Containing Ottawa’s Skyrocketing Power Bill

by Tom Adams and Brian Lee Crowley

[Note:  the authors prepared the following commentary to coincide with the recent energy ministers meeting.  It has appeared in other publications across the country.]

Federal taxpayers are exposed to an explosion of liabilities to fund provincial electricity misadventures, the worst of which are undermining Canada’s international trading reputation. A federal-provincial energy conference in Kananaskis, Alberta running until July 19th threatens to up the ante.

Last week, Texas energy titan T. Boone Pickens launched a $775-million
NAFTA challenge alleging the Ontario government has discriminated against his privately owned wind energy company. Pickens is demanding that the federal government pay up.

The federal government is also defending protectionist elements of Ontario’s controversial Green Energy Act against a challenge Japan has launched with the support of the United States and European Union at the World Trade Organization.

Ontario is not the only province with electricity initiatives undermining Canada’s trading reputation and sending the bill to Ottawa.

Last August, a NAFTA dispute panel obliged federal taxpayers to pay the industrial firm Abitibi-Bowater $130 million after the government of Newfoundland and Labrador confiscated electricity generation assets. Far from holding the Newfoundland government responsible for shafting federal taxpayers, Prime Minister Stephen Harper instead promised loan guarantees for submarine transmission connections
required by a Labrador power megaproject with very dubious economics.

With the subsidy offer, Harper effectively rewarded Newfoundland’s government and further impaired Canada’s trade reputation in an unsuccessful bid to win seats on the Rock (although the Conservatives did pick up a seat in Labrador).

Newfoundland justifies its power scheme on the basis that provincial power costs are going to soar anyway, eventually making pricey Labrador power relatively cheap by comparison. Most of the new Labrador power, however, is earmarked for the Maritimes and potentially New England. Unlike Newfoundland, those markets have access to North America’s glut of natural gas, a key factor driving down average power rates across the U.S.

Any subsidies to Labrador power are likely to attract yet more trade complaints from generators in New England, particularly those now selling significant amounts of power into the Maritimes. International competitors of export industries in Atlantic Canada may also complain.

The Newfoundland government estimates that a federal subsidy for the Labrador power project in the form of a loan guarantee will cut local power costs by 6 or 7 per cent. Likely cost over-runs could push the value of the federal guarantee much higher.

The Kananaskis meeting provides a platform for provincial governments and lobby groups to push the federal government deeper into provincial electricity matters. Many, including the governments of Ontario and Newfoundland & Labrador, have demanded federal subsidies to interprovincial transmission projects. Ontario also demands federal subsidies for its nuclear expansion ambitions.

The federal track record in the electricity business is dubious, as illustrated by its recent cut-the-losses exit from nuclear power development and marketing. Even if the federal record in the electricity business was solid, using the federal spending power to buy its way into provincial energy affairs now will annoy our trading partners, promote inefficiency and create jurisdictional confusion.

The federal government should focus its electricity sector involvement first on its core constitutional responsibility for interprovincial trade and commerce. The best way to make Labrador power truly competitive against abundant natural gas is to avoid hugely expensive long distance submarine transmission and to instead achieve the best possible economies of scale with more affordable transmission over land.

To reach markets in Ontario or the U.S. Northeast, Labrador power must transit Quebec, which has its own electricity export ambitions. If those provinces cannot negotiate a mutually agreeable solution, the federal government should act to ensure the constitutionally-guaranteed freedom of interprovincial trade. Ontario and Newfoundland should not require Quebec’s approval to move electricity any more than Alberta needs Saskatchewan’s permission to move natural gas to Manitoba, Ontario and Quebec.

Naturally, Quebec does not welcome another big hydro-power competitor, particularly while market prices are low. However, to maintain its access to electricity markets in the United States, Quebec already accepts the U.S. Federal Energy Regulatory Commission’s non-negotiable rules compelling them to open their market to electricity imports. The constitutional powers that the U.S. relies upon to promote highly successful inter-state trading are similar to our own federal
government’s constitutional authority, which Ottawa has always been reluctant to exercise in the electricity sector.

Canadians too should be entitled to an open national electricity system, where no province can hold its neighbours hostage and Canadians can buy and sell power freely. The federal government should keep federal tax dollars out of the electricity sector. Any subsidies to the sector create unfairness to taxpayers across the county and harm Canada's trading reputation, vital to our long term economic interests. Instead Ottawa should use its legitimate powers to create an open national electricity market that treats everyone transparently and fairly.

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Tom Adams is an independent energy and environmental advisor. He has held a variety of senior responsibilities including Executive Director of Energy Probe from 1996 until September 2007, membership on the Ontario Independent Electricity Market Operator Board of Directors, and membership on the Ontario Centre for Excellence for Energy Board of Management. His guest columns have appeared in many major Canadian newspapers. He has been a media commentator for 20 years and a lecturer in energy studies at University of Toronto. He has presented expert testimony before many regulatory tribunals in Canada on a wide variety of energy subjects. He has made presentations to Legislative Committees in Ontario and New Brunswick, academic, regulatory and trade conferences, the Atomic Energy Control Board, and the Canadian Nuclear Safety Commission.

Brian Lee Crowley has headed up the Macdonald-Laurier Institute (MLI) in Ottawa since its inception in March of 2010, but he has a long and distinguished record in the think tank world. He was the founder of the Atlantic Institute for Market Studies (AIMS) in Halifax, one of the country’s leading regional think tanks. He is a former Salvatori Fellow at the Heritage Foundation in Washington DC and is a Senior Fellow at the Galen Institute in Washington. In addition, he advises several think tanks in Canada, France and Nigeria.

Crowley’s published numerous books include two bestsellers: Fearful Symmetry: the fall and rise of Canada’s founding values (2009) and MLI’s first book, The Canadian Century; Moving Out of America’s Shadow, which he co-authored with Jason Clemens and Niels Veldhuis.

Crowley twice won the Sir Antony Fisher Award for excellence in think tank publications. From 2006-08 Crowley was the Clifford Clark Visiting Economist with the federal Department of Finance. He has also headed the Atlantic Provinces Economic Council (APEC), taught politics, economics and philosophy at various universities in Canada and Europe.

Crowley is a frequent commentator on political and economic issues across all media. He holds degrees from McGill and the London School of Economics, including a doctorate in political economy from the latter.

Bullshit then or now? Nalcor boss changes story on natural gas and Muskrat megadebt project

Ed Martin dismisses the idea that natural gas might be a sensible replacement for burning Bunker C at Holyrood.

Here’s the whole story from VOCM in the event they disappear it:

Nalcor has considered - and rejected - the use of liquefied natural gas at the Holyrood generating station as an alternative to Bunker C oil. Because of the current and projected cost of oil, Newfoundland and Labrador's energy corporation has decided to develop Muskrat Falls hydroelectric power on the Lower Churchill River.

Nalcor CEO Ed Martin, speaking on VOCM Open Line with Randy Simms on Tuesday, said the corporation would have to construct a plant to liquefy the natural gas, which is a very costly venture. The other alternative is to tap in to the international market for natural gas and have tankers, which are supplying markets abroad, offload material for Holyrood.

But from the that was then, this is now file, Martin didn’t always think that way.

A mere seven months ago, Martin sang a very different tune.

Back then, turning natural gas to electricity was one of the great opportunities that lay in building a line from Newfoundland to Nova Scotia. The Telegram covered Martin’s speech to the Board of Trade

Many of those opportunities flow from the Maritime link connecting the island portion of the province with the rest of the North American electrical grid.

One example: the possibility of generating electricity from natural gas, also known as gas-to-wire. It’s also an alternative to building pipelines to export natural gas.

So the question is:  was Ed Martin bullshitting in December or is he bullshitting now?

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Former Tory fin min not giving up in fight against Muskrat

Former Conservative finance minister John Collins is fighting the Muskrat Falls project as fervently as ever. 

The 80-something has a new letter in the Telegram taking issue with recent comments by Nalcor boss Ed Martin and natural resources minister Shawn Skinner.

The basic issue here revolves not around the Holyrood close-out, nor around Labrador/island inter-tie (both much needed and long delayed by Hydro), but on the need to develop Muskrat Falls itself at this time.

Question: do panic conditions really demand a $3 billion Muskrat Falls plant and dams now? The answer: no.

Collins demolishes the argument the project is needed to meet demand with a simple fact drawn from Nalcor’s own documents:

Documented demand needs in 2010 are 30 per cent less than in 2004, when no panic was cited nor acted upon, so that particular point is moot.

He then points out that Nalcor has offered no “credible account of investigations” to prove any of its claims about the need to build Muskrat falls now.

Collins is right.  For all the effort Nalcor and the provincial government is putting into selling this project they haven’t provided the simplest of answers to the simplest of questions.

The haven’t provided them because they can’t.

Either that or the answers prove there is no need for the megadebt project.

In April, Collins wrote the Telegram to argue that

“even the export of power doesn’t seem to be rendering enough to justify the cost of generating the power. The only benefit to the province seems to be closing down the Holyrood [generating plant], and  I think there are other ways of doing that.”

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Nurturing a democratic revolution

Public life in Newfoundland and Labrador remains as fundamentally undemocratic as it ever was.

Paternalism remains the order of the day.  As three sitting members of the House revealed, they they are the face of government in their districts. 

Never mind that neither of them is actually in government.  As members of the legislature, each member has but one job:  to hold the government to account for its actions.  They do so on behalf of their constituents. Doesn’t matter if they sit on the government back benches or the opposition benches.  Their job is to serve the people of the province and the House.

By that measure, none of the current members do their jobs very well. 

The House of Assembly sits  - on average - the least number of days of any legislature in the country.  Members have little time to study any legislation the government proposes.  From the government side, members usually read prepared speeches full of officially sanctioned drivel.

The opposition members of the legislature are no better.  Liberal and New Democrat alike, they tend to rely heavily on official government statements for what they know and say about a bill.  Their comments in an afternoon sitting of the House are often laughable paraphrases of what officials told them in a morning “briefing”.   One need only look at the Hansard record of speeches by Lorraine Michael and Yvonne Jones on the day their rolled over and helped the government in the Abitibi expropriation fiasco to see this situation plainly.

The House has no functioning committees to review legislation. The Committee of the Whole remains nothing more than a hollow exercise in form over substance. The public accounts committee – once the means by which the legislature reviewed all public spending – remains as dead as it was during the darkest days of the recent patronage and corruption scandal. 

As amazing as it is to say, the House of Assembly in the early 21st century has reverted back almost to what it was before the collapse of Responsible Government in 1934.

The House of Assembly is reduced to a form of Punch and Judy show. And to compliment it, recent changes to the provincial access to information laws have systematically reduced public knowledge of government actions when the legislature is not sitting.

The people of Newfoundland and Labrador have turned their backs on politics in increasing numbers.  Voter turn-out in recent general elections and by-elections is at historic low levels.  They know that they have little control so there is no incentive to take part. 

Even the appointed House officers – the Speaker, and the watchdogs of privacy, children’s interests, elections and public accounts – are bumbling and useless. Some offices have been or are filled by political hacks who do not even pretend to be impartial.

A modern, prosperous province deserves a healthy thriving democracy.  Nothing short of a spiritual revolution can reform public life in Newfoundland and Labrador and raise it to the standards that the ordinary men and women of the province deserve.

Here are some ways to do that.

For starters, we need election finance reform:

• Ban corporate and union donations.
• Only individuals should be able to contribute to political parties to a maximum of $5,000 a year.
• Ban “in kind” contributions to parties and candidates.
• Limit election, by-election and leadership campaign fundraising and spending.
• Limit spending by political parties and third parties during elections and during the years between general elections.
• Require full disclosure of donations when they occur, with additional monthly updates on the Chief Electoral Officer’s website.

Piece-meal and largely unnecessary changes to elections in the province from 2004 onward have produced an electoral system that is an embarrassment in a democracy worthy of the name. Electoral reform should include the following measures to break the influence of money and to restore some power to the backbenchers and opposition members:

• Remove the provision that the resignation of a premier triggers a general election.  Overbearing ego created it and it serves no useful purpose.
• Eliminate mail-in ballots and the current system that allows voting before an election writ is actually issued.
• Restore the mandatory 90 day period in which a by-election must be called to fill a vacancy.  The 2004 change to 60 days proved unnecessary and, as in 2007, produced the laughable case of a by-election that was called but never actually held.
• Cut off incumbent expense charges, cell phones and other perks of office 45 days in advance of a fixed election date. This will discourage campaigning at public expense by incumbents.
• Compel members not seeking re-election to vacate their offices and cut off their expense accounts 45 days before a fixed election date or 30 days after they announce their intentions publicly, whichever saves the public more money.
• Introduce amendments to the House of Assembly Act that set mandatory sitting days (for example 50 days in the spring and 40 in the fall) for the House of Assembly with cash penalties for each member if the House does not sit the prescribed number of days.
• Introduce amendments to the House of Assembly Act to establish legislative committees, set the number of hearing days they must sit.
• Make the membership on the committee a function of House seniority regardless of whether a member is on the opposition benches or government back benches.
• Give the committees research and administrative staff to be hired by the Speaker.
• Update:  To go along with this, some other changes to funding would follow:  the office of the leader of the opposition would get funding for administrative positions such as chief of staff, executive assistant and communications director.  Caucuses would no longer get funding for staff and research positions.  Instead, every member would get a standard allotment for a constituency assistant, a travel budget etc. to support individual work as members.
• Update:  The Public Accounts Committee should be the only one with an opposition majority and an opposition chair. 
• Cabinet minister would only be allowed to serve on the House of Assembly management committee.
• Introduce legislation to limit the size of cabinet and the number of government party members who may draw extra payments for government duties.  Exclude those members drawing extra pay from committee work.
• Strengthen the conflict of interest rules for politicians to limit their business and other interests while serving in the House. 
• Add charities to the list of prohibited interests that members may have, especially once they sit in cabinet.
• Extend the prohibited period for doing business with government after leaving office to five years for all politicians and political staff.
• Former cabinet ministers should be barred from any dealings with all government departments, not just the one for which they last served as minister.

To restore the integrity of the House of Assembly officer appointments, nominees should be vetted during public hearings by a House of Assembly committee on appointments.  Nominees should come from a publicly advertised competition, although the list of potential candidates may include recommended nominees from cabinet.

Existing legislation should be amended to allow that officers can only be removed by the Speaker with the concurrence of the committee.  Any suspension or removal from office while the House is not in session must be the subject of a public hearing at the next sitting of the House.

And that’s just the start of it.

In future posts in the series, we’ll look at changes to the province’s access to information laws and reforms to senior appointments.

There are more than 15 good ideas for a stronger Newfoundland and Labrador.

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People unfamiliar with the legislature might not understand how some of these changes could produce a dramatic difference in the House.  Let’s see if this helps:

• Banning corporate and union donations breaks the influence of big money on party policy and shifts power back toward individuals.
• Adding charities to the conflict of interest guidelines closes a gigantic loophole in the current conflict guidelines that has proven to be a major problem in the United States. 
• The new committee structure is intended to restore some power to the legislature and to individual members of the House and help break the centralization of power in the first minister. Among other things, it breaks the patronage hold that Premiers have on perks and bonuses that are often held out as a way of influencing members unduly. 
• Individual members should be able to develop a profile, reputation and a power base that would make them contenders for cabinet based on merit rather than obsequiousness and pliability.
• Funding committees instead of caucuses prevents majority parties coupled with a biased Speaker from doing as the Conservatives did in the current legislature with funding for the official opposition.
• Cutting off expenses before a fixed election levels the playing field between incumbents and challengers at the district level.

From the Earth to the moon

Forty two years later, the American manned space program is about to die.

For the first time in half a century the United States will not have the ability to send humans into space and bring them home again.

How truly sad that is.

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Rumpole and the Cardinal Rule

St. John’s lawyer Averill Baker is pissed that the Crown prosecutor is trying to remove her from a case because she represented the victim in the savage beating her current client is accused of visiting on his head.

He’s facing a second degree murder charge for allegedly shooting his accomplice in a botched armed robbery.  The fellow is also facing an attempted murder charge for the beating of baker’s former client.

Lisa Stead sent Baker a letter. According to Baker, Stead wrote that she will ask a judge to remove Baker if she shows up in court representing the fellow accused of .

Seems the Crown tucked the fellow in in 2005 for possession of stolen goods and possession of marijuana for the purpose of trafficking.  Baker represented him at the time. 

What’s more, Stead advised Baker that she may be called as a witness in the case.

A couple of things stand out from the CBC account of this and Baker’s comments.

First, she says that she represented the victim in the current case  for “half a day” in 2005 and therefore knows nothing else about the fellow and his life.  While there may be no connection between the brief appearance in court and the conviction, the two things don’t look good together. 

Baker might have been better off walking from the current case given the fairly obvious conflict of interest.  Any cross examination of the victim in the current case would be fraught with problems.  On the face of it, one would be hard pressed to see how that would do her current client any good.

But second and perhaps more important than anything else, there’s the line at the end of the CBC story:

Baker said if the Crown comes up with other charges to attempt to make her be a witness, she will apply to Newfoundland and Labrador Supreme Court to rule on malicious prosecution.

This suggests that – contrary to her earlier assertion – Baker may know something of her former client’s business or his relationship with the fellow she now represents that she claims.  The charges mentioned here seem to be related to Baker, not her current or former client.

Let’s hope someone at CBC misunderstood.

Otherwise, the implication for Baker’s client is one thing.

The implication for Baker is another, and it is not good.

Not good at all.

In fact, the implications are so serious this might be a case where the lawyer needs to get some legal advice before saying another word.  There’s a reason why lawyers often advise their clients to first of all follow the cardinal rule:  shut the f*ck up.

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Making the Most of Our Energy Resources, Part II – Oil and Gas in the Future

Without new oil and gas discoveries, the Newfoundland and Labrador petroleum industry will dry up within a couple of decades.  There hasn’t been a significant discovery in the offshore since the 1980s, with the exception of one find in the Orphan Basin.

The problem isn’t a lack of oil or gas.  The geological estimates back up the notion there is plenty more to find. The problem is no one is looking for it hard enough to find it. 

To give you a sense of how low exploration levels are now compared to a couple of decades ago, take a look at this slide.  It’s taken from Wade Locke’s recent presentation for the Harris Centre. 

Low exploration levels is one of the most important problems facing the oil and gas industry.  It’s not a new problem.  It’s not the only problem.  There are others, all of which centre on the basic challenge of how we can make the most of our oil and gas resources now and in the future.

Here are some basic ideas that can help us to get there.

For starters, Newfoundland and Labrador has to be an attractive place for investment, exploration and development. Oil and gas is a highly competitive industry, especially in the exploration sector.  There are only so many exploration dollars to go around.  There are only so many rigs to go around and there are plenty of places in the world where companies can find oil and gas, develop it, get it to market and make a lot of money.

Sending delegation after delegation to oil shows in places like Houston doesn’t produce a single new exploration well. What the local oil and gas industry needs is a stable, predictable environment.  That is something they haven’t had for a while.

One of the easiest things for the provincial government to do is set an offshore oil royalty regime and a gas royalty regime.  The provincial government had an oil royalty regime but the 2007 energy “plan”  to replace it with something else.  Not surprisingly for the current administration, there is no sign of a new oil royalty regime four years after they promised it.

Ditto a natural gas royalty regime. The current administration promised one in 2007 but they still haven’t delivered.  In fact, the provincial government has been working on development of a gas royalty regime for the past 14 years and still they haven’t managed to produce anything but a discussion that went nowhere.

With the royalty regime set, there’s no need for the provincial government to hold up any developments while it “negotiates” with a developer.  That’s the sort of thing one might expect in a banana republic.  It isn’t what happens in mature economies.

In the same way, the provincial government should set – or allow the offshore regulatory board to set – basic rules for local benefits.

The current administration held up the Hebron development and in the end settled for a royalty regime only marginally better than the generic regime. But any gains on so-called super royalties were offset by give-aways on the front end of the royalty structure and on local benefits in the form of research and development spending commitments.

Standard royalty and benefits regimes that work across a variety of price ranges and that work fairly for the resource owner  - i.e. taxpayers - and the developer will promote stable economic development.

The provincial and federal government should also implement a policy of merit-based appointments to the offshore regulatory board.  The Canada-Newfoundland and Labrador Offshore Regulatory Board is one of the most important agencies in the province. The most recent fiasco with efforts to stuff a former political staffer into a job she was unqualified for highlight the potential damage that politicians can do to an important official body.  At the very least, the provincial government should advertise for applicants for board appointments based on well publicized criteria. Board appointees should serve for fixed terms and each appointment should come with a publicly available expiry date. The offshore board is no place for political hacks and cronies.

While the offshore oil and gas industry is well developed, the oil and gas industry that lies exclusively within provincial jurisdiction is not.  As a way of encouraging development of a well-managed industry within the borders of the province, the Government of Newfoundland and Labrador should develop a regulatory board to administer lands, manage reservoirs, serve as a repository for information on oil and gas and generally serve as the focus of industry regulation from the three mile limit inward. 

The new oil and gas regulator should complement the work of the offshore board.  Naturally, the new board will assume some of the roles assigned to the old provincial petroleum directorate as well as ones that have grown up within the oil and gas division of the natural resources department. The new onshore regulatory board should also administer new, standard royalty and benefit regimes for any future developments.

Other elements of the 15 ideas (and more) also will apply to the oil industry.  For example, breaking up the energy company and either privatizing it or forcing it to function like other companies would break its strangle-hold on the local business environment.  This would inevitably allow for new life and energy in a sector that is rapidly becoming stagnant.

Without new life in the province’s energy industry,  the future looks bleak.  Staying on the current path is not a practical option. 

These are a few ideas to stimulate life and growth and to create a future for the province and its people that works.

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Like Momma always said…Part Deux und Trois

The only funnier thing than a guy up on assault charges claiming he is a wannabe Tory candidate are opposition party politicos who campaign for the incumbents.

In the past couple of weeks, comments coming from both parties have highlighted positive economic news.

Liberal leader Yvonne Jones did it before she headed back to Labrador for a series of meetings. She issued a news release that mentioned how the Labrador economy is booming.

Then  provincial NDP president Dale Kirby tweeted a link to a Globe and Mail story about how well the provincial economy is doing in comparison to the rest of the Atlantic provinces.

Wonderful stuff.

Except that in both cases, Jones and Kirby wound up reinforcing the classic argument for staying the course and keeping the current government in power. Things are going well, say the incumbents. Don’t risk all the good times by changing horse in the middle of the stream of cash and jobs.

Opposition parties need to draw attention to things the incumbent party isn’t talking about. There are plenty of issues. Some of them are ones the incumbents just don’t give a frig about but opposition voters do.  Some are issues the incumbents haven’t figured out are potentially decisive. Others are ones the incumbents will scream blue murder about because they are sore issues.

But talking about how good things are under the current administration?

Not really a message that says vote for me, the leader of the party that didn’t deliver all this good stuff.

It’s good for them to be positive, you say.  Otherwise the opposition parties would be all negative.  No one likes it when you are negative.  More people would listen to the opposition parties if they weren't negative all the time.

Well, for starters if you think that way, then you are – without question  - an ardent supporter of whatever incumbent government we are talking about.  Either that or you make Pollyanna look like a suicide waiting to happen.

Only incumbent politicos and their staunch supporters dislike it when others talk about problems.  Face it:  problems exist all the time.  They may not be big problems but they do exist.  It’s natural for people to talk about them if for no other reason than they would like the incumbents to fix them.

But incumbents hate people talking about problems.  The longer the incumbents are in office the more they dislike problems.  The longer the incumbents are in office, you see, the more likely it is that they caused the problems.

Incumbents also know that problems energise the opposition supporters.  After all, talking about the problems at the time are what helped get the incumbents elected in the first place. 

It seems like ancient history these days, but those who can recall the period between 2001 and 2003 will remember Danny Williams talked relentlessly about problems.  He was angry.  He stayed angry even after the 2003 general election. In fact, Danny stayed angry right up to his last days in office.

Tories  - and Danny lovers - don’t see it that way, of course. They think he spoke the truth.  But that’s what one would expect Tories to say, just as Liberals would have said the same sorts of things the last time Liberals were in power.

And when the incumbents hissed at Danny that he was too negative, he just ignored them and carried on about his business.  Danny carried on because he knew what opposition politicians are supposed to do if they ever want to get back into a government office again.

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And Harry won't be running either

Conservative cabinet minister Harry Harding won't be seeking re-election in this fall's general election, according to media reports on MOnday..

Free tuition at NL university for Nova Scotians: NL NDP leader

The Newfoundland and Labrador local of the New Democratic Party wants taxpayers in her province to give Nova Scotians free tuition at Memorial University.

Sounds idiotic, doesn’t it?

But that’s exactly what she wants to do, at least if you follow the thrust of Lorraine Michael’s July 8th news release.

In the release the NDP leader said that “free tuition is essential to ensuring that all of Newfoundland and Labrador’s young people get equal access to education they will need for their own, and by extension, all our prosperity.”

Wonderful stuff.

Then she cites in study released by her party president Dale Kirby, wearing his education professor hat.

Kirby and his colleagues surveyed Memorial University students from Maritime Canada and asked them some questions about why they decided on studying at Memorial University. As the executive summary in the report notes, the number of Maritime students at Memorial went up “ten-fold’ in the past decade or so. And as the report also notes, there have been other reports, most notably by news media, in which Maritime students identified cost as one of the big reasons for them coming to Memorial. They can study at a comprehensive university that has a decent reputation overall(outstanding in some faculties) and they can do it cheaper than they could at Dalhousie or Acadia or University of New Brunswick.

They come here because the tuition is cheap, they said. 

So, reasons Michael, free education for Nova Scotians will benefit Newfoundland and Labrador.

She does not explain how. 

Odds are she can’t.

That’s not important, though. 

In the world of Conservative-style retail politics, all a political party has to do is offer this sort of cash incentive to win votes. It’s like the one about cutting taxes on gasoline or home-heating products.  None of those ideas make any sense except as a way of luring voters:  give us your vote and we’ll give you cash.

The foolishness of the free tuition idea is actually right there in Michael’s release. All you have to do is think about it for a second.

You see all those Maritime students frig off back to Nova Scotia or New Brunswick or Prince Edward island once they get their Memorial University degrees.  They only come here because they can get a decent university paid on the cheap.  They don’t spend four years at Memorial because they plan to settle in Hibb’s Hole once the drinking…err…studying is done.

And if lower tuition is already bringing in the mainland students in droves, then odds are free tuition will attract droves more. The university will have to hire more professors and build more classrooms and laboratories.

And who will pay for this?

Why the taxpayers of Newfoundland and Labrador, of course.

Now think about that a bit more.

In a province where the government is facing a pretty severe financial problem because of foolish spending, the New Democrats want to spend millions more to make university education free.  Then they’ll have to spend hundreds of millions more making the university larger to accommodate all the new students.

And where will thousands of those students come from?

Why Nova Scotia, of course, the most populous province in Atlantic Canada.

Now where else has Nova scotia cropped up lately?

Yes. 

Of course.

Lorraine Michael, Kathy Dunderdale, and Yvonne Jones want to spend billions on this Muskrat Falls project so they can ship cheap electrical power to Nova Scotians.  Newfoundlanders and Labradorians will pay the full cost of the power plus a profit for Nalcor and Nova Scotia-based Emera so that Nova Scotians get a break.

And this is how Newfoundlanders and Labradorians will gain a long-term benefit from their natural resources:  by selling discount electricity to Nova Scotians. 

That sounds an awful lot like this education scheme Lorraine and Dale have cooked up.

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Traffic that never flip flops

The weekly top 10 Bond Papers posts for the week of July 11 to 15, 2011, selected by you, the readers.

1. Forecasting the fall
2. All three NL parties back Muskrat project
3. A world of their own
4. Ahem
5. Political parties and debt:  the Kennedy perspective
6. You might know it as bribery, Ma’am
7. Cross yet another one off your list and Not much to see [tie]
8. Cross Sheila off your list
9. The Ballot Question:  October 2011
10. Did I say “yes” to Muskrat?  I meant “no”:  Jones

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Telly takes wind out of Muskrat

The Telegram editorial on Thursday linked the Muskrat Falls project with the recent announcement by Kruger Inc of a wind energy project in Quebec:

Power, apparently, is cheaper in Quebec. Hydro-Québec says its 2,000 megawatts of wind power are being purchased for an average cost of 8.7 cents a kilowatt hour. That's a huge difference - especially because we're also supposed to be selling power into North American markets.

But you have to wonder - if Hydro-Québec is bringing 2,000 megawatts of wind power on stream at 8.7 cents a kilowatt hour before Nalcor brings 824 megawatts of power on stream at 14.3 to 16.5 cents a kilowatt hour, who will be subsidizing the off-island sale of power of Muskrat Falls to make it competitive with power that costs a third less?

And just why is Muskrat Falls clearly the provincial government's only choice - and Nalcor the only possible supplier - to meet our energy needs again?

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Did I say yes to Muskrat? I meant “no”: Jones

Political decisions in Newfoundland and Labrador are apparently like the local weather at least as far as the current crop of party leaders in the province is concerned.

Wait a minute and everything changes.

Kathy Dunderdale set the standard for indecisiveness with her on-again, off-again subsidies for Danny Williams’ latest gaggle of professional jockstraps.

Now it’s Yvonne Jones’ turn.

In an interview with NTV’s Issues and Answers last week, Jones said that as Premier she’d hand over responsibility for deciding the fate of the Muskrat Falls to the Auditor General. 

And if he ruled the thing was good, then that was good enough for Jones.  She’d go along with it.  Jones sounded positively giddy at the thought of all the jobs and electricity to fuel develop in Labrador.  She claimed there’s 700 megawatts need for mining developments.  That’s pure crap, of course.

Well wait a minute, or in this case a couple of days, and Jones wants to scrap the deal now. That’s what she says in the latest news release from the Opposition Leader’s Office

The reason Jones changed her mind is an interview with Vermont Governor Pete Shumlin on CBC Radio.  Shumlin noted, among other things, the problems with the current projected prices for Muskrat Falls power. 

“If the power is too expensive for residents of the United States, how is it affordable for us, when Premier Dunderdale wants to charge us more for it than consumers outside the province,” Jones said. “Kathy Dunderdale is content to saddle this province with generations of debt for a project that doesn’t make financial sense.”

Quick!  Get the smelling salts.  Regular readers of this corner are swooning at this revelation. After all, it’s not like your humble e-scribbler hasn’t been pounding the drum about how uncompetitive the Muskrat Falls power is on the markets not just today but well into the future.

In fact, there’s even a comment from Kathy Dunderdale  - from last fall - about the lack of American markets for the super expensive Muskrat power.

And if none of that rings a bell, don’t forget the Rhode Island memorandum of understanding.  Kathy Dunderdale told the legislature one story.  Turns out that, to paraphrase a famous politician, nothing Kathy said could be further from the truth:

As far as we can determine, there is no legislative hold up here in Rhode Island, it is more of a question of cost.  While the power generation is inexpensive, the cost of transmission adds to the final price. The possibility of purchasing power is still alive; it may be a topic of discussion at the conference of New England Governors and Eastern Canadian Premiers that is happening today. Interest in purchasing renewable energy remains. 

Yes folks, there you have it from 2009:  New England states are interested in buying energy from renewable sources but the damnable costs of transmission are a problem.

That post did not make the local media sit up and take notice.  It took two years and another governor for them to figure it out.

Anyway, scuttling the deal is Jones’ latest position. Once she gets a few phone calls from people who want jobs on the project or from business owners anxious to suck harder on the public debt tit, she’ll swing around again.

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Aquaculture centre opened three years behind schedule, more than 100% over budget

Premier Kathy Dunderdale opened an aquaculture centre in the south coast community of St. Alban’s on Thursday three years after it was supposed to be finished and at more than twice the original forecast price.

Former fisheries minister Tom Rideout announced the offices and laboratories in 2007.  He estimated the cost at $4.2 million.  It was supposed to be opened in 2008.

In a news release marking the opening, the provincial government reported the facility cost $8.8 million.

Danny Williams included the project as part of the provincial government’s “stimulus” package in 2009.  That was just one of the delayed and over budget Williams included as if they were brand new projects in response to the recession.

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Ahem

From the e-mail inbox this week came a gentle reminder from Kevin Kelly, editor at the Herald:

Just wanted to point out that in last week's Newfoundland Herald, (the one with Kiss on the cover), I did a story entitled "Headed for Disaster" discussing the province's spending habits, including how much money the government was spending on itself, as well as comparing govt. spending from 2004 to now. I also brought up the Muskrat Falls costs and comments from both sides of the issue.

Kevin didn’t like the reference in another post that only the Telegram was getting the message that provincial government deficits and Muskrat Falls debt weren’t a good mix.

Fair ‘nuff, Kevin. 

Just to make it clear though, your humble e-scribbler divides the local media scene into two piles.  The daily electronic and print gang go in one pile.  These are the gang who make up the press gallery in the House of Assembly and who have reporters covering the provincial political scene. They tend to break or report on hard political and economic news day-in and day-out.

The weeklies, monthlies and bi-weekly print outlets go in another pile, for a bunch of reasons.  This doesn’t mean they are less important, less influential or anything less in any way.  They just have a different focus.  It could be the local community, as in the Transcon weeklies.  It could be the local arts and entertainment scene.

Rather than skimp, here’s an extract from what the Herald ran in a piece titled “Headed for disaster?”

But here’s the thing. The provincial government is showing no signs of cutting its spending, even on itself.

The Tories have come under fire in recent budgets that included enormous revenues from the oil industry, but were matched by increases in spending and less worry on debt reduction.

Even with the looming financial crisis that could happen, the provincial government increased spending this year by 5 per cent, a trend that has continued over the past number of years.

“We have responded since being elected to office with expenditure levels that support a high level of programs and services, and we stimulated the economy during the recession,” stated Finance Minister Tom Marshall during his recent budget.

“Always, however, we were committed to spending within our means. During my consultations with the people of the province prior to this Budget, I was clear that, while strong expenditure growth was necessary during the catch-up and stimulus periods, more moderate expenditures are required in the future. Our net program expenses will grow by less than 5% in 2011-12, with much of this growth relating to wage increases previously negotiated.”

…

But there is still no arguing that it [Muskrat Falls] will cost a lot of money to get the project underway, and does the benefit outweigh the cost?

It’s one of many questions ahead for government as it deals with what could be a looming financial deficit.

Economist Wade Locke says the government has to make some tough decisions in the years ahead to deal with the upcoming debt crisis.

“There are three options you can do: you can borrow, you can raise taxes or you can cut expenditure,” he said. “All three have negative consequences for you, so what you need to think about is which of these options are the most effective way of dealing with your issues.”

It might need to start thinking way ahead, and perhaps cutting where it hurts most, itself.”

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Pesticide ban regulation not even written yet

While everyone may think the provincial has banned the cosmetic use of pesticides, a quick check with the province’s environment department confirmed this afternoon that not only haven’t they gazetted the regulation needed for the ban, they haven’t even written it yet.

That’s not what the news release would have you believe.

The headline reads:

“Ban implemented on cosmetic pesticides for lawn care”

Note the past tense of the verb, suggesting this is something was already done.

The provincial government actually announced on Thursday that it will  - that is, at some undefined point in the future  - write a regulation, send it for approval and have it gazetted to bring it into force.

But until then:  nada.

Without a regulation putting the ban in effect, there’s no other legal way the provincial government can ban the cosmetic use of pesticides.

No reg.

No ban.

This isn’t the first time the provincial government had problems with pesticide regulations.

In February 2004, then-environment minister Tom Osborne announced a consultation into new pesticide regulations to replace pesticide regulations introduced in 2003 by the Liberals.

In September 2005, he announced the new regs would be implemented shortly thereafter.

They were introduced in April 2007, just in time for the provincial election.

Plenty of people have been fooled.

None of them did a simple bit of homework.

News media took the announcement of government’s intention to ban the cosmetic use of pesticides and ran it as if the ban was done. Both of the province’s opposition parties issued news releases praising the provincial government for listening to people and doing what’s right. 

 

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Labour crunch coming

Only the naive or the demented would portray the looming labour crunch in the province as a “tremendous opportunity”.

A report released on Wednesday by the provincial human resources department forecasts that by 2020  - less than a decade from now - there will be 70,000 vacant jobs in the province.  They will be in all sectors of the economy.  They will be in all areas of the province.

The primary cause of the vacancies will be retirements. Only 10% of the vacancies will come from employment growth, that is from new job creation.

This is not an opportunity of any sort.  Newfoundland and Labrador will face a labour shortage at the same time as the rest of North America will go through the same problem. Many of the jobs will remain vacant because there won’t be anyone to fill the positions. Some other provinces, notably Quebec, will face a far worse situation.

This is a situation that the provincial government, labour unions and businesses have seen coming for more than a decade. So far, they have done nothing about it except talk about it.  Now the problem is here.

It represents a very real financial problem for the provincial government.  As baby boomers retire, some costs like health care will increase dramatically.  At the same time,  revenue sources will drop off as there are fewer people working to produce taxes and other sources of government revenue. Increasing the number people drawing a government paycheque may look good  for votes in the short-term, but when you look at the big picture, you can see just exactly how grossly irresponsible the current administration has been for the past seven years.

Regular readers of these scribbles will be very familiar with the implications of the looming labour crunch. Unsound financial management by the current administration promises to make the problem much worse than it would have been if people in responsible government positions had acted instead of talking before now.  The Muskrat Falls megadebt project looks even stupid in this context than it does standing on its own.

Only the naive or the demented would look on this as anything positive.

Government, labour unions and business leaders have seen this coming and they’ve done nothing about it except talk.

On Wednesday, they carried on as if nothing happened.

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The Ballot Question: October 2011

Here’s the question for voters to decide in this fall’s general election as the party leaders themselves have defined it.

If you want:

• guaranteed high electricity prices in Newfoundland and Labrador (roughly double current rates),
• at least double the current provincial debt, and,
• subsidised electricity exports to Nova Scotia and anywhere else in northeastern North America…

then vote:

Progressive Conservative

 

or

Liberal

 

or

New Democratic

 

No matter what you chose,  you get Muskrat Falls.

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Public sector job growth outpaces private in NL

From labradore:

In the five years since the recent-historic low, in early 2006, of about 55,600 public-sector employees, the public-sector labour force has increased by about 11,500 or over 20%. As a share of total employment, the public sector has grown from 26% to 30%.

The twelve-month average ending in June 2011 was 67,100 — an increase of 4100, or 6.5%, from the same period twelve months earlier. This represented an increase of over half a percentage point in the public sector's overall share of the employed labour force.

Then there are the pretty charts showing the public sector employment, federal, provincial and municipal, in thousands of people:

and the private sector:

 

So when you have digested the full impact of that little bit of information, consider what the Muskrat Falls project is really all about: the megadebt will be worth it because it will “bring significant employment and income to the residents and businesses of Newfoundland and Labrador.”

 

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Related:

• The Fragile Economy;  … and two steps back
• The Fragile Economy:  hard numbers

Not much to see

The Telegram’s Russell Wangersky looked ahead to the fall election and didn’t like what he saw.

Wangersky’s assessment is brutal but it is accurate.

The Liberals:  “When someone who isn't looking for the leader's job is bigger news than the person who's already holding it, you've got big problems.”

The NDP:  “Unremittingly hopeful but doomed to disappointment….Don't bet the family fortune on renting floats to the victory parade.”

The Conservatives:  “Right now, they are an all-encompassing government that stresses the need for belt-tightening (while spending more), reducing debt (while increasing it) and telling people that we have to live within our means (all the while living beyond their own).”

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