Labour Force and Employment, March 2007-March 2010

Just for the fun of it all, here’s a table showing the Newfoundland and Labrador labour force (top line and the employment, by month, from March 2007 to March 2010.

The numbers are from Statistics Canada’s The Daily.

There are a few things to notice:

1.   Employment in Newfoundland and Labrador peaked in May 2008 at 224,700. Then it dropped drastically and kept on falling until November 2009.  That’s when it seems to have started a rebound.

2.  May 2008 was two to three months before oil prices peaked and the recession started.

3. As one might have expected, all that provincial government capital spending last year kept construction workers employed but it sure as heck didn’t work any miracles in the job market. 

4. Even though there’s been a pretty steady climb in employment since later 2009, there doesn’t seem to be any particular reason for the climb, at least not in the private sector. The employment level also seems to have hit a plateau for a while.

5.  The only major private construction project due to ramp up in the near future is the Vale Inco project at Long Harbour.  The Hibernia South and White Rose work aren’t really jab-makers. Hebron is the next big one to hit and that won’t show up until 2012 at the earliest.

6.  Notice that the labour force in the province has been growing steadily since  the middle of 2007.  That matches the observation made by labradore about economic refugees who started returning home in advance of the recession.

7. Is the recession really over? Continued labour force grow suggests there is a problem elsewhere and that economic refugees continue to head back to Newfoundland and Labrador in the hopes things are easier at home.

-srbp-

The Fragile Economy: …and two steps back

In 2007, the contracts manager at Metalcraft Marine, a Kingston Ontario boat builder noticed the growing number of reports from the united States that predicted a looming downturn in the American market.

The threat was potentially devastating for a company that did 95% of its business manufacturing small patrol boats for American government agencies.

The company shifted its marketing focus to South America, the Middle East and Asia.  The work paid off:  revenues in 2010 will be 50% higher than 2007 based on new customers outside North America.

Inertia

Meanwhile, since 2007, the provincial government in Newfoundland and Labrador has been working alongside the other eastern Canadian provinces to increase trade with the United States. There is now a whole trade focus on the south-eastern Untied States complete with junkets and conferences. 

Just this weekend – April 2010 -  the Premier co-hosted the latest conference for the south-eastern project.  This is the same trade venture. incidentally, that drew Paul Oram to Georgia when he was the business minister. His grasp of recent events in the province is breathtaking.  Well, breathtaking that is, if you have no idea what he is talking about.  If you do have half a clue, you’d wonder what planet he was from to have cocked everything up so badly.

Now to be fair, the whole idea for this venture seems to have been cooked up back before 2007 when it looked to some like the growth in the United States economy would know no end. By the time the bureaucrats and politicians managed to get themselves organized, the first signs of looming trouble were showing up.  And by October 2008 when Oram was in Georgia, the entire arse had fallen out of the American economy.

By then, of course, or even by 2007, the bureaucratic juggernaut couldn’t be stopped even if someone wanted to.  And now three years after the first one, a whole bunch of people get together regularly at taxpayer expense to talk about how nice it would be if the private sector companies in the respective jurisdictions did a little business with one another. 

These trade affairs never seem to do much more than talk, of course and set up permanent offices employing public servants to help co-ordinate future meetings.  That’s what happened with the Tobin-era Irish junket-fest, revived by the Williams crew or the Team Atlantic missions to anywhere that has warmth and sun in the wintertime.  But the purpose of this discussion let’s run with the assumption used by governments, namely that these trade missions and junkets actually work.

Increasing Dependence on a Single Market

Politicians who come into office without any idea of what to do usually wind up following the flow.  This American trade idea is likely no exception. 

You see, the United States has been the province’s major foreign trading partner for decades.  In 1999, two thirds of all exports from Newfoundland and Labrador  went to the States. By 2006, that proportion had climbed to 75%.  Even in 2008 – the last year for which the provincial government provides statistics – 71% of exports from Newfoundland and Labrador went into the American market.

To put it another way, take a look at the export value compared to the province’s gross domestic product (GDP):  the  total value of goods and services produced in Newfoundland and Labrador. In 2008, about half the GDP went to the Untied States. The GDP in 2009 was 22 billion.  The drop was pretty much all due to the collapse of the American market.

Now that level of dependence is not as bad as Metalcraft's problem in 2007, but it certainly should have made someone within the provincial government sit up and take notice.  After all, the provincial government’s own statistics analysts produced the figures cited above.  The level of dependence on the American economy is not a state secret.

Rather than trying to increase trade with the United States, Newfoundland and Labrador would be strategically better advised to diversify its markets. But since 2003, the provincial government has been doing exactly the opposite. 

What’s more, the provincial government  - in an apparently capricious move -  specifically rejected getting involved with a major international trade initiative aimed at diversifying the markets for local goods and services. 

Sure Paul Oram took a jet to India in 2008, but the very next year, the provincial government rejected a major national effort designed to open the European union to free trade with Canada. A few million dollars worth of seal bits trumped what had managed to become, by 2008, close to a couple of billion dollars of trade into the European Union. The prospect of more trade with the Europeans opens opportunities for new business throughout the province not to mention offering the chance to resolve some long-standing trade issues in the fishery.

However, none of that seems to have had any impact on the group of politicians and bureaucrats determining the province’s economic policy.  So it is that the European opportunity was neglected, to put it mildly, while the American continues.

Markets?  We dun need no stinking markets?

Now this is not the first or only time such a situation has occurred since 2003.

The provincial government took a hand in smashing to bits the only internationally competitive fishing enterprise based in the province.  Fishery Products International continues as a brand.  The brand, along with the international marketing arm went to a Nova Scotia-based company.  Another section, a seafood marketing arm based in the United Kingdom also wound up on the block, snapped up just as quickly by someone else with far greater vision than the provincial government and the band that sliced the company to pieces.

Now it does not matter if the provincial government actively worked to destroy FPI or if it merely went along for the ride because it lacked a coherent fisheries policy of its own.  The end result is the same:  The parts of the company that could have helped to diversify markets for local seafood are gone to others.  The unprofitable and problematic bits – the processing bits – remain in the province and continue to be highly problematic  although they are now held by a smaller company with far less global clout.

The others are doing quite well for themselves.  John Risley, vilified by the Premier during the FPI debacle, personally runs a successful company that last year turned a profit of $25.8 million despite the downturn in the American market and the high Canadian dollar.  A key part of the success is the FPI stuff Risley bought with the same Premier’s agreement.

Oh to be in that room

There is no small joke in discovering that the Biloxi conference co-hosted by Danny Williams is sponsored,in part, by AbitibiBowater. Williams’ expropriation gambit of AbitibiBowater’s and other’s assets in 2008 has turned out to be a legal disaster for the provincial government and may well prove to be as big a financial mess too.

Irrespective of that, though, there is something fitting in having Williams hosting an event designed to encourage trade while it is sponsored by a company which is the poster-child for the Williams administration’s erratic, contradictory policies. 

It is one thing to sell products in another market.  Another key component of trade missions is attracting new investors.  What could more readily turn off investors than the spectacle of a provincial government seizing control of assets, revoking permits and unilaterally quashing legal action? 

Williams did not just lay waste to AbitibiBowater’s presence in the province with his December 2008 surprise.  The expropriation bill also seized assets belonging to two other companies:  the Italian multi-national ENEL and St. John’s-based Fortis.  There is still no sign of any settlement with any of the parties affected, including those like ENEL and Fortis which appear to have been collateral damage in whatever war lay at heart of the expropriation.

One step forward and two steps back

Two decades ago, the Government of Newfoundland and Labrador recognised both the problems faced in the province and the opportunities posed by changes in the global economy. The Strategic Economic Plan aimed to make fundamental changes in the economy, diversify industries and markets.  The plan was a step forward.

Two decades later, the province is two steps back.  The SEP and all the knowledge that lay behind it are tossed aside. 

As the old adage goes:  fail to plan.  Plan to fail. 

The results are there for all to see:  increasingly, the provincial labour force is dominated by people whose jobs depend on tax dollars, rather than on jobs that generate tax dollars.

 

The provincial government now accounts for almost 25% of the employed labour force in the province.  This is not just the result of the near collapse of the forest sector and the steady decline of the fishery:  public sector employment like public sector spending generally continues to grow apace. Curiously enough, the Williams administration started out with a policy of reducing the public service.

Since 2003, the only development projects that have taken place were all either begun before the current administration took power or build modestly on existing work.  Nothing new has turned up despite the creation of an entire department supposedly devoted to generating new economic development.

More of the provincial economy in 2010 depends on exports to the United States than a decade ago. About 71% of all foreign exports now head to the United States.

Oil generated one third of the provincial gross domestic product in 2009;  that’s about seven billion dollars in a $22 billion economy. Total provincial government spending for 2010 is about seven billion.  As industries like forestry and the fishery have withered or faltered, the provincial government has stepped in to take its place.

The provincial economy is increasingly driven by public sector spending which, itself cannot be sustained at current levels.

There are ways to correct the course the provincial government has currently set.

That is where this series will turn next.

-srbp-

Rosy with a chance of goofballs

Not only will the provincial government continue to make billions despite dwindling oil production, that situation will continue over the next decade with the provincial government raking in around $2.0 billion annually.

That includes 2016 when – according to the production forecast used to make these awesome predictions - production will be a mere 65 million barrels.

The source of this sunniness is none other than the local Blue Team’s favourite economist Wade Locke.

Yes, folks, the same guy who complained when he was accurately quoted (but unfortunately contradicting the official spin) is predicting sunny days ahead.

And it’s there for all to read, on the front page of the Saturday Telegram complete with a pretty graph of annual oil production.

Not surprising, is it?

And there is no reason for doubt.

Locke remains confident in his forecast, a year after he gave it:

"That what I was expecting before, and that's what I'm still expecting."

Of course, he is. 

Just like he was confident when he forecast gigantic things for Labrador at a time when the global economy was tanking.  he expected it then and he still expected it right up until it didn’t happen.

Or like 1990 when he pissed all over the economic benefit from Hibernia.

Yes, those economic boons can be hard to predict.

We just have to make sure the credit goes in the right direction.

-srbp-

Let he who didn’t oppose The Deal…

cast the first stone against New Brunswick Power’s proposed 3% rate hike or any of the other proposals aimed at coping with the company’s financial problems.

The ones who worked to kill the NB Power/Hydro-Quebec deal can just suck it up end enjoy it.

(h/t David Campbell.

-srbp-

Conveniently close to home

The Premier is co-hosting an international trade mission this weekend, as the provincial government’s information service dutifully tells us all on a sunny Friday.

The event will bring together a bunch of state governors and provincial premiers to talk about ways to promote trade among the states and provinces.

The conference is Biloxi, Mississippi and that, as we all now know, is just a short Citation hop across the Gulf of Mexico from the Premier’s condo in Sarasota, Florida.  It’s so nice when things take place so close to home.

Almost immediate Update:  Since his truck hasn’t been in the Premierial Parking Space, odds are the Premier’s been back in the Southern Tower since the House closed for a three week break.

-srbp-

Cod farm folds only months into start-up

Cooke Aquaculture is closing an $8.5 million cod demonstration project it opened last year with financial help from the federal and provincial governments totalling $4.0 million.

The facility got its first cod fry in September 2009,

The existing stock will be raised to maturity in 2012, as planned but the company won’t breed new stock.

In a story in the regional weekly newspaper The Coaster, the company blamed higher–than-expected costs and competition from wild cod fishing for its decision.  The company also said it couldn’t attract additional investment from its partners or from the provincial and federal governments.

-srbp-

Community Values

Some Newfoundlanders and Labradorians may be offended that a Pentecostal pastor received a light sentence – a suspended sentence and 12 months probation - for masturbating in a Walmart parking lot.
Put it down to community values.

Since 2005, Newfoundland and Labrador is a place where throne speeches are annual exercises in public oratorical onanism, members of the governing party routinely massage their Leader’s ego whenever they can.
Even a newspaper editor got into the public jerk-off craze before he entered politics.


If the good pastor could learn to stroke himself verbally, he might have a wonderful new career ahead of him.
Apparently the locals don’t think there is such a thing as either too much self-love or the enthusiastic public verbal display of ones self-affection.

Yes, we do love our wankers.

-srbp-

Not quite #bustyhookers - Twin Peaks 20th anniversary

The first episode of Twin Peaks aired 20 years ago – April 8, 1990.

Here’s a quick clip in which SA Cooper meets the ever-lovely Audrey Horne:

-srbp-

From the ridiculous to the absurd: national news quickies

1.  A Harris-Decima poll for Canadian Press confirms what most Canadians have known for a couple of years:  neither of the federal political parties is persuading Canadians that it has the stuff to govern with a majority in Parliament.

2.  Gilles Duceppe gets a few headlines by discovering there is life outside the Queensway.  He didn’t really have anything to say – new or otherwise -  mind you, but Duceppe got a few headlines largely for showing up.

3.  As others have noted, former Quebec Premier Jacques Parizeau may have thought that the ethnic vote cost him the referendum in 1995 but he was still willing to let a few “ethnics” look after his health at Montreal’s Jewish General Hospital.

As the Gazette notes in a more serious vein, though:

So we owe Parizeau not only our good wishes for a full and speedy recovery, but also our thanks for the wisdom of his choice. It serves us almost as well as we're sure it will serve him.

4.  Putting Rahim Jaffer’s name and the word “absurd” in the same headline is redundant.  Access is related to power and influence.  People who really have them don’t talk about them.

Significant Digits – oil production

In 2009, the Canadian Association of Petroleum Producers forecast a steady decline in local oil production. 

The decline is forecast to end around 2017 as new production from Hebron comes on stream, but the increased production only lasts for a couple of years before the decline sets in again

The peak once Hebron comes on stream is forecast to be about the same level as the forecast shows for 2012.  That’s slightly above 80 million barrels.

 

But hang on a sec.

Production for the current year – 2010 – is forecast by government officials at 86 million barrels.

Yessirree, that’s right.  And production last year was 97 million barrels, again a figure CAPP had down for 2011.

In other words, the decline is about two years ahead of forecast. We also know that Hebron is behind schedule as well.  How much behind schedule isn’t clear but it could be as much as a year later than the optimistic projections when the deal was announced or when it was re-announced.

So that period in the low-production trough could well be longer than CAPP’s forecast shows and the rise back up after Hebron could be much slighter.

In other words, when finance minister Tom Marshall admits that oil production is on the down-slide, he’s acknowledging that he already knows exactly what the implications are from that CAPP graph.

Let’s put it this way:  this year, if oil averages around $83 a barrel as the provincial government believes, the total value of oil production offshore will be about $7.1 billion ($83 X 86 million)

In order for the provincial treasury to bring in the same royalty as it forecasts for this year - $2.1 billion – with production at 40 million barrels (i.e. the bottom of the trough) – oil would have to average $178 dollars per barrel in that year.

No sweat, says you, oil got to $147 a couple of years ago.

Yes it did, sez your humble e-scribbler.  And look what happened right afterward.  Oil didn’t average that price:  it hit the number and then fell off quickly.

If that isn’t enough for you, consider that oil prices averaging $178 a barrel would be more than double the average price ($83) the provincial government forecast for oil this year.

So in order for the provincial government to do exactly what they are doing in 2010 in that mythical year we will call 2014 (remember everything is two years ahead of schedule) oil would have to be almost $180 a barrel all year.

For those keeping track, and just to show you how soon this is, just bear in mind that 2014 is one year beyond the period of continuing deficits forecast in the spring provincial government budget.

And just remember, as well, that this year the budget is forecast to be short by almost a billion dollars of cash.

Not only is there not enough of a cash reserve to cover that sort of a shortfall in 2014, there wouldn’t be enough cash in any secret government pockets to handle a deficit half that big.

And that’s without thinking of what tremendous pressures there’d be for higher wages and higher costs and higher priced everything else in a world where the price of oil doubled in a mere four years. 

Yes, gentle reader, that little scenario assumed spending stayed where it is predicted to be in 2010.  But as we all know, if oil prices were to shoot up that way, spending would have to go up just as radically.  The only problem is that spending would shoot up but – as we know – the major source of provincial government revenue would only come in at the level for 2010.

When oil was forecast to be half the price.

Increase your spending dramatically while holding your revenue about the same.

That’s the definition of “unsustainable”.

-srbp-

Significant Digits – health care edition

In 1995, the provincial government spent slightly less than a billion dollars on health care. 

That was 26.4% of the provincial budget that year.

In 2010, a mere 15 years later, the provincial government is spending roughly 43% of the budget (not including capital works) on health care. 

That figure drops slightly – to 38% - if you add capital spending but that's only because of the disproportionate amount of spending on capital works not related to health care. 

In 2008, the provincial government spent 43% of the budget on health care.

That’s on par with spending in Quebec, for example, but the rate of change has been much greater in Newfoundland and Labrador than it has been in Quebec. Health care spending in Newfoundland and Labrador has doubled since 2003; in Quebec, health care spending grew 33% between 2003 and 2007.

Wait.

It gets better.

With health care spending at about $2.7 billion, that works out to be the equivalent of 12% of the value of all goods and services produced in the province  - the gross domestic product or GDP - in 2009.

According to the Organization for Economic Co-Operation and Development, the Untied States spent 16% of its 2007 gross domestic product on health care.  That’s the most recent year for which the OECD supplies statistics online.

Canada as a whole spent 10% of its GDP on health care.  That was slightly behind Germany and around the same amount as Austria and France. But the majority of countries in the comparison of Europe and North America spent less than 10% of GDP on health care.

Just to be sure, in 1995, Newfoundland and Labrador spent about 10% of its GDP on health spending.  

-srbp-

 

Incidentally, those 1995 figures are from the Strategic Social Plan consultation paper.  It was supposed to have been released in early 1996 but circumstances prevented that from happening. Since copies are scarce – they were rounded up and shredded on orders from on high – your humble e-scribbler will scan his and start posting it very shortly.

Crisis at Tammany

Well, not really.

It’s really just a couple of councillors who have opted for hysterics over reason given the decision by Fortis to withdraw its proposed 15 storey high rise development in a heritage zone that had a four story height restriction.

Read that again, just to make sure you are clear.

A proposal that already violated the city building restrictions died before it got to a vote.

And some councillors are a wee bit miffed.

Like At Large councillor Tom Hann and mayor Doc O’Keefe (via CBC):

"Some of us were labelled gutless wonders, and spineless. So in the present atmosphere, why would anyone want to come here and be part of the city," said Hann.

"We slammed the door, your worship. We slammed the door in their face."

A disappointed Mayor Dennis O'Keefe agreed, saying the company had voiced similar concerns to him.

"They felt that they weren't getting a fair shake," said O'Keefe. "What they heard the loudest was the naysaying and the branding of being arrogant."

If Hann would stop with the foolishness for a moment, he’d realise that there are plenty of places in St. John’s, including in the downtown area, where a developer like Fortis can build high rise towers.

So if a developer like Fortis decides to submit a proposal for development that violates the area height restrictions, then it’s their own fault if the thing fails.

There was nothing stopping Fortis from submitting a proposal that fit within the rules and that incorporated a redevelopment of their existing 12 story property.  That one would have been grandfathered through anyway.

But there isn’t a single developer who will refuse to come build in the city of St. john’s because  - to use his own words - some people think councillors like Hann are “gutless wonders” and “spineless”.

Developers likely don’t care that much about Hann’s feelings.

As for Fortis, they did a pretty slick job early on of lobbying people like Hann and O’Keefe and putting them in the bag long before the residents of St. John’s even heard about the proposal. That’s the sort of old-fashioned crony politics that has left this city in a development mess there is. That’s the one where no one knows what the rules are.  They don’t know what the rules are because there are a few councillors who can be persuaded to toss the rules out the window if the mood strikes them.

Ultimately Fortis lost this round because of a pretty effective lobby.  Those opposed to the development just put the squeeze on the notoriously fickle councillors.

That’s the way things go in politics.

And if Hann wants to fix things  - if he wants to show he has a spine - well he can start by bringing about some changes that open up city hall to greater public scrutiny. That way people wouldn’t be worried that developers can get their way around the rules.

Who knows?  If the rules were suddenly clear and fairly and consistently applied there might be more people willing to invest.

-srbp-

The Fragile Economy: reductio ad argentum

Political parties that come into power without direction tend to fall back on a couple of crutches to help them get through.

One is inertia.  They just keep going with what happened before.  Sometimes they just take ideas pushed up by the bureaucracy but that is really just another form of carrying on with the set of assumptions everyone knows.

The collapse of health regions and education districts into just a handful is just such an idea.  Faced with an apparent financial problem – which the new Williams administration should have known all about before they got to office, by the way – the novice Premier took a couple of suggestions pushed forward by bureaucrats as a way of saving cash.

Poof:  four health regions and five education districts. The changes didn’t actually deal with the problem nor does it appear they were thought through. Yet they were quite accepted quite readily as the election commitment of growing our way out of economic tough times  - “Jobs, jobs, jobs” - was replaced by the staples of cuts, freezes and re-organization.

That’s not really all that surprising.  After all, this was an administration that had not even been able to figure out what its departments were going to be called.  That decision wouldn’t arrive for another month.

The noobs elected in October 2003 took five months to get enough material together to present to the House of Assembly.  But even then, the overwhelming majority of the bills were modest amendments to existing laws that had been in train before the election. 

Those that weren’t already planned by the old administration didn’t produce dramatic changes of direction for government. Amendments to the Elections Act, for example, mandated that a by-election had to be called within 60 days when a vacancy occurred.  The old version dated from the early 1990s and set the maximum at 90 days.

For a government that supposedly had a plan and was keen to get to work on its new agenda, there wasn’t much sign of that new agenda from the first session of the legislature.

Aside from a toothless lobbyist registry, the Transparency and Accountability Act was the only major new piece of government business. Duly passed after a cursory debate the government then didn’t bother to put the law into force until two years later.  Even then, the bill only took effect two afters later still, that is, four years after it was passed.

Another new bill, the Court Security Act, is still not in force and likely won’t be implemented.

It’s only when one goes back and looks at that first session in hindsight that one can see exactly how little new material the brand new government brought to its first legislative session.

Directionless governments also have difficulty making decisions.  Most governments find decisions difficult to make because they issues involved are enormous and the opportunity to make a tragic mistake is great. Contrary to what people may think politicians are sincere people trying to do what they think is best. But in a directionless administration, all those sincere people have to struggle to agree on what “best” actually means.

Now by directionless, we mean nothing more than a group of people who have not learned how to work together effectively as a team.  Lack of direction may also arise where political power generally or on a given issue is so diffuse that no one individual or group of individuals can get enough support among colleagues to move in a particular direction.

Directionless governments tend to decide in favour of the lowest common denominator.  On some issues the LCD is no decision.  But, more often than not, agreement is easiest to reach if it involves spending money.

Take a look at the current administration and you can quickly see the prominent role money plays.  In fact, money is the only real measure of anything.  news releases typically refer to how much money will be spent and how much has been spent.  When asked about how important a subject like the fishery is, a typical Williams administration reply will focus on how much money has been spent on fisheries-related issues.

A by-election is fought based on how much money the premier and his party delivered to the district.  Puzzled at a by-election loss, the Premier will note how much money the district received and then roll his eyes up dismissively at the rejection.

The final Hibernia South agreements were not good enough in themselves. Rather, the estimated valued of the deal had to be inflated by an entirely artificial means.

Everything - not just principle - converts to cash. Indeed, so pervasive is the reference to money that you likely took it for granted.  But from this point onward, you will likely have a hard time looking at any news story from the provincial government and not seeing the focus on, the near obsession with cash.

There are other examples of how the current administration lacks focus and direction.  Equalization, the delays and cost over-runs throughout government, the health care cuts that sparked last fall’s crisis,  the break-up of Fishery Products International:  all are signs of an administration which lacks a coherent view of the problems it faces and a cohesive organization that can tackle them successfully.

Knowing how the current administration has a problem finding its way is one thing.  The consequences for the province and its people are something else.

-srbp-

The Fragile Economy series:

• “Staying the course”
• Next –    “…and two steps back”.

Colonel Mustard…

in his jail cell with aluminum foil and cardboard.

Accused murderer Russell Williams tried to off himself in his cell at the Quinte Detention Centre.

Now QDC is crowded and all, but surely someone thought about putting this guy on suicide watch before now.

Next stop:  Kingston Psych, on the shores of lovely Lake Ontario.

-srbp-

Seven cent nickel

How the Tories plan to balance the budget:

-srbp-

Colbert doesn’t RATE

Retired at Taxpayer Expense that is.

If Gerry Colbert wants to retire after 25 years of working, then let him.  No one would begrudge him a rest after his labours.

It’s one thing to hear the rumours that Colbert spent most if not all of the last municipal election in warmer climes, but Colbert’s got another thing coming if he thinks  that time spent during council meetings is nothing more than “face time”.  Let’s not even talk about the idea that for the rest of the week Colbert thinks he can just phone in the job from the Sunshine State.

Maybe Colbert ought to just give up council altogether.  

The taxpayers of St. John’s shouldn’t have to pay him a nickel while he swans off to Florida and enjoys the condo life with the rest of the retired and soon-to-be-retired townies.

Better that than try and retire at taxpayer expense, as he currently is doing.

If Colbert won’t pack it in on his own, then maybe we - the poor sods who are foolishly paying people like Colbert to serve as city councillors -  should reconsider the contents of their pay envelope. 

After all, if being a city councillor is such a lightweight job that you can safely frig off out of the city for upwards of a third or more of the year, then taxpayers shouldn’t be forking over any payments to anyone elected to serve on city council. 

Period.

After all, it’s not like Colbert is alone in being absent from council.  There are others with dubious attendance records.

Maybe it’s time to end the gong show that is city council.  What better way than by punting the biggest gong.

-srbp-

Epic Fail of The Week: prov gov loses to Abitibi… again

First, the provincial government’s Legal Genius(es) drafted the expropriation bill which seized - all, as it turned out -  AbitibiBowater assets in Newfoundland and Labrador.

They told the good burghers of Danny-ville that this meant only that the power plants and everything else belong to the people of Newfoundland and Labrador.

Everything, except that is for the mill itself, they said which would be used as leverage in negotiations over any compensation for the expropriation.

It would all be a wash, in the end.

Or so people were told publicly and in briefings before the expropriation bill turned up in public.

Then, people discovered that the same Legal Genius(es) didn’t actually exclude the mill as they’d originally claimed.

Nope.

They seized it all.

Big screw up.

Now, the people of Newfoundland and Labrador discover that trying to get some sort of court action forcing the former mill owners to foot the bill for environmental clean-up – as the legal genius(es) assured everyone – won’t work either.

Hands up anyone who is surprised at the latest failure by the provincial government?

Okay, well just stop and think for a minute: 

The Legal Genius(es) behind this latest string of expropriation epic fails would be exactly the same Legal Genius(es) who brought you the Ruelokke legal mess.

And they’d be the same Legal Genius(es) who are now betting massive chunks of the public purse on a law suit against Hydro-Quebec to try and settle a dispute over the 1969 contract.

Any bets on how good that one will turn out for taxpayers in the end?

-srbp-

Medvale School for the Gifted Update:  Seems the Legal Genius(es) indeed have caught themselves in another bit of jurisprudential bother.  As Russell Wangersky astutely points out, the lovely Abitibi expropriation bill clearly gives no value to water rights and timber rights.  Yet, the scheme to funnel money to Corner Brook Pulp and Paper is based on timber rights having value.

The two things cannot live in the same space.

So either no cash will go to CBPP or, as your humble e-scribbler expects, the real legal geniuses who work for AbitibiBowater (they are 2-0 so far) will use the CBPP cash hand-over to put a much higher price on the expropriation now that they can legitimately claim cash for timber and water rights.

Not only that but AbitibiBowater can also claim – quite rightly – that the expropriation was unusual and punitive aimed specifically at one company and remains without any merit. Coupled with all the nasty words flicked by ministers toward Abitibi, they can likely show that the whole thing was prejudiced and that will only add to the poor beleaguered Newfoundland and Labrador Taxpayer’s legal misery in other places (NAFTA challenge anyone?)

Momentous Update:

Hypothetical Answer by Hard-done-by Citizen:  “Golly Gee Mr. Finance Minister, what will happen if they get more money?”

Not-so-hypothetical Answer by Finance Minister:  “The debt will go up.  We cannot stop the momentum.”

Happy Confederation Day!

Signing of the Terms of Union between Newfoundland and Canada, December 1948.

The union took effect shortly before midnight on March 31, 1949 but events marking the occasion took place on April 1, the start of the new fiscal year.

For a worthwhile perspective, one first generation Canada – your humble e-scribbler – will recommend the words of another first generation Canadian at nottawa along with some thoughts offered from this corner last year on the 60th anniversary of Confederation:

“As we mark this 60th anniversary of Confederation, it is worth considering the extent to which current government policies fail to continue those changes.  It is worth noting that in the endless wars with outsiders, there has been a steady rebuilding of the walls and barriers we have worked so hard to tear down.  We worked to tear them down because they served only to restrict us.

It is worth noting that genuine pride, innovation and self-reliance can be stifled by a late-night telephone call and by the relentless personal attacks that come from merely dissenting from official views. By choking off healthy debate about public policy issues within Newfoundland and Labrador, by strangling any alternative views we serve only to return this place to self-defeating isolation.

Confederation gave Newfoundlanders and Labradorians the tools and opportunities to make for themselves a better place in the world. In 1949, we became once more masters of our own destiny and masters of our own house.

On this 60th anniversary of Confederation, we must be mindful of how far we have come and at the same time, be aware that if we are to continue to grow and prosper we must safeguard the foundation on which our current prosperity is built.”

-srbp-

The Fragile Economy: staying the course

“Obviously, I don't like to run deficits, but if I've got to fight a recession ... if we've got to get the economy booming again, then I'm not afraid to spend money and we're not afraid to lower taxes to stimulate the economy - that's good public policy.”

Finance minister Tom Marshall often speaks about one thing and does another.  He’s famous for trotting out a debt clock during one budget consultation farce only to deliver a budget that did nothing to reduce debt.

This year Marshall has been trying to pass off deficit spending as if it was something new for this administration.  It isn’t. They’ve run cash deficits in all but two years since 2004.  If their current forecast holds, they will be adding a considerable amount of debt for the foreseeable future.

Adding debt is just staying the course for the Williams administration.

Premier Danny Williams himself has dismissed balanced budgets as meaningless. Marshall explicitly rejected any action like balanced budget legislation or having a debt reduction policy.

Marshall’s predecessor as finance minister - Loyola Sullivan  - talked about balancing the books on a cash basis – he only did it once – and possibly not balancing the accrual books for a number of years.  That was back in the early days of the administration when it looked like they were actually going to deal with some of the provincial government’s financial woes. But even for all that notice debt got within the first couple of years after Williams and the Tories took office,  they were willing to rack up additional public debt.

Since we are discussing debt, let’s dispose of one of the finance minister’s more laughable claims from budget day:

“But we have cash to pay for that deficit. We will not increase our borrowing. Our debt will go up, but we don't have to borrow for that.”

On the face of it people may well wonder how you can increase public debt while not borrowing money.

The answer is pretty simple and it goes to the heart of the public debt charade Marshall and his colleagues have been foisting for the past few years.

Marshall covered the half billion shortfall in 2009 from temporary investments – extra cash – the provincial government had on hand.  He didn’t have to go to the banks and negotiate a loan but he sure as heck borrowed the money:  he borrowed it from taxpayers.

As for the debt, what he is referring to is net debt.  Now for those who may not know, net debt is a calculation of what is owed compared to assets – cash, property and so on – that could theoretically be sold off to pay down the money that is owed.

Those temporary investments that the provincial government racked up over the past couple of years helped to make it look like the public debt had been paid down. That’s because they are exactly the sort of assets that would have bee used to figure out the net debt:  liabilities less assets.

So when Tom took the cash and spent it, the net debt could only go back up.  The net debt will go up again next year and the year after and any other year Tom winds up having to cover off over-spending.

Just remember, though, that the total liabilities haven’t changed much in the past few years. You can see that from a post last December on net debt and liabilities and in another post on net borrowings.

This is not a subject the Fan Clubbers like to talk about but it is real. it also just happens to be one of the major financial problems facing the province that isn’t being addressed by the current administration.

Just to give you a sense of how much the past two budgets have followed what we could call the Williams administration debt addition policy, take a look at just the current account spending since 2003.  That’s the money that pays the heat and light and delivers the services and salaries every day of every year. 

And just to really keep it in perspective think of it this way.  You can have a great net debt because you have a nice house, an expensive car and some jewels that could possibly be sold off if the bank called all your loans. 

But since the house and the jewels don’t generate any cash each year they don’t help you pay the bills today.  If you can’t afford food without whipping out the credit card you could be in a situation of being cash poor. Lots of nouveau riche business types are leveraged to the max.  They drive flashy cars but they don’t really have a copper to their name. So without considering the cash deficit, the net debt could be a very misleading figure.

Anyway, take a gander at this table.  It shows the percentage increase in current account spending every year from 2003 to the current budget.

Fiscal Year	Percent increase from previous year
2004	Zero
2005	5.3
2006	4.6
2007	8
2008	7.8
2009	10
2010 (forecast)	7

That’s right.

Except for that first year, there’s never been a time when current account spending didn’t go up by at least twice the national rate of inflation.  In some years spending shot up three and four times the rate of inflation.

This sort of spending is unsustainable.

This sort of financial state – all that spending coupled with all that untended debt – is unsustainable.

There are other consequences to the Williams administration economic policy, consequences that will become more obvious as this new series – The Fragile Economy – rolls out in the days ahead.

-srbp-

Jobs that depend on tax money: stump of forest industry edition

So the provincial government is pumping taxpayer cash to keep a paper mill in Corner Brook alive.

Gee, like that hasn’t been done before.

2006.

2007.

And that’s just the stuff we know about.

-srbp-