The inexplicable persistence of nonsense #nlpoli

“There was a very good job done … of boxing this province out [of the Equalization program] a few years ago,”

That was Premier Dwight Ball talking to reporters on Tuesday after the Throne Speech that set the agenda for his new administration. He was talking about the prospect that he might get some cash from Ottawa to cover the province’s massive deficit.

What Ball said isn’t true.

It’s hard to know why the false version of events lives on, but it does. All sorts of intelligent people continue to believe – and repeat – the story that Equalization reforms made in 2007 were designed to screw Newfoundland and Labrador.

But it is most emphatically not true.

The New Approach #nlpoli

In 2003, Paul Davis' predecessor as leader of the provincial Conservative party went to Ottawa to beg for a hand-out.

Called it The New Approach

 He got one.

Then he begged for more through Equalization.

Got what he asked for.

Pretended he didn't, backed by some economist from the university named Locke.

Threw a childish tantrum and kept at it for years.

 Drove the province up on the rocks through unsound financial management that carried on through all his successors.

And now Danny Williams' successor is carrying on the fine tradition. The first Conservative private members' resolution in their new role as Official Opposition begs Ottawa to send money to fix the mess he and his pals created.

BE IT RESOLVED that this hon. House urges the Government of Canada to recognize the impact of the steep fall in oil revenues on our province and that it consider financial support to our province in order to prevent deep cuts in services to the people of Newfoundland and Labrador; 

and BE IT FURTHER RESOLVED that this hon. House urges the Government of Canada to modernize the federal-provincial arrangements, including the Equalization Program and the Fiscal Stabilization Program to more fairly and promptly reflect our province's needs, and to more fairly account for natural resource revenue.

-srbp- 

Open Data #nlpoli

James McLeod has released the data he compiled to produce his Saturday story on the number of people in the provincial public service who make a salary of more than $100, 000 a year.

What James has done is follow the Open Data policy the former Conservative government announced but never implemented.  The new crowd running the place are understandably a bit preoccupied at the moment but Open Data is an idea they should latch onto.  Not only does it save money, but it also puts a pile of government data in the public where folks can make good use of it.  If you want to support innovation, making information readily available is one of the best things any government can do.

McLeod submitted a series of access to information requests to the core government departments as well as the larger agencies and Crown corporations. Some responses, like the one for Memorial University, is pending. McLeod put all of the bits and pieces into a spreadsheet and that’s what he has offered up to the public to do with as they wish.

Chevron starts production at GORGON (Australia) #nlpoli

SAN RAMON, Calif.--(Chevron via BUSINESS WIRE)--Mar. 7, 2016-- Chevron Corporation (NYSE: CVX) today announced it has started producing liquefied natural gas (LNG) and condensate at the Gorgon Project on Barrow Island off the northwest coast of Western Australia. The first LNG cargo is expected to be shipped next week.

This Smart News Release features multimedia. View the full release here:http://www.businesswire.com/news/home/20160307006452/en/

Chevron has started producing liquefied natural gas (LNG) at the Gorgon Project off the northwest coast of Western Australia. The company is poised to be one of the world's largest LNG suppliers by 2020. (Photo: Busines Wire)

"We expect legacy assets such as Gorgon will drive long-term growth and create shareholder value for decades to come," said Chairman and CEO John Watson. "The long-term fundamentals for LNG are attractive, particularly in the Asia-Pacific region, and this is a significant milestone for all involved."

Chevron is positioned to become a major LNG supplier by 2020. In particular, Chevron's Australian projects are well located to meet growing demand for energy in the Asia-Pacific region and more than 80 percent of Chevron's Australian subsidiaries' equity LNG from the Gorgon and Wheatstone projects is covered by sales and purchase agreements and heads of agreements with customers in the region.

"We congratulate the Gorgon workforce on this achievement," Watson continued. "This is the result of the collaboration of hundreds of suppliers and contractors and many tens of thousands of people across the world during the project design and construction phases."

The Gorgon Project is supplied from the Gorgon and Jansz-Io gas fields, located within the Greater Gorgon area, between 80 miles (130 km) and 136 miles (220 km) off the northwest coast of Western Australia. It includes a 15.6 MTPA LNG plant on Barrow Island, a carbon dioxide injection project and a domestic gas plant with the capacity to supply 300 terajoules of gas per day to Western Australia.

The Chevron-operated Gorgon Project is a joint venture between the Australian subsidiaries of Chevron (47.3 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent).

-srbp-

The Trump Phenomenon #nlpoli

The gaggle of American political scientists at the Monkey Cage have been doing a series of posts about Donald Trump's campaign for the republican nomination.

They started with a post that reminded us that most voters aren't ideologues.  That is, folks don't conform to a text-book set of definitions of left, centre, or right and within the major parties in the United States,  there is lots of variation within the very broad Republican and Democratic tents.

In that vein,  the most recent post on the subject reports on polling that suggests Trump's views are closer to what Republican voters believe as opposed to what the party Establishment espouses.

Most people seemed to have figured out early on that  it's the economy.  And, of course, lots of disaffected or economically displaced white folks are loving up Trump's  airing of  White identity and grievances.

In sum, Trump’s “us against them” campaign resonates in an American political environment that has long been centered on social groups and has grown even more so in the Obama era. Both white identity and hostility toward minority groups are propelling Trump — perhaps even to the nomination.

-srbp-

Jim Thistle, 1954 - 2016 #nlpoli

Most of you have likely never heard of Jim Thistle.

Jim passed away on Thursday after a brief illness.  He was only 61 and until he was diagnosed with a very serious and ultimately fatal illness, Jim had more mental and physical energy than most of us had when we were kids.

Jim was blessed with one of the sharpest minds this country has ever produced.  He was kind, gentle, funny, and generous with his time and his insights. Despite being one of the busiest people around, let alone one of the busiest lawyers around, Jim had time for lots of other pursuits including working on a master's degree in history.

The Walking Dead #nlpoli

In China in these days of hard economic times, none are hit so hard as the people who work in zombie industries.

These are industries that keep producing despite there being no market for the product.  Like coal.  Or cement.  Or iron.

In most cases, the government steps in with fresh credit or other supports to keep the plants going and keep workers employed rather than close them down.

Serendipity do dah #nlpoli

Some people on da Twitter were talking about verbal tics like saying “ya know.”

One of ‘em asks if the other had counted Danny Williams’ penchant for them.

Yes, butts in yer humble e-scribbler who was not part of the original discussion:  Cameron inquiry.  270 in a four hour stint, plus eight “quite frankly”s. If anyone on the Internet had that kind of obscure information, it would be The Scribbler or labradore.

Ya knows, right?

So then, you know your humble e-scribbler had to check the record by searching on SRBP for all appearances of the phrase “verbal tic”  and the plural.

The persistence of uncommunication in government #nlpoli

For some interesting insights into the way government works, take a look at an access to information request someone submitted for documents related to the bond ratings for the province issued earlier this year.

First, notice that the department responsible for openness and transparency continues to follow the decidedly closed and opaque practice of printing electronic documents,  scanning them, and then posting a picture of the document.  This makes it harder to find information in the documents and use it and of course that is precisely the intent of the practice.

Second, notice the enormous amount of effort spent by finance department officials to obtain comparative credit ratings for other provinces and for Newfoundland and Labrador over time.  It’s a relatively meaningless piece of information but it sucked up an astonishingly large amount of email traffic.

A tax to build a tax #nlpoli

A tax to pay a tax.

Interesting idea, no?

Well, that’s what Jim Feehan suggested last week.  He told a luncheon meeting of the St. John’s Rotary Club that the government should consider financing the rest of Muskrat Falls through a special tax. Start paying today,  Feehan said, and avoid borrowing money and paying that money plus the interest in the future.

Don’t dismiss the notion quite so quickly.  There is some sense in the idea.  But before you give a big thumbs up to Feehan’s idea, though, consider all the details.

Lions, jellyfish, and a quotable Italian fascist #nlpoli

American media circles were all abuzz this weekend about a little episode on Twitter featuring Donald Trump and a quote he liked.

Gawker created a Twitter account last year that spouted quotes from Italian fascist dictator Benito Mussolini but attributing the quotes to Donald Trump.  Nothing happened to the account until Donald Trump himself retweeted this quote:

Note the name on the Gawker account is ilduce2016. Il Duce, for those who don’t know is Italian for The Leader, and was Mussolini’s chosen title. German nazis took the cue from Mussolini, incidentally, when they referred to Adolf Hitler as der fuhrer.

Things are THAT bad #nlpoli

David Thompson is an independent economist in the same way that Jerry Earle and Wayne Lucas are independent human resource consultants.

But the problem isn’t that CBC couldn’t make a factual statement in the first three words of a news story.

Nor is it a problem that Thompson recently visited the province at the expense of a public sector union and met with the Premier to offer some helpful “independent” advice.

No.

The problem is that Thompson simply didn’t know anything about the province and the state of the government’s finances.

Sheilagh fits right in #nlpoli

What exactly is Sheilagh O’Leary?

Did she get elected to Council in the Ward 4 by-election or is she a re-elected councillor?

Well, never mind.  She will fit right in with the gang at Tammany on Gower, d.b.a. St. John’s city hall. They are, generally speaking, very high on themselves, and very low when it comes to competence.

CBC has one of those great money-quotes in their coverage of the by-election results.  “People have lots of issues,”  O’Leary said, “and I'm just — I'm honoured, I'm humbled and I'm so excited about getting back because you know what?  I belong in that chamber.”

“When you know that you can make a difference and that you can make that change happen, you have to follow your heart.”

Exit Reality on the Rock #nlpoli

Last fall, Conservatives, New Democrats, and assorted political watchers attacked the Liberals for the lack of detail in their election platform.

Now, most of those same people are accusing the Liberals of  hoodwinking folks into voting for them with all their great promises they never intended to keep.

Dipper slash Telegram editor  Dipper Brian Jones is a good example.

If more evidence is needed to prove Liberals are slippery creatures, ponder the election promises that were made mere months ago and the utter lack of principle in crassly breaking those promises without remorse or embarrassment.

The Tories were no kinder, accusing the Liberals of knowing that the financial arse was out of her and yet making promises anyway.

Uncle Ottawa's cash #nlpoli

The federal government would run a deficit this year three times larger next year than the one the Liberals expected during the election campaign.  The deficit this year is running slightly north of $18 billion and while the Liberals expected to run deficits of around $10 billion each year, the current projection puts the deficit at something around $30 billion.

The economy, it seems, is in significantly worse shape than it was last November.

That's the same thing that Premier Dwight Ball is saying but we should note one very importance difference.  Newfoundland and Labrador was already in a bad financial spot last spring.  By the time Ball took office in the fall things were twice as bad as they had been when he'd promised to get rid of the teensy sales tax hike.  So while the federal situation may now find itself well up the proverbial river of excrement,  they are still looking at our backside as we blaze a trail to the headwaters.

Cabinet documents and no brainers #nlpoli

Years ago,  a couple of enterprising reporters at CBC submitted what was then a request under the Freedom of Information Act for information about entertainment expense allowances for senior bureaucrats and cabinet ministers.

They got the information and aired a story that claimed that, in a time of great restraint,  the government had increased the budget for entertainment. It was a wonderful story that made the government look bad and that raised all sorts of self-righteous indignation about fat-cat politicians and bureaucrats living it up while the poor folks suffered.

Wonderful story.

Just not true.

Muskrat Falls electricity prices... again #nlpoli

The infamous JM is at it again.

"Top 10 Muskrat Myths" (via Uncle Gnarley) rebuts 10 of the arguments in favour of Muskrat Falls. All of this has been argued before in several places, but this is a one-stop summary of the key points.

One to notice is the idea that Muskrat will make money from export:

“It will generate Export Revenue”:  Initial export sales of 2,000 GWhr (40% of MF output) will generate about $80 million annual revenue, based upon current market pricing.  To put that figure into perspective, interest on the ~$8 billion (the final figure may be much higher) which will have to be borrowed for this project will cost about $320 million a year.  Muskrat Falls will not be a significant revenue generator for the province until it is paid off in 2067.

In the second part of his myth-busting extravaganza, JM tackles the claim that Muskrat Falls will stabilise electricity rates.  This is a long, dense post with lots of charts.  it will turn most people off.

The big take-away is that, as SRBP and others have told you,  Muskrat Falls is going to double electricity rates, guaranteed.  Double the rates, at least.

But the bigger point is that doubling rates will push electricity consumption down, despite the fact that Nalcor sold Muskrat Falls on the assumption that consumption would only go up.

The problem is that we pay for Muskrat Falls whether the energy is needed or not.  "The impact on ratepayers will be profound," JM notes.  If we have to distribute the cost over fewer kilowatt hours, you can expect the price for each kilowatt hour will go up. That will induce even more conservation with a similar pressure on prices.

JM notes that Nalcor hasn't produced a simple set of rate projections.  The reasons is likely that Nalcor doesn't know how it will translate the final cost of Nalcor to rate payers.  For example,  a future government may find itself under pressure to keep electricity prices down.  One way to do that would be to limit how much of the total cost of Muskrat Falls is recovered through rates.

Here's how that might look. If MF costs $10 billion all-up,  half of that is covered by the federal loan guarantee while the other half is provided by the government through additional borrowing. The provincial government might decide to only recover the half of the cost covered by the federal loan guarantee.  The government itself would pay back the other half through other taxes.

Since taxpayers and ratepayers are the same people,  the final cost will be the same.  The difference is that government can hide half the cost of Muskrat Falls with a bit of creative accounting.  There are reasons why the House of Assembly destroyed the province's transparent electricity rate system in 2012 and replaced with one ultimately dictated by cabinet.  Hiding the real cost of Muskrat Falls from consumers is one of them.

-srbp-

Evidence-based decision-making #nlpoli

James McLeod had a tidy piece in Wednesday’s Telegram on the government’s effort to find a way of out of the financial mess. it's well worth your time.

The document McLeod got through an access to information request shows the extent to which the cabinet wants to cover all the bases in finding a way out of the province’s current mess.  The document, which we already knew about,  tells government officials to look not only at what they are currently doing but also how they are doing it.

What comes back to cabinet for discussion should be as wide a range of options as possible.  It’s precisely how the government should be tackling the problem it faces, despite what the Premier’s out-to-lunch messaging has suggested.

If we dither, we die. #nlpoli

by Chuck Furey
________________


"Indecision becomes decision with time" someone once said.

The current fiscal nightmare in Newfoundland and Labrador is real.

One only need compare the amount of borrowing in 1933 (34%} to the borrowing today (30%) as a share of spending. The similarity is stark and raw and scary.

Sadness and desperation come to mind as the ghosts of history now stare down the new Ball government. They certainly didn't make this mess but they are now summoned to clean it up.

Fraser Institute, National Newswatch, and other fools #nlpoli

If the issue wasn't so serious, it would be funny.

Newfoundland and Labrador is up the financial creek, according to Charles Lammam, an analyst with the Fraser Institute,  in a new opinion piece with a couple of his colleagues..  The cause is excessive government spending.  "Had the government restricted program spending increases since 2004/05 to the combined rate of inflation and population growth, Newfoundland & Labrador would now have a small surplus, not a large deficit."

The fundamental problem with Newfoundland and Labrador’s approach to public finances over the last decade is that the government increased spending during the good times as though they would never end. When resource prices ultimately fell, the province found itself at an unsustainable spending level.

You certainly won't get any argument from this corner about those observations.

The problem is that over the last decade, Lammam and the rest of the folks at the Fraser Institute have consistently told us that Danny Williams and Kathy Dunderdale  were the finest financial managers in the country among the provincial premiers.  That's significant because they are the premiers during the period when Lammam now says the government was spending way too much.  The two ideas don't fit together.

It's not as though we suddenly learned things we didn't know at any point over the past decade.  Some of us have been criticising the excessive increase in spending by the provincial Conservatives since 2006.  By the time we got to 2009,  Williams had admitted government spending was unsustainable. Dunderdale admitted the same thing every year she was in office.  It's not like the folks at the Fraser Institute could have missed the repeated admissions of fiscal mismanagement.

Yet they did.

Which Fraser Insitute conclusion should be accept?

Neither.

The Fraser Institute has produced such laughable "analysis" of Newfoundland and Labrador over such a long period of time that we can only conclude their most recent observations are a fluke.   What we should do is be extremely wary of pronouncements from folks like Fraser who can look at the same data and come to diametrically opposed conclusions.  There's a fairly obvious problem with the way they do their analysis.

And anyone pretends to be a psychic forecaster who says "never saw that coming" is someone we should just laugh at.

-srbp-

This is a revised version.  The original incorrectly identified the National Post as the source of the Lammam opinion piece