Rentierism at the national and sub-national level #nlpoli

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This is the third in a four part series on the current financial crisis the provincial government is facing.  The first instalment – “The origins of rentierism in Newfoundland and Labrador” – appeared on Tuesday and the second – “Other People’s Money”  - appeared on Wednesday.

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A rentier is a person who lives off the income from property and investments.  That distinguishes a rentier from a person who earns income through labour.

For the past 40 years or so some political scientists and economists have studied something called a rentier state.  In simplest terms, a rentier state is one that derives a significant portion of its national government income from the money they get from oil and other high-value, but volatile commodities.  [FN 1]

For our purposes, we’ll rely on a definition of “significant portion” as being 40% or more of  government income.  [FN 2] We’ll also focus the discussion on states that derive most of their income from oil.

What we are talking about here goes by several names including  the Dutch Disease or even the resource curse.   Jeffrey Frankel of the Kennedy School of Government put it this way:

It has been observed for some decades that the possession of oil, natural gas, or other valuable mineral deposits or natural resources does not necessarily confer economic success. Many African countries such as Angola, Nigeria, Sudan, and the Congo are rich in oil, diamonds, or other minerals, and yet their peoples continue to experience low per capita income and low quality of life. Meanwhile, the East Asian economies Japan, Korea, Taiwan, Singapore and Hong Kong have achieved western-level standards of living despite being rocky islands (or peninsulas) with virtually no exportable natural resources. Auty (1993, 2001) is apparently the one who coined the phrase “natural resource curse” to describe this puzzling phenomenon. …

Whom the gods destroy #nlpoli #nlvotes

There's letters seal'd, and my two schoolfellows,
Whom I will trust as I will adders fang'd—
They bear the mandate, they must sweep my way
And marshal me to knavery. Let it work;
For 'tis the sport to have the enginer
Hoist with his own petard, an't shall go hard
But I will delve one yard below their mines
And blow them at the moon.

For the past seven years the Tory political staffers masquerading  online as a variety of real people have liked to push the theme that the New Democrats should form the official opposition in preference to the Liberals.

Danny Williams , you may recall who that is, used to compliment Lorraine Michael on her performance and her questions in a way that was by no means smarmy, condescending and appearing to be insincere.

He and his friends slagged Liberals – especially Yvonne Jones – at the drop of a hat.

The Tories even agreed among themselves, backed by the supposedly impartial Speaker of the House of Assembly, to give extra cash to the NDP caucus and to deny the Liberals of funds recommended by an independent commission.

They did this in the mistaken belief that fostering a fight between the opposition parties would allow their beloved benefactors [and party] to stay in power.

If the trends in this election hold true, their clever little political plot has already come back to roger them in ways they did not see coming.

And they richly deserve both the shock and the shaft. 

“Hoist with his own petard” are the words Shakespeare wrote for Hamlet.  A petard is another word for a bomb intended.

A few centuries later own goal is a word you’ll still hear military engineers talk about them.  Except this time they call them “own goals.”

You’ll find own goals in other places too, like when any crafty plan backfires.

Own goals are the way the universe reacts to over-weaning and undeserved arrogance.

Own goals are Fate’s reward for douchebags.

The New Democrats are giving the Conservatives a hard run in their supposedly safe homes in St. John’s. 

Tom Osborne, of the Osborne-Ridgley dynasty, is fighting hard against a sharp young New Democrat named Keith Dunne in St. John’s South. He is a former health minister.

Ed Buckingham has represented the uber-Tory seat of St. John’s East.  He replaced John  Ottenheimer as the representative for a seat that has previously sent such ardent Townie Tories as Witch0hunt Willie Marshall in to battle with the evil Liberals.  Buckingham’s got a fight on his hands from gasoline guru George Murphy.

Over in St. John’s North,  Bob Ridgley is having a hard time just like his nephew in St. John’s South.  Among other things, Ridgley is apparently facing the ire of public sector pensioners whom the Tories poked needlessly in the eye early on in the campaign.  Bob’s under pressure from New Democrat party president Dale Kirby.

And in St. John’s Centre, New Democrat Gerry Rogers is threatening to cut short the political career of natural resources minister Shawn Skinner.  That struggle contains the stuff of Greek theatre, bringing together, as it would appear, the breast cancer scandal  - the second biggest political controversy since 2003 – with the Conservatives’ entry in the campaign to supplant the 1969 Churchill Falls contract as the public reference point for political disaster.

Since the late 1990s, the Tories have used their old guaranteed seats in St. John’s as the base from which to stage their comeback.  They’ve had an unassailable lock on the seats in the metro area since 2003.  The Tories evidently figured this time would be the same.

But something happened that no one seems to have expected.

Sure the polls showed a marked drop in Tory support starting in early 2010.  The former Tory enthusiasts just seemed to disappear off the political polling landscape.

Where they went didn’t show up until later on.  New Democrat support didn’t really pick up until May 2010.  What appeared to be a temporary bump from the federal election turned out to be something more.

What the provincial Conservatives missed along the way is that in the St. John’s area their supporters bleed to the New Democrats.  So anything that builds the New Democrats weakens the Tories, not the Grits. 

If the Tories imagined the NDP could not organize its way to anything beyond what they had already, then the Tories figured wrongly.

As the Tories talked up the need to keep a member on the government side, they seem to have forgotten that in St. John’s, the old patronage lines don’t work.  They don’t work because they don’t matter.

Townie members of the House of Assembly don’t deliver pork to their constituents.  They have precious little to do with the majority of their constituents whose needs for fire trucks and road paving come from municipal government rather than their provincial politician. 

Townie voters can elect an opposition member to the legislature and not feel a single pang of retribution. 

Townie voters are also public servants in large numbers.  Tom Marshall’s dismissal of retired public servants in the talk of giving them a modest raise in benefits may well have resonated with the majority of public servants who are getting ever closer to retirement age. 

When the Tory platform promises included a set of crossed fingers – we’ll deliver the promises of more cash only if we don’t need to cut spending – that likely sent a second uncomfortable chill up the spines of civil servants everywhere.

Safe to vote for an opposition politician and given plenty of reasons to do so.

Sweet, eh?

Regardless of what happens on Tuesday, regardless of how many seats the New Democrat win and regardless of whether they form the opposition or not,  this election marks a shift in provincial politics.

The Tories got a big scare. 

The New Democrats got a big boost.

What happens next is what matters. 

At age 68, New Democrat leader Lorraine Michael is likely to step down before 2015.  The party’s new energy will drive more interest in the job and the party than usual. They will get lots of media coverage and the chance to showcase their new energy for the entire province.

The new leader and the New Democrats already have genuine new energy.  They will stand in stark contrast to the Conservatives.

The Tories will face a leadership fight delayed from Williams’ departure. Kathy Dunderdale was only supposed to stay for a while.  Now she plans to stick around for two terms.  The oldest person ever elected Premier plans to hang on until she is the second oldest person to retire from the job. 

That may cause tension within the caucus, especially if there are other potential leaders who put their ambitions aside for what they thought was a short time. 

Political pressures coming out of the election or internal divisions from tough governing choices could add other tensions.

The party platform is already starved of new ideas.  It is in autopilot.

And then there are the other Tories who planned to retire but who hung on for the good of the party through one more election.  They will go sooner rather than later.

And so the Tories will face by-elections.

Those by-elections will not be as easy as they used to be.

Political parties in Newfoundland and Labrador aren’t good at refreshing themselves while they are in power.  Then tend to coast rather than move off in a genuinely new direction that aligns with voter moods.

The inevitable result is that they get tossed.

The only reason political parties last as long as they do – 17 years for the Tories the first time, 14 years for the Liberals the second time – is that the other guys never get their act together.

That might be changing.

Whom they gods would destroy, they first make proud.

- srbp -

The Politics of Public Spending

Check the local media for the past week and you’ll see a sudden bunch of stories about the series of fire truck announcements provincial politicians of the Tory persuasion are making across the province.

Voice of the Cabinet Minister’s got one.

CBC’s got one.

Apparently there have been 19 announcements or unveilings of new fire trucks, with three more to come.

Municipal affairs minister Fairity O’Brien insists this is just routine stuff and has nothing to do with the provincial election coming in October.

Now ordinarily that would be such a nose puller of a line that one would involuntarily scream “bullshit” at the top of one’s lungs. 

Except that it is Fairity O’Brien. 

In fairitiness to Fairity, the guy who probably can’t remember the name of the  district St. Anthony is in and who bullshitted about planning and emergency response likely does not know that what he said about the fire truck and the truth are two different things.

So let’s just say he has a particularly virulent case of pinochiosis.

And that he’s more full of shite than usual on top of that, besides.

The announcements are all about politics and the upcoming election.  Even Fairity knows it.  As Geoff Meeker pointed out, here’s what Fairity said in his rambling answer to a question on an open line call-in show about the pork announcements.  After denying they were political, O’Brien said:

okay, so the question here in my district is, and I am only speaking for myself, do you want four more years of what you’ve just experienced in the last eight, or do you want to sit in the Opposition, or whatever it may be…

Now sending such an incredibly weak minister as O’Brien out to defend blatant pork-barrel politics is a sign of arrogance or cynicism.  Take your pick which it is; either way is bad.

O’Brien threat, however is one thing:  stupid.  Were Fairity and his colleagues to punish a district for voting for an opposition member, they would only be cutting their own political throats. Ask the Tories from the 1980s what that sort of political extortion netted them. 

Better yet, ask the Tories on the Great Northern Peninsula what even the mere perception of a political vendetta – the air ambulance decision – has netted them since the Tories lost the Straits and White Bay North by-election.

Not much of any good would come back the answer.

If Kathy Dunderdale wanted to send a stupid message to voters about patronage and voting, then she evidently picked the right fellow.  Fairity O’Brien did a fine job for her.

The Tories might have a bigger problem.  They might be faced with an electorate that knows full well this is all about pork and that realises they win pork no matter what way they vote. He who lives by the hock might wind up dying by the hock, so to speak.

All three political parties in the province will be running campaigns this fall built around delivering ever increasing amounts of pork in exchange for votes.  All three political parties agree that the provincial economy is going gangbusters.  So basically there’d be no legitimate reason to justify cutting back any spending.

The choice for voters this fall is not between fire trucks and no fire trucks. It is over how many fire trucks they want. 

Or a search and rescue centre.

Or an offshore supply base.

If you want to see naked electoral pork-barrelling in action, don’t look at fire trucks.

That’s old hat.  The first election fire truck announcements came in 2007.

Look instead at Bay Bulls.

The provincial and federal governments held separate announcements this week to give cash to the same project.  They held separate announcements so the provincial minister – in trouble in his own district – could get some free advertising for himself without the original tree hugging federal cabinet minister horning in.

Federal cash of $1.0 million for an expansion to Pennecon’s offshore supply base at Bay Bulls met the investment criteria for a provincial program.  Now the province will kick another half million.

$1.5 million in public money for a project estimated to cost no more than $2.1 million in total.

The job haul? 

Maybe 15. 

$100,000 per job.

The Tories hand out millions of taxpayer dollars to private businesses, often free of charge  The Newfoundland and Labrador NDP want to give Nova Scotians a free university education. The Liberals and the New Democrats want to give rich people in the province a break on their Hummer fill-ups and cut the cost of heating their luxury homes. Next thing you know the Liberals will resurrect that God-forsaken Stunnel idea just to mark themselves as the stupidest of stupid political parties.

But seriously: the Tories ran in 2007 on the argument that the Liberals would bankrupt the province by spending like drunken sailors.

They simply can’t make the argument any more. No one will believe it is possible to bankrupt the place after Fairity and his buddies spent the last four years spending on anything and everything imaginable.  And they really will find it hard to accept that money is tight if every political party in the province wants to double electricity rates in the province and double the public debt at the same time through this insane Muskrat Falls megadebt project.

Happy days are indeed here again, b’ys.

The only thing missing is the Fonz.

Now that you are squirming a bit, think about what might happen if at the same time people had three parties offering variations on a pork-flavoured platform, they also realised that neither of the leaders would be in their jobs four years from now.

And then wonder what all that might mean in an election where there is nothing to chose from and turn-out might drop by 20%, mostly consisting of Tory voters.

After all, that’s what happened in 2007.  Liberal vote collapsed.  Tory vote declined and the same New Democrats turned out in 2007 that had turned out in 2003.

It could give new meaning to the politics of public spending.

- srbp -

Pressure #nlpoli

A curious thing happens in societies where a huge amount of the collective income derives from outside the local economy and the local tax base.

They do not see a connection between the money they receive and the action of earning it.  The money that flows into the collective pot – the government treasury – seems to appear by magic.

That might sound a bit odd but if you think about it this way, you may get the idea.  Whatever you did for your first paying job, you could see a direct relationship between the labour you expended and the cash you received in exchange.  Painting a fence earned you an amount of money. 

Paint two fences and you could get twice as much money. Or paint another bigger fence and you could get a bit more, Depending on how big the fence was and how much more paint you needed and how much more time it took you to finish painting, as a result,  you could get more money for painting the fence.

And if everybody in your community painted fences or had the same basic connection between labour and reward,  you could all understand it when someone asked you to give a bit of your fence-painting money so that you could buy a fire-truck to fight fires in your town.  That extra bit of money for the community is a portion of your individual earnings from fence-painting or ditch-digging or tree cutting, or whatever it was that you did to make money. 

But what about a place where, in addition to that cash, you all shared in something like money that came from producing oil?

The Top Ten for Eleven #nlpoli

1. Tory angst may be well founded (January 2011)
2. Humber West post mortem (February 2011)
3. Connie leadership rigged? (January 2011)
4. Watton to carry Liberal banner in Humber West (January 2011)
5. From 61% to 44% since August:  NTV poll shows Tory support slides further (February 2011)
6. HMV (March 2011)
7. Rick Hillier?  Tim Powers?  No thanks say NL Tories (January 2011)
8. Anyone seen John Hickey? (March 2011)
9. Connie Leadership 2011:  Brad and Circuses  (January 2011)
10. Patronage, pure and simple (March 2011)

- srbp -

More like a snapshot than a panorama #nlpoli

Last week, a group called Samara released the results of its research on Canadians and politics.  Democracy 360 they called it.

The media locally covered it, if for no other reason than it showed that Newfoundlanders and Labradorians trailed the country in things like donations to political parties.  Didn’t fit our perception that we all love our politics, some reporters said.

One of the news stories went to Memorial University and talked to students. Results are shocking said one student politician. Students are really politically engaged, apparently.  They talk about politics a lot.

Democracy 360 and the coverage of it are more good examples example of why it pays to look at the details to find out what is going on.

Cabinet control of Crown corporations #nlpoli

Hearings at the pubic utilities board revealed that senior executives at Nalcor received hefty bonuses again in 2014 as they have in other. 

Ostensibly, they are a reward for achieving corporate performance targets. Given that Nalcor has had some serious problems with its capital works and maintenance program over the past decade, it is rather surprising to see people getting great gobs of cash while the company hasn’t been performing.

Ostensibly, the bonuses are part of a compensation package that keeps the company competitive.  That’s how Nalcor chief executive Ed Martin justified the compensation now that we understand they are the chief cause of the cost increases Nalcor is using to justify its request for an increase in electricity rates this year.

Surprise Traffic, 29 Nov to 3 Dec

Betcha can’t guess what the top post of the week was?

If you thought the Old Man’s going away present was it, you can guess again.

Here are the top posts at Bond papers from last week based on what people read the most.

1. NL Wikileaks References Decoded
2. No US market for Lower Churchill power:  deputy premier
3. All we want is fairity
4. [Tie]  An Ibbitson Inanity Hat Trick and Energy Analyst doubts Muskrat Falls economics and Introducing Premier Kathy Dunderdale
5. Government by Fernando
6. Introducing Premier Dunderdale:  patronage and the Public Tender Act
7. Why he’s heading south
8. [tie]  Hubris and Separated at birth: delusions edition
9. [tie] Kremlinology 7: desperate in the Straits and The politics of history (reprint)
10. [tie]  Premier Fairity and Premier Doug Moores

- srbp -

A sign of the problem #nlpoli

One of the reasons why the provincial Conservatives are in political trouble is that their communications are frigged up.

For those who are wondering, that is the relatively polite version of the technical term for it in the communications business.  Think of it like the B-52, one of the largest airplanes ever to fly.  The US Air Force used to say that the crews called it the BUFF:  big, ugly, fat fella.  Well, they didn't actually use the word "fella".  That's just the word the Air Force used so that prissy people wouldn't complain about hearing the word f**ker coming from someone in a light blue uniform.  For others, of another inclination, it's akin to why hippies used to refer to police as "pigs".

Anyway,  James McLeod has a thoughtful piece in his periodic blog over at the Telegram about something he and his colleagues in the Press Gallery have been having with government ministers for the past few months:  they won't talk about good news.

Basically it boils down to this:  ministers won't do media interviews until a bill hits second reading in the House.  Lately this has meant that the opposition and others are talking away about government initiatives days before the minister shows up for an obligatory, pro forma dog and pony show.

It can be a matter of days or weeks after it's been tabled before a piece of legislation makes it to the floor of the House of Assembly for second reading.
This interval is the crux of what we're talking about here today.

McLeod wanted an explanation so he went to Jerome Kennedy, the minister who is responsible for wrangling his team in the House.  Kennedy's response was that this was a time honoured practice going back before 2003.  The idea is that to talk about the bill before it was debated in the House would be an insult to the members of the House.

Well, Kennedy may think that's what is going on.  After all, that explanation is similar to what happens in court.

The truth is something far different. Your humble e-scribbler spent seven years dealing with the legislature in the early 1990s.  If that sort of thing was happening back then, your humble e-scribbler is drawing a complete blank in his old brain box about it.  You see, back in those days, sessions of the House lasted a long longer than they do these days.  Members got lots of time to prepare for debate.  They got the text of the bills well in advance and lots of people talked about one bill or another long before it got to the floor of the legislature.  Wide public debate is what everyone wanted, even when the government might have a bit of pain over things like the Lands Act in the early 1990s.

Somewhere along the line, the government party started to shorten up the time a bill got any discussion in the House.  Remember in the House of Assembly patronage scandal that some stuff went through the House in a day or two?  Yeah, well, this is part of the same thing.  What the government party used to do was try and jam the opposition up.  They'd keep a bill close to their chests until the last possible minute.  Then on the day the government decided to call second reading, they'd hold a media briefing in the morning, then have a briefing for the opposition, give them all the wording of the bill and call the thing for debate in the afternoon. 

The current crowd  - Jerome's crew after 2007 - were famous for it.  They took to the anti-democratic practice just like they loved another Tobin era practice called poll goosing.  The result was pure crap, of course.  The opposition got stampeded into going along with the government because they didn't have any information other than what they'd been fed.

If the House became dysfunctional in the process, to use Kathy and Danny's favourite word for it, it's because Kathy and Danny and some of the crowd before them made it that way.

It's also why they introduce big things like the access to information amendments in the last few days of a long session.  They want to limit discussion and get their way before anyone realises what is happening. 

Someone just said "coughexpropriationbillcough". 

Exactly.

So James does a fine job of highlighting a problem the current crowd are having.

And to go with it, there you have a bit more of the story.

The fact the current crowd are frigging themselves up apparently because of their misunderstanding just highlights why they are having basic political problems.

-srbp-

Responsible Public Spending #nlpoli

You don’t need drugs or alcohol to get the feeling of dizziness or stupor like you smacked your head with a hammer. Hard. Repeatedly.

Just listen to a representative of one of the special interest groups talking about the provincial budget and public spending. It doesn’t matter which one.  As your humble e-scribbler was finishing off this post on Tuesday, a representative of the appropriately named St. John’s BOT was on television talking about how government had to cut public sector jobs and tear into public sector pension benefits because of the hideous unfunded pension liability. 

Corporate lawyer Denis Mahoney even quoted the distorted, misleading government claim about the unfunded liability as a share of only a fraction of the public debt to bolster his position. He never mentioned the billions going to subsidize his members, of course. 

In the process, Mahoney looked about as convincing as the labour mouthpieces like the Canadian Centre for Policy Alternatives who said in 2004 that the government wasn’t spending too much.  It just didn’t have enough money.  Of course, they never mentioned that the government was outspending just about every other province on a per capita basis.

Listen to this sort of mindless crap long enough and you don’t have to wonder why people wander around in a daze.

To clear your head, take a look at a chart showing the actual government spending from 2005 to 2012 (in blue) compared to the income from sources other than oil and minerals (in red).

Chainsaw Earle keeps austerity on the table #nlpoli

NDP leader Earle McCurdy called the province’s major open line show on Thursday and by the sounds of things he hasn’t backed off the position that the size of the government’s financial problems will mean more cuts.

Sure he said he was opposed to austerity,  but what Earle did say was that the government will have to cut jobs, lay people off and slash spending to cope with its financial problems. 

Potato, potato, Earle.

How convenient for Len and Danny

Any bets Len Simms will get his patronage job back right after the election?

-srbp-

Beth and Expenses #nlpoli #cdnpoli

All this talk of Senator Beth Marshall and her hefty annual stipend for chairing a committee that has met once in two years brings to mind the good senator’s role in the House of Assembly patronage scam, a.k.a. the spending scandal.

Marshall is credited with first sniffing something was amiss when she went hunting for Paul Dick’s expenses in 2001-ish.  She was barred from the House by the legislature’s internal economy commission.  The members were Liberals and Tories and, as accounts have it, they unanimously wanted to keep Beth’s nose out of their files.

But if you go back and look, you’ll have a hard time finding any indication Beth thought something else was on the go.  While we didn’t know it at the time, subsequent information confirmed that members had been handing out public cash pretty generously by that point. Yet Marshall has never, ever indicated she felt something more than a few wine and art purchases might have been amiss.

That’s important because of Marshall’s record once she got into the House herself as a member in 2003.

Premier Tom and Uncle Joe #nlpoli

The provincial government announced on Thursday that it had directed the provincial energy corporation to build a new transmission line between Churchill Falls and western Labrador.

You’ve got to wonder why.

Not why they decided to build the line.  Apparently, there’s a need for the additional power.

Not even why it took them so long to announce it.

No.

You’ve got to wonder why this $300 million project needed a cabinet decision.

The legacy of Sir Sam

Canada has had its fair share of blow-hard and/or incompetent defence ministers.

The ones that do the most damage are the former military officers who never made it to the top while in uniform but manage to circumvent the eminent good judgment of the professional promotion system and get there through the political route.

Witness one Gordo, the current MND, but formerly a brigadier general who spent his career bouncing around inside a tank.

O'Connor seems determined to follow in the fine tradition of politicians who, as national defence minister, presume to know considerably more than they do.

Gordo, as many across the country have known for far too long, is trying to impose his vision for the Canadian Forces on a professional and highly-competent officer corps that knows their business far better than the retired zipperhead. His ideas do not stand up on their merit. Instead, O'Connor persists in advancing his ludicrous notions - like relocating JTF 2 to Trenton or creating whole new battalions of currently non-existent troops for deployment across Canada - merely because he is the political boss.

In the meantime, the far more competent Chief of Defence Staff, General Rick Hillier, faces the challenge of reconciling the demands of the men and women in the field doing the hard work of defending the country with a budget that cannot support them and Gordo's foolishness.

To give an indication of how obvious was the problem with Gordo, consider that Bond Papers pointed it out fully one year ago, shortly after the retired tank driver was appointed to the job at 101 Colonel By.

Also noted at the time was the misery being inflicted on the people of Goose Bay who have been taken in by O'Connor's promises of troops, troops and more troops. They have their hopes pinned on O'Connor's commitments.

If they are lucky, Gordo will be fired - the sooner the better - and the community can start finding a new direction for the town's major employer.

If they are unlucky, the current federal administration will leave the decidedly wrong man defence minister, waste millions of taxpayers dollars fulfilling Gordo's pledges and in the process hook the people of Goose Bay to a form of economic crack cocaine: political patronage and pork.

It will fall to a future administration, gifted with more reasonable leadership to cope with the results of the mistake inherent in putting retired military men or women in charge of national defence.

It's not like we haven't been down this road before, far, far, far too many times.

The Politics of Oil and Budgets #nlpoli

When any country or province depends heavily on the money that comes from resource extraction, it affects politics there.

Political scientist Michael Ross is probably the most recent author on the subject. Terry Karl has also written extensively on the resource curse.  She wrote of the best known books on the subject:  The paradox of plenty:  oil booms and petro-states.  You can also find some of Karl’s further thoughts on the issue in an article she wrote in 2007  and revised in 2009.

These studies focus on the developing world, for the most part, but what academics observe about those countries can cause you to think again about politics in other places.

Like say, Newfoundland and Labrador.

Roger Grimes: savage political attack dog #nlpoli

Maybe it was the headline on John Ivison’s opinion piece in the National Post that threw them off.

Spat over $400M N.L. fund could make federal government look bad to European trade partners

Provincial Conservatives, their patronage clients, and their paid staffers were all over Twitter all weekend tweeting touting the support in Ivison’s piece for their fight with the federal Conservatives over a federal cheque for $280 million.

Pay up feds, says Ivison, and end this dispute because it looks bad.

The problem for the Conservatives is that if you read the whole Ivison column, this is not a great endorse of the provincial Conservatives’ desperate political ploy.  It offers sensible advice in that both sides need to get this dispute settled now,  but Ivison gets there based on all sorts of half-baked ideas.  That much of it shows the extent to which observers both at home and outside the province don’t really understand what’s going on here. 

And if you follow the piece through to the end, you see just exactly how bad a position Paul Davis and his crowd really are.

The problem with no problem #nlpoli

Dwight Ball is the latest Liberal to emerge from the candidate protection program.  He popped up on NTV on Monday evening to tell us all two things:

First, he thinks there should be an inquiry into the Dunphy shooting.  He made up some nonsense about the need for an imaginary process that supposedly had to play out before he revealed the real Liberal position.  After telling us about Step One:  the Dunphy family grieving,  and then Step Two the two investigations that aren’t finished,  he could now announce Step Three, namely that he will appoint an inquiry when he is premier.

Not gonna call on the Conservatives to do it now. Nope. Gonna wait until he is on the 8th.  If that happens. And, allowing that he might not get to be Premier until October 2016, that could be a long wait for an inquiry that could begin soon and be finished by this fall.

Then, of course, you have to recall that on Friday,  the official Liberal position was that anyone calling for an inquiry now is just playing politics with this tragedy.

You can see a few pretty obvious problems with the latest Liberal position on the Dunphy inquiry. But at least  the Liberals are finally accepting the need for an inquiry.  They are going to be the butt of more than a few Conservative and New Democrat jokes but at least they are finally in the right spot.

Making the Most of Our Energy Resources (Part I – Electricity Reform)

In slightly more than a decade, fundamentally bad policy decisions by Liberal and Conservative administrations have turned the provincial government’s electricity corporation into an unregulated, unaccountable monster.

Such is the power of this hydra corporation as we enter the second decade of the new millennium that it can corrupt the public body  - the board of commissioners of public utilities - that is supposed to control the corporation in the public interest and turn it, instead, into nothing more than a tool of the corporation’s Muskrat Falls venture, all with the enthusiastic support of the provincial government.

The result of all this is that the people of the province will not be getting the most of their own resources.  Rather, they will pay dearly to supply discounted energy to other people.

No single act created the beast.

No single act will bring it under control.

But there is no question that the province’s electricity industry must be radically over-hauled.  If we allow the industry to continue on its current disastrous course, what should be a very rosy future for the people of Newfoundland and Labrador  may well turn out to be as bleak as the bleakest time in the province’s history during the 20th century.

In reforming the electricity industry in the province, we must keep an eye on our basic principles.

1. The entrepreneurial private sector must be the main engine of growth in a globally competitive economy.
2. The provincial government must regulate the industry to support economically and environmentally sustainable development.
3. At the same time, the provincial government must ensure that the people of the province – the resource owners – get their fair return at the lowest possible level of risk.

With those three elements in mind, let us now turn to some specific actions.

Privatize


While there may have been an argument in favour of nationalising the provincial electricity companies 40 years ago, those rationales have long since vanished.  Even some of the politicians who created the hydro corporation in the mid-1970s now think it was a bad idea. And if privatizing a Crown hydro corporation is a good policy for a former Parti Quebecois activist, the idea is well worth considering in this province.

Privatizing the provincial government’s energy corporation remains the best way to reform the provincial electricity industry almost two decades after a provincial government first pursued the idea.  Turning the corporation over to the private sector would net the provincial government significant cash while at the same time removing a huge debt from public shoulders. 

In the past 20 years public attitudes have changed.  A renewed sense of confidence in the public would support the creation – in effect – of several new corporations doing business within the province and expanding outside its borders.

The provincial government will need a plan on how to privatise the electricity corporations. They could entirely in the private sector from the start.  The provincial government could sell shares or accept offers – as Danny Williams was ready to do – for any or all of the company and its assets. 

Alternately, the provincial government could create Norwegian-style hybrid companies that are jointly own by the state and private share-holders. The public interest in hybrids would be managed through a parliamentary oversight committee similar to the type used in Norway and elsewhere to remove Crown corporations from decisions that may be based on too many partisan considerations.

In either approach, the new companies must be incorporated under the Corporations Act* and subject to exactly the same laws and taxes as all other companies in the province.

Embrace Competition


No matter what route the provincial government choses to take on privatization, it must sell off the generation assets seized from private sector companies in the 2008 expropriation legislation. This will be an important first step in smashing the dangerous monopoly created under the 2007 energy plan.  It will also send a powerful message to investors that the provincial government will not tolerate such grotesque abuses of power.

Reform would also mean replacing the provincial energy corporation’s  tangled mass of interlocking directorates and companies with clearly defined companies that look after electricity transmission (TransCo) and generation (GenCo).  GenCo could be also subdivided into the island generation assets and those in Labrador.

Churchill Falls (Labrador) Corporation should remain a separate company and possibly would be retained as a Crown corporation as proposed in 1994. The provincial government should move quickly to repeal legislation that supports the Lower Churchill Corporation, including the 1978 development corporation act.

In the future any Lower Churchill development should be undertaken by the private sector, based on sound financial plans.

For TransCo, the provincial government will also have to set an open access transmission tariff or give the public utilities direction to do so. OATT allows open access to transmission facilities. It is part of the competitive system fostered by American regulatory changes in the early 1990s. This is an important part of connecting the province into the North American electricity market system fairly and equitably.

Protect the Public


The 1994 version of the Electrical Power Control Act created a role for the public utilities board in managing the electricity industry in the province.  The provincial government should repeal a series of exemptions granted in late 2000 that effectively stripped the PUB of its power to ensure that the people of the province benefit from the electricity they need at the lowest possible cost, as mandated by the EPCA, 1994.

As part of the reform, the PUB leadership must be removed from the realm of political pork and patronage.  New commissioners should be appointed from the winners of an international competition.  Funding for an expanded commission that we will need to carry out the PUB’s new role should come from a combination of public funds and levies on the regulated industries.

The PUB’s first task will be assessing the province’s energy needs for the future.  This will determine what, if any new power sources might be needed.  The PUB can then re-allocate existing generation to meet the forecast need or call for new projects.

Set the Taxes and the Policies


In the new world, the provincial government will have a new role.  At first, politicians and bureaucrats will have to get used to a new role instead of involved in all sorts of high-powered negotiations for which they have usually turned out to be uncomfortably unsuited.

The provincial government will have to set broad electricity policy to deal with environmental issues:  how much of the province’s domestic supply should be from renewable sources?  Should the province allow natural gas generation?  What about nuclear power?

The provincial government will also have to set taxes and other charges that generators, transmitters and domestic retailers will have to pay to the people of the province in exchange for developing electricity resources. This could turn out to be an interesting new source of provincial government cash. There’s another post coming on that aspect.

The government would also have to set the broad rules that the public utilities board would follow when setting retail prices within the province.

Taken altogether, these reforms to the provincial electricity industry would:

• Reduce the public debt load.
• Produce an initial pot of cash for the provincial government from sales.  This would be followed by new annual revenue from taxes and other charges that the provincial government currently doesn’t collect.
• Promote sustainable development of new energy sources at the lowest cost for domestic consumers.
• Create a stable environment in which entrepreneurs can attract investment in order to develop the province’s full energy potential.

- srbp -

* Corrected from Companies Act

A room with a view of the pork barrel

The provincial ambassador’s office in Ottawa costs the better part of a half million a year to run, hasn’t had an ambassador in it for the better part of the past two years and so Premier Kathy Dunderdale will keep it open because it is so effective.

The office serves a great purpose when it’s functioning the way that it should,” she told a Telegram editorial board [last] Wednesday. “And it’s important to me that we maintain that.”

The thing is the office hasn’t served any purpose except to demonstrate how completely useless it is or how crap Premier’s have been in finding people to occupy the sinecure.

The first incumbent -  former Liberal cabinet minister, former wannabe Conservative candidate, former Liberal candidate and soon-to-be-former radio talk show host Bill Rowe – stayed in the job for about half a year and accomplished exactly squat before packing it in and coming back home.

Rowe – who left politics in the late 1970s after a political scandal about leaked police reports – wrote about his complete waste of tax money in Ottawa in a book that became a national best seller last year.  The book is a litany of slapstick moments like making taxpayer’s foot the bill for shipping his used snow-tires to the nation’s capital or his inability to get Danny Williams’ political and public service bureaucracy to cough up a Blackberry and a laptop for weeks on end.

Your humble e-scribbler has described the book as an insider’s account of events the author wasn’t inside the room for.

As Rowe documents, Danny Williams offered Rowe a key position in the new administration before the 2003 general election. Rowe stayed in his job on-air during the election and took up his ambassadorial appointment as Williams’ personal representative to Hy’s early in 2004.

The second incumbent  - former Memorial University professor John Fitzgerald  - reportedly spent most of his time not meeting with federal officials, that is when he wasn’t hanging out in the Commons visitors gallery.  His tenure in Ottawa coincided with Danny' Williams’ endless feuds with Ottawa for something or other and after a certain point he reportedly had a hard time getting in to see anyone. Regular readers will recall him as Our Man in a Blue Line Cab.

Fitzgerald quietly left Ottawa when his contract ended.  Williams gave him another contract in St. John’s in the classic patronage holding pen of the protocol office.  His official title is “special advisor.”

Before Bill Rowe, the provincial government never maintained an office in Ottawa.  The job of dealing with the federal government fell to officials and ministers, including the Premier.  And more often than not over the past 30 years there has been an office called Intergovernmental Affairs intended to deal specifically with – you guessed it – relations between and among governments in Canada.

So there you have it.  The office has been vacant for more time than it’s been filled, a point labradore makes succinctly.  And when it has been occupied, the incumbents apparently accomplished nothing.

And yet the current Premier wants to keep spending money on an office that has never worked because it is great when it works.

Says more about Kathy Dunderdale’s judgement than anything else, apparently.

- srbp -