internet, even on Muppet fora.

Doesn’t matter who said;  it’s hysterically funny especially for those of us who find the critters a lot less cute and cuddly than they seem.

Not all squirrels are Miss Suzy, you see.

Changing the frame, at last

Premier Danny Williams may well have lived up to an election promise and brought the auditor general in to look at the books, but until then, not one single "honourable member" involved at the centre of the slimefest thought of taking a principled stand on the issue.

We’ve talked about frames before and that quote from the Saturday Telegram editorial shows just exactly how effective some frames can be in skewing the discussion of a topic.

That idea – that Danny Williams made an election promise and sent the auditor general to the House of Assembly – is one that the governing party and its supporters have pushed since the moment the Premier revealed the existence of the auditor general’s investigation.

It has survived despite countless column inches of news coverage and minutes of electronic reporting.  It has survived despite an extensive investigation by the province’s Chief Justice that shows the full detail of things.

But try and find one single sentence in the entire report by Chief Justice Derek Green that confirms anything even close to the claim that “Danny Williams…  brought the auditor general in to look at the books…”.

You won’t find such a sentence, though, because it never happened.

The second half of that editorial quote is also wrong.

Not one but three members of the House of Assembly “thought of taking a principled stand on the issue” of ethics and accountability in the House of Assembly.

In fact, the three – Danny Williams, Harvey Hodder and Ed Byrne – felt so strongly about the need for stricter financial controls that they held a news conference in order to unveil nearly two dozen commitments designed to address public distrust of politicians.

In the event, the three only got around to implementing about half their commitments, though,  and the ones related to the House of Assembly allowances only came about because there was no way to avoid them. 

The Telly editorial isn’t just satisfied to repeat the official frame;  the writer takes the time to add a myth or two of his or her own.   Take, for example, the view of the role played by the provincial government’s cheque-writer, otherwise known as the comptroller general:

The comptroller-general's office, which issued the cheques, unable to question any of them, no matter how peculiar.

That simply isn’t true, of course. One of the enduring mysteries of this entire affair is how the chief cheque-writer could issue cheques far in excess of maximum amounts that were well known to officials and yet at no point did he or his staff apparently raise any concerns. As Chief Justice Green notes in his third chapter:

During this era, the Comptroller General had full access to all financial documentation in respect of the disbursement of public funds from the accounts of the legislature. Internal audit and compliance staff of the Comptroller General could review transactions of the House of Assembly and test for compliance with policies. In short, while the House and the IEC were understood to have the authority to make management and policy decisions, independent of Treasury Board or Cabinet, various elements of this overall financial control framework of government were deemed to apply to the House of Assembly.

Far from being unable to pose questions, the comptroller general had both the knowledge and the legal ability to ask questions about the chronic overspending.  He didn’t.  Nor did the auditor general raise any questions either even though he and his staff  had access to the same information available to the comptroller general. 

Both offices – the CG and the AG – produced annual reports on government spending and dutifully reported the overages.  Neither said so much as “boo”.  For 2004 and 2005, for example, both the AG and the CG issued the Public Accounts that showed the House accounts for members’ allowances out of whack by roughly a  million each year.  They never once noted that the budget presented the previous spring had claimed that the accounts were exactly on budget

The Telegram editorial illustrates the extent to which the frame applied to the House of Assembly scandal persists despite a mountain of evidence to the contrary.  In other words, three years after the people of the province learned of the scandal and after a series of reports and court cases, there is still a marked preference in public comment for fiction over faction, for myth over reality. 

Until commentators reject the frame applied to the scandal three years ago, it will remain a political life unexamined.

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Hydro Quebec intervenes on Lower Churchill

Hydro Quebec has taken a shot at the Lower Churchill project as part of the environmental review, saying the environmental documents do not contain the amount and the quality of information normally required within the framework of the environmental evaluation of major hydroelectric projects, according to le soleil.

The HQ submission said that unless deficiencies are corrected, the project shouldn’t be approved.  Newfoundland and Labrador Hydro has until September to respond to the HQ submission, as part of the environmental review process for the project.

One of the issues highlighted by HQ was water resource management between the Churchill falls power plant and the Lower Churchill. 

That may be a valid objection and could be the reason why the provincial government made changes to the Electrical Power Control Act two years ago but still hasn’t implemented them.  Under the changes, two energy producers on the same river would have to come to an agreement to ensure both projects worked to the maximum.  In the absence of an agreement the province’s public utilities board could impose one.

But, the revisions are in limbo.  Incidentally, the only part of the province the section applies to would be the Churchill River.  It would have applied to any developments on the island but any potential issues there were eliminated when the provincial government wiped out most private sector electricity generation on the island with its December expropriation.

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Paying not to produce electricity

A drop in electricity demand in North America will see Hydro Quebec paying some of its suppliers not to produce electricity in the next year, according to le devoir.

Selon les documents déposés devant la Régie par la société d'État, ses surplus d'approvisionnements s'établissent à 11,3 TWh pour l'année prochaine. Le chiffre inclut les volumes d'énergie différés par le passé. De ce volume important, Hydro-Québec souhaite désormais soustraire les 4,3 TWh de la centrale de Bécancour. «Notre contrat avec TCE nous permet de payer pour la non-livraison d'électricité», a commenté Guy l'Italien, porte-parole d'Hydro-Québec. «Cette option nous coûte, dans le contexte actuel, moins cher que si nous décidions de prendre possession de l'électricité pour la revendre sur le marché.» La Société n'a pas été en mesure hier d'indiquer si des clauses similaires étaient présentes dans ses contrats d'approvisionnement avec d'autres de ses fournisseurs.

HQ is looking to shutter a natural gas generator operated by TransCanada Energy and pay the company $250 million under the terms of the contract between the two companies.

In the near term, HQ may also wind up with a significant surplus of generating capacity as it looks to bring the La Romaine and other projects on stream.  HQ will go ahead with the megaprojects since it has the capital and will look to recover its costs over a very long time span.

A drop in energy demand and competition from other electricity generators will likely also lessen the chances the provincial government’s cherished Lower Churchill project will find favourable capital arrangements.  The $6.0 to $9.0 billion project remains chronically about two to three years behind schedule in its most recent iteration. 

The project also doesn’t have a single customer to date outside consumers on the island portion of province.  They would be – in effect – forced to subsidise the massive project by virtue of having an infeed line strung to the Avalon peninsula even though demand on the island could be met through other less costly means.   Other than that, there are no signed power purchase agreements.

Interestingly, as demand has lessened, interest in the project has increased, particularly within the Maritime provinces.  Federal cabinet minister Peter Mackay and Prime Minister Stephen Harper recently toured the proposed dam sites by helicopter.

Of course, weakening demand and a proponent jammed up for cash and pushed along by its own hyper-torqued rhetoric might create a much better circumstance for energy buyers looking to strike a favourable long term deal.  That’s very similar to the situation that led Brinco to sign a disastrous deal with Hydro Quebec in 1969, with the backing of the provincial government.

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h/t to Claude Boucher.

An unhealthy trend

In a province with a notoriously underdeveloped private sector,  the news of a manufacturing venture in Argentia should be bringing a lot more voices of concern than it likely will.

That’s because the metal fabrication facility will be a joint venture of JV Driver, D.F. Barnes Group and the provincial government. 

Out of a total estimated cost of $10 million, the provincial government is tossing in $4.0 million. And of that amount fully half is going to purchase specialized equipment for welding pressure vessels as well as training employees.

In other words, the provincial government is taking on the capital costs and the human resource costs for two private sector companies of the start-up venture. 

Now it’s not like these sorts of government-backed ventures have a spectacular history of success in Newfoundland and Labrador, and that history spans a half century and more.  Typically, the ventures that need such massive transfusions of public money are marginal at best or  - even worse - unthinkable without it. 

Places that have a market demand and industrial sectors where there is demand usually can attract sufficient private sector investment to make a go of things without government involvement to the tune of 40% of project cost and with government absorbing the cost of training and capital equipment purchases. 

If you look at the news release, there’s no sign this new venture has any contracts already aside from whatever demand might come from local offshore projects.  That might point to another issue, namely that this pressure vessel fabrication plant is competing with well-established players globally that are considerably closer to customer locations than Newfoundland and Labrador.   The existing companies would also have the competitive advantage of experience and a proven track-record for delivery.

Taken altogether, those points suggest it might be difficult to break into the pressure vessel market successfully without using government subsidy as a way of lowering costs.

This is not the first example of government subsidized industry in this province and, if the current administration’s policies are any clue, it won’t be the last.  What this project indicates is that government has decisively abandoned the 1992 Strategic Economic Plan. 

That plan, you may recall was built on the twin ideas of lower to non-existent government subsidy on the one hand and on the other a focus on industries where Newfoundland and Labrador offered an obvious competitive advantage.  The idea was to create businesses that were sustainable in the long-haul in a global economy without government financial support.

What is now appearing more obviously is that the provincial government’s industrial development policy is a throw-back to the rubber boot and eyeglass factories  of the Smallwood era and the 1980s vintage cucumber grow-ops. 

Plus ca change, it would seem, or perhaps res ipsa loquitur:

"In particular, My Government will create sources of capital to enable businesses to establish, grow, diversify, and prosper."

There are also white tips poking through the sand, portents of the bleached bones of Latvian dinosaurs from the days when another government brought back little more from its wanderings than the crushing weight of debt. It is not for government to create sources of private sector capital out of public money, Premier Williams. One shudders at what the winds of time will expose of that seemingly Smallwoodian tyrannosaur.

After years of looking at the Irish and Icelandic models, the province’s industrial policy has apparently reverted to its original Latvian root.

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