The remittance economy and the long-term future

CBC Radio is running a short series of reports on remittance workers. Those are people who maintain a permanent residence in Newfoundland and Labrador but who travel to other places, mostly Alberta, to earn a living.

If the CBC figures are accurate - upwards of 10,000 people earning pre-tax salaries of $100,000 a year - then remittance labourers are contributing to the Newfoundland and Labrador economy on a scale that rivals agriculture and the fishery.

Remittance labour is a common feature of the economy in the developing world. The figures for Newfoundland and Labrador would be also on a par with some countries at the low end of the scale in a 2003 World Bank study. Bond Papers noted the local history of remittance work in a post earlier in 2007.

The local workers involved in the Newfoundland and Labrador version of remittance labour include fishery workers displaced by changes in that industry. Others are older, skilled workers from the former paper plant at Stephenville or from the shipyard at Marystown. Neither of these groups will likely be doing the Big Commute for a long time. Either the projects they are working on will shut down or they will retire in Newfoundland and Labrador.

Others are young men and women who are attracted by high wages and steady work in their chosen fields. While the older workers are contributing to a localized economic boom in places without major industries - like Marystown or Stephenville -

Only a major and sustained series of local projects rivaling the work elsewhere will cause the younger workers to stay in the local labour force. Many are likely to settle outside of Newfoundland and Labrador.

In that context, it's interesting to recall that in 2003 Danny Williams campaigned on his commitment to "growing" the economy and creating jobs. He didn't do that, of course, as Bond Papers has noted several times, including in a reprint of a 2004 column from the original (pre-Cleary) incarnation of The Independent. The economic miracle of the past four years has been entirely due to the upsurge in world oil prices.

Essentially, the current progressive Conservative administration is following the same approach of its predecessors. The long-term is sacrificed to short-term expediency. The rise of highly-paid remittance work has served to both cushion the blow of outmigration and enable the provincial government to contribute disproportionately to the provincial economy in the process.

The current administration started out, supposedly, with a plan to control spending and deal with the burgeoning provincial debt. In reality, it did nothing about either. Spending has grown by 35% - well beyond the rate of inflation - and at the same time, the provincial direct and total debt is larger today than it was in 2003. Spending is forecast to increase, as is the debt.

Both oil prices and the remittance economy are shaky underpinnings for government spending and development of larger debt. Oil prices are historically subject to significant fluctuations. The remittance economy is limited either by the life of projects or the short time some of the workers have left to retirement.

Remittance work and the related subject of demographic changes in the province have been largely ignored by successive provincial governments in Newfoundland and Labrador and there is virtually no discussion of it in the public at large.

Perhaps the CBC report will change that.

-srbp-

A tightening labour market

A recent Syncrude job fair in St. John's didn't turn out very many prospects, according to the National Post.

They [the recruiters] are well aware of the challenge. Even in St. John's, where the unemployment rate, at about 15%, is the highest in the country and disposable income the lowest, the turnout is poor relative to what had been expected.

Only about 20 people trickle in for the Friday evening session. Another15 come for one on Saturday morning. Hundreds of expectant seats are empty. Organizers and others wonder if this market is tapped out. "Almost every week there is someone here," said Paul Barnes, Atlantic Canada manager for the Canadian Association of Petroleum Producers.

It's not just oil sands employers, he notes. Alberta's service sector, from Wal-Mart to Swiss Chalet, is also recruiting, offering transportation to Alberta and signing bonuses.

The hollowing out of the local labour market is one result of both the Hebron failure and the pull of a booming economy in Alberta.

As the Post notes, many workers have become trans-continental commuters, leaving family in Newfoundland to work for weeks at a time and flying home for brief rest periods.

Skilled workers from Abitibi's Stephenville operation are doing that, for example. Many, though, are near retirement age and once they hit the magic age, they'll be shutting down and retiring in Stephenville. Many in the formerly bustling mill town on Newfoundland's west coast are contented for now. Others wonder what happens when the retirees come flooding home if there is no new employer to replace Abitibi.

The labour crunch was one of the major considerations in trying to move Hebron forward last year. Oil industry insiders were acutely aware of the challenges in finding workers for a major industrial project as Alberta continues to draw more and more from all parts of the country.

"If Hebron went ahead tomorrow, we'd have a hard time finding staff," said Tony Goobie, a former chairman of the Newfoundland Ocean Industries Association, and the general manager of Eastern Valve & Control Specialties.

A smelter/refinery complex being built by Inco at Long Harbour and the prospect of Lower Churchill construction beginning in 2009 will stretch the local labour market to the point where the province will have no choice but permit companies to import skilled trades workers from anywhere they can find them. Many may well be Newfoundlanders and Labradorians who have moved to Alberta but who will commute in the opposite direction for the sporadic work on major construction jobs likely to occur in Newfoundland and Labrador over the next decade and a half.

The provincial government is moving ahead with new programs designed to produce skilled workers. The province has already announced a reciprocal agreement with Alberta that would recognize work experience in Alberta for skills certification in Newfoundland and Labrador. The catch is that workers need to maintain permanent residence in this province.

But in the absence of local work on major projects, many may wind up heading to Alberta and elsewhere and staying there. Greg Locke is a Newfoundland photojournalist who recently left the province to take up a management position with a weekly newspaper chain in Alberta. Locke's already noted that among ex-pat Newfoundlanders and Labradorians he's met so far, he hasn't found one genuinely pining to return home. Once settled in Alberta, workers tend to stay.

Remittance work is nothing new in Newfoundland and Labrador. Offal News' Simon Lono discussed the idea in February of workers who ship cash back home from foreign countries. It's a well-established idea in the developing world and to some it may be shocking to appreciate that the idea thrives within Canada.

Locally, though, the remittance economy has been booming in recent years. The provincial government's work programs actually encourage the remittance economy in its commuting variety, especially since the migrant labourers taxes go to the provincial treasury and their heads count toward the federal government's Equalization income support program for provincial governments.

Remittances are inconvenient for this government because they represent a policy failure: people who have taken the initiative and have left the province for work rather than heed empty government assurances that something will be done for them and their communities.

Before Confederation, remittances were a way of life. A 1931 book by Joe Smallwood, written to introduce Americans to the easternmost part of the continent - then an independent country - put it this way:

Back in the early part of this decade [Smallwood actually mean the 1920s], when the flow of emigration to the United States and Canada was at its height, somebody facetiously declared that our principal exports were "codfish and men". There was a tragic vein of truth in it. At all events, even away from Newfoundland, many of these natives sons are contributing importantly to-day [sic] to the upkeep of the country. The money orders paid within Newfoundland from the United States and Canada in the past three years for example, were as follows...

Smallwood then listed a total of $2,081,232 from the United States between 1927 and 1929 and another $712, 054 from Canadian sources in the same period. [Source: J.R. Smallwood, The new Newfoundland, (New York: MacMillan, 1931), pp. 111-112].

Neither Statistics Canada nor the Government of Newfoundland and Labrador have investigated the scope of the remittance economy.

The labour market reality in Newfoundland and Labrador is garnering some attention from government. Programs may help generate workers, but in the absence of major industrial development, there is little to keep workers in the province any more than there may have been in the heady days of independence.

Workers will look outside Newfoundland and Labrador to earn a living. So too will an increasing number of companies in the oil and gas sector, among other sectors.

Promises of a rowdy revolution or of a return to independence, built on little more than myth and superheated rhetoric seem to be little more than a fatuous diversion from a meaningful discussion of public policy.

After all, is more income support for the provincial government any replacement for local economic development?

-srbp-

h/t to Greg Locke.

The ongoing saga of the remittance economy #nlpoli

A downturn in the economy in Saskatchewan and Alberta caused by falling oil prices will affect Newfoundland and Labrador.

This is hardly surprising.  Regular readers will know the phenomenon as remittance labour or migrant labour, something your humble e-scribbler has been writing about since 2007 or thereabouts.  One of the curious aspects of recent economic growth in the province has been that a sizeable chunk of it is actually driven by circumstances outside the province. 

Thousands of workers have been travelling to work in Alberta, Saskatchewan and the north on a cycle of so many weeks working followed by so many days or weeks back in the province. 

World Bank warns of impact on poor

Robert Zoellick, head of the World Bank, is warning that the global credit crisis threatens to become a human crisis.

One of the most likely affected will be remittance workers, people from underdeveloped regions and countries who work in more affluent places and ship large portions of their wages home to support families.

Closer to home remittance workers and migrant labourers working in Alberta and elsewhere in Canada - largely responsible for the recent economic boon of regions like Stephenville and the Great Northern Peninsula -  may soon have less money to send back or may be heading home looking for work where work simply doesn't exist.

-srbp-

Funny how things come together #nlpoli

First, there’s a new post at the Monkey Cage that notes a discussion in economist circles about public discussions of economic subjects:

… economics lost communication with policymakers and practitioners leaving room for all sorts of “charlatans and cranks” to fill the void. In doing so, academics ceded important ground to think tanks aligned with one party or the other, to self-appointed economic experts, to business economists maximizing profit rather than public knowledge, and to a media that doesn’t always comprehend the economics that underlie a particular issue.

Second, there’s a short piece in the Telegram that torques the latest Statistics Canada labour force stats:

Newfoundland and Labrador is bucking the national trend, adding jobs in October, even after the rest of the country faces higher unemployment.

The bucking of the trend thing is zero point nine percent year-over-year.  Not necessarily something to write home about, especially considering the national decline the story runs with is actually an increase in employment of 1.2% year of year as well.

One month decline nationally but a year over year gain.  Growth provincially month-to-month and year-over-year.

Unfortunately that doesn’t fit with the accepted narrative of the economic miracle that is Newfoundland and Labrador these days, supposedly.

Third, as if to confirm the generally poor understanding of things economical, there’s the text of a speech Premier Kathy Dunderdale gave to an energy forum in the United States.  It includes copious references to the economic miracle thingy, along with a raft of other completely  - and demonstrably - false claims about Muskrat Falls.

Fourth, there’s a piece in the Atlantic Institute for Market Studies blog that  - purely by coincidence - takes up the economics ignorance theme and relates it to a politician who thinks a remittance economy is a good thing.

Fifth and for those who don’t know, that economic miracle thingy in Newfoundland and Labrador has been built in large measure on shipping workers outside the province and having them ship their paycheques back home. You can get a sense of that, and some of the previous discussions of this from a post at SRBP back in December 2008.

There are parts of the province that are almost entirely dependent on migrant labour and remittance workers.

In others - like Stephenville - the economic disaster of losing a pulp and paper mill on the Premier's watch didn't materialize solely because the workers there could find jobs in Alberta.

But yes, you say, there has been more people coming back to the province since 2007, you say.

At the time, they were coming back in advance of the huge recession.  Just as surely they started heading out again as the economy picked up again in other parts of the country.

Sixth, flip back to that first post on economists and public commentary.  Follow the link back to the original article.  There’s a fascinating discussion about the use and misuse of economic arguments and models. 

Just for the fun of it, then, consider:

• the amount of media coverage the most recent pronouncement by a certain economist on the Hebron project even though it was nothing more than an update of previous assumptions using new assumptions and that they are all – wait for it – assumptions.
• Note, in particular, the references to the relatively better prospects for Hebron  - heavy sour crude in a highly fractured structure - compared to Hibernia, lots of light sweet crude and a fair bit of natural gas. Despite the fact that Hibernia will generate more than double the economic benefit to the province in terms of royalties over its lifespan than Hebron – even using the most recent assumptions – the lesser of the two is apparently worth more.
• Of course that sort of conclusion has nothing to do with the fact that the same economist criticised Hibernia when it occurred and that his old predictions of horror never showed up, in practice.  In no way could his previous, dubious predictions or any other non-economic consideration have in any way influenced his most recent assessment of relative gloriosity for Hebron.
• It’s not like the guy has made some boner projections based on knowledge he acquired from his consulting work for the provincial government and its agencies. Sure he’s talked about debt problems that the provincial government folks might not like but he avoided a discussion of Muskrat because he’s been doing some consulting on the project.
• And it’s not like his public comments for different audiences haven’t sometimes crossed each other much to his embarrassment.
• The one guy has a colleague who has also been known to produce some ideologically tainted bits of commentary.

The media’s relationship to economists is almost as bad as their attachment to the equally dismal science of the pollsters.

But what is truly remarkable here is the way a whole bunch of economist related stuff wound up appearing in different places for different reasons in the same week.

And it all ties together.

- srbp -

Remittance Work and the Newfoundland Economy #nlpoli

For those who have been following the issue, SRBP and others were talking about remittance work back in 2007.

It remains a key part of the current administration’s economic policy.  The proof is in an airport in western Newfoundland that offers parking facilities for patrons who may be gone for upwards of one year.

-srbp-

SOL Special Ballot update: Voting started Monday!

Turns out the eagle-eyed e-mailer wasn't so right after all.

Turns out too, your humble e-scribbler needs to check some fine details sometimes.

Advance voting by special ballot began on Monday, under a set-up proposed by former chief electoral officer Chuck Furey (see story below) and passed in the House of Assembly in June of this year.

The Elections Act, 1991, as amended last spring, allows for anyone otherwise qualified to vote in the province to apply for a special ballot now , get a kit from Elections NL and then write in the name of the candidate, the name of the candidate and party or just the name of the political party he or she wants to cast a vote for.

Who might be affected by this new voting method?

Well, anyone qualified to vote. If you are a "Canadian citizen 18 years of age or more on polling day is qualified to vote at an election if he or she is ordinarily resident in the province immediately preceding polling day," then you can vote.

So like remittance workers who take the Fort Mac express but maintain a permanent residence in the province?

Yep. They're in.

But basically, anyone can vote early provided that, as a minimum, they have a personal reason to believe he or she won't be able to vote on the actual polling day on October 9.

And here's another fun piece of work: under the Act, those ballots will be collected and can be counted before polling day.

The election campaign has been on for months. It got a big boost with the Hebron announcement on Wednesday.

But it will be really interesting to see how many special ballots are cast, let alone how many are cast before the campaign officially starts sometime in mid-September.

We'll know that sometime after October 9.

-srbp-

The Telegram
November 28, 2006

Voting window could widen to accommodate Alberta exodus

Rob Antle
The Telegram

The province may be losing its workers, but it's hoping not to lose their votes.

Elections officials are proposing changes that would allow voters to cast their ballots nearly two months in advance of the 2007 provincial election, to accommodate Newfoundlanders working out west.

"The idea is to try to make it as flexible and as open and as transparent (as possible), and to give everybody the full opportunity and the fair opportunity to cast their ballots," chief electoral officer Chuck Furey told The Telegram.

In 2004, the Williams administration passed legislation setting fixed election dates every four years. The next provincial election will be held Oct. 9, 2007.

By law, the premier must officially ask the lieutenant-governor to dissolve the legislature and drop the election writs a minimum of 21 days before polling day.

Currently, those who can't vote on election day can cast an absentee ballot - called a special ballot - during that 21-day time period.

Furey said his proposal would allow voters to cast those special ballots up to four weeks before the writ is officially dropped.

"We're trying to say, look, if you've got a fixed-date election, why are we limiting it to 21 days, if we have such a migratory and transient population now? They're coming and going - let's try to capture people and give them a full opportunity to vote by
adding that extra four weeks."

The proposal is currently awaiting a decision by the province.

By law, anyone over 18 can vote in a provincial election as long as they have a fixed address in Newfoundland and Labrador.

There are no official figures on how many transient workers commute to Alberta or other destinations for work while still maintaining a home in Newfoundland.

The Newfoundland and Labrador Statistics Agency does not compile such data, saying it would be nearly impossible to gather and maintain.

But there is ample anecdotal evidence confirming the trend.

An estimated 9,000 people attended an Alberta job fair held in St. John's last month.

Air Canada established a daily direct flight between St. John's and Fort Mc-Murray this year to meet the demand of workers travelling back and forth.

And Canadian North is operating weekly private charter flights linking Deer Lake, St. John's and northern Alberta.

Vincent Pratt, from the Triton area, is one of the commuters using that service.

In a recent interview with Transcontinental Media, Pratt estimated that more than half of the 2,000 people employed at his work camp in northern Alberta are from Newfoundland.

Net out-migration increased to more than 4,100 this year, according to provincial figures.

The most recent provincial population estimate is under 510,000, a drop of about 70,000 since 1991.

The burst bubble

Only a few short weeks ago, Premier Danny Williams was claiming that Newfoundland and Labrador would be largely immune from the global economic crisis because it was protected by some sort of magical fiscal bubble.

On Thursday, Williams acknowledged that the bubble burst:

"But going out next year [2009] and the years forward … once you get into the $60 range, then you are starting to look at deficit situations."

Of course to anyone paying attention, Williams' magical bubble claim was preposterous:

1. The provincial government knew for some time  - pre-dating the October 2003 general election - that oil production would decline this year and every year from here onward.
2. The Auditor General, among others, has warned as recently as this past spring that massive increases in public spending since 2005 built on highly volatile  - and hence unreliable - commodity prices were unsustainable in the long run.
3. In October, Dominion Bond Rating Service changed the trending on the provincial government's finances from positive to stable with a cautionary note in its detailed analysis about the heavy dependence on volatile commodity prices.
4. Historic trending, coupled with an analysis of the causes of high oil prices in recent years, strongly suggested a correction would occur.  it was only a question of when the correction would occur.

New wells at White Rose and Hibernia will not restore oil output to the peak level, no matter what the price.  Rather it merely slows the rate of decline.

Hebron is not around the corner.  Even if it is sanctioned within the next twelve months, Hebron will not come on stream until sometime after 2018.  At that point, it will merely replace White Rose, Terra Nova and Hibernia which by that time will have ceased production or be on the verge of being tapped out.  One field cannot replace three.

Of course, we are already looking at deficits on a cash basis.  Bond Papers readers have known that for months.  There have been a series of posts highlighting economic forecasts of extremely poor growth in gross domestic product, forecasts that have only forecast even further shrinkage in the economy. 

On top of that, however, several specific posts addressed in detail the factors contributing to the current and future economic problems to be faced:

• On 27 October, a post described exactly the scenario the Premier confirmed on Thursday. In fact, that post underestimated the scope of the problem by assuming a much higher premium for oil sold in American dollars and then converted to Canadian dollars on a 30% premium.  The Canadian dollar has been trading at a 20% and Brent crude is trading - as of this writing - at around US$51 to $52.  That would translate to about $700 million less in oil revenue next year than this year.  This year's budget already projected a cash deficit of $414 million on current and capital account.
• A 12 March post titled "We live in a fiscal house of cards" describes the massive spending increases over the past four.
• A 21 March post titled "What goes up must come down" described the shaky foundation on which the spending was built.
• A 25 March post titled "Hebron and old people" highlighted two fiscal challenges well known to the provincial government that would boost spending at the very time that - even without a massive economic downturn - would strain the treasury.  One - the impact of demographics - has been known for decades and is unavoidable.  The other - debt for oil projects - was discretionary.

That last one is only one major item which will add to the provincial government's financial burden.  The money needed for the 5% shares of Hebron and White Rose, and possibly for a 10% share of Hibernia South will have to be borrowed, either from lenders or from the other partners.  That debt is not optional any more and in the case of Hebron, there will be no revenue for at least a decade from that project which would make the debt self-sustaining.

Any cuts to government spending in the coming months and years will further tighten the local economy and consumer spending.  The St. John's housing market, for example, is enjoying a boom built almost entirely on public spending.  Some have credited projects like Hebron but since that project doesn't exist yet, it's hard for it to generate anything but marginal economic activity. 

Nor has the St. John's market, for example, been buoyed by remittance workers.  Some of the boom can be traced to that source but the major beneficiaries of migrant labour revenue have been in areas like Stephenville or the Great Northern Peninsula.  St. John's remains a company town and the company is the provincial government.  Hack its spending, either in salaries, programs or capital works and you hack into the local service and retail sectors. Hack into those sectors and consumer spending, another staple of government revenue, will decline as well.

Nor can the provincial government look to other construction projects to boost the economy.  NLRC's refinery is dead.  The gas facility is rumoured to be still on track but until sod is broken, it remains nothing more than speculation.  Harvest Energy's expansion at Come by Chance has been shelved. The Lower Churchill project is also more talk than reality.

More than anything, the looming provincial government financial mess should put paid to the fairy tale that the current administration practices anything looking like prudent fiscal management.  To the contrary, it has shown repeatedly that there is little if any strategic planning to its spending beyond the need to present the best face to the polls or to have spending match income.

The current administration ignored any criticisms of its approach and specifically.  It emphatically rejected constructive alternatives to its spend-happy approach such as creating an investment fund from some non-renewable resource revenues. 

A former finance minister once forecast annual deficits of a half billion dollars a year. His successor borrowed $1.0 billion to fund public sector pensions.  The Premier himself committed to meet any future deficits with increased public debt.

By all appearances, he will get his wish.

The people of Newfoundland and Labrador will get the bill.

It didn't have to be this way.

-srbp-

The economics of Snuffleupagus

Funny thing how people miss stuff.

Like a Bank of Montreal economist who offered this view of the provincial financial state:

"The commodity boom has lined the province's coffers," he said. "Meantime, a reversal in migration flows has sprung population growth back into positive territory after three years of outright declines - an important development given that a lack of skilled labour could be a constraint on the province as offshore development picks up speed and major construction projects come online."

If "lining the coffers" means supported spending way beyond what is sustainable then he's right, but look at that migration comment.

You'll see similar views coming from the provincial government, not surprisingly.  There's lots of talk about the growing population as another sign that the fiscal messiahs are now in charge and that their "plan" is working.

That would be the plan, by the way, that Barack Obama is following.  No, gentle reader, that isn't some effort at humour.  It's a real quote and yes, he believes every word of it.  That's just how brilliant this crowd are.  This plan  - which consists of nothing more grand than spending everything that comes in through the door - must come from all those books, well not books really but articles and magazines the Premier reads 24/7 on a go forward basis to try and keep track of what's going on out there.  

But we digress.

This migration thing.

Three years, eh.

Only goes to show how much these bank economists don't know.

The outmigration problem - and net population decline - goes back to the cod moratorium of the early 1990s. 

It hit some new records in the best years of Danny Williams economic miracle.  That's right.  At a time when the economic miracle was taking hold people were flooding out of the Happy Province in near record numbers. The chart at left gives an idea of how big the problem has been.

There are parts of the province that are almost entirely dependent on migrant labour and remittance workers.

In others - like Stephenville - the economic disaster of losing a pulp and paper mill on the Premier's watch didn't materialize solely because the workers there could find jobs in Alberta.

But yes, you say, there has been more people coming back to the province since 2007, you say.

And yes, that's true, but it isn't because of great economic opportunities in this province.  Look around, especially outside the overpass.  All those enormous, job-creating projects that were supposedly luring people back don't actually exist.

Even though he mentioned them in his financial statement, finance minister Jerome Kennedy told CBC Radio this morning that - in fact - the big projects that supposedly exist to keep the fire going in the economy, stuff like the Lower Churchill, don't actually exist right at the moment.  These are projects Kennedy and his boss are "trying to get money for", according to his own words.

People started coming back to Newfoundland and Labrador, just as they have done previously, in advance of a major downturn in Ontario and Alberta.  Only the stupid came back for jobs that - as Jerome Kennedy knows - don't exist.  The housing boom in St. John's is driven largely by the movement of people within the province toward St. John's where there is at least the chance of decent work. The open taps on those public coffers don't hurt either. You'll find detailed discussions of the whole population thing over at labradore.

It really is funny how people miss stuff. Really obvious stuff that is readily available in the public domain.  People who - presumably - actually keep track of these things like bird-watchers scanning the trees for this winged thing or that.

Evidently not.

Evidently, great big yellow birds get missed a lot.

Aloysius Snuffleupagus would understand.

-srbp-

No tax cuts: Williams

Notice in this short clip that Premier Danny Williams makes the pitch for expanded employment insurance benefits instead of tax cuts. 

"They need the money now, they need to support their families now…"is the quote attributed to Williams but not in the clip.

Odd.

Unless the feds are planning to boost the amount of money paid out in benefits as a percentage of former income or extend the period of benefits the people he is talking about – people tossed out of work due to the recession or, prematurely, due to hasty government action – will get the benefits.

It’s not like people will go without.

Of course, one of the biggest beneficiaries of a revamped EI system in Newfoundland and Labrador would be the remittance workers from the province who were working in Alberta but who are now finding themselves laid off due to the down turn in Fort MacMurray. They’d be bringing a hefty chunk of cash to Newfoundland and Labrador even though they are out of work and won’t likely find one at home.

Nothing better to reduce public frustration with government impotence on the economic development front in some areas of the province than a big cheque from Uncle Ottawa. 

It’s an old line, but a good one.

It’s just an odd one coming from the Premier of a “have” province.

-srbp-

Random-Burin-St. Georges: a quick look at the results

 Random-Burin-St. Georges is a relatively new seat resulting from re-apportionment before the 2004 election.

However, the seat continues to trend as a decidedly Liberal seat, carrying on the trend pre-2004.

The 2008 result is not the one to look at closely here.  rather we need to look at 2006. 

That was the year the Provincial Conservatives threw their political weight behind the federal Conservative party.

The Blue team ran a staunch Provincial Conservative closely associated with the Premier. 

She had campaigned relentlessly between 2004 and 2006 against the incumbent, largely by using a refugee family's plight in a church basement as a rod with which to beat the incumbent and his party.

It apparently escaped her notice that the party she ran for had a policy diametrically opposed to her own stated position on this issue. In the end, her campaign was also caught up in the in-out scheme even though, as these results show, Random-Burin-St. Georges was not a lost cause for the Blue team.

The New Democrats ran a candidate from outside the riding in that election.  Not surprisingly, she fared considerably worse than the popular fisheries activist the NDP had run in 2004.

In that race, the Conservatives appear to have pulled voters who had voted NDP in 2004 and added a few thousand more besides.  The Liberal candidate - Bill Matthews - also increased his vote share.  Overall, turnout in the riding increased by slightly less than 4,000  voters.

What we don't see here is a collapse of the Conservative vote.  Rather, in 2008, it sank back to what essentially appears to be its core. The New Democrat vote declined by 3244 but did not slip back to its 2006 level.  The Liberal vote declined by 1100 votes.

Overall, it would appear that the New Democrats in 2008 had picked up some soft vote that in 2006 had gone to the Conservatives.  The bulk of the 2006 Conservative vote stayed home.

More than in some others, the vote pattern in this riding may have been affected by the remittance labour force from the Burin Peninsula currently working in Alberta. Without more detailed analysis it is difficult to know how much of this vote pool actually turned out and if it did, how it voted.

Even though the 2006 incumbent did not seek re-election, this is not a riding that was affected by Family Feud as obviously as in the three ridings on the Avalon peninsula.

It is interesting to speculate, though, what might have happened had the Provincial Conservatives taken an entirely different approach in 2008.

-srbp-

The fault, dear Wade…

Wade Locke doesn’t like a story in the Thursday Telegram. He dislikes it so much he called a local radio talk show to set the record straight.

Locke didn’t accuse the reporter of misquoting him in exactly those words, but he did end the conversation with the radio host by suggesting that maybe his comments were deliberately misrepresented.

Locke said something along the lines that he couldn’t imagine anyone reading the comments and coming to the conclusion he was suggesting the economy might be headed for disaster.

Locke went out of his way in the Open Line call to repeat phrases along the lines of “the future is bright” and “the future is rosy.”

The root of the issue is in comments Locke made for a news release from the Atlantic Provinces Economic Council. The headline on the story by Peter Walsh reads “N.L. economy facing disaster: experts”. The rest of the story summaries the comments from Locke and fellow economist Scott Lynch.

Here’s exactly what APEC attributed to Locke before getting into the specific suggestions Locke and Lynch had for the federal government’s budget:

Depressed commodity prices continuing throughout the year and longer would have a disastrous impact for Newfoundland and Labrador from a fiscal perspective and for the continuation and expansion of major resource projects within the province. A continuation of the existing tight credit market conditions will adversely impact small export firms and fishing enterprises and will be felt disproportionately in rural parts of the province.

If the U.S. economy continues to lose jobs as it did last quarter, then real GDP would decrease by 5% on an annual basis, which would produce a significant deep and prolonged recession. Forecasts of U.S. growth at -2.5 to -3% with recovery in late 2009 assumes that the Obama stimulus package removes deflationary expectations and returns the economy to its trend growth rate. For this optimistic scenario (successful stimulus and late 2009 recovery) Canada could experience a 1 to 2.5% decrease in real GDP, with the earliest recovery in September/October.

However, should the U.S. recession reflect the 5% decline in real GDP then Canada, as a small open economy, will follow the U.S. and be faced with a significant period of rising unemployment and declining economic activity, with recovery occurring in 2010. If, on the other hand, the recession in the U.S. is closer to the pessimistic scenario, then this may produce a decoupling of the Canadian/U.S. trade relationship and in that case, predicting possible outcomes becomes very murky.

It’s hard to imagine anyone reading that and not coming to the conclusion the boys were suggesting there could be disaster out there.

In fact, that’s exactly what Locke said in the very first sentence:

Depressed commodity prices continuing throughout the year and longer would have a disastrous impact for Newfoundland and Labrador from a fiscal perspective and for the continuation and expansion of major resource projects within the province.

Locke’s problem likely isn’t with the Telegram, Peter Walsh – who wrote the story – or indeed with APEC.

Rather his problem is that his APEC stuff wasn’t on the same page as the line being pumped by Locke and the provincial government before Christmas. The government crew have been in lock-step with one of their favourite outside consultants on this economic bubble thingy since the get go.

They were matching up word-for-word before Christmas and Locke this morning and the APEC suggestions sounded almost like a replay of what the Premier delivered to the feds last week. [edited to clean up the sentence jumble; link added to Premier's comments.]

Number One thingy: reform employment insurance to give people more money for longer.

Number Two thingy: Build ships and dole out the money so Newfoundland shipyards can get the work.

Number Three thingy: Lower Churchill. Never mind that the thing is shaky, let’s get people out there cutting brush and doing stuff of some possible, theoretical kind.

The odd thing is that Locke’s APEC assessment is actually closer to the truth than anything else. If commodity prices stay down for the rest of this year, into next year and maybe a few years after that, then there will be disaster.

But it won’t be a disaster necessarily for Newfoundland and Labrador, as in the province. It will be a disaster for Newfoundland and Labrador, the provincial government.

There’s a difference even if some people tend to forget that in these “l’etat c’est moi” days. That’s not to say there won’t be problems in some sectors of the local economy. Tight credit is going to force the fishing industry to sort itself out once and for all. Lower prices for minerals will mean that mines will shut down for periods and lay people off.

And let’s not forget that a slow down in Alberta will mean that remittance workers will either roost here and agitate for government help or leave altogether, permanently.

But still, there are mines that will be working away. There’s a new project coming for Long Harbour and the oil industry will continue to do very well, despite lower prices and reduced production. After 2009, production will pick up again. If we look farther out, then Hebron will come along.

The disaster Locke noted in his very first sentence for APEC (unless APEC misquoted him terribly) is really one for the provincial government’s treasury. Their disaster is entirely self-made. They boosted spending based solely on highly unreliable commodity prices and foolish predictions of ever higher or constantly high prices. They did very little to pay down public debt (accumulated borrowings) or sock away money in a rainy day fund. The provincial government also committed to a raft of borrowing to support the oil plays.

That put the provincial finance minister looking at 2009 with a shortfall of over a billion dollars in cash and demands for higher spending. Downturns in the market put extra costs in there to cover pension shortfalls. The 21% wage increase promise looked great politically but it was way beyond the rate of inflation even in the headiest of commodity price days over the past couple of years.

That sounds pretty much like a disaster to anyone who cares to take a look at it either from an economic or public policy standpoint.

It’s hard to imagine anyone could look at that and not see the disaster waiting to happen. Now the disaster doesn’t have to happen if the government shifts its policy direction in a number of significant ways.

That would require people in power to look at the world as it is and take appropriate action. But if think we live in a bubble, you’d be almost guaranteed to head down the wrong track.

You’d keep smiling all the way to disaster.

And it would be your own fault.

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Local remittance economy picks up speed

Fish plants in the Maritimes are increasing offers in the hopes of luring Newfoundland and Labrador workers to their companies as migrant labour.

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Thank God for snow days

Seems like Simon's posts are better - if that's possible - when he's stuck indoors.

1. A short piece on the growing tendency of elected officials hiding behind appointed officials...likely telling us how "accountable" they are all the while.

2. A longer piece on how Newfoundlanders (and likely less so Labradorians) are joining the ranks of the world's remittance labourers.

And their government is jiggy with that.

Migrants and Migrant Labour #nlpoli

Russell Wangersky devotes his Tuesday column this week to migration and labour.  He starts out with a discussion of the recent quarterly population figures from Statistics Canada, notes that they run against the popular story that things are booming around here, and then segues neatly to a discussion of local labour shortages.

There is a feeling, at least in government, that Newfoundlanders and Labradorians away are somehow a sort of flexible employment pool, skilled workers who are willing to give up their stable, long-time Alberta or Saskatchewan careers to move their families back here at the drop of a job hat. 

Along the way, Wangersky hits a familiar point about how some people seem to think that the solution to our economic problems rests entirely with people who are supposedly ready to come home at any price.  They are homing pigeons, supposedly. Before you get too upset at that idea,  just remember that the Old Man Hisself once used that phrase.  Unfortunately, the CBC link in this old post is now dead but it does note that Danny Williams made the comment during a trip to Alberta sometime in 2007.  Maybe someone at the Mother Corp can dig out the link.

The other term that the word "migration" brings to mind is one of the solutions the current crowd running the place have used to cope with their stunning lack of success at economic development.  The term is  migrant labour.  Here's an excerpt from a post - "The Economics of Snuffleupagus" - that should give you a sense of how persistent the migration issue has been for the Conservatives:

It hit some new records in the best years of Danny Williams economic miracle.  That's right.  At a time when the economic miracle was taking hold people were flooding out of the Happy Province in near record numbers. The chart at left gives an idea of how big the problem has been.


There are parts of the province that are almost entirely dependent on migrant labour and remittance workers. 

In others - like Stephenville - the economic disaster of losing a pulp and paper mill on the Premier's watch didn't materialize solely because the workers there could find jobs in Alberta. 

But yes, you say, there has been more people coming back to the province since 2007, you say. 

And yes, that's true, but it isn't because of great economic opportunities in this province. 

Look around, especially outside the overpass.  All those enormous, job-creating projects that were supposedly luring people back don't actually exist.

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