Oil royalties down 57% from 2008; 15% below budget so far for 2009

Forget the bubble, the imaginary protection Newfoundland and Labrador supposedly enjoyed from the global recession.

Forget any prospect of another windfall year in 2009 like the one in 2008.

The prospect of a balanced budget  - let alone a slashed deficit - could be dim if provincial oil royalty figures thus far in the fiscal year hold true to the end of March 2010.

According to figures released by the federal natural resources department (NRCAN), Newfoundland and Labrador averaged $89.6 million a month in oil royalties for the first five months of 2009. 

That’s about 57% below the average monthly 2008 oil royalties, based on $2.5 billion over 12 months.

It’s also 15% below the projected oil royalty figure contained in 2009 Estimates.  If that trend continues, the provincial oil royalties would come in at around $1.08 billion instead of  the $1.262 billion forecast in the Estimates. 

Budget 2009 projected a $1.3 billion cash shortfall on a cash basis (The Estimates) and a $750 million shortfall on an accrual basis (The Budget Speech).  In 2007, the current provincial government quietly reversed the practice established in 2003 and began to report the province’s budget using both accrual and modified cash accounting.

Without significant changes in other revenues, dramatic spending cuts or a combination of both, it’s going to be tough for the provincial government to avoid a deficit this year and it may well wind up with a larger deficit than forecast.

While other areas of the economy may be performing better than expected, it’s doubtful they be able to generate the added revenue for the provincial treasury  that came from oil within the past few years. 

Borrowing would seem to be inevitable, whether it was borrowing from banks or borrowing from the $1.8 billion in temporary investments the provincial government had on hand last spring.  Some of that $1.8 billion is committed to other projects, however.

The table below shows the monthly oil royalty figures for April to August 2009 as well as the offshore oil production from April to September and the average royalty per barrel for each month. 

Month	Royalty  ($)	Production (barrels)	Average royalty amount per barrel ($)
Apr	94, 344, 222. 11	9, 116, 213	10.34
May	77, 970, 776. 28	6, 915, 304	11.25
Jun	97, 572, 585. 54	7, 374, 739	13.23
Jul	89, 287, 050. 27	8, 629, 918	10.34
Aug	49, 851, 328. 75	6, 537, 149	7.62
Sep	N/A	6, 164, 839	N/A
Total	448, 461, 684. 47*	44, 738, 162**	N/A
Average	89, 692, 336. 89*	7, 456, 360**	N/A

* First five months

** Six months

The August royalty total is particularly low due to decreased production at White Rose for planned maintenance. The September figure may also be low due to scheduled maintenance. 

The production figures are taken from the Canada-Newfoundland and Labrador  Offshore Petroleum Board website.

Bond Papers tried unsuccessfully to get the information from the provincial finance department before contacting NRCAN.

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Freedom from Information: oil royalties version

After two e-mail requests to the provincial finance department yielded nothing but delays for two weeks, a simple e-mail to the federal natural resources department produced information on the provincial oil royalties the provincial finance department had trouble releasing.

And it only took four working days.

The request on October 21 to the provincial finance department was simple enough:

What is the total offshore royalty received by the provincial government from 01 Apr 09 to 30 September 2009?

The first response (October 23) from the department spokesperson said:

The information you are requesting is provided at the end of the year in the public accounts and can be made available to you at that time.

Of course, the estimates are publicised at the end of the fiscal year but the audited financial statements  - the public accounts -  for 2009 won’t be released until February 2011. 

That seemed like an unusually long and unnecessary wait for information that should be readily available.

Oil royalties are collected each month by the federal natural resources department (NRCAN) under the terms of the 1985 Atlantic Accord.  The amounts collected are set by the provincial government through its own royalty regimes for Hibernia, Terra Nova and White Rose.  The royalties collected are turned over in their entirety to the provincial finance department monthly.

A second request (October 23) to provincial finance asked for the reason the information was being withheld.   The reply to that inquiry came on November 4, 2009 and gave a new, more curious response:

For the particular timeframe of your request, the department is still receiving the relevant information.  When the data collection is complete, the information will be made available. 

Still receiving information?  Now that’s a bit of an odd idea since the finance department should be in the process of completing a mid-year financial update for public release.  The figures on oil royalties would be sitting right there on someone’s computer, presumably since they form a very big part of the provincial government’s annual revenues. 

If nothing else, finance officials produce monthly statements of account showing revenues and expenditures both for government as a whole and for individual departments.   It would be exceedingly strange if the finance department didn’t have the figures for at least April to August. 

As it is, your humble e-scribbler went looking for the information in October.  It might have been a bit optimistic to get even the September figures.  At this point – early November - provincial officials should have September done and October should be well on the way.

But nothing at all until the whole thing was complete?  Highly unusual, to say the least.

Your humble e-scribbler turned instead to NRCAN.  An e-mail inquiry to the NRCAN manager of media relations on November 5 for the year to date oil royalty figures produced the response on November 9:  the oil royalty figures for April to August 2009.  September is in the pipeline and even October might be available within a few weeks.

It was that simple and that fast.

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Lower Churchill a long way off

In another Telegram story not available on line Danny Williams admits the Lower Churchill is still a long way from being a reality:

“We’re not looking at a Lower Churchill in the near term. “

He then expressed his hope to have the project approved within two years and started some time after that.

But that’s just his hope, not a prediction of anything.

As Bond Papers readers have known for some time, the project is full of problems, not the least of which is a lack of markets and financing, the two elements crucial to building the multi-billion dollar project.

Again, it’s pretty much old hat since he’s been dampening expectations about the project since at least early 2008.

Many people didn’t quite know what to make of it. Now we know that Williams had been consistently rebuffed for five years in his efforts to get Hydro Quebec to take an ownership stake in the project.

That wasn’t what Williams said publicly at the time but then again, when people don’t know what’s going on they can’t ask uncomfortable questions.

Incidentally, it has been two months now and not a single conventional news media outlet has bothered to follow up on the stunning revelations from natural resources minister Kathy Dunderdale about the secret pitches to Hydro Quebec.

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Governments are afraid of their people after all

Well, afraid of their people getting their hands on information and then daring to ask questions.  Good heavens, imagine the time that would take.

Take for example, this quote from a weekend Telegram news story (Correctional Update:  Yeah it is online.) on Danny Williams and his attitude toward disclosure of public records:

“If things get out and they have to be known, and we can be questioned on it, absolutely but if we had to have an open book on absolutely everything we’re doing, I’ve got to tell you, I’d be out of here.  I’d be gone.”

In the front end of that quote, Williams was expressing his concern about the drag on his time if he had to explain things once documents and other information were released.

This is really old hat by now and it is really old hat to note that Danny Williams was a huge proponent of open records laws before he got elected.  Once he took the oath, he very quickly thought it a bad idea for the public to know what he was up to.

Take for example his very first great foray into freedom from information.  The telegram asked for copies of polling Williams commissioned from one of his favourite pollsters.  Williams refused to disclose them despite the fact the law stated in plain English that polling couldn’t be withheld.   In another instance, the telegram asked for files it knew existed.  Williams admitted there were “purple files”.  The official reply to the request was that they didn’t exist and no documents were disclosed. 

Funny, then to see him quoted in the Telly six years later as saying:  “we go through the process and we vet what we’re entitled to vet by the rules. ”

That purple file one is still lost in the “process”, incidentally, almost two years later.

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Cougar 491 survivor’s statement

Robert Decker survived the crash of Cougar 491 on March 12, 2009. The S-92 ditched in the ocean off St. John’s Newfoundland after aborting a routine resupply run to two of the province’s offshore oil production platforms.

He testified this week at the Wells inquiry into offshore helicopter safety. That’s an important point lost on some reporters and most of the ghouls – political and otherwise – who’ve busily been trying to capitalize on the tragedy for their own purposes. This is an inquiry primarily focussed on offshore safety.

Decker’s testimony was riveting and added considerable new detail to the events on that late winter day. The testimony was, however, tightly controlled, with Decker agreeing only to respond to previously agreed upon questions. The trauma of the event and its effect on him were painfully evident.

There’s an account of it at the Telegram. The full transcript is also available at the helicopter inquiry website.

Decker also read a prepared statement. His closing words should be heeded by all, particularly those who have used this tragedy for their own purposes. The ghouls should take note:

"If we really want to make offshore helicopter travel safe, what we have to do is to make sure that every helicopter does not crash.

"The best way to keep every offshore worker safe is to keep every helicopter in the air where it belongs.

"Safety starts with the helicopter, and I think everything else is secondary."

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Legislature Light

The Bow Wow parliament will be having another short fall. 

The legislature, normally open in the middle of November, won’t be opening until after the Terra Nova by-election.

Supposedly this is to ensure the parties can participate in the by-election.  More likely, it is to let the government avoid the daily heat of question period at such an inopportune moment.  Of course it could also mean that the entire Tory caucus will be living in Glovertown for the month of November.  That worked so well last time.

If the governing Tories lose Terra Nova don’t be surprised if the House doesn’t sit at all until the new year.

The members of the House of Assembly are among the highest paid legislators in the country and sit in the legislature the fewest number of days annually of any federal or provincial house.

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Fire cost NALCOR $18 million in lost revenue

A fire at Churchill Falls last November cost the province’s energy corporation a total of $18 million in lost revenue in late 2008 and early 2009 under the Guaranteed Winter Availability Contract (GWAC) with Hydro-Quebec.

NALCOR Energy released updated information in response to a request from your humble e-scribbler.

The fire occurred November 3, 2008 in a cable shaft at the Churchill Falls generating station and caused what a NALCOR spokesperson described in an e-mail as “extensive damage”.  Damage knocked two of the plant’s 11 turbines out of action and reduced overall generating capacity by a reported 1,000 megawatts.

According to the spokesperson,

This contributed to the decrease in GWAC revenue to Nalcor Energy in 2008 of $8.4 million and year-to-date 2009 of $9.6 million. No penalties [for non-performance] apply under GWAC.

One of the turbine/generation units was back in action by February 2009.  Repairs to the second unit were completed over the summer.

Under the GWAC,  Churchill Falls Labrador Corporation [CFLCo] agrees to supply Hydro-Quebec with a set amount of power during HQ’s high demand winter season apparently in addition to that supplied under the 1969 contract.  The power is used in Quebec. 

GWAC is one of several elements of a 1998 deal that included the recall and resale of a block of 130 megawatts of power and a new shareholders agreement for CFLCo between majority shareholder Newfoundland and Labrador Hydro and minority shareholder Hydro-Quebec.  

In the recall component of the deal, NL Hydro recalled a block of power under the 1969 contract and then resold it to Hydro Quebec at new, higher rates.

The recall element of the agreement has now been replaced by a new deal to wheel upwards of 800 megawatts of Churchill Falls power to the United States through Quebec.  Newfoundland and Labrador Hydro pays Hydro Quebec’s transmission corporation $19 million annually in fees for wheeling the power under terms set down by Quebec’s provincial energy regulatory board.

NL Hydro gets  about the same net price for its power under the wheeling deal with Emera and Hydro Quebec as it did selling the power directly to Hydro Quebec. 

Note that some of the links on GWAC are no longer active. They seem to have disappeared in a series of routine redesigns of websites in the provincial government and in the development of the new NALCOR website.

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How far will the make-over go?

The Mighty Mother Corp’s newly minted/re-organized national political news reporting is well worth the time and effort every single day.

There’s even a blog -   Inside Politics – where the reporters in the Ceeb’s parliamentary bureau weigh in on all manner of stuff that local news hounds and political watchers will love.

Like skewering the Liberals for not knowing how many sleeps there are until Santa comes.

Or the federal Conservatives for their new-annoyance with Access to Information (all the while insisting they are the most accountable, open and transparent government in history, shurely)

Or printing transcripts of scrums and interviews or – mercy sakes – doing something called “linking” to other information using that new-fangled Innertubes, or Internet or whatever the heck that infernal contraption is on the desk there.

Undoubtedly, politicians in Ottawa will be soon accusing the Ceeb’s reporters of misrepresenting quotes,  of just cutting up things to suit their evil purposes and moaning about how they will inevitably suffer the wrath of what the parents of 50-somethings still call the blogosphere.

The CBC news make-over is refreshing.  Interesting to see how far it spreads.

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A new era of original ideas

The Government of Newfoundland and Labrador spent an untold sum on a consultant to develop a so-called youth retention and attraction strategy.

They created a new ministerial title: “Minister Responsible for Youth Engagement.”

The news release has nine paragraphs and no fewer than four media contacts.

The “strategy”, as described by the consultant, consists of four elements. 

It took 13 focus groups with young people across the province and in Ottawa and Fort MacMurray to come up with these highly innovative concepts designed to keep young people in the province:

1.  Create jobs.

2.  Put services in major centres. Like maybe St. John’s, Gander, Grand Falls-Windsor and Corner Brook?

3.  Link education to the labour market.

4.  Build “an understanding of the benefits of immigration and diversity through public education, community dialogue and strengthened curriculums in the education system.”

 

The “strategy” document describes this as a “fresh, modern approach.”

At least the current administration is getting faster at peddling someone else’s old ideas in new packages. 

In 2007, they unveiled the provincial government’s 2002 waste management strategy.

This took only 18 months.

You could not make this stuff up if you tried.

 

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Why people who can think are abandoning the conventional media in droves

Courtesy of CBC’s provincial affairs reporter comes an explanation of why the local press gallery did not report Danny Williams “sell it off and pay off the debt” comment.

Seems the Premier did not actually mean to say he would sell off the provincial energy corporation in order to pay off the public debt.

Rather, the Premier explained that he meant to say he would sell off all the assets of the provincial energy company to pay the debt off.

Oh.

So glad that got cleared up.

For a second there it looked like he said he would sell of the company to pay off the province’s debt. 

Apparently what he really said was that he would sell of the company piece by piece to pay off the province’s debt.

Oh.

At least someone explained it.

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Williams wants energy sell-off in NL, too

Danny Williams in 2009, on the sale of NB Power which will reduce the provincial debt by 40%:

"They've agreed to sell away their future."

Danny Williams, in 2008, on his own plans for the energy corporation owned by the provincial government in Newfoundland and Labrador:

This particular government wants to strengthen Hydro, wants to make it a very valuable corporation: a corporation that will ultimately pay significant dividends back to the people of this Province; a corporation that perhaps some day may have enough value in its assets overall as a result of the Hebron deal and the White Rose deal, possible Hibernia deal, possible deals on gas, possible deals on oil refineries and other exploration projects, where hopefully we might be able to sell it some day and pay off all the debt of this Province, and that would be a good thing.

Huge tip of the hat to Geoff Meeker and ultimately labradore for that one. It is amazing after all this time and the countless examples just like this one that conventional media still report his comments on anything without balancing them with his other comments about the same thing.

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How will you remember?

The official description of the 2009 Veterans Affairs poster:

The Veterans’ Week 2009 poster pays tribute to Canada’s service men and women who have served this nation from the First World War to current missions.

The Veteran featured in the background on the left of the poster is Harold Wishart as he salutes his fallen comrades. Mr. Wishart was a pilot in the Second World War and since then he has done so much to preserve the memory of the achievements made by Canadians in wartime and in peace.

Over the years, Mr. Wishart was a very active member of the Wartime Pilots’ and Observers’ Association and the former provincial chairman of the Royal
Canadian Air Force (RCAF) Benevolent Fund.

The image seen in the background features Canadian Forces soldiers on the international mission in Afghanistan as they pause for remembrance. These men and women are continuing Canada’s legacy, passed on by our Veterans, of defending peace, freedom and the preservation of human values worldwide.

The central image features a young girl, Brianna Arsenault, whose reflections on the contributions of our Veterans and Canadian Forces members in Afghanistan are demonstrated in her creation of a poppy. The image reflects this year’s call to action to all Canadians through the phrase “How will you Remember?” which asks Canadians to think about their own remembrance and participation in remembrance activities.

Canadians are encouraged to take an active role in commemoration and to ensure that the selfless dedication of Canadian Veterans is never forgotten. Talk with Veterans and Canadian Forces members about their service to Canada, learn how serving our nation has changed their lives, and pass on what you have learned to your peers.

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Remember, remember…

People should not be afraid of their governments.

Governments should be afraid of their people.

A bad deal

Gordon Weil thinks the NB Power purchase deal with Hydro-Quebec is a bad idea.

Interesting that both the pro and con for this two part series in the Telegram both come from people associated with the Atlantic Institute for Market Studies.

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You can never go home again

Ron Ellsworth lost his bid to sit on the eastern school district board, the place where he began his short career in elected politics.

That’s hot on the heels of his humiliation at the hands of Doc O’Keefe in the race for mayor of St. John’s in September.

All that bodes extremely well for his opponents if  Ron gets the Tory nod in any St. John’s seat in any upcoming provincial general election or by-election.

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A good deal

Brian Lee Crowley and Tom Adams weigh in on the NB Power sale.

Among other things they not that the Lower Churchill is a dead horse owing to the current market situation:

The lesson for Newfoundlanders and Labradorians is inescapable. They should learn from the Mackenzie gas experience before supporting Premier Williams' ephemeral dream to press ahead with hydro-electric development on the Lower Churchill in a glutted market. Taxpayers should be relieved, not outraged, that Nalcor, Newfoundland's Crown energy company, is not out in the market trying to sell costly power right now.

In the long term, the economics of Lower Churchill development may well turn around, particularly if the market for its environmental characteristics becomes sufficiently rich to overcome the costs of remoteness. But that's for another day.

Perhaps one day soon local reporters will stop carrying the transmission line line as if it was anything vaguely close to reality.

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And then another EA steps up…

Sandy Collins, former executive assistant to Paul Oram is the provincial Conservative candidate in Terra Nova in the by-election yet to be called.

Orange Update: Robyn Brentnall is the New Democrat in the running.

Red Update: The Liberal candidate is John Baird. He was elected in a nomination fight on October 17.

Two things:

1. Remember what your humble e-scribbler said about a party that can only offer up former executive assistants as candidates, and,

2. The people in Terra Nova district can vote today by special ballot even though no election has been called.

Every person can request a special ballot including:

• an elector who has reason to believe that he/she will have difficulty voting on polling day perhaps due to work or personal commitments;

• a student who is in attendance at a recognized educational institution either inside or outside the Province;

• an elector temporarily residing outside the Province for a continuous period of less than 6 months who is unable to attend at either the advance or regular poll;

• an elector who is incarcerated in a correctional institution or in detention at the Waterford Hospital;

• a patient in hospital who will be unable to attend either the advance or regular poll.

All you have to do is contact the Office of the Chief Electoral Officer, otherwise known as Elections Newfoundland and Labrador.

There’s a form to complete and send in. You can find it in pdf format here.

They’ll send you back a voter kit which you can use to cast your vote right now.

But there’s no election yet, you may be thinking.

Doesn’t matter.

Under section 86(4) of the Elections Act, voters who meet those criteria above can ask for a special ballot no more than four weeks before an election or by-election is called. Well, you and the rest of the world don’t know when the thing will be called but we know when the earliest date is that it could be called.

That would be the day Paul Oram threw his teddy in the corner. Any of you who knew Paul was going could have already voted.

But since the rest of us found out later on, you should be able to get a ballot and vote right now.

There is no legal reason for the Chief Electoral Officer (former Tory party president Paul Reynolds) to refuse you the opportunity to vote under section 86(4).

And don’t worry if you don't like the party but not the candidate. [Updated to reflect that all candidates are now in place, barring any independents]

Under section 86.4, you can write in the name of the political party you want to vote for instead of the name of a particular person.

Voting is your right.

Now that’s pretty much the same thing said in a post about the Straits, but you know, it is not very often people get to protest a completely foolish electoral law twice in the space of a month or so. In the Straits, people were a bit fried so a protest vote was possible.

In Terra Nova, townies may not be able to judge which way the local wind is blowing.

This time everyone can take advantage of the oddest election rules in the civilised world. Only in Newfoundland and Labrador could you get to vote before an election has been called.

Vote early for the candidate of your choice.

But vote.

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Oh where, oh where did his big report go?

The province’s auditor general release a report last week to update issues covered by some of his previous reports.

or did he?

Your humble e-scribbler dutifully noted the release when it appeared and flagged it for later examination.  returning to the site today, your humble e-scribbler found that the release had mysteriously disappeared.

There are traces of it, though, just in case you were thinking the old boy had finally lost it entirely. 

On the government website you can find the archive of AG news releases.

The month of October is there but underneath it is nary a thing.  Odd that, given that in other months where nothing was said, not even the name of the silent month is noted.

On the AG website, the name of the report is there  - right at the top of the pile -  but the report itself is not.

Interesting, wot?

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His Greatest Hit seems to have missed

Hard across the province on CBC Radio, Tuesday afternoon, a woman in Plum Point reminding the host of CBC radio’s On the Go that many parts of the province still live in what host Ted Blades had referred to as the Dark Ages of the Internet or some such.

Dial-up.

Not broadband.

There is no modern, high-speed access in said community because of the costs of bringing such tools to sparsely populated areas of the province.  The woman interviewed talked of a federal government initiative to help expand coverage of the information superhighway to places like Plum Point.

The lovely town of Plum Point is interesting because it is in the same neck of the woods once represented in the House of Assembly by Trevor Taylor.  Trev represent the Straits and White Bay North and across the highway, his buddy Wally young still represents the district of St. Barbe in which Plum Point is located.  The boys were touted back in January 2001 as the start of a Tory wave sweeping the province.

Odd the number of people scurrying to claim that the opposite is not true now, but that’s another issue.

The only thing Trevor listed as an accomplishment as he hastily ran from cabinet and local politics a month ago was a provincial government plan to give a bunch of private sector companies a wad of public cash so they could stretch broadband access across the island to places that sounded suspiciously like Plum Point.

Now Plum Point is also no ordinary town as these things go for many more reasons than the fact that it is near where Trevor used to rule.

Plum Point is also home to the local member of the House of Assembly, one Wallace Young.  He owns the local motel.  His official biography also reminds us that his wife is a teacher who “has seen first-hand the effects of teacher cuts and larger classrooms”.  Old news or foreshadowing?

Anyway, perhaps Wally’s good lady wife knows, as well, the value of Internet access for local schools. 

Maybe someone should ask Wally and his wife about that.

And while they’re at it wonder how it is that this glorious fibreoptic deal Trevor was so proud of could benefit Greenland but not the lovely community of Plum Point.

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Class act

A few years ago Roger Grimes took a royal roasting for telling an off-colour joke at a small, private gathering of business people in New York. 

It was inappropriate, to put it mildly.

That’s why it so nice to see the decorum Grimes’ successor has brought to the office as he welcomed the Prince of Wales and Duchess of Cornwall yesterday in St. John’s.

This came shortly after a plug  - completely out of place - for the Danny Dam, by the by:

Hopefully your experience will be contrary to the experience of Sir Winston Churchill who when asked if he had any complaints after his tour of the United States in the 1930s said, and I quote him, “the toilet paper was too thin and the newspapers were too fat.”

Yes, there is nothing like a Royal Visit to make a joke about the ‘loo.  And if the thing is broadcast live on national television, so much the better.

Don’t even bother with the fact that the quote is only attributed to Sir Winston.

The rest of the speech is about Hisself, of course.  His time at Oxford.  Miniskirts.  Popular music from the mid 1960s.  And his staff, fish and chips and Coronation Street. 

Incidentally, the applause at the front end of the speech might have to do with the fact that the relatively small crowd in the venue (600 out of a seating capacity 10 times that) was crammed full of the governing party’s caucus and staffers.

His capper for the crapper speech – of course – was a half-story about the naming of the stadium, something Hisself said he had done.  Mile One was the half of the tale he told.  What Hisself didn’t say is the name he wanted but everyone else rejected.

The applause was restrained, even for such a loyal and faithful audience.

It all makes you wonder who is writing speeches for Hisself these days.    This one was about as cliche-laden, stereotyped and – as the quote shows – as grossly inappropriate as can be imagined.  He’s been known to deliver the odd clunker or six, including one in Toronto where his flat tone must have had his security detail making sure to keep an eye on the sharp objects and the high ledges.  Then there was the mess from the now legendary January 5, 2004 speech.  

But this one?  Makes you wonder what the Governor General and HRH, the Prince of Wales tittered over immediately after the Churchill “joke”. 

At least if Hisself didn’t write it they can correct the problem by finding someone who can write speeches for the next one.  You see,  speech-writing is like a lot of things:  you are usually better off not doing it yourself.  Experience counts.

The speech also stood in stark contrast to the other two, one by the Prime Minister and the other by the Prince of Wales which were light in tone and charming in content.  And lookit, if Stephen Harper – one of the worst speech readers even to live at 24 Sussex Drive  - comes off sounding better than you do, you know you are doing something wrong.

Again.

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