The Way Forward #nlpoli

Last December, Dwight Ball laid out his plan to deal with the provincial government's financial problems.

Ball made the comments to CBC's David Cochrane a week or two after he'd been sworn in.  This was after he'd been briefed on the provincial government's financial situation, so he'd had a chance to get over any shock and figure out a plan to cope with an unprecedented financial mess.

Depending on whether you go with what Ball said last year or what he said at the Liberal fund-raising dinner last Thursday,  Ball was totally shocked to find out how bad things were or didn't bat an eyelid because he knew exactly how bad things were.  Take your pick.

Either way, here's what the newly minted Premier said were his three ways to handle the unprecedented financial mess:

Dependence and Independence #nlpoli

For those who might be interested,  Tuesday's post on Churchill Falls and Wednesday's post on the road to Muskrat Falls are a summary of a draft on hydro-electricity development that's been in the works for a couple of years now. It was supposed to be the chapter of a book but it got out of control and might be worth turning into a book.

Sometimes you get caught up in the details of things so it's useful to take a step back and look at the broader themes that emerge from your writing.  One that hadn't appeared before now was the consistency that ran from Joe Smallwood in 1949 through Moores and Peckford in the 1970s and 1980s,  Wells and Tobin in the 1990s and finally Roger Grimes.  

Each of their administrations had as its goal the development of the provincial economy to the point that the provincial government would no longer be what Smallwood called a poorhouse. His vision was a "growing prosperous province of independent families."  That's not surprising if you know anything of Smallwood's experience in Newfoundland from the 1920s onward.  He had disagreements with the federal government, the most famous being the 1959 row over Term 29 payments.

In-house and cheap #nlpoli

Provincial government communications consists chiefly of making up vacuous comments for ministers to recite.

They are called key messages.  In the uncomms-speak of the government bureaucrats,  they are KMs, pronounced Kay-Emmzzz.

On Thursday, two rating agencies downgraded the province's rating with a negative outlook.  Not surprising but definitely not helpful since the government has already exhausted its political capital for nothing thanks to the complete disaster last spring.

Anyway, let's take a look at what Moody's said about the government's finances.  Specifically let's look at what they said about the negative trending.

Being there #nlpoli

Thursday is July 14.

Bastille Day.

It's also another anniversary.

Dwight Ball has been in office seven months.

In the latest edition of The Overcast, publisher Chad Pelley asks "What do we do if Dwight Ball resigns?"

That's a  reminder of where we are in this province.  A mere seven months into his first term, after winning a comfortably-large majority government,  people are demanding that Dwight Ball resign.  In the most recent poll Ball's personal popularity is south of 20%.  His party is in the same neighbourhood as is the level of satisfaction with his administration.

There is no precedent since 1949.   No precedent for the dramatic drop in a Premier's public support. No precedent for the calls that Ball resign.

And certainly no precedent for an article with that title that isn't panicked at the prospect the Premier might resign.

Developing a sustainable, diverse economy #nlpoli

When it comes to developing a successful economic development strategy, Edsel Bonnell has advice worth heeding.

He co-chaired the team that developed "Change and Challenge," the 1992 Strategic Economic Plan. The SEP "called for a transformation of culture, away from a dependence on government initiatives and government control and toward one based on individual initiative and private-sector entrepreneurship.

"The plan did not promise easy answers, nor did it fixate on one sector of the economy or on large megaprojects. Change and Challenge represented the result of a long development process that was itself crucial. The long period of discussion and consultation both inside and outside government helped to develop a consensus among those who took part in the discussions."  

Everything in the SEP represented a departure from the unsuccessful approaches we had already tried in the province,  all the ideas we knew were unsuccessful and yet the ones that the  Conservatives put back in place after 2003.  In many respects, it's how we got into our current financial mess... again.  

The process  - "the long period of consultation and discussion" - was an important part of the SEP's success.  The discussions helped build a strong agreement throughout the province about what needed to be done to develop a sustainable, diverse economy.  Not surprisingly,  Edsel recommends we try the same thing again.  He's described the approach very simply in two recent letters to the Telegram:  June 13 and June 18.   

Edsel may be a bit optimistic about how fast we might develop the plan:  this fall would be very fast.  But there is is merit in the idea of bringing all the parties together to set an apolitical task force on the track to build a plan to get us out of the very big hole in which we find ourselves. The politicians can't do it alone.  The bureaucrats can't,  and the business community can't. Nor can ordinary citizens fix things all by themselves.

-srbp-

A chasm they can't ignore #nlpoli

That didn’t take long.

The fundamental strategic political problem Dwight Ball and his senior advisors have been busily building since last year exploded on Wednesday with the leak of a treasury board directive to departments, agencies, boards, and Crown corporations.

Ball has been promising that he would deal with the provincial government’s mess without layoffs.  As recently as last week Ball said that attrition – job vacancies due to retirements – were the only way he’d consider job reductions in the public service.

Yet,  the ministers of the treasury board have recently sent a note to departments, agencies, boards and Crown corporations asking them to come up with options to reduce spending by 30% over the next three years. There is no commitment that government will cut that much.  This is an exercise in generating options for the cabinet to consider.

Process Question #nlpoli

Finance minister Cathy Bennett told CBC that "everything is on the table and we have to make sure that we don't leave anything that potentially could help us move to the destination that we all want to get to...So, my answer would be everything is on the table."

Soooo, my question would be "where is that destination?"

Consistency #nlpoli

"We need to find a way to bridge us [from] where we are currently until the commodities rebound and be [sic] the significant contributor we need them to be." That’s what Premier Dwight Ball told NTV’s Mike Connors in an interview that will air in full this coming Sunday.

The words are very familiar. 

We heard them just a few short months ago.

"I have laid out a five year plan,” Conservative finance minister Ross Wiseman told the House of Assembly last spring, “to bridge the commodity revenue dip and get us back to surplus, step by responsible step." 

The Narrative War #nlpoli

The day after a massive Liberal victory in the general election,  CBC’s David Cochrane posted an analysis piece on the new administration.  CBC distributed it nationally.

Cochrane described Dwight Ball as a man “unlikely” to be Premier:

Four campaigns. Two losses. Two wins.  By a combined 75 votes.

Cochrane’s account leaves out relevant context.  When it comes to describing how the Liberals won,  Cochrane focuses not on anything the Liberals did but rather a string of Tory blunders that  - according to Cochrane  - made it easy for the Liberals to win the election essentially by accident.

And now, as Cochrane’s story goes, Ball The Unlikely will have to face enormous financial problems using a plan that Cochrane claims “was greeted with enormous skepticism in the final week of the campaign.”

Brain Farts #nlpoli

Some people have a hard time with the idea that a great many political decisions are not the product of deep thinking, extensive research, and agonizing debate.

They come from brain farts.

You can hear that pretty clearly in the most recent episode of On Point. The political panel talked about a couple of cock-ups by the Conservatives last week.

 In among the few nose-pullers the panel tossed out, the basic elements of the story were there.

A Greek Tragedy #nlpoli

While you are busily mulling over the possible implications the drop in oil prices might have on the provincial government’s budgets,  distract yourself by pondering some of the other implications of low oil prices on the provincial economy.

The Paris-based International Energy Agency thinks that about 25% of Canadian energy projects would be in jeopardy if oil goes below US$80 a barrel and stays there for any length of time.  As the Financial Post noted in its report last week on the IEA opinion,  that would put a number of newer more expensive projects in Alberta and maybe in Saskatchewan in doubt.  Norway’s Statoil has already shelved an oil sands project.

Globally,  the low prices would also make about three percent of all energy projects dodgy propositions.  Some of those are deep water projects like those in the Orphan Basin offshore Newfoundland. The Orphan isn’t turning up in any of these global forecasts because people don’t know enough about the prospects there to determine if they are even commercially viable.

The Politics of Fashion #nlpoli

As it turns out, Corporate Research Associates president Don Mills had lots to say to the St. John’s Board of Trade besides a few guesses.

Newfoundland and Labrador can’t create economic booms in every nook and cranny.  Instead, we should focus on growth centres where people are moving anyway.

Such radical - dare one say revolutionary  - ideas. How blessed the Board of Trade members were to hear these comments the likes of which they have never heard before.

Surely.

Never heard the likes of it before, except for the 1992 Strategic Economic Plan.

Damn the finances! Full spend ahead! #nlpoli

We don’t know precisely what economist Wade “the Can-Opener”  Locke is doing to earn his loonie from the Newfoundland and Labrador taxpayers.

Finance minister Jerome Kennedy hired him this year to give advice on how to manage the province’s financial mess.  According to the Telegram his contract caps of his pay at $75,000 for a couple of months work.  Locke says regardless he’ll only bill a dollar.  That’s decent of him given that the university is giving him 80% of so of his usual paycheque now that he is on paid research leave from his usual job.

Locke has given the provincial government advice before on everything from Equalization to the annual budget to Muskrat Falls.  We don’t know what, if anything, he got paid for those other stints, but that’s really neither here nor there.  The thing is that Locke is closely tied to the current administration and to what they are doing.

We may not know what else he has been doing the past few weeks but Kennedy released a short memo Locke sent him on March 25, the day before the provincial budget.  It’s a telling little document in many ways.

We can get there from here #nlpoli

People across the province are astounded that some students at Memorial University cannot correctly identify countries, continents, and oceans on a map of the world.

Geographic illiteracy shocks people.  Well, it should, just like they should be appalled that 44% of the people over 15 years of age in this province read below the minimum level needed to function in modern society.  And they should be left speechless at the idea that 66% of the people in Newfoundland and Labrador over 15 years of age lack the numeracy skills for modern society.

Some help for the St. John’s Board of Trade #nlpoli

…who have suddenly discovered that the provincial economy is in serious need of diversification: a 2010 series called the Fragile Economy.

• Staying the course (March 2010)
• Reductio ad argentum (April 2010)
• …and two steps back (April 2010)
• Now three steps back and loving it (April 2010)

If they really want to get a handle on economic diversification, BOT chair Steve Power and his colleagues could start by reading the 1992 Strategic Economic Plan.  What the Board of Trade has been slavishly been supporting since 2003 is diametrically opposite to the 1992 SEP and its call for diversification based on  – gasp! – entrepreneurship, competitiveness, and innovation.

Frankly, it’s been pretty bizarre since 2003 to have a bunch of business owners who endorsed excessive public sector spending and clammed up about entrepreneurship, competitiveness and other subversive ideas.  In November 2010, here’s what the chair at the time said:

Chairman of the Board of Trade, Derek Sullivan said government contracts give a competitive advantage for local businesses and “can be a very powerful and reliable revenue stream.”

-srbp-

Going down by the front end #nlpoli

In the late 1980s, the Progressive Conservative administration in Newfoundland and Labrador committed more than $11 million  - ultimately $22 million -  to a plan to grow cucumbers and tomatoes using hydroponic technology developed by Philip Sprung.

Sprung predicted his technology would grow almost seven million pounds of cucumbers and tomatoes in its first year of operation and upwards of nine million by the end of five years.  Sprung had little evidence to back the claim from his test facility in Alberta.

An assessment by provincial officials concluded that the Sprung’s projections were impossible to attain.  Aside from any technological miracles, the Sprung predictions would need the average daily sunlight of Cairo to stand a chance of coming true.  Mount Pearl  - the site chosen for the greenhouses – didn’t even come close to those light levels in the very best years.

Still, the government persisted.

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

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

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

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

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

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

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

…

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

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

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

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

Huge, it is.

Bigger than humans have ever done before on the planet. 

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

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

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

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

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

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

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

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

- srbp -

All they want is fairity #nlpoli

The people who run the province’s town and cites are looking to get a new financial arrangement from the provincial government.

Last week, the municipalities federation held an emergency meeting to discuss recent developments:

“What we’re asking government for today is very clear,” said Rogers. “Short-term help in this 2012 budget and a commitment to participation in the development of a long-term, strategic plan for the municipal sector.”

Sounds reasonable enough. 

Odds are they won’t get anything in the near term. Give a listen to what municipal affairs minister Kevin “Fairity” O’Brien said at the outset of an interview with On Point with David Cochrane this past weekend. O’Brien quickly started into a recitation of how much money the provincial government has spent since 2008 on municipal infrastructure and things like fire trucks. he finishes off with the warning that any new financial arrangement has to be sustainable for taxpayers.

Coming from a guy who has helped boost provincial government spending to irresponsible, unsustainable heights without a toss about such ideas, those words sound a bit like a lead bell.  

O’Brien is using coded language.

What he really was telling municipalities president Churence Rogers is a simple “f*ck off”.  No one should be surprised if Rogers has heard something along those lines over the past few weeks, perhaps even from O’Brien himself.  Maybe no one used the “f” word exactly, but language likely would have had the finger buried in it.

You see it all comes down to money, power and control.

Right now the provincial government has all of it.

And they will not give up any of it.

The provincial government isn’t interested in changing municipal funding at all.  Any change to funding would have to transfer some of the provincial cash or the ability to raise cash over to the towns and cities. 

If the province doesn’t have that cash, then it no longer has the power to control what goes on in the province.  Fairity O’Brien may not have deliberately mentioned infrastructure and fire trucks, but there’s no coincidence that he did.  That money and those items are part of the old pattern of politics in this province: patronage. 

And that’s the money, power and control we are talking about.

None of that has anything to do with the very serious problem in many towns and cities in the province but frankly provincial politicians like O’Brien don’t give a rat’s backside about that. 

Many parts of the province aren’t really doing all that well, despite the reports you may have heard.  They don’t have the municipal tax base to come up with the sort of cash of their own they need to put into road work, water and sewer projects and other infrastructure.

Problems in the fishery, the loss of paper mills have all taken their toll.  People may be working in Alberta and still living in Stephenville and Grand Falls-Windsor but it’s local companies that pay the taxes that help to keep the street lights on, quite literally.

What’s more, way too many of the towns on the island are full of retirees and not much else.  People on fixed incomes don’t have the ability to tax up the tax slack.  Those towns also have problems finding people to volunteer for municipal services like firefighting.

There’s a bit of a false impression of a boom in some places.  People in Grand Falls-Windsor thinks everything is smurfy.  Ditto Gander.  But in both these towns the major economic engine is the provincial government and a level of spending that we know is unsustainable. 

What’s more, the provincial government doesn’t pay taxes to municipalities.  They do – however – collect taxes on every municipal purchase through the harmonised sales tax (HST).  The effect is to claw back a portion of the money the province grants in the first place.  Until the fictitious oil royalty claw back, though, this one actually reduces the amount of money the towns and cities in the province have available to actually spend on services to residents.

And then when towns and cities go looking for cash, politicians like Kevin O’Brien start coming up with all sorts of excuses for why things must remain as they are.  The miserable, dark joke in all that shouldn’t be lost.  Towns and cities in the province are looking for a fair shake on provincial funding.  Kevin O’Brien is the guy who told us all that the province just wanted “fairity in the nation.”

David Cochrane exposed the fundamental bullshit of government’s position.  Cochrane asked why it was that O’Brien was talking about the impossibility of making commitments of funds for a few millions in the short term to towns and cities while government was prepared to forecast the price of oil for 55 years in order to justify Muskrat Falls.  All O’Brien had was talking points.

O’Brien also couldn’t explain or justify the four years that it has taken for O’Brien to start getting around to talking about a new financial arrangement for towns and cities.  Municipal leaders have asked for predictable funding.  All O’Brien has said is that he and his colleagues in government are willing to talk.

The real bottom line is that people like O’Brien who have politicized the purchase of bed pans and fire trucks simply want complete control over spending in the province for their own, pork-barrel, patronage reasons.

All municipal leaders want is fairity.

They aren’t going to get it from Kevin O’Brien.

- srbp -

. 

Literacy plan still MIA #nlpoli #cdnpoli

Newfoundland and Labrador has one of the highest illiteracy rates in the country.

There’s a huge demand for skilled labour in the province and that illiteracy level doesn’t help.

The 1992 Strategic Economic Plan recognised the connection between literacy and economic development:  it’s not like government officials weren’t generally aware of the concept.

And yet:

“There are no province-wide initiatives to deal with family literacy, aboriginal literacy, English as a Second Language, GED (General Educational Development) preparation or workplace literacy and essential skills,” [Literacy NL executive director Caroline Vaughan] said.

That’s a killer quote taken from a story the Telegram ran Monday about a news release from Literacy Newfoundland and Labrador.  They are wondering where the heck the strategic literacy plan went. 

The Telegram again:

Literacy NL said is was told by the province last September the plan would be released in the 2011 calendar year.

In case you are left scratching your head, be assured that the provincial government started work on a literacy plan in 2008.  They even had consultations.

As you can see from the picture, they started work on it so long ago that the link is dead from the news release announcing the consultation to the consultation document. In fact if you try and find anything on “literacy” in the education department, you’ll find yourself out of luck.  Most the links in this search your humble e-scribbler tried on Monday night turned up 404s – page not found. Ditto another search run from the front page of the government website.

You really couldn’t make this shit up.

If you want a strategic literacy plan from the government, you can find one.

It’s a link to one developed 11 years ago when Judy Foote was education minister.

You really, really couldn’t make this up.

And if you want to find the adult learning and literacy section, you will have to guess that it is now part of Joan Burke’s new department of advanced learning and skills development.  The government’s website won’t tell you where it is, though.

A search of the advance education department website for “literacy plan” redirects to a search of the old human resources, labour and employment department. That’s foolish since adult literacy belonged to education before the recent re-organization. Luckily for the government types, people who have a problem with literacy likely don’t have enough computer knowledge to get totally frigged up by the government’s website. They wouldn’t be able to get to the advanced education site to get misdirected by the search engine.

You really, really, really could not make this stuff up.

That’s not to say that successive ministers of education haven’t done something about adult literacy.

In 2010, education minister Darin King issued a news release that endorsed an awareness program on literacy being launched by the four Atlantic provinces.

In 2009, the education department issued a news release on behalf of the Council of the Federation to announce the Council had recognised someone here for achievement in adult literacy.

Aside from those news releases, though, the education department hasn’t been able to deliver the latest update to the provincial literacy plan. 

Regular readers of these e-scribbles will be noticing a familiar pattern here.  For whatever reason, the current administration cannot seem to deliver anything. They’ve got a chronic problem.:

• Serial Government:  the “Northern Strategic Plan” that was out of date before they released it.
• Serial Government:  the original business department.
• What plan was that again? The NSP also wasn’t much of a plan;  it was pretty much just a list of spending.  Sounds suspiciously like the $5.0 billion infrastructure “strategy” in the most recent Auditor General’s report.
• A list as long as your arm:  Check the section on building maintenance in the AG report and you’ll find another example of government’s fundamental management problems.  Hundreds of buildings need repairs.  Some need so much overdue maintenance work it would be cheaper to tear the buildings down and build a new one.
• The missing oil royalty regime:  according to the energy plan from 2007, the Tories were supposed to deliver a natural gas royalty regime (under development since 1997) as well as a completely new oil royalty regime.  They posted something called a gas royalty in April 2010 but the thing isn’t back by regulations.  Is it real or just a fake?
• There’s also the churn in senior management.
• And the fact that massive cost over-runs and delays are now the norm in provincial government public works.

The literacy plan joins a long list of commitments that are missing in action or went missing for years.

You can read Literacy NL’s  submission to the consultation on the literacy plan here.

- srbp -

Undisclosed risk (September 12, 2007)

[Editor's Note:  This is a post originally scheduled for publication in September 2007.  For some reason, it never appeared. Here it is, as originally written.  Note that some of the links may not work].

Take a look at the energy plan consultation document released in November 2006.

Try to find any reference to changing the province's generic oil royalty regime.

You won't find one.