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Celebrity economist Wade Locke thinks it’s just great that the provincial government is going to use any surplus on its current budget to pay down debt.
As he told the Telegram:
Putting it towards debt was the best thing, I think, you could do.
Too bad for Wade that he is praising them for something they aren’t doing.
Wade did have some comment about spending the cash:
Spending it would be wrong and it would create more problems in the future.
Wow.
Two for two in one quote.
Wade’s on a roll.
Hang on. Wade did the hat trick:
“You still have to, when you’re doing your budgetary stuff, think about what is the long-term focus you want to have. What are your priorities?” Locke said Thursday. “We haven’t had that discussion, and I don’t think the government has had that discussion either.”
Of course, they’ve had the discussion, Wade, old man.
They had and then they had their decision ratified in the recent election, or so they thought.
Their priority is Muskrat Falls.
Wade can’t comment on that, though just like he wouldn’t comment on it when he made his earlier comments about the coming debt crisis.
Wade, you see, has done some consulting work on the project. That’s why he left it out of his debt analysis.
Maybe you should read Wade’s comments again about what a good idea it is to pay down debt.
But this time take an extra pinch of salt beforehand.
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Tom Marshall can’t seem to make up his mind whether oil prices are easy to forecast or tough to figure out.
On Thursday, he seemed to tell the St. John’s Morning Show host Anthony Germain that figuring out what oil prices will be in the future is pretty much a blind guessing game.
Prices could go up.
Or as Tom joked, they could go down too.
Yep.
And if you think that’s bad, labradore noted Tom’s problem extends to forecasting what his view was on forecasting oil prices.
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Tom Marshall made the rounds on Thursday talking up his latest financial update.
But after a call to Randy Simms on Open Line, Marshall likely felt likely he’d gone a few rounds in the ring. Simms asked a few sharp questions rather than let Tom ramble on with his usual shite. And in asking a few simple questions, Simms just had to sit there and listen as Tom tied himself in contradictory knots. Tom’s been in the state before – like on Muskrat Falls and Bay d’Espoir – but this time Randy wasn’t letting up on him.
Things started badly for Tom when he had to explain right off the bat that all his bullshit on Wednesday about applying the surplus to the net debt was, not to put a fine point on it, just bullshit. No surprise for regular readers of these e-scribbles as Tom explained that net debt is just a calculation of assets and liabilities.
When Randy pressed Tom on what the provincial government will actually do with the cash, Marshall said they’d be spending it on capital works rather than borrow, as planned. Fair enough, but then he noted that the provincial government hasn’t borrowed for capital works in years. Tom wound up going around and around before it became clear that his talk about using the cash to avoid borrowing was not what Tom was trying to make it out to be.
It was, in fact, far less.
To get a sense of what might have buggered up the finance minister, take a look at the Estimates. That’s the budget document that lays out the proposed spending on day-to-day operations and capital works for 2011.
And just so that everyone is on the same page with this, understand that Tom the Finance Minister reports the Estimates on what is called a cash basis while the budget speech and the financial update use accrual accounting.
One big difference in how the two different methods show the government’s financial performance comes right up in the front of the Estimates.
In the budget speech, Tom Marshall talked about a $59 million surplus. What you can see in Statement 1 of the Estimates is a deficit of about $769 million. In other words, when the finance department looked at the actual cash it would receive in 2011 and the bills it would pay, the government planned to spend $769 million more than it would actually take in.
The only way they’d make that up is to borrow cash. Normally, governments would have to go to the bond markets or the banks and borrow the cash.
Over the past few years, the provincial government here has managed to pile up a couple of billions dollars or more in cash and short-term investments. Rather than borrow from the bank, they’ve covered off cash deficits by taking the money out of that pile of cash.
It’s still borrowing, of course, even though it would never get repaid.
And last spring, that’s what Tom Marshall planned to do: borrow cash to cover a deficit. He and his colleagues planned to overspend and they planned to borrow cash from every person in the province to pay for it.
When Marshall announced in May that the surplus would grow to $200 million, that was on the same accrual basis as the $59 million.
But on the cash basis, the deficit would have only dropped from the $769 million Marshall planned for down to a little over $500 million.
But it was still a deficit.
A real deficit.
And Marshall would have had to take a wad of cash from the piles hidden under his mattress to cover it off.
So now that Tom has boosted the accrual surplus to $755 million, some of you might be already leaping ahead.
Yes.
That’s right.
And for the rest of you who resisted jumping ahead, understand that if the new revenue projections hold, Tom Marshall will likely still have to borrow some cash to cover it off. Another $755 million in cash would leave him short about $14 million on that $769 million deficit in the Estimates.
So that borrowing Tom talked about with Randy Simms likely wasn’t about capital works spending. It was likely the borrowing in the Estimates.
When it comes to provincial finances since 2003, about the only surplus there’s been has been bullshit flowing from the provincial government’s spin machine. The latest update is no different.
The provincial government’s financial truth deficit, on the other hand, continues to grow.
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Two new studies of Canadian soldiers who served in Afghanistan between 2001 and 2008 shows the prevalence of psychological casualties in modern combat operations. The Globe and Mail reported that:
In one study of 792 frontline soldiers who fought in Afghanistan in 2007, some 20 per cent suffered from posttraumatic stress disorder, while 3.1 per cent suffered other mental illnesses such as depression.
In a larger national study, researchers examined medical records of 2,045 soldiers who served from 2001 to 2008 and found 8 per cent suffered from posttraumatic stress disorder and another 5.2 per cent suffered other mental-health illnesses over a follow-up period averaging five years. (Globe and Mail)
The studies also found that 98% of those experiencing symptoms had sought and received treatment.
Things have changed radically since the first deployments to the former Yugoslavia almost 20 years ago. But psychological casualties still turn up, even from older operations. As the Globe story also noted:
“People are still coming forward from Chicoutimi and Swissair,” said Colonel Rakesh Jetly, head psychiatrist for the Canadian Forces. The Chicoutimi submarine fire killed one seaman in 2004, and the military was deeply involved in recovering bodies and wreckage after the 1998 Swissair crash.
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Related: Those interested in the history of the treatment of psychological injuries in the Canadian Army can find a excellent account in Terry Copp and Bill McAndrew’s Battle exhaustion: soldiers and psychiatrists in the Canadian Army, 1939-1945.
Sadly, much of the experience gained in pioneering work done during the Second World War vanished in the years after only to be rediscovered – out of sheer necessity – since the end of the Cold War.
Finance minister Tom Marshall delivered his fall financial update on Wednesday. Thankfully they no longer wind up being called mid-year updates since they appear long after the middle part of the fiscal year.
Having successfully lowballed some of their numbers from the spring budget, Tom’s officials have produced a surplus – on an accrual basis – of what they figure will be more than $750 million.
The extra cash is due to higher than forecast oil prices coupled with higher than forecast offshore oil production.
“This surplus will be applied directly to debt, decreasing the province’s net debt to approximately $7.7 billion, which is a significant achievement,” said Minister Marshall. “There has never been a better time to live in Newfoundland and Labrador. A robust economy is producing record employment, income levels and consumer confidence. Having said that, we must remain prudent in our fiscal management as there are challenges on the horizon that we must face.”
In a media interview, Liberal finance critic Dwight Ball clapped the minister on the back for paying down debt and gave him a bollocking for not being able to forecast things more accurately.
New Democratic party leader Lorraine Michael gave Marshall a dressing down for not spending all the extra cash. it was so predictable a statement one wonders why Lorraine is still hogging the spokesperson job.
One statement.
Three stories.
Wonderful stuff, of course, except that everyone seems to have missed the one gigantic fib in the whole thing.
No one is reducing any public debt whatsoever.
Tom Marshall claims he will do it. he claims in the media release that he and his friends have been doing it all along.
But it is complete nonsense.
You can tell it’s nonsense because both the news release and the financial update itself refer to net debt.
And as regular readers of this corner know, net debt is nothing more than an accountants statement of all that you owe less anything you have on hand you could sell off to pay the debts.
This extra bit of cash that’s just turned up won’t actually be used to reduce any debt at all. Most likely it will be set aside to pay for – Lorraine will love this – to cover off an increase in spending next year or to help pay for some massive cost over-runs on this, that or another infrastructure project. SRBP went through the whole thing back in May when Marshall forecast that he would have a healthy surplus. As it turned out, his forecast of a bigger surplus than originally forecast still lowballed the final result.
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From the Canada-Newfoundland and Labrador Offshore Petroleum Board:
Call for Bids NL11-01 (Western Newfoundland and Labrador Offshore Region)
The following bids, based upon the work commitments bid, have been accepted:
Parcel 1 (218, 468 ha)
Ptarmigan Energy Inc. 100%
$1,501,000.00Parcel 2 (135, 520 ha)
Ptarmigan Energy Inc. 100%
$501,000.00Total: $2,002,000.00
Call for Bids NL11-02 (Flemish Pass/North Central Ridge)
The following bids, based upon the work commitments bid, have been accepted:
Parcel 1 (247, 016 ha)
Statoil Canada Ltd. 50%
Chevron Canada Limited 40%
Repsol E & P Canada Ltd. 10%$202,171,394.00
Parcel 2 (186, 780 ha)
Statoil Canada Ltd. 50%
Chevron Canada Limited 40%
Repsol E & P Canada Ltd. 10%$145,603,270.00
Total: $347,774,664.00
Subject to the bidders satisfying the requirements specified in Call for Bids NL11-01 and NL11-02 and upon receiving Ministerial approval, the Board will issue exploration licences for all four parcels in January 2012.
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According to Nalcor’s final submission to the Canadian Environmental Assessment Agency review panel, the company dismissed natural gas as an alternative source of electricity instead of Muskrat Falls.
This alternative is purely hypothetical, as the current offshore operators have looked into the technical and economic feasibility of transporting and marketing their natural gas reserves and none have identified a viable business case. (page 20)
A Nalcor consultant that was asked to review Nalcor’s decision-making for Muskrat Falls agreed that studying natural gas was a waste of time because there was no commercial natural gas development already in place in the province.
Purely hypothetical.
Not worth the time to review?
Well, not exactly.
According to documents filed by Nalcor with the public utilities board, the company asked consultants in 2008 to prepare a cost estimate to build a natural gas plant with different capacities. According to the consultant’s report, the largest of the variants – capable of replacing Holyrood by producing 550 megawatts – would cost between $617 and $633 million.
According to another document tabled by Nalcor with its PUB submission, the company was still reviewing cost options for natural gas generators. The estimate for a 50 megawatt turbine obtained by Nalcor in 2010 shows that the prices remain comparable to the 2008 study.
In Nalcor’s submission to the PUB, the company acknowledges that it studied and then dismissed natural gas as an alternative based on what turn out to be misleading claims about offshore natural gas.
First, Nalcor states that:
To date, no proposal for natural gas development, either export or “landing”, has been submitted by the offshore operators despite years of technical and economic study. (page 58)
That’s grossly misleading though. Nalcor officials know that at least one offshore company has expressed an interest in studying the economic feasibility of natural gas development offshore.
The problem is that in order to assess the economic potential, the company would need to know the provincial government’s natural gas royalty regime. And – despite studying a natural gas regime since the late 1990s and despite a 2007 commitment to finalise the draft natural gas royalty regime contained in the province’s energy plan, the provincial government still hasn’t produced that crucial piece of financial information.
Four years later.
The provincial government still can’t tell offshore companies who want to develop natural gas what it will cost them.
And then the provincial government’s energy company uses the lack of development as justification for Muskrat Falls.
Talk about circular reasoning.
With that convenient bit of information out of the way, Nalcor’s next reason for ignoring gas – the lack of a domestic market in the province – also falls by the wayside.
Then Nalcor claims that development of the natural gas resource would have to involve all four fields and, well, all four fields have different natural gas strategies:
Natural gas is associated with the Hibernia, Terra Nova, and Whiterose [sic] developments, but each operator has its own strategies for the gas associated with their respective development. Natural gas associated with the Hibernia development is re-injected into the reservoir in order to increase the recovery of oil from the reservoir. This re-injection is a form of enhanced oil recovery, or EOR. In the case of the Terra Nova development, natural gas is re-injected and is also used to reduce the viscosity of produced crude oil, an EOR technique known as natural gas lift. Finally, natural gas from Whiterose [sic] is being stored in an adjacent reservoir for future use. Each operator has developed its own strategy for natural gas use, and to date, no concrete plan for domestic natural gas development exists.
Ultimately, that’s just a restatement of the same original misleading Nalcor claim, combined a bit of additional misleading information along the way.
Hibernia does re-inject natural gas as part of its oil extraction strategy. The companies also use some of the gas to power the platform. But the plan has always been to preserve the gas so that the companies can exploit the gas for commercial sale eventually. After all, estimated reserves are on the order of 2.6 trillion cubic feet.
Ditto Terra Nova.
And, as Nalcor notes, at White Rose – that’s how the name is spelled – the developers are hanging onto the gas so they can exploit it when and if they find a market.
Three things stand out about this most recent revelation:
First, Nalcor continues to rely on misleading statements to justify its decision to ignore lower cost alternatives to Muskrat Falls.
Second, work completed for Nalcor confirms estimates done in 2005 that proposed natural gas as a viable source of electricity for the province and for export. Nalcor makes no reference to the NOIA study.
Third, Nalcor did not disclose this information before. In fact, the PUB submission seems to be nothing more than an effort to rebut a series of substantive criticisms of the Muskrat Falls project that turned up during the CEAA review.
And that’s what is most disturbing of all: Nalcor didn’t disclose this information about natural gas before now. In fact, the final submission to the environmental review made no mention at all of the fact that Nalcor had cost estimates for a natural gas plant.
Given that the most recent disclosures to the PUB further undermine Nalcor’s central claim – that Muskrat is the only viable choice – it’s no surprise Nalcor has tried to hide as much information as they could for as long as they could.
No surprise either that as the public learns more about the project, their support for the Muskrat Falls project is dropping like a stone.
Nalcor has given them good reason to doubt the company’s claims.
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Voting for the Canadian Blog Awards 2011 is underway.
There’s the usual wide range of categories and the usual wide range of blogs from across the country.
Before you vote take the time to check the blogs, reads some posts and check out categories you might not usually be interested in.
And when you’ve done all that, your humble e-scribbler is humbly asking for your vote.
Help make Sir Robert Bond Papers the best political blog in Canada for the second year running.
It’s readers choice so it all comes down to you.
Click the picture to vote!
(Opens in a new tab)
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The Canadian economy will slow in the months ahead, according to the Organization for Economic Co-operation and Development (OECD). As the Canadian Press reported:
Severe debt problems in Europe combined with slow growth in the United States, Canada’s biggest trading partner, to drop demand for the natural resources Canadian companies produce.
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Free advice, they say, is worth exactly what you paid for it.
And when it comes to free advice on the provincial Liberal Party leadership, Dean MacDonald is more full of it than usual. CBC’s David Cochrane gave MacDonald free airtime this past weekend to share his insights into what the party needs to do.
Cochrane describes MacDonald as having “long Liberal ties” but that really isn’t an accurate description of MacDonald’s limited association with the Liberal Party. Sure the guy spent some time as Brian Tobin’s bagman for Tobin’s abortive federal leadership run. But other than that and raising some cash recently, MacDonald’s most significant act while associated with the Liberal Party was blading Roger Grimes as MacDonald’s old business buddy - Danny Williams – strode toward the Premier’s Office.
And that, dear reader, is the extent of MacDonald’s association with provincial Liberals. If that’s all that it takes to have not only ties, but long ones by some estimations, then perhaps that speaks more to the sorry state of the provincial Liberal Party at this point in history than anything else.
The guy, after all, hasn’t held any positions within the party, has an incredibly limited record of his own of making financial contributions to the provincial Liberals and, as far as it appears has absolutely no political experience whatsoever.
MacDonald acknowledges this point, by the way, when he talks about the need for establishing some street cred within the party.
And aside from suggesting he could “help out” by fundraising or doing some other odd jobs, MacDonald doesn’t offer much else.
What he does do is spout a phenomenal load of pure shit throughout the entire interview. One of the choice moments is when Cochrane asks MacDonald about Dean’s criticism about Kathy Dunderdale’s “unsustainable” spending. MacDonald quickly disavows any suggestion he was criticising the Conservatives.
When Cochrane notes – quite rightly - that Danny is the guy who started the unsustainable spending, MacDonald launches into an extensive Conservative apologia for Danny Williams’ unsustainable public spending. It’s vintage Williams bullshit from a charter member of the Fan Club.
Beyond that, Dean doesn’t have anything to offer on the Liberal Party beyond the need to “rebuild”, bring in "new people and fresh blood.
And that’s it.
To describe this as amateur and superficial would be generous. His own experience in fundraising is, by his own characterization, nothing beyond “arm-twisting” and organizing big dinners with high profile speakers.
On Muskrat Falls, MacDonald doesn’t do much better. he exaggerates his own involvement with the provincial government’s hydro corporation. His observations about the project and the issues involved are best described – again to be very generous – as superficial. MacDonald does not even have substantive talking points on the subject. The best he can do to try and counter David Vardy’s critique is suggest Vardy is recycled from the 1970s.
And that – you can see where this is going - is all there was.
If you want to talk about Liberal leadership politics, you’d be far better off looking at the federal party. There, at least, you can find people with ideas and energy. You can find people who have done a few things, taken a few for the team they were actually on, and who remain ready to do more.
The federal Liberals are talking about having a wide-open leadership race that lasts several months and involves a series of votes. Some are likening it to the American primaries. As the Toronto Star reported:
“This is not tinkering at the edges. This fundamentally changes how power in a political organization is exercised,” Liberal party president Alfred Apps told reporters on Thursday as the revival plan was released.
Some of the problems the federal Liberals have experienced are mirrored at the provincial Liberals:
For the provincial crowd, you can add a third one: a tendency to accept players from another team into their midst. Some of them even wind up being touted as potential leadership material spouting tons of free advice.
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Enbridge will invest $330 million for a 50% stake in a 300 megawatt wind farm 400 kilometres northeast of Quebec City.
The Lac Alfred project will consist of 150 2MW REpower turbines with locally-manufactured blades, turbines and converters. Construction is scheduled to occur in two phases: the first began in June and will conclude in December 2012; the second will be completed in December 2013.
EDF EN says the wind farm after completion will supply electricity for about 70,000 homes. Provincial utility Hydro Quebec will buy the power under a 20-year agreement and also construct a 30km transmission line linking the project to the grid.
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The Telegram’s Saturday edition carried a profile of Lieutenant Colonel Perry Grandy.
For those of us who know Perry, Alex Brannan’s description hits it squarely on the head:
“I have soldiered with him on a deployment. … He is a great role model who tears down obstacles so that others can advance. He sets the standard for staff work. He has an insatiable appetite for analyzing, preparing and executing plans,” Brennan said.
Brennan said Grandy is driven by the understanding that well-prepared plans reduce the chances for casualties.
“Canada is fortunate to have him and I am proud to count him as a friend. He is an asset to his employer and to our province.”
The word you’d use to sum up all those qualities and more is: Perry
And for those who know the men and women of the Canadian Forces Primary Reserve, the word that comes to mind is: typical.
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The only people who seem excited at the prospect of Dean MacDonald leading the provincial Liberal Party are people who – like Dean – worked to undermine it or actively fought against it over the past decade.
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Kathy Dunderdale claims she hasn’t heard “any substantive argument that contradicts any of the analysis or research or even the process that we’ve used to get us where we are as we move on.”
Truth is there are plenty of arguments against her plan – left over from Danny Williams - to double the provincial debt, drive up electricity prices and all so that the provincial energy corporation can deliver discount power to Nova Scotia and anywhere but Newfoundland and Labrador.
The problem isn’t a lack of arguments against the scheme.
The problem is that Dunderdale - like her predecessor - refuses to pay attention.
Well, when she’s through reading Shawn McCarthy’s fluffier than usual puff piece in the the Newfoundland nationalists’ favourite newspaper – the Toronto Globe - she can wander over to a real newspaper – the Gazette - that reports real news. Dunderdale should prepare to have her ears blown off.
Hydro-Quebec forecasts it will have an electricity surplus in the coming decade. Lower-than-expected demand and lots of supply from natural gas.
That means electricity prices will be down.
Sounds like something the rest of us have heard before, like say most recently from David Vardy. He’s the Princeton-educated former Clerk of the Executive Council in Newfoundland and Labrador who is just the latest to chime in against the Muskrat falls scheme.
If Kathy Dunderdale hasn’t heard of any reasons not to pursue Danny Williams’ hare-brained scheme maybe she could read a few instead.
That way she could really distinguish herself from her predecessor. Scrapping Danny’s Muskrat insanity would be a damn-sight better for the people of the province than the fight-with-Ottawa from McCarthy’s piece as an example of how Dunderdale is not like her predecessor.
He never fought with Ottawa, did he?
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“I have yet to hear any substantive argument that contradicts any of the analysis or research or even the process that we’ve used to get us where we are as we move on.”
That’s Premier Kathy Dunderdale in an interview carried by the Globe and Mail.
So if she hasn’t heard any arguments, maybe Kathy should start listening.
Maybe someone could read the analyses to her. Like Dave Vardy’s or the joint environmental review panel.
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For Remembrance Day, here are five war movies you might consider checking out.:
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Twitter.
Facebook.
Social media.
All stuff for young people, right?
Wrong.
A new poll by Harris-Decima shows an increase in social media use among Canadians over the past two years, from 57% in a poll conducted two years ago to 68% in the latest survey.
The most significant growth came in the over-50 age bracket.. Only 39% of those over 50 had used social media in 2009. But that number had climbed to 57% in the recent survey.
CTV carried a report on the poll by Canadian Press:
They're [the over-50s] getting more comfortable online," Mike Leahy, senior Harris-Decima vice-president, said in reference to older Canadians.
"My impressions are that they are communicating with different generations, who are very active in social media."
Facebook is the most commonly used type social media. All but three percent of respondents had used Facebook. Only two percent of respondents used Twitter in 2009 but 25% of respondents used Twitter in the most recent survey.
That parallels a survey of Americans conducted by the Pew Institute in August:
The frequency of social networking site usage among young adult internet users under age 30 was stable over the last year – 61% of online Americans in that age cohort now use social networking sites on a typical day, compared with 60% one year ago. However, among the Boomer-aged segment of internet users ages 50-64, social networking site usage on a typical day grew a significant 60% (from 20% to 32%).
“The graying of social networking sites continues, but the oldest users are still far less likely to be making regular use of these tools,” said Mary Madden, Senior Research Specialist and co-author of the report. “While seniors are testing the waters, many Baby Boomers are beginning to make a trip to the social media pool part of their daily routine.”
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