Osborne whistling past financial graveyard #nlpoli

Moody’s delivered a clear and serious message to the Government of Newfoundland and Labrador on Wednesday night by lowering the government’s credit rating.  The credit rating action came after a series of consistent warnings by Moody’s since it last lowered the government’s rating of credit-worthiness in 2016.

Wednesday’s downgrade suggests that Moody’s has doubts the provincial government can hit its target of balancing the provincial budget by 2022.  While Moody’s changed its trending to stable from negative,  bear in mind that Moody’s rating period ends before the government’s budget period expires.  It doesn’t mean – as both finance minister Tom Osborne and NDP leader Alison Coffin suggested on Thursday - that everything is fine.

In a news release issued on 24 July 2019, Moody’s cited three major reasons for the downgrade:

1. “Newfoundland and Labrador's elevated debt and interest burdens”, 
2.   “continued expectation of material consolidated deficits over the next 2 years”, as well as
3.  “heightened credit risk stemming from the large debt level and weak financial metrics of Nalcor, the province's wholly owned utility, which raises the likelihood the province will need to provide financial support to, or assume debt service from, Nalcor.”

Finance minister Tom Osborne dismissed the downgrade, telling reporters that the downgrade was “not a reason for alarm” and “nothing to be alarmed about”. Osborne said lenders were not surprised by the action, which would be true since both the warnings from Moody’s and the province’s failure to heed them have been well known for two years.

Osborne *is* whistling past the financial graveyard here as he responds to the short-term political imperatives of his own party as opposed to the longer-term interests of the province.  As SRBP noted in January, the provincial government abandoned its deficit plan from 2016 within 18 months of starting it. The spring budget understated the government’s financial state.   

The motivation was purely political just as the reaction to Moody’s is political.  “If re-elected,” SRBP noted before the May election, “Dwight Ball is unlikely to make any changes to the government’s current trajectory unless forced to do so. The members of the Liberal caucus, primarily interested in securing their pensions and possibly becoming ministers in a post-Ball Liberal administration, would have no interest in doing anything that would jeopardise their political future.”

Luncheon Speech: From Muskrat Falls to the Future #nlpoli

Please note time change

Your humble e-scribbler will be speaking to the St. John's Rotary Club about getting beyond Muskrat Falls.

That's Thursday, August 1, 2019 at the Sheraton Hotel Newfoundland.

Luncheon starts at 12:30 PM 1:00 PM with the talk at around 1:00 PM  1:30 PM.

-srbp-

The background to the Rotary speech:   

1.  Restoring Power:  Mitigating the entire impact of Muskrat Falls. (April 2019)

2.  Restoring Power:  The tax option (July 2019)

Restoring Power: The Section 92A Option #nlpoli

One of the potentially most valuable revenue sources would be a new tax on electricity production that could yield upwards of $450 million a year. The bulk of the tax would be paid by Emera and Hydro-Quebec, both of which currently profit from free or near-free electricity through two patently unfair agreements. 

The basic problem of the Lower Churchill was always how to pay for it. 

Everyone who tried to build it before wanted people outside the province to use the electricity and pay for the whole project, with the profit flowing to the people of Newfoundland and Labrador.  When they couldn't get that to work, they simply didn't pursue the project. 

The politicians and bureaucrats behind what became Muskrat Falls were smarter.  They decided in a meeting at The Rooms in April 2010 they would force the people of Newfoundland and Labrador to pay for the entire project through their electricity rates, even though they would use very little of it. The benefits would flow outside Newfoundland and Labrador. 

The Dwight Ball-Ches Crosbie rate mitigation scheme is still about having Newfoundlanders and Labradorians alone pay for Muskrat Falls with others reaping the benefit.  On top of that, the Ball-Crosbie approach includes money that doesn’t exist.  Their scheme also doesn’t address other problems with Muskrat Falls that are as troublesome as the problem of the government’s proposed scheme to have only one small group of people bear the whole cost.  So, it won't work.

The Slaughterhouse Five #nlpoli

Coupled with comparable high rates of staff changes in the senior ranks of the public service,  unprecedented staff turn-over in a critical part of Premier Dwight Ball's office raises questions that need to be addressed.

Premier Dwight Ball has entered the history books.

He has chewed up more communications directors than any Premier since 1972.

Word from the Confederation Building is that Erin Sulley, right, who left community television for the communications business only last October, is now the Premier’s Director of Communications.  It's the most senior political communications job in the provincial government

Sulley was host of Out of the Fog just before joining Ball's staff last fall in the media relations role. In what was a pretty clear conflict of interest, she also started writing a column for the Telegram at the same time.

The Kick in the Guts #nlpoli

Those following the Muskrat Falls inquiry last week will likely have noticed that one of the big issues not discussed during Dwight Ball's testimony was the circumstances surrounding Ed Martin's resignation.

It bears on the inquiry since the entire episode goes to the heart of the government's relationship to Nalcor, which itself shaped Muskrat Falls, and to the resolution of the Astaldi mess.

Yet, for some reason,  Commissioner Richard LeBlanc does not want to hear about Martin's departure.

The incident that supposedly triggered Martin's departure (and that of the board) were a few sentences in the budget speech from April 2016.  Ken Marshall described it as a "kick in the guts" for the folks at Nalcor.

Your humble e-scribbler posted this as part of a bigger piece back in 2016 but just for the fun of it,  here are Bennett's words, in total:

As the province’s energy corporation, Nalcor belongs to every citizen of Newfoundland and Labrador. 

Since its creation in 2007, taxpayers have invested over $2.25 billion yet have received no dividends. For all corporations and their shareholders, this would be unacceptable. 

The previous administration allowed Nalcor’s organizational structure, compensation and benefits packages to grow beyond what taxpayers would consider reasonable, particularly given our current fiscal and economic circumstances. 

Through Budget 2016, initial steps have been taken to identify operational savings at Nalcor approximating $6.7 million. 

However, due to prior year commitments by the former administration, the required equity the province will need to invest in Nalcor this year is $1.3 billion, bringing the total investment by the people of the province to $3.6 billion. 

Further actions will be taken to maximize the return on investments made by our province. 

Like government departments and public entities, Nalcor will be expected to take a zero based budget approach to their administration and operations effective with Budget 2017. 

The Nalcor Board will be directed to review their operational structure to achieve efficiencies and develop a plan to bring their compensation, benefits, and gender equity policies more in line with similar positions in other public sector bodies. 

Work at the Muskrat Falls Powerhouse is significantly behind schedule. 

Faced with these schedule delays and expected cost increases on the project - a concern to all of us - government is doing and will continue to do everything possible to help get this project back on track.

-srbp-

Today's post was originally supposed to be a much longer look at Dwight Ball and Muskrat Falls.  This turned out to be a much bigger subject than anticipated.  Stay tuned for it to appear later this summer.

Women in politics: women political staffers in Australia and Canada #nlpoli

Feodor Nagovsky and Matthew Kerby, “Political Staff and the Gendered Division of Political Labour in Canada,”  Parliamentary Affairs, 24 August 2018.

Summary:  While there is considerable research on elected legislators in a variety of contexts, the academic knowledge about their advisors is very limited. This is surprising, given a considerable portion of work attributed to legislators is performed by political staff. Further, political advising increasingly serves as a training ground for future politicians in many professionalised legislatures. 

We use a mixed-methods approach to understand how the influence of men and women differs in political advising positions in the case of Canada’s House of Commons, and how this may affect women’s political ambition. 

We demonstrate while close to an equal number of men and women work for MPs in a political capacity on Parliament Hill, men continue to dominate legislative roles while women continue to dominate administrative roles. Further, legislative work increases political ambition, which means more men benefit from the socialising effects of legislative work than women.

Marija Taflaga and Matthew Kerby, “Who Does What Work in a Ministerial Office: Politically Appointed Staff and the Descriptive Representation of Women in Australian Political Offices, 1979–2010”, Political Studies, 19 June 2019.

Summary: Women are underrepresented within political institutions, which can (negatively) impact policy outcomes. We examine women’s descriptive representation as politically appointed staff within ministerial offices. Politically appointed staff are now institutionalised into the policy process, so who they are is important. 

To date, collecting systematic data on political staff has proved impossible. However, for the first time we demonstrate how to build a systematic data set of this previously unobservable population. We use Australian Ministerial Directories (telephone records) from 1979 to 2010 (a method that can notionally be replicated in advanced democratic jurisdictions), to examine political advising careers in a similar manner as elected political elites. 

We find that work in political offices is divided on gender lines: men undertake more policy work, begin and end their careers in higher status roles and experience greater career progression than women. We find evidence that this negatively impacts women’s representation and their later career paths into parliament.

-srbp- 

Quebec appeals court decision on Churchill Falls contract no win for Newfoundland and Labrador #nlpoli

Media reports, political comments, and pundit opinions are wrong about the decision last week by the Quebec Court of Appeal in a case about the renewal clause of the 1969 Power Contract between Churchill Falls (Labrador) Corporation and Hydro-Quebec.

The Court decision leaves Hydro-Quebec with virtually all of the electricity produced from Churchill Falls and, most importantly, operational control of water flows on the river.  This will have an adverse impact on Muskrat Falls. As a result, CF(L)Co is likely to appeal the decision.

__________________________________________________

The Quebec Court of Appeal ruled last week that Hydro Quebec retained operational control of electricity production at Churchill Falls. It made a minor change to an earlier decision by the Quebec Superior Court in a decision from 2016.

That’s why Hydro-Quebec issued a statement that it was satisfied with the outcome of the decision.

In other words, English-language media reports and political commentary got it wrong when they claimed “Quebec's top court rules for N.L. in Churchill Falls dispute with Hydro-Québec” (Canadian Press) or “A Victory For NL In Long-Standing Legal Battle With Hydro-Quebec On Upper Churchill” (VOCM).

The English-language reports focused on the idea that Hydro-Quebec could only buy electricity from Churchill Falls up to a maximum each month under the terms of an automatic renewal to the 1969 power contract between Hydro-Quebec and Churchill Falls (Labrador) Corporation.  VOCM went a step further in the mistake department my making it sound like both Hydro-Quebec and Newfoundland and Labrador Hydro could sell electricity from Churchills Falls. 

The clue that something was amiss in the English-language coverage is the statement from Nalcor that said the Quebec Court of Appeal “had ruled substantially in favour” of CF(L)Co on the question of Continuous Energy.

Here’s why.

Critical Thought in a Technological Age #nlpoli

Some thoughts from Simon Lono on civil discourse.

-srbp-

Women in elected politics: is it a choice? #nlpoli

The number of women in elected office in Newfoundland and Labrador remains below the numbers one would expect based on changes in society over the past 40 years.  

Why is that? 

Maybe, it's a choice.

Luana Maroja is a biology professor at Williams College, a small liberal arts college in Massachusetts.

Maroja wrote recently in The Atlantic that for most of the decade that she’s taught evolutionary biology and genetics, “the only complaints I got from students were about grades. But that all changed after Donald Trump’s election as president. At that moment, political tensions were running high on our campus. And well-established scientific ideas that I’d been teaching for years suddenly met with stiff ideological resistance.”

The resistance she is getting is not from MAGA-hat wearing Trumpians. On the contrary, the criticism Maroja takes has come from those who would fancy themselves progressives. They reject evidence of the biological basis of some differences among humans but they do so based on ideological assumptions. 

When confronted with evidence that contradicts their assumptions, some “students push back against these phenomena not by using scientific arguments, but by employing an a priori moral commitment to equality, anti-racism, and anti-sexism. They resort to denialism to protect themselves from having to confront a worldview they reject—that certain differences between groups may be based partly on biology.” 

An example of the type of evidence to which Maroja pointed was a study published in Psychological Science.  It compared the percentage of women STEM graduates in a country with its Global Gender Gap Index.  Countries with the highest gender equality scores also had the lowest percentage of female graduates in science, technology, engineering, and mathematics.

The New SRBP

After a couple of years of irregular posting, SRBP has been back since the start of the year with at least one new post every Monday.

Some of you have likely noticed this already. 

What you may also have noticed is the appearance of  a longer form paper as well.  They are a return to the original idea for this space:  a series of detailed papers on major issues affecting the province.

From the production end of things, that's been the most significant development.  The longer papers allow for a bit more background and a bit more discussion of the conclusion.  That's important for people who want to better understand the issues involved and,  as in the paper on rate mitigation,  a better explanation of the proposed solution.

So far there has been one paper,  the one on rate mitigation.  There is another in the works on barriers to medical care, a subject the Atlantic region's governments have made a top priority.  This is one of those well-known problems that no one has come to grips with so far.  The SRBP paper will describe the scope of the problem and highlight some solutions to it.  The solutions are practical and workable.  They will only need a decision from those in authority since the problems - quite ridiculous once you see them laid out - are theirs to fix.

There's also one on reforming the provincial political system.  This is a bit different as the ways to achieve goals many people desire are not quite so easy to attain as some imagine.  All the same,  the paper should give anyone interested in the subject both a better understanding of how we got to the place we current find ourselves in and of the potential ways to get to the end goal.

There may be some other changes as the year progresses. 

Stay tuned to see what happens.

-srbp-

Jack Harris: Good Bye and Good Night #nlpoli

From 2006 to early 2010,  Simon Lono wrote Offal News, a commentary on local politics, debating, and whatever caught Simon's eye.  

When Jack Harris quit as leader of the provincial New Democratic Party,  Simon turned his sharp eye to Harris' legacy. Simon respected differences of opinion but he had no time for anyone who fell below the high standards that Simon set for himself.  

Harris jumped to federal politics not long after and represented St. John's East until he was defeated by Nick Whelan in 2015.  Since Harris announced last week that he wanted to be the NDP candidate again, here's a second look at Simon's obituary for Harris' provincial political career.  

Jack Harris:  Good Bye and Good Night

by Simon Lono (April, 2006)

Like many of us of a certain age, I had the period in my life where the ideas of democratic socialism had a certain appeal. And why wouldn't they? They expressed some of the highest ideals of human generosity, belief of control over our destiny and the sense that all people deserve basic fairness. And further, it seemed that all those things were within the grasp of government to deliver.

But then as Aristide Briand said, "The man who is not a socialist at twenty has no heart, but if he is still a socialist at forty he has no head."

Jack Harris, I'm sorry to say, never found his head. Nor did he ever find his calling as the leader of a provincial political party. When you look as his record as a political leader and contributor to provincial public affairs, the best one can say is that he always demonstrated potential.

The problem was that he generally managed to perform way below his perceived potential. On occasion,  he surprised us all with occasional flashes of true political competence worthy of his inflated reputation. More often he just disappointed us all.

Let me give you just two examples:

More beige than beige #nlpoli

The Premier had a carefully rehearsed message when reporters asked him on Thursday why he had appointed everyone in cabinet back to their old portfolios despite an election that had reduced his party to a minority government.

A cabinet of "experience, consistency, and stability,"  Dwight Ball called them.

He used the word "experienced" a couple of times and emphasised the word "stable" as he finished the answer to one question.  You can find a bit of Ball's scrum with reporters at about the 42 minute mark of CBC's Here and Now broadcast. NTV's story got the "stability" message loud and clear.

The election result was a shock to many people.  People can debate what it meant that voters didn't endorse any one party to have a majority in the legislature.

Ball has a political problem even if he is in heavy denial about it but all the talk about experience and stability wasn't about dealing with a political problem.  Voters aren't panicked by the minority government.

Ball was dealing with a financial problem.  His plans depend heavily on the ability to borrow a couple of billions dollars to make his budget work.  Ball will have a much harder time borrowing money if the bond-rating agencies take a dim view of his government's ability to manage public finances in the wake of the election.

Deficit *is* higher than previously announced #nlpoli

The House of Assembly will have to deliver a budget that keeps access to new public debt for the foreseeable future. The politicians must satisfy the bond-rating agencies, not the voters. 

Parties don't matter.  Ideologies don't matter.  Voters don't matter.  

That is the essence of politics in Newfoundland and Labrador in the early 21st century.

Anyone who knows Dwight Ball knows that he does not make simple mistakes with numbers.

Yet, the official explanation is that he made a simple mistake with numbers on Sunday's Issues and Answers when he said the deficit for the current year is between $800 and $900 million dollars. SRBP pointed out his comments on Tuesday.

As NTV's Michael Connors reported first via Twitter and later on the NTV Evening News,  Premier's Office and finance department officials claim that the Premier's comments "were actually looking ahead to 2020-21, which has a projected deficit of $796 million."  The deficit projection for 2019 remains at $577 million, according to officials.

Deficit $250 - $300 million higher than announced before election according to Premier #nlpoli

In the episode that aired on 26 May 2019, Premier Dwight Ball told NTV's Issues and Answers that the deficit for the current budget is between $800 - $900 million.

"Are you prepared to make any specific changes to the budget in order to get their support?" asked Mike Connors.

"I think this budget is the one we ran on... everyone understands this budget is between an 800 to 900 million dollar deficit..."

Minor problem.

When finance minister Tom Osborne delivered the budget on April 16,  he confirmed that the deficit in the budget the Liberals ran on was $575 million, once you took out the payments from the Hibernia Asset-Backed Dividend Agreement.  That's the figure finance officials gave during the budget lock-up to media and other groups.

Simon Lono , 1963-2019

Simon Lono  - husband, father, grandfather, advocate, orator, writer, mentor, friend  - died Friday, May 24, 2019.  

He was 56.  

When our friends are alive, we do not spend time thinking about the past.  We do not think about how we met them, about all the things we did with them, or why it is that we like them.

When they are alive, we do not need to remember because they are there, every day.

We only feel a need to remember, once they are not there any more.

Simon Lono’s family and friends spent Saturday as they are likely to spend a lot of days from now on.  They thought about him, remembered when they first met him, all the things they had done together, why they loved him.

Simon is dead.

And so, we remember.

We recall.

Frantically.

As if the memories will make the hard truth go away.

As if the memories will replace all of the things that could have been or would have been.

But that will never be.

Because there is a hard truth.

Simon is dead.

Killed by a rare disease.

In itself, entirely fitting.

The Lowest-Common Denominator Minority Legislature #nlpoli

An inherently unstable minority legislature where the parties have a history of finding political agreement through public spending is not exactly a recipe for tough decisions.

There is something seductively sweet about the idea that the minority government that resulted from last week’s general election has now solved all our problems Just get back to work, some people are saying.  And play nice, together.  No more of this bickering and name-calling.

Something seductively sweet but the sweetness reveals itself as bitter naïveté when one considers that we now have a fundamentally unstable legislature at the very time when both the government’s finances and the Muskrat Falls mess are coming together.

Make no mistake about it.  Minority legislatures are inherently unstable.  They tend not to last more than a couple of years. The one elected last week will get through six months or so without much chance of upheaval.  But once the opposition parties have sorted out their finances and, in all likelihood, the Tories have found a new leader, they will be ready to bring down the House.

Anyone who tells you that the public doesn’t want an election, either now or in the near future, simply has not been paying attention.  For the past three years, poll after poll gave the current administration very low marks.  Respondents consistently rated the Premier poorly.  The last poll before the lection and two during it all showed the same thing.

The 1908 Election all over again #nlpoli

You will hear a lot of spin about Thursday’s election result.  

Doesn’t matter where it is coming from. 

 It is all spin and all spin is bullshit.

Thursday night’s election result has been coming for three years.  The polls have pointed to the public mood and their views of parties and leaders.  Only the blind ignored it.  Robocalls and dirty tricks did not produce the result.  No Blue Waves were involved.

The Forecast

On Thursday morning, SRBP posted a projection based on polling and information coming from all three parties directly and indirectly.

Here’s how it played out compared to the result at about 10:00 PM Thursday.

	Lib	PC	NDP	Ind
Forecast	19	18	1	2
Range	+/- 2	+/- 3	+/- 1	- 1
Actual	20	15	3	2

The Liberal projection was almost bang on.  The Conservatives were within the range of the projection.  The Independent forecast was bang on.  Only the NDP exceeded expectations and that was by virtue of a good candidate who succeeded, in some respects, despite the deadweight of the Dipper crowd in town.

Poor Ed's Almanac - a hot summer is coming #nlpoli

The prospect of a minority government coupled with the need to pass a budget in the legislature after the election could produce a long, hot summer of political manoeuvring.

Mainstreet Research released its poll on the Newfoundland and Labrador election.  It basically shows what Abacus and Forum showed, which is a slightly Conservative lead in overall vote intention.

With that and the election due tomorrow, here's a guess at a possible seat count. This is based on the polls, observation of the campaign, and a bit of guesswork. There is no right answer and this version could be off by a seat or two for the Liberals.  You might add an extra New Democrat to the mix but no more.  There might be one fewer Independent.

Ego, Brain Farts, and Electoral Reform #nlpoli

Public ignorance of our political system is a scourge. Tackling that is the first step to meaningful electoral reform in Newfoundland and Labrador.  The second priority is to make sure the players do not set the rules for everyone, as they have done repeatedly, and disastrously, since 2003. Most of all, we need to get on with reform, as soon as possible.

While there are many good reasons for electoral reform in Newfoundland and Labrador, most of the recent talk of changes to how elections run in the province is from people who want to give an advantage to a party they like.

Take the decision in 2015 to slash public representation in the House.  The Conservatives who were behind the notion, figured it would be easier to win a majority of 20 seats instead of 48. They knew they couldn’t get 24 but hoped they could cling to power with 20 or 21.  Depending on how the count goes on Thursday, they might be right.

The Liberals who backed the cuts, like Dwight Ball, were concerned only that the idea appeared popular.  They thought that by siding with a popular initiative they would gain favour with voters. 

Lots of popular things don’t drive votes and this was one of them.  If they thought about the electoral math – and there’s no sign they did – then they likely hit on the same self-serving reason the Conservatives did.  Depending on how the count goes on Thursday, they might be as right or as wrong as the Conservatives when they last held power.

Then there’s the business of fixed election dates.

The Abacus Poll for Election 2019 #nlpoli

The chart below looks like there has been a huge jump up and down in “no choice” and a corresponding big change in party choice but actually there is some consistency across the board.

Click to enlarge

As SRBP has been saying for a couple of months, the Conservatives and Liberals have basically been polling in the 20s for the past three years.  These results are within that 10-point spread, allowing with the odd leap above 30 or below 20.  The “no choice” option (green dotted line) has been consistently above 35 the whole time.  Abacus is an outlier in that sense but, there is an election campaign underway.

The Abacus poll – conducted between May 2 and May 5 – shows the Conservatives in the lead with the Liberals trailing.,  But here’s the thing,  the gap, even in the presentation of “decideds” or “committed” is really inside the bounds of possibilities covered by the margin of error.

Just to drive the point home.  Here is a sample of MQO and Abacus results over the past year or so.

	Liberal	Conservative	New Democrat	No Choice
Abacus Feb-18	22	18	12	48
Abacus May-18	22	24	13	41
MQO Apr-19	25	20	06	47
Abacus May-19	29	33	12	21