The Muskrat Ah-Prentice #nlpoli

The local Tories were all twitterpated over the weekend with Jim Prentice’s comments about the Lower Churchill.

One suspects, of course, that they were loving it all up for the same reason they love Muskrat Falls in the first place:  they don’t know anything except that it is the official plan of the moment for their team and therefore they are all for it.

You see, neither of the loyal MFers who tweeted and re-tweeted actually looked at what Jim-bo said.  If you accept the VOCM version, it went like this:

Speaking to the Newfoundland and Labrador Offshore Industries Association, Prentice states now is the time Ontario, Quebec and Newfoundland sit down and work out a long-term plan to deliver power to the rest of Canada.

Ontario and Quebec submitted a proposal in 2005 to develop the entire Lower Churchill, not just Muskrat falls.  The provincial government rejected the proposal out of hand in favour of what Danny Williams called the “go-it-alone” option. Jim Prentice  - quite obviously - doesn’t know anything about the Lower Churchill project.  Nor do people who are re-tweeting his words as an endorsement of a project he clearly knows nothing about. They don’t know what they are talking about either.

But wait.

It gets better.

Jim wants a long-term plan to deliver power to the rest of Canada.  If Jim knew anything about electricity transmission he’d know that Nalcor could move power tomorrow if they wanted.  The lines are there.  Nalcor is already using the lines to wheel power to New York.

All Nalcor would need to move power to Ontario would be an Ontario customer.

Well, if you missed it, go back a couple of paragraphs and note that the provincial government rejected a guaranteed sale.  Nalcor has been trying ever since to find a customer in Canada – or anywhere else – for their electricity.  They can’t find one because the Lower Churchill power is too expensive.  Hydro-Quebec isn’t an obstacle.

It’s that simple.

So that’s two huge problems with Jim’s comments. Now for the third.

Even if Nalcor sold electricity to Ontario at a loss – as they’d have to do given current markets - Muskrat Falls won’t meet the existing needs for the power as Nalcor has described it. Between January and March the plant will barely meet the island need.  Nalcor will likely have to ship recall power from Churchill Falls to Nova Scotia for free to fill the gap.

And if they wind up send Muskrat Falls electricity to meet Labrador mining needs they really won’t have enough juice.

Replacing Holyrood would take about 500 megawatts.  There’s another chunk of a 160 MW or so that goes to Nova Scotia. Muskrat Falls will only produce about 570 MW, on average.  Sometimes it will produce close to the installed generating capacity of 824 MW.  Sometimes it could push out less than 350 MW.  That’s all because the river’s water flows don’t come at the same steady rate all the time.

Now those Labrador mines will need about 750 megawatts of steady power. Do some pretty simple math.  You will see that even for the couple of months a year when Muskrat Falls cranks out its maximum, it won’t be able to supply all the demands Nalcor and the provincial government have already claimed Muskrat Falls will support – newfoundland, Nova Scotia and Labrador mines.

Nalcor certainly couldn’t ship any electricity from Muskrat Falls to Ontario because they won’t have any to ship.

So yeah. Jim Prentice thinks Muskrat falls is a great idea.  He supports it because he has no idea what is going on.

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Corner Brook hospital: follow the money talk #nlpoli

Let’s get something clear up front.

The provincial government will build a new hospital in Corner Brook.

That much shouldn’t be in doubt.  The existing Western Memorial Hospital is long past due to be replaced.  The provincial government has the cash in the bank.  And even if they didn’t, they’d have to find the money somehow to build it.  That’s the thing about hospitals.  You have to build them even if you don;t have money in the bank.

The current political problem finance minister Tom Marshall faces in his hometown comes from the usual problem he and his colleagues seem to have:  they announce something, put timelines on it and then fail to deliver on time.

Then the other problem cuts in:  they resort to all sorts of bluster and such, all the while insisting that absolutely nothing is wrong. That’s the thing about the Tories:  you always know what they are going to say. 

Tom Marshall went to the Corner Brook Board of Trade on Friday to talk about the budget and, inevitably, the hospital. The Western Star sent Gary Kean out to report on it.  He’ll stay in politics until the steel for the hospital starts going up, insisted Marshall, “and I plan on going soon.”

Good on both points:  Marshall was supposed to retire last year.  He put it off as part of the deal cut inside the Tory caucus that left Kathy Dunderdale as leader to get them through the election.  Marshall is due to go as are a number of others, including, most likely, Dunderdale herself.

As for the money supply, he was equally firm that there wasn’t a problem.  He’s a quote from the Western Star story:

“That is one of the stupidest things I’ve heard in a long time,” Marshall said, when asked about criticism that government doesn’t have the money to proceed with construction right now.

“We are flush with cash. Our financial position is the strongest it has ever been. The economy is as strong as it’s ever been.”

Let us forget, for the moment, that the main message Tom is carrying around these days is that the provincial government coffers are flush with cash.  They are full to overflowing.  And now, having just finished spending public money the likes of which we have never seen in this province before – including taking the public debt to record heights -  Marshall  must now start on a 10 year program of spending cuts and layoffs in the provincial government the likes of which we have never seen in the country before, let alone the province.

Let us just forget all that for a moment.

Let us also dial back Tom’s inevitable hyperbolic outburst a bit.  They will have the cash. They will have to find the cash because they need to replace the hospital.

And so they will build a new hospital once they figure out what they want the hospital to do.

The first plan the health department came up with wasn’t the right one, according to health minister Susan Sullivan.  According to the Western Star,

Sullivan said the plan did not adequately reflect the province’s changing demographic, so planners were sent back to the drawing board to come up with a better programming strategy.

When the Western Star wondered how that could have happened, Sullivan claimed she didn’t know.  She wasn’t the minister when they started so she had no idea what they were asked to do.

And as for what “better programming strategy” means or what the “demographic“ thingy was, she didn’t let on. Those are wonderfully vague terms, wonderful bits of bureaucratic gobbledygook. What it sounds, like, though, is the same sort of problem the current administration have run into with other major projects.

The health centre in Lewisporte, for example, went so far over budget that the provincial government started hacking out services in order to get the costs under control. That was at the heart of the problems in 2009 that contributed to Paul Oram’s untimely departure from politics.

So while Corner Brook will get a new hospital - at some point in the future - the major problem seems to be a familiar one:  balancing what gets done in the hospital with what it costs to build it. Part of that problem could be in whatever promises He Who Must Not Be Named suggested eons ago that are simply no longer affordable, if they ever were in the first place.

Almost certainly, part of the hang up is within the health department.  After all, they are trying to cope with increasing pressures on budgets at a time when cash is getting tighter and tighter.  You see that’s the real issue.  Corner Brook will get a hospital, but the government’s financial and demographic problems will have a profound impact on what the hospital costs and therefore what the final hospital winds up doing.

Now as for all that financial stuff Tom Marshall mentioned that we said we’d forget for a moment?

Well, the moment is up.

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So close to a deal they just can’t finish it #nlpoli

As CBC reported on Friday, a spokesperson for Nova Scotia Premier Darrell Dexter says it is just an “update” meeting.

"As you know this is a very important project for both provinces, and the partners have update meetings as needed," Jennifer Stewart, a spokeswoman for the Nova Scotia premier's office, said. "This is one such meeting."

Newfoundland and Labrador Premier Kathy Dunderdale says it is a meeting to continue negotiations on an agreement to develop Muskrat Falls:

“We’re concluding our negotiations of the term sheet with Emera. We do this on a pretty regular basis and he’s here to talk about it.”

Okay so the term sheet is already done.  What they are supposed to be doing is finishing the whole agreement.

But anyway, there’s a bit of a difference between a routine meeting and a negotiating session.

And there’s an even bigger difference given that when the two companies missed their second deadline to finish the deal, both parties said there were just a few things to tidy up.

Real close to a deal though.

So close they didn’t need to set a new deadline.

That was how many months ago now?  Three months since they missed the second deadline at the end of January and five months beyond the original deadline from the end of November.

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Why People in Corner Brook (and elsewhere in NL) are Worried #nlpoli

About four years ago, your humble e-scribbler pointed out a fundamental strategic problem with the way the provincial Conservatives spent money.

The premise was pretty simple:  at the same time that we knew  - as a matter of irrefutable fact  - that provincial costs for things like health care were going to skyrocket, the provincial government wanted to start building megaprojects. 

In 2008, we were just talking about Hebron and the few hundred million dollars.  We didn’t know and still don’t know how much the final costs will be. That was before the Premier and other ministers acknowledged provincial spending was unsustainable. That was also before the global recession.

It was before the provincial Conservatives wanted to spend upwards of $10 billion on a hydro-electric project that won’t produce any revenue outside the province.  And it was way before those same Conservatives decided to embark on a decade long period of public sector job lay-offs and spending cuts. Well, at least, that’s what CBC reported on Thursday night that the Tories plan to do.  They were reporting on what finance minister Tom Marshall told the St. John’s Board of Trade at a luncheon speech..

If anything, that 2008 series of posts about the precarious provincial financial position understated things.  Things are so bad that even Wade Locke had to warn his political friends in the Conservative Party that they needed to deal with the problem.  Locke had this to say in 2011:

“It gets progressively worse as you go out, from five years onwards,” Locke said. “The next five years, it’s manageable, but after that it gets less manageable if we don’t start dealing with it now.”

…

“There is a a serious problem in terms of debt and deficits,” Locke said. “I understand that people believe that we are a ‘have’ province, which we are technically. However, they then believe that there’s unlimited money to address all of our needs and wants. That is not true.

People in Corner Brook are worried that the provincial government is going to have problems building the new hospital they promised in 2007.  They were supposed to start construction this year but, as it now appears, they won’t be ready to start work for at least another year.

People are nervous.  The politicians are more nervous.  You can tell they are nervous by the way Tory politician Vaughn Granter shat massive, enormous, huge bricks on Twitter Thursday night.

If he could, Granter probably would have used a 72 point font in addition to the capital letters to make sure everyone knew just how enormously, massively complicated this hospital project is.

Huge, it is.

Bigger than humans have ever done before on the planet. 

People on the island’s west coast won’t be persuaded by Granter’s amateurish horseshit.  In fact, no one would be surprised if his nervous tweeting and the same sort of foolishness in person only served to increase public anxiety about the hospital.

Of course, as people start to realise the way all those big economic things are coming together, the provincial Tories will have a harder time persuading people that the hospital and other projects aren’t at some risk.  It’s not like the Tories can avoid building something in Corner Brook. They need to replace Western Memorial Hospital. But that doesn’t mean that they will build the hospital they promised in 2007.

It wouldn’t take much to make the current tight financial situation all that much worse.  Drop the price of oil at the same time that  - as we know - oil production will drop off over the next decade.  Drive up the cost of Muskrat Falls at the same time.  Nothing radical and nothing at all unusual. Then think about building a hospital project that they said would cost the better part of a billion dollars before they started building it.

Then think about all those projects that were far less complicated, as Vaughn Granter would tell you,  than the new hospital.  Think of a small aquaculture office building, for example.  Announced in 2007 to be finished in 2009.  They didn’t start construction until 2009 and by the time they turned the key on the front door, the cost was more than double what they estimated originally.

Hospital in Labrador.  Started at $56 million.  Hit $90 million and still counting on a project that has actually been longer in the “planning” stage than the one in Corner Brook.

That’s a 60% increase in cost, incidentally.  Sixty percent is the low end of provincial government cost over-runs, these days.  So if, by some estimates, this Corner Brook hospital started out at $750 million, think of how much it might really cost.  $1.5 billion wouldn’t be outrageous.  $1.2 billion would put it on par with the Labrador cost over-run.

Now go back and lower the price of oil, increase the cost of Muskrat Falls and do all those other very likely things. The more people like Granter talk up the enormous cost and the complexity of the hospital and the longer they delay getting it started, the more likely people are to worry.

And it’s not like they weren’t worried already, before the politicians started protesting too much in their denials about a problem in Corner Brook.

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There’s no greater fraud… “unsustainable” version #nlpoli

The provincial Conservatives promised on Tuesday that they had a 10 year plan to reduce the provincial debt.

They have been in office since 2003.  in that time they boosted public sector spending by more than 60%.  Since 2009, the Conservatives have acknowledged their spending practices are unsustainable.

To date they have done nothing to change their ways.

Here’s some of what they promised in 2003:

• Keeping real program spending constant by limiting the annual growth in spending to the anticipated growth in inflation. New needs that arise will be accommodated within this budget constraint.
• Ensuring value for money by eliminating ineffective and inefficient programs, and by setting objectives for program spending and tracking results.

…

• Reviewing financing arrangements. In 2001-02, the province spent $700 million to service its debt. We will immediately review all financing arrangements in all government departments and crown agencies to reduce interest costs. Such a review will include all debt, investments and cash management practices. We will also review the $1 billion sinking fund to determine if a portion should be used to reduce the Province's debt and reduce interest costs.
• Approximately 40% of all government expenditures goes towards salaries and employee benefits. Over the next five years, approximately 25% of the public service will be eligible for retirement. A Progressive Conservative government will use this five-year period to reduce the size of the public sector through attrition.

There really is a greater fraud than an unkept promise.  It’s making promises on top of the unkept ones.

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Finlandia

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Trouble near mill: the Corner Brook hospital #nlpoli

The 2012 provincial budget includes $1.4 billion in capital works but none of it is apparently connected to two hospitals..

How long should it take to start construction work on a new hospital? That’s a really good question. 

For the provincial Conservatives in Newfoundland and Labrador, six years is not enough.

They announced money for it in 2006.  They had a tractor start digging a hole in the ground for a new hospital in time for a 2007 by-election in Labrador.  By 2010, the whole thing was on hold with a budget that was well on its way to doubling the original estimate.

The new Corner Brook hospital is apparently caught in the same time vortex::

• Promised in 2007.
• Some work done in 2008.
• Site selection September 2009.
• Tender to extend water and sewer to the site, June 2010.

According to a September 2010 release, “[c]onstruction is anticipated to begin in August 2012 with occupancy expected in April 2017.”

Yeah, well, that was then.

According to finance minister Tom Marshall, there’s only $1.0 million in the 2012 budget for the new hospital. That was for “planning”. if that runs out, the public works guys can spend another $5 million for more “planning”.

If the public works minister “runs out of money,”  Marshall told the House of Assembly on Wednesday, “they can come back to me for more money for planning.”

As for construction, Marshall had no answer as to when that might happen.  Odds are good, the hospital won;t be starting in 2012 and it definitely won’t be opening in 2017.

 

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That didn’t take long: public sector negotiations #nlpoli

Here’s what your humble e-scribbler said on Wednesday morning about the fact the provincial government didn’t include any amount in the 2012 budget to cover salary increases:

Pull the other one

The budget contains no amounts for wage increases.  Any talk of forcing departments to come up with increases out of existing budgets is..well..talk.  That’s all Tom Marshall does.  The Tories left out the amounts because they don’t know how much they’ll be forced to pay yet.

Watch for it.

And here’s what Premier Kathy Dunderdale said in the House of Assembly on Wednesday afternoon in answer to a question about the negotiations from Liberal leader Dwight Ball. 

Bear in mind Dunderdale warned the universe until the end of March that she and her colleagues would be hauling three percent out of government spending and were looking at layoffs of hundreds of public servants:

PREMIER DUNDERDALE:  Mr. Speaker, this will not be our first round of negotiations with the wonderful people who work for the Government of Newfoundland and Labrador and the people of Newfoundland and Labrador.

…

Given our record, Mr. Speaker, we have not done badly and we have not had to fire people, lay people off, and close down programs as a result of our negotiations, nor do we expect we will have to do the same this time either.

At least you didn’t have to wait for too long until you saw Kathy blink.

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More significant budget digits #nlpoli

3%:  The amount by which Premier Kathy Dunderdale said she and her colleagues would be cutting spending in the current budget.

As the Telegram editorial pointed out on Wednesday:

Instead of the three per cent in program cuts suggested at one point by Premier Kathy Dunderdale, the province will actually increase its program expenses by $113 million and its debt-servicing expenses by $40.5 million.

That $153.5 million increase in costs means the province’s spending — despite an expected $1.1 billion in reduced oil royalty and Atlantic Accord revenue income — will actually increase by 2.1 per cent, slightly under the expected inflation rate of 2.2 per cent. This, despite non-core program cuts that saved $38.8 million in additional spending.

Yes, friends, the three percent cut morphed into a 2.1% increase.

45:  The number of temporary positions supposedly cut in Tuesday’s budget.

As the Telegram noted, though:

The 45 temporary jobs that were cut actually weren’t enough to offset 142 new positions created in other areas — including 47 temporary positions.

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Oil and Democracy #nlpoli #cdnpoli

Michael Ross contends there is a relationship between oil revenues and democracy.  Crudely put:  oil hinders democracy.

First, the oil-impedes-democracy claim is both valid and statistically robust; in other words, oil does hurt democracy. …

Second, the harmful influence of oil is not restricted to the Middle East. …

The third finding is that nonfuel mineral wealth also impedes democratization. …

Ross has a couple of simple tables comparing the relative reliance of some national economies on oil and non-fuel minerals.  in both cases you just calculate the export value of the minerals as a share of gross domestic product.

In 2011, the provincial GDP was $33 billion.  Of that, the province produced and exported about $10.7 billion in oil and $4.6 billion in non-fuel minerals.  That gives an Oil Reliance number of 32 and a Mineral Reliance number of 14.

To put that in perspective,  Ross’ calculation using 2006 figures for oil producing countries puts Newfoundland and Labrador on the same rank as Qatar and Saudi Arabia, both of which scored 33.85. It puts the province behind Brunei, Kuwait and Nigeria but miles beyond Libya (29.74), Iraq (23.48) and Venezuela (18.84)

Norway scored 13.46.

The Mineral Reliance score puts Newfoundland and Labrador at the fourth highest spot among the countries on Ross’ chart. Third place belongs to Bahrain (16.39), while fourth on the chart is occupied by Chile at 12.63.

Canada as a whole scored only 2.2.

Before you get too excited, the relationship between oil and democracy is a wee bit more complex, as Ross relates.  Let’s just look at those simple calculations first.  We’ll get back to the other ideas Ross discusses in his new book The Oil Curse.

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Another Tom Marshall masterpiece #nlpoli

You’ve gone through the media reports and heard the interviews and comments from pundits and politicos alike.  Now you want a better idea of what is going on and what isn’t happening.

Well, right off the bat, anyone who reported about an austerity budget or that forecast any significant change to provincial government practice was completely and utterly full of crap.  CBC kept pushing that theme even though they’d been told that all talk of cuts and restraint were no longer operative.

No decision too serious to avoid 

What you’ve basically got here is a budget that pushes off any decisions about anything until some undefined point in the future.

The “program review” that will last a decade has no real goals and thus has nothing to deliver. It will deliver exactly that. The people who created the provincial government’s unsustainable spending aren’t going to change it. They can’t.

That isn’t a political surprise.  At the very best, Kathy Dunderdale is an interim leader.  She can’t commit the Tories to a serious fiscal reform when she’ll be retiring soon.  fair enough.  If that’s the case, someone else can make some serious financial reforms in a couple of years time.

At the very worst, Kathy Dunderdale she is a leader who  can’t get her own agenda through cabinet. This would be an enormous problem.  After all, Dunderdale admitted she’s got a financial mess on her hands.  People remember her board of trade speech.  Announcing a crisis and then doing nothing looks dumb.

And speaking of dumb…

Threatening layoffs is one thing.  Not delivering any at all is pure political stupidity.  People remember this shit. And they’ll really remember if the financial mess the Tories are trying to avoid turns out to be real.

Pull the other one

The budget contains no amounts for wage increases.  Any talk of forcing departments to come up with increases out of existing budgets is..well..talk.  That’s all Tom Marshall does.  The Tories left out the amounts because they don’t know how much they’ll be forced to pay yet.

Watch for it.

What government cannot deliver capital works?

To get a good sense of how the current crowd run things you need to look at last year. You need to look at the budget and the figures they project and then you have to look at what actually happens.

In this case, you will find the budget forecast in the 2011 Estimates and the actual spending in the 2012 Estimates.  We’ll be looking specifically at Statement I, the summary of cash, as well as the revenue forecasts in Statement II.

Note that the Estimates are presented on a cash basis. The budget speech is delivered on an different accounting basis so the numbers don’t match up. There is a table in the budget speech that reconciles the two. 

The provincial government 2011 budget forecast a deficit of roughly $769 million. They produced a cash surplus of $411 million.  That’s a variance of 14.75 percent ($1.18 billion on an $8.0 billion budget)

Bear that in mind when you hear anyone from government talk down the prospect of any spending they don’t want to do, like say municipal infrastructure spending.  They say the same thing every year: we don’t have any money.  And then they turn out a giant surplus. 

Here’s Hisself from 2008:

“People need to understand government cannot write a cheque for everything,” said Williams. “We can’t be all things to all people.”

“On the other hand, even in poor times, we have tried to do the best we could for people who were, for lack of a better term, in poorer positions.”

Back to the miraculous turn-around last year:  you probably think it all came from oil.  Well, you are partially right, but a few other things helped turn around the 2011 result from the forecast.

( in 000s)	Forecast	Actual	Difference
Personal Income Tax	862,300	939,453	+ 77,153
Payroll Tax	121,498	168,472	+ 46, 974
Oil Royalties	2,269,400	2,800,772	+ 531,372
Total Own Source Revenue	5,351,309	5,903,224	+ 551,919

The total isn’t higher because they over-estimated some revenues.  The net difference was about $551,919,000.

Still a long way from the total variance, though of more than $1.1 billion.

The net current account spending was almost dead on the forecast.  They budgeted to spend $6.080 billion and they came in at the end of the year having spent $6.086 billion.

The other chunk of cash came from capital spending.  The 2011 budget had net capital account spending of $1.271 billion.  Instead, they spent about half that - $677 million -  a difference of $594 million.

That’s been the pattern for pretty much the whole Tory tenure. They budget for capital works but just can’t deliver.  In fact, the last time they did more than planned was 2004.  They came close in 2005 – $199 million against $204 million budgeted – but in every year since, they couldn’t spend what they budgeted.

In 2010, they had budgeted to spend about $1.064 billion and spent about $741 million.  But the next year they budgeted more – $1.2 billion – and spent less ($677 million) than the year before.

That doesn’t sound anything like exemplary financial management.  It’s more like managerial ineffectiveness.

And for the municipal leaders like Danny Breen of St. John’s, it should be the information they need to wring a few bucks from the tight provincial government fists that have the cash by the bucket load but – quite obviously – can’t deliver their capital works.  After all if Tom and Kathy can’t use the money, it’s just as well to give it to people who can.

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The rule of opposites, Penashue edition #nlpoli

Federal intergovernmental affairs minister Peter Penashue wrote a letter to the Telegram to take issue with a previous correspondent in the province’s largest circulation daily:

In a letter you published recently, Kate MacDonald of Portugal Cove-St. Philip’s suggested that Newfoundland’s concerns have been “neglected” in Ottawa under the current Conservative government.

This could not be further from the truth.

Penashue then rattles off a bunch of thing the federal Tories have done while “both opposition parties either opposed or flip-flopped on these initiatives”.

Big fat hairy deal.

Seriously.

Who gives a frig?

What’s really interesting about this letter is the letter itself.  A federal cabinet minister has to write a letter to the local paper taking exception to the comments of a vote.  The question most people would ask is “why?”.

The answer is right at the end:

In closing, Ms. MacDonald was wrong to call me a “lapdog.” She should know that our province has produced only two dog breeds, the Newfoundland dog and the Labrador.

Like me, both are excellent working dogs but very poor lapdogs.

It’s the rule of opposites.

Not X = X.

If it were otherwise - that is, if Penashue wasn’t some federal politician’s bitch -  Penashue wouldn’t have to write a letter and compare himself to dogs in order to rebut the assumption is a “lapdog”.  People would know it already.  And Penashue would be confident that people knew. So he wouldn’t have to write a letter to the paper.

Besides, Penashue’s letter is wrong.  More than two dog breeds originated in the province. He – or perhaps his mainland ghost-writer – should have checked.  There is the Newfoundland and the Labrador.  But the Labrador derived from another breed:  the water dog. 

And of course, people from Labrador are probably wondering how Penashue forgot about the Labrador variant of husky known, oddly enough as the Labrador Husky.

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Significant budget digits #nlpoli

As you try and contain your excitement on provincial budget day, here are a few numbers you might want to keep in mind:

Dozens:  What CBC reported on Friday as the number of layoffs in the budget.

Fewer than 150:  What CBC reported on Monday as the likely number of layoffs in the budget.

$5.0 billion:  The amount of cash Tom Marshall had in the bank last year after the finance minister paid all the provincial government bills a year ago.  Don’t believe it?  Check Volume 1 of last year’s Public Accounts.  Windfall oil prices have delivered every penny of it.

$5.1 billion:  Total spending in the Tories’ first budget in 2003.

$13 billion:  The public debt, i.e. gross liabilities. Roughly $26,000 for every person living in the province. 

Don’t believe it?  Check the Public Accounts.

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No truer words #nlpoli #cdnpoli

“When you wage an ideological war,” wrote Lana Payne this past weekend, “lies are necessary weapons.”

Payne, for those who don’t know, is president of the province’s labour federation and a major player for the provincial and national New Democratic Party.  She has a column in the weekly Telegram, for which she once worked.  That’s where she wrote those words, at the start of a column about the federal Conservatives.

Payne has a special hate on for Stephen Harper and his Connies. Sometimes it seems that hardly a moment goes by before Payne is tweeting, writing or telling a reporter about the awful f*ckers, those federal Tories.  No words are too strong for Payne to use in condemning Harper and his cronies.  There are no crimes, it seems, that she could not imagine them doing.  There is no evil too black for them to plot, deep in their caves,as they stroke their beards and lick the blood of some freshly killed innocent from their lips.

Payne hates Tories the same way any ideologue hates competition. Doesn’t matter if the ideology is religious or political. The reaction is the same, one for the other.  Payne’s column follows the form:  the Tories are waging an ideological war. She is merely exposing them.  They Lie, the blasphemers.  Only the “I” can tell you the Truth. Her opening sentence is a tracer round fired to light up the enemy.

Only a true ideologue, though, could start a column about the crucial role of lies in ideological war and not – apparently – realize the veracity in all tracer rounds  Tracers, you see, point both ways.

The same weekend that Payne fired at Harper about fighter jets and cooked books, Payne appeared in her usual role as pundit on CBC’s On Point with David Cochrane to talk about next week’s provincial budget.

Asked about the provincial government’s limited restraint coming in the next budget, Payne blessed it as sound since the government’s problem was “short-term”. Things are growing. Things are good.

She dismissed Telegram editor Russell Wangersky’s challenge that the problem wasn’t so transient.  We have paid down on debt, according to Payne. The debt-to-GDP ratio is among the best anywhere.

The provincial government has done no such thing of course.  The public debt remains at record levels. It only appears smaller by some calculations if you include a raft of cash the government has laying about.  The money is ear-marked, of course, for Muskrat Falls.

So paid down the debt?  No.  That would be false.

And as for the debt-to-GDP ratio?  Well,  that would depend on your definition of debt.  The provincial auditor general uses net debt.  As we’ve noted, that figure can be misleading since it includes cash that is actually already ear-marked to be spent.  The result is a misleading, low number for debt compared to a value of the economy, which, by the way, shifts based on a couple of highly volatile prices.  

Really with that indicator you are dealing with the same problem as the first one.  So far Payne is zero for two biggies on the veracity front.

Payne also doesn’t talk about the vulnerability of the economy, built on the precarious base of public sector spending that comes from volatile and unreliable oil and mineral prices.  Think of that as a lack of veracity by omission.

Zero for three.

These omissions must be a necessary weapon in the ideological war, as Payne told us. The ideology in this case is Payne’s concern to represent the major unions in her federation. They represent people who get their paycheques from the public purse. More public sector good.  Less public sector bad, always, according to that ideology.

Now ideology, like religion, can be a good thing. It can help people give shape and meaning to life. It can help them do good.  It can be a comfort.

The problems start when ideology becomes a barrier to other ideas or to thought and reason.  That’s when you get tunnel vision.

And nothing good for anyone ever came from tunnel vision.

-srbp-

Muskrat Voodoo #nlpoli #cdnpoli

A Canadian Press story on Muskrat Falls this week starts with economist Brendan Sullivan’s recent critique of Muskrat Falls:

He said in an interview that the province and its Crown corporation Nalcor Energy are using "voodoo economics" to justify a long-term power purchase agreement.

…

But Sullivan argues the agreement essentially writes off depreciation later — "kicking the can down the road" for future generations — and that it wouldn't get past private shareholders who expect faster return on investment.

CP also gives Nalcor boss Ed martin some space.  Curiously he tosses out some additional voodoo as if to prove Sullivan’s point without realising it.

Try this for starters:

In an email, Nalcor CEO Ed Martin said the province needs more power and that Muskrat Falls is cheaper than if Newfoundland generates its own energy, much of it dependent on an aging oil-fired plant.

Two bits.

First there’s the claim that MF would be cheaper than generating energy on its own.

It’s a weird way to say it:  “cheaper than if Newfoundland generates its own energy.”  After all the end-users foot the entire bill either way so whatever that curious phrase means it doesn’t matter.

Second, the infeed system isn’t cheaper than the alternatives. Nalcor hasn’t studied the alternatives and won’t have studied them before government sanctions the project.  At best they don’t know.  At worst, as some of the critics have suggested, Muskrat falls is actually more expensive and potentially the most financially risky choice of all the ways to me the island’s electricity needs.

Third, look at this:

Muskrat Falls "moves the island from dependence on thermal generation to the use of clean, renewable hydropower," he said.

The island isn’t dependent on thermal generation now.  Thermal is part of the mix.  Any place that has a majority of its year-round generation from thermal sources is “dependent”.  The island uses Holyrood for less than three months a year.  Some years, Holyrood supplies a mere 11% of the island’s electricity needs.

Fourth, and, as Ed Martin knows, if he spent a few hundred millions, he could shutter Holyrood for about 15 years.  Martin has a supply of hydro available from the old Abitibi properties to displace Holyrood.  The problem is that the line between the generators and the consumers on the Avalon can’t handle the extra load.

And for fifth, recall another wonder bit of voodoo on Martin’s part:  the Muskrat Falls scheme actually includes more thermal generation for the island than is currently installed at Holyrood.  It’s right there in the same Manitoba Hydro report Martin keeps citing when he pronounces himself baffled that the public utilities board refused to answer his set-up question with Martin’s pre-determined answer.

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If Danny didn’t have the balls for it… #nlpoli

Job cuts in the public service.  One of the more spectacular communications frig ups by the Premier lately.

Here’s what your humble e-scribbler said on March 6:

So if Danny Williams couldn’t cut anything even after saying it in plain language, what makes anyone think that Kathy Dunderdale and the rest of her crew are even saying “cuts” let alone thinking about doing them?

Then the Friday before the provincial budget is scheduled to appear, CBC reports that “sources say the job cuts will number in the dozens, instead of the hundreds.”

Surprise!

Of course, public sector spending is still unsustainable.  The provincial government has been saying it since 2009.  It’s like debt reduction.  They talk about that too.  They just never do anything about it.

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The essence of bribery #nlpoli #cdnpoli

Authorities in Quebec have their hands full with a raft of corruption investigations, according to the Globe and Mail.

This paragraph toward the end of the Globe story stands out:

The opposition parties alleged that the unit was being hampered by political interference. The Parti Québécois this week revealed in the National Assembly that the government had failed to cooperate with the anti-corruption unit in an investigation involving the awarding of daycare spaces to individuals who were alleged to have close ties with the Quebec Liberal Party.

Daycare spaces.

The essence of bribery involves very mundane things.

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Tightening up EI access #nlpoli #cdnpoli

People drawing unemployment insurance in the Atlantic provinces might be in for a new way of life in the near future, if changes to the Employment Insurance system turn out as described by the National Post on Wednesday:

What we will be doing is making people aware there’s hiring going on and reminding them that they have an obligation to apply for available work and to take it if they’re going to qualify for EI,” Mr. Kenney told the National Post editorial board on Wednesday. …

The reforms would require unemployed Canadians to accept local jobs that are currently being filled by temporary foreign workers.

The story includes an example of Nova Scotia Christmas tree farmers who have to bring in Mexican workers to harvest trees in the fall.  Unemployment in Nova Scotia is running at 8.3% according to Statistics Canada.  Newfoundland and Labrador’s unemployment rate is 13%, the highest in the country.

Changes to Employment Insurance could have a significant impact on seasonal workers in Newfoundland and Labrador.  Historically, they and the companies they work for have been heavily dependent on federal subsidies.  The fishing industry, already under pressure to reform, would face profound changes under the changes.

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Good bye to KP #cdnpoli

Kingston Penitentiary – the oldest federal prison in Canada -  will close this year as part of the federal Conservative’s get tough on crime agenda…err…budget cuts.

Some people are predicting hard economic times in the Limestone City.  Those who’ve been to Kingston know that even with the P4W gone and now KP closing, there are six prisons in and around Kingston to keep the area economy afloat. 

Your humble e-scribbler spent a couple of years in Kingston as a graduate student back when the cop shop was downtown next to the bus depot and Block D was a perpetual sore point with the local council.

Bonus points to anyone who can name all the prisons.

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The Budget-Spending Disconnection #nlpoli

The provincial government announced on Wednesday that they will spend $2.0 million to fund new child care spaces across the province.

Through Budget 2012, the Provincial Government remains committed to providing affordable, accessible and quality child care services throughout Newfoundland and Labrador. Today, the Honourable Charlene Johnson, Minister of Child, Youth and Family Services, announced $2 million for the second year of the Family Child Care Initiative, one of several key investments to be included in Budget 2012 to support child care.

Sounds like good news and it is.

But this announcement is peculiar.

For one thing, we won’t get Budget 2012 until next week. Traditionally. that’s when you get budget announcements like this one. You’d get it after the finance minister delivers the budget speech. Sometimes you get announcements before-hand but those used to be rare.

Now what makes this announcement a wee bit more peculiar is that this news release and news conference was really about spending commitments continued from 2011. It’s really cash you would anticipate they would spend so getting it this year wouldn’t be a big deal.  There’s no sign they plan to spend more than originally announced, so if you look at this big production, you are left wondering why they bothered.

Quotas of happy news, someone is yelling from the cheap seats.  That’s likely part of it.  If you look at the list of news releases for the week, they issued four on Monday and three on Tuesday.  On Wednesday, there were seven, not counting the two notes sent to editors that there would be two spending announcements later in the day. They made four spending announcements on Wednesday, incidentally.

There’s no polling that we know of. There’s no major controversy at the moment so yeah, quotas of happy news would seem to be a likely explanation.

Let’s look at something else, though.  One local reporter tweeted on Wednesday questioning the announcement of funding already announced, in effect, last year. If they funded it last year “of course” there’d be funding in 2012.

He garnered a comment from the Premier’s communications director:

There are no 'of courses' when it comes to budgeting. Multiple variables at play-affordability being a primary one.

Can’t take anything for granted, even government priorities.  Many things can change from year to year.

Now puhleeze.  These guys have had more cash than any previous government in the province’s history.  They have more in cash in the bank today than most governments ever had in any given year.  In fact, they might even have more than they did in 2003.

These guys have billions in cash earning interest while they wait to spend it on Muskrat Falls. A fraction of the interest on that $4.0 billion or so would cover way more than the chump change for this child care program. Affordability was never an issue in this case.  There were no variables at play at all.

As for the rest of it what the Premier’s comms director seems to be saying is simply unbelievable.  Not a good spot for a communications person to be in, mind you, but there it is.

But while she seemed to making a very general statement, those words  - the many variables – sounds rather like something else.  And there seems to be more to this release and others of its type than just quotas of happy news.  One of the bigger things we are seeing in this child care announcement is the growing disconnection between government communications and government operations.

It’s functionally the same as all those other announcements they make for projects that don’t actually happen until months or years later.  These days, the government budget speech is less about government’s spending program for the year than it is about the show for the news.

Not so very long ago, the budget itself was part of an annual process that had a great deal to do with keeping a very keen eye on spending.  By the early fall, departments were already talking to cabinet’s most powerful committee – Treasury Board – to find out the gross spending limits for the next year. 

As the weeks and months of the fall passed, Treasury Board would sharpen their focus line by line until you basically could get the budget done by February or so.  That allowed the government to put the budget in the House by March and get it approved before the new fiscal year started on April 1.

You could set your watch by it, the process was so well timed.  And you could map your year for spending and accomplishment by it.  Treasury Board could tell you within fractions of a percentage point how much cash they would have and how much they would spend.

Some time after 2003, that all went to crap.  At first, it looked like maybe Loyola Sullivan was just copying the Paul Martin formula for success: tell them the worst case predictions, no matter how implausible.  When things turn out better, you look like a genius.

The serial government always seemed to have trouble doing more than one thing at a time.  By early 2009, though, the “stimulus” announcements bundled the examples into a convenient pile for anyone interested in looking.  Later that year, Paul Oram started a huge political controversy by making budget announcements in run up to polling month.

No one announces budget cuts in August.

Period.

What the Oram-initiated debacle made plain was the extent to which things inside the upper reaches of government had grown increasingly nebulous as time went by.  Some time after 2003, the usual seasonal markers people inside government could use to keep things on track - start and end of the fiscal year, for example  – just disappeared.  Rather than forecasting actual government activity, the budget was just a general statement of intentions that might or might not turn out to be true.

There were no longer any “of courses” for government.

Just think about that.  The Premier’s communications director may have meant something else in her tweet but this alternative interpretation would explain an awful lot about a government that seems to have a chronic problem with getting stuff done on time and on budget.

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