Change and Challenge: Chapter Four - Creating a competitive edge (4)

Government Operations

The public consultation process on the development of the strategic economic plan highlighted people's feelings that they are over governed. The public feels the Province is over-regulated, that Government is too inflexible, rigid and complex, and that there is a definite need for a change in the attitudes and commitments of politicians, bureaucrats and the general population alike. People expressed a great deal of frustration about the number of development agencies and the confusion, duplication and red tape which they create. The public emphasized the need for better co-ordination between both federal and provincial agencies; the need for front-line managers to make decisions; the need for government officials to have more flexibility in making business decisions; the need to streamline the process to speed up decision making; and the need for educational and training initiatives within Government to provide public servants with sound management skills, and which would stress the importance of providing quality service to businesses.

Government itself has recognized these concerns and has already taken action to address them. The Province has made considerable progress toward reducing duplication with the consolidation of its business support activities within Enterprise Newfoundland and Labrador, which has also been mandated to co-ordinate regional activities.

The current challenge to Government is to provide better service in a time of diminishing resources and increasing demands for service. Government is, therefore, now committed to the introduction of a long-term program to improve the quality of service to clients. This "service quality initiative" will be a comprehensive approach intended to transform Government's organization from a process-oriented system to a supportive client-focused, results-oriented system. This will require continuous support and commitment from management and an emphasis on open communication, teamwork, innovation and training.

While the greater decentralization of decision making was a recurrent theme in the public hearings of the Royal Commission on Employment and Unemployment six years ago, the issue did not generate as much interest in the public consultations for this strategic economic plan. This may reflect satisfaction with the decentralization of decision making now in effect in the five ENL regions. Government believes that rather than imposing regional decisions from the top, it is better to let regional organizations emerge as needed from the community level.

During the public consultation process the public did indicate a desire for improved co-ordination among departments, more decision making at the local level, a greater sensitivity by regulatory departments and agencies to economic development issues, and an improved attitude and commitment from the existing political and bureaucratic system. There was also general agreement that Government should not be the operators of businesses but instead should establish a positive economic climate for the private sector.

Strategy Statement. The Province mil take steps to ensure that the structures and processes of government departments, particularly those involved in economic development, are streamlined to provide for greater efficiencies and responsiveness in delivering services to the public. Government mill become more focused on serving the client. Likewise, the public will have to recognize that government funding and programs are not limitless and priorities will have to be established for the provision of services.

Actions. The Province will:

30. Establish, within each Enterprise Newfoundland and Labrador region, a process to allow for the better co-ordination of economic development activities across all applicable provincial government departments and agencies. ENL will take the lead in the process by establishing regional groups composed of the senior official of each of these organizations to:

• share information on respective activities and priorities in the region;
• improve the timing of decision making on economic development activities;
• assist in developing a client-Centre approach to program delivery within all departments and agencies working in the regions, particularly programs relating to administrative and regulatory functions affecting economic development decisions;
• advise departments on the appropriate level of authority that should be delegated to local and regional offices;
• establish guidelines which give priority to processing proposals or applications related to economic development; and
• recommend courses of action to co-ordinate federal and provincial
  activities related to economic development, and to reduce duplication of government services and programs.

31. Avoid providing services where they can be provided by the private sector.

32. Implement a Service Quality Program within the public service. This program will make the public service more client oriented, permit more flexibility and accountability within the system, provide for a more decentralized approach to program decision making and ensure a simplification of rules, policies and procedures.

33. Request the Advisory Council on the Economy to make periodic reports and recommendations to the President of the Executive Council on the need for improving the efficiency and effectiveness of government services delivery.

34. Continue the review and elimination of the various fees and licences which directly affect economic development initiatives.

Tax Initiatives

The Province must ensure that its business tax climate will complement its economic development objectives. Both established and new businesses must be assured that the tax regime is fair and equitable. The tax regime has to be structured to provide a business environment conducive to investment and economic growth, and we must remove disincentives which keep businesses from locating here. Although the overall tax burden on businesses in Newfoundland and Labrador is less than in Canada as a whole, it is currently somewhat higher than in the other Atlantic Provinces.

Responsible tax reform must recognize that the Province has to operate within the constraints of Federal-Provincial tax agreements and has to generate a sufficient revenue base to maintain an acceptable level of public services.

Strategy Statement. To strengthen the Province's ability to attract new investment, Government will intensify its comprehensive examination of the tax system in consultation with the business community and others. The Province will ensure that the tax system encourages economic development, and that the private sector operates under a tax system that allows local businesses to compete equitably with those in other jurisdictions.

Actions. The Province will:

35. Pursue at the earliest opportunity harmonization of the provincial Retail Sales Tax (RST) and the federal Goods and Services Tax (GST) and provide full input tax credits for RST. Harmonizing the two taxes will greatly reduce the tax burden on business, stimulate increased economic activity in many important areas and be essential for international competitiveness in the long term.

36. Adjust taxes where it can be demonstrated that these would have a positive impact on investment and economic growth without compromising the overall fairness and efficiency of the tax system.

The Province will move to reduce the corporate tax rate for small businesses, including small manufacturing and processing businesses, to 5% from the current level of 10%. In addition, the current general manufacturing and processing rate will be reduced to 7.5% from 17.5%, and the general corporation tax will be reduced to 16% from the present rate of 17%.

37. Conclude the review of our mining tax regime and make amendments which will ensure a positive climate for investment in mineral development in the Province.

38. Recommend a standardized common assessment base for municipal business taxes, with particular emphasis on the tax burden on capital and equipment.

39. Investigate the feasibility of using the tax system to encourage an employee equity-investment program.

Innovation and Technology

Our past and future economic circumstances are tied closely to export markets. Economic considerations associated with geography and proximity to markets are, however, decreasing in significance. Instead, technological development and adaptation are becoming important determinants of competitiveness.

The Province's low level of productivity and slow adoption of new technologies have constrained economic growth and development in the past and will continue to do so unless our industries increase their use of new technology. The Province will therefore actively implement its Science and Technology Policy to ensure that industry is technologically equipped, and capable of competing locally, nationally and internationally.

Government will also play a proactive and sustained role in concert with research institutions and the private sector in pursuing new areas of technological development. Although this will inevitably result in some risks and additional costs, it will produce better links between institutions, governments and the private sector. Emphasis will be placed on marine-oriented industries where we already have a comparative advantage, as well as on other industries which demonstrate they can develop competitive advantages.

Strategy Statement. The Province will demonstrate to the private sector that innovation through technology development and adaptation is essential to improved productivity and competitiveness. Programs mil be made available to the private sector to develop competitive advantages through the transfer of technology-Actions. The Province will

40. Implement programs to develop further expertise in our research institutions and business community focusing on marine activities, including communications, the sciences, cold-oceans engineering, food and fish processing, and related manufacturing, as well as cold-oceans technologies related to offshore oil and gas exploration and development, and to promote this expertise internationally.

41. In partnership with the Federal Government, implement programs to commercialize and market new technologies, products and processes, and to encourage quality enhancement, plant modernization and training.

42. Within the bounds of national and international trade agreements, develop a strategic procurement program aimed at research companies who have the potential to become competitive suppliers of goods and services in domestic and external markets.

43. Assist Memorial University and other post-secondary institutions to develop better links and partnerships with the private sector and to market more aggressively the capabilities of local research institutions and organizations.

44. Reallocate human resources within Government to give priority to the implementation of the Science and Technology Policy and to work with industry and the general public to demonstrate the importance of a technologically progressive society.

Environmental Initiatives

The past decade has seen a sharp rise in environmental awareness and concern throughout the world. The Province recognizes the potential economic consequences of such problems as global warming, acid rain and changes in the stratospheric ozone level. While we may not have a large impact on the global situation, we accept our responsibility to help resolve these issues. We will also seek solutions to our own problems, such as waste management, and will continue to participate in efforts to protect and restore the natural environment wherever it is threatened.

Vast areas of Newfoundland and Labrador remain unspoiled and must be protected for future generations. However, our environment is also an important economic asset which must be used wisely. Tourism and recreational fishing, for example, are directly dependent on a clean environment.

All resource developments will be properly managed to ensure they are implemented in accordance with the principles of sustainable development, incorporating the values of multiple use, considering wildlife habitat, watershed management, recreation and tourism potential. Public input into major developments which impact on our environment will play an integral part in the Province's decision-making process.

Strategy Statement. The Province mil undertake measures to ensure that all development takes place within the framework of an overall sustainable development strategy. The Province has already established its own Round Table on the Environment and the Economy to identify, advance, promote and advise on a strategic framework to reconcile economic and environmental needs.

Actions. The Province will:

45. Implement a sustainable development strategy which ensures an adequate balance between industrial and economic development and environmental concerns.

46. Establish cooperative arrangements with the Federal Government to harmonize and streamline the federal-provincial environmental assessment process, to avoid unnecessary duplication, expense and delays to potential investors, and to ensure consistency in the application of all legislation. The concept of an Environmental Review Agency, operating at arms length from Government, will be examined.

47. Undertake a program to increase awareness of environmental legislation, the sensitivities of ecosystems, and the requirements for environmental assessment.

48. Introduce a new Waste Management Strategy which addresses such issues as recycling, municipal sewage and solid waste disposal, the disposal of toxic and hazardous waste, and clarifies jurisdictional responsibilities for waste management with federal, provincial and municipal governments.

49. Implement new regulations to address the problems of abandoned vehicle wrecks, littering and the indiscriminate use of All-Terrain Vehicles (ATV) in sensitive ecosystems.

50. Examine current policies with regard to the alienation of Crown lands from resource development to allow multiple use, where appropriate.

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Change and Challenge: Chapter Five - New opportunities for growth

Missing in Action: the 2006 economic policy review

In 2006, Danny Williams decided he needed to take a second look at the economic development plans he was following.

"Over the past two years we have undertaken strategic initiatives that are significant planks in our economic development agenda," Premier Danny Williams said. "Now, halfway through our mandate, it is time to take stock of what has been initiated to date, and move to the next phase to ensure our development strategies are being carried out in an integrated, co-ordinated fashion, in line with our original goals."

He appointed Doug House to “lead the process”.

The process was supposed to lead to some called an “integrated provincial development plan”.

So where the heck is it?

Missing in action, apparently.

In April 2008, House quietly slipped back to his real job as a sociology professor at Memorial University. There’s absolutely no reference in his resume to what he did after the 2006 news release other than to mention he was a deputy minister.

There’s a mention in his biographical sketch of the work he did but no title for the final report or indeed any sign that there was a final plan produced after two years of work.  In fact the only thing House mentions in his bio is being a “key contributor” to the 2003 Tory party platform, although he doesn’t call it that.  Likely that was the chapter that paraphrased the 1992 Strategic Economic Plan.

Now maybe there’s a good reason for all that.  Maybe the plan doesn’t exist.  Maybe it doesn’t exist because of a fundamental difference of opinion between Doug House and some others  - or maybe just one big other - in the current administration. 

You see, going back to the 1986 report of the Royal Commission on Employment and Unemployment, House has been one of those who has rejected the megaproject model for local economic development.  You know megaprojects:  things like Hebron, Hibernia South and the Lower Churchill.

You can find a good description of the report – titled Building on our strengths – in House’s memoir of his time at the Economic Recovery Commission in the 1990s.  House defined what he viewed as the attitude of the Old Guard within the bureaucracy.  They combined the industrialization policy of the Smallwood era with the resource-management focus of the Peckford years.  The result was a focus on big projects Hibernia, Voisey’s Bay and the Lower Churchill which were – and are – often described as the “last chance” for the province.  This same Old Guard view rejected or was suspicious of the potential for  small scale industrial development, agrifoods, and aquaculture.

The Old Guard  - the attitudes that House fought against from 1989 to 1996 - also believes in an expanded federal presence in the province comprising things like a federal penitentiary and defence bases.

Now it shouldn’t take too much energy for someone to realise that the economic development policies of the current administration heavily favour large scale industrial development projects.  Other stuff  like forestry and agriculture and the list House mentioned don’t get nearly as much attention.  There is a bit of cash thrown at them in the budget but when it comes to capturing the attention of the real decision maker(s) in the current administration, if it isn’t really big it just doesn’t exist.

With all that as background, it’s really no wonder House left government.  What’s really amazing is that he stayed as long as he did. 

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Change and Challenge: Chapter Five - New opportunities for growth

The Province's fisheries, forestry and mining industries cannot be expected to provide much, if any, net increase in employment during the years ahead. In fact, employment in these resource industries has been declining steadily over the last decade, as shown in Chart 5. In the forest industry, person years of employment declined from 5,300 in 1981 to 3,600 in 1991, and in the fishing industry employment declined from 21,700 to 19,200 during the same period. The decline in the mining industry was similar, falling from 5,600 in 1981 to 3,200 in 1991.

To provide the new jobs needed to reduce our high unemployment rate and to provide employment opportunities for our young people as they enter the labour market, new growth opportunities must be identified. While our economy is more diversified than is generally recognized, further diversification is no longer merely desirable - it is essential.

Advances in telecommunications, the globalization of trade, the environmental movement and the growth of knowledge-based industries have changed economic prospects internationally, nationally and locally, and Newfoundland and Labrador enjoys many potential competitive advantages which it can use to benefit from these changes. It has a strategic location dose to Europe which could allow it to act as a gateway to and from North America, a relatively unspoiled natural environment with magnificent scenery and untouched wilderness areas, and many well-educated and well-trained people, including a core of professional expertise in marine-related engineering and electronics.

The challenge is to recognize these new opportunities and for the private sector to take advantage of them, with Government's support. Traditionally we have thought of ourselves as producers of raw materials, but several companies in the Province have already become sophisticated traders of knowledge-based, value-added goods and services in local, national and international markets. It is through the creation of new wealth in new industries that the Province's problems of over-dependency and under-employment will ultimately be addressed.


In its strategic economic plan, the Province has identified three main areas of growth. These are:

• manufacturing and technical industries
• tourism and culture
• energy.

Manufacturing and technical industries will build on existing engineering and technical strengths, especially in marine-related activities. Tourism and cultural industries will grow by taking greater advantage of the province's natural environment, our unique culture, our quality of life and our human skills. Energy industries will grow through developing our significant growth potential in oil and gas, hydroelectricity, alternative energies (such as peat, wood biomass and cogeneration) and by a demand for greater energy efficiency. These three established industry groups offer significant potential for new wealth generation and increased employment during the next decade, and government's economic development thrust will be targeted on these industries.

Manufacturing and Technical Industries


In this strategic economic plan, manufacturing and technical industries include

• non-resource-based manufacturing
• innovative technologies
• information industries
• professional services
• environmental industries.

Non-resource based manufacturing (in Newfoundland and Labrador, virtually all manufacturing other than fish processing and pulp and paper making) declined after Confederation in 1949 because the elimination of customs duties made it impossible for many local firms to compete with cheaper "imports" from mainland Canada. But, more recently, and very gradually, non-resource-based manufacturing has become more important, so that now there are about 400 such firms operating in the Province, accounting for 4.1% of our GDP in 1990. This makes it more significant than some of our traditional resource industries.

Although Newfoundland and Labrador manufacturers produce mainly for the provincial market, some firms, selling such products as paint, footwear and ice cream, compete successfully in mainland Canada. There is also a small, but growing number of innovative technology companies (those using proprietary intellectual property and advanced scientific or technical know-how to provide new goods or services) that export sophisticated, knowledge-based electronic and telecommunications products to the global marketplace. This industry developed rapidly during the 1980s, so that by 1990 there were 55 such firms and organizations employing an estimated 1,200 people and with total annual revenues approaching $100 million.

Information industries are the fastest growing part of the economy, both nationally and internationally. Because of the way national statistics are collected, it is difficult to specify the actual number of firms and people employed in this industry in the Province, but it is estimated that Canada's information technology industry grew by 5% in 1991 despite the current recession, and had revenues of more than $16 billion.

Although it is not possible to identify the Province's share of this industry, we do know that Newfoundland and Labrador already has considerable strengths in the application of telecommunications technology. Altogether, it is estimated that more than 100 private- and public-sector organizations are now active in the province's information industry and employ dose to 2,600 people. To achieve more rapid growth, these private firms need better access to provincial government markets which are now served mainly by Newfoundland and Labrador Computer Services. This Crown agency has recently been given a direction to cooperate and collaborate on efforts to promote the commercial development of this industry.

The services sector now accounts for nearly 30% of global trade, and Canadian trade and consulting services have seen exponential growth, rising from $42 million in revenues in 1969 to $987 million in 1985. Although the Province's business service industry now has some 250 professional consulting firms employing more than 3,000 people with expertise in such services as business consulting, construction management and economic analysis, the export of this expertise to bring new money into the province has been small to date. This industry is relatively undeveloped and has much potential for growth.

Environmental firms are also enjoying rapid growth internationally as jurisdictions everywhere become more concerned about, and introduce new legislation to protect, the environment. During the past 10 years, approximately 25 Newfoundland-based companies have developed expertise in such activities as environmental consulting, oil spill clean-up, waste management, recycling, environmental assessment and information, geomatics and environmental technology development. This is still a small industry in Newfoundland and Labrador, but it has significant potential for growth.

The Government will place greater emphasis on these manufacturing and technical industries in the future, and will work with private firms to help them realize their, growth potential in both local and export markets. New initiatives will be introduced to encourage supplier development so that local products and services can gain better access to large private and public organizations that operate in the province, including government itself; and new programs will be introduced to help local firms gain access to, or become more competitive in, export markets.

To achieve these goals, the Department of Development will be re-focused and re-organized for the new challenges of the 1990s. The Tourism Branch will be incorporated into a new Department of Tourism and Culture (described in the following section) and responsibility for the development of resource industries will rest more with their respective departments. A new Department of Industry, Trade and Technology will be given a mandate to encourage and promote the growth of manufacturing and technical industries and will be affirmed as the provincial agency with the main responsibility for trade and industrial promotions, for attracting investment and for technology development. It will also provide a centralized business analysis service for other departments.

The new department will focus specifically on stimulating the growth of non-resource-based manufacturing, innovative technologies, information industries, professional services and environmental industries. The department will also be responsible for strengthening the Province's construction industry, which is a major employer, contributes significantly to GDP and affects the competitiveness of other sectors. It will also undertake initiatives to make Newfoundland and Labrador firms more competitive, both at home and abroad. These initiatives will include supplier development, technology transfer, trade development, business analysis, business policy, promotions and investment. The department will also take a targeted, proactive approach to attract outside firms to the province.

Consistent with a major theme of this strategic economic plan, the Department of Industry, Trade and Technology will focus attention on our marine environment. Special initiatives will be undertaken to assist marine-related industries, with particular emphasis on the development and commercialization of advanced marine technologies.

Strategy Statement. The Province mill stimulate growth in sectors of the economy where there are new opportunities, especially in non-resource-based manufacturing, innovative technologies, information industries, professional consulting services and environmental industries.


Actions. The Province will

51. Re-focus and re-organize the Department of Development into a new Department of Industry, Trade and Technology which will concentrate on stimulating the growth of the manufacturing and technical industries in local and export markets, improving the competitiveness of local firms, and actively targeting outside firms in the new growth industries to locate in the Province.

52. Establish a supplier development program which will provide the private sector with the knowledge and opportunity to capture a more significant portion of the public- and private-sector procurement markets, such as major capital projects and defense contracts.

The Province will organize supplier seminars and make supplier development a major part of the provincial industrial benefits policy.

53. Pay specific attention to the information technology industry; a standing-offer list of approved suppliers of products and services will be developed for use by all government departments and agencies.

54. Expand financial assistance programs to firms involved in manufacturing and technical industries. Assistance will be provided for research and development, commercialization of new technology, company development, export marketing and working capital financing.

55. Create within the Department of Industry, Trade and Technology the funding flexibility needed to attract public- and private-sector research organizations to establish in the Province.

56. Aggressively pursue multinational manufacturing and technical firms to locate here, particularly those firms which would fit established niches in marine industries and electronics applications.

57. Continue to work for the establishment of foreign trade zones as an economic development initiative.

58. Establish a Provincial Communications Agency, which will include representation from the public, private and educational sectors, for expanding data communications, for co-ordinating data networking initiatives within the Province, and for developing common standards for the industry. The Communications Division (currently located in the Department of Municipal and Provincial Affairs) will be transferred to the Department of Industry, Trade and Technology so that it can assume a leading role in this area.

59. Encourage the development of an education-related information industry to create products for the Province's education system and for export; develop enhanced instructional capacity in software design and development in our community colleges and university.

60. Support the private sector through the development and implementation of a program aimed at exporting the Province's business and professional consulting services. This program will match local companies with foreign contracts administered by such agencies as CIDA and the World Bank.

Tourism and Culture


The Province's unique history, environment, culture and lifestyle offer some of the greatest opportunities for economic growth in the 1990s and beyond. The combination of its scenic beauty, its long and colourful history, its pristine areas, its rich culture and the renowned talents of its people constitute a resource that is still underdeveloped and underestimated. These resources are not only renewable, but can continue to be expanded and enhanced.

Tourism and culture can also employ, both full time and part time, more people than any other resource or industry. Crafts production, for example, although a long-standing and growing contributor to the provincial economy, can become more business-like and professional and find new opportunities for growth. While our crafts have been successful in this province and in other parts of Canada, there are also significant opportunities in the international marketplace.

As business and daily living become more complex and globally competitive, alternative lifestyle and cultural values will increase in importance when businesses decide where to locate, to meet and to hold conventions, and when people plan vacations. With proper development and promotion of our traditional, indigenous qualities and advantages -especially our unique marine environment - Newfoundland and Labrador can create a niche as a major holiday destination and cultural region in North America.

All the necessary natural and human resource components to achieve these objectives have existed for a long time. What has been lacking is a concerted, co-ordinated strategic program to blend them into one major economic entity.

In the tourism and cultural industries of the future, our relative remoteness from highly industrialized areas, our sparse population in a large landmass, and our relaxed pace of life will be seen as major advantages.

We have much to offer, including

• the oldest and richest history in Canada, with two world heritage sites;
• a marine environment which offers opportunities for cruises, yachting, whale-watching, seabird sanctuaries, wind-surfing, sea-kayaking, ocean sports fishing and other marine-related activities;
• outstanding scenery and ecological diversity;
• world-class hunting and recreational fishing;
• excellent multi-season recreational facilities;
• the wilderness experience at affordable rates;
• a vibrant cultural community, with a rich folklore preserved through five centuries of continuous settlement;
• artists, musicians, actors, writers, sculptors, dancers, and craft artisans - both professional and amateur - in numbers that are disproportionate to our population, and many of whom have achieved national and international stature; and
• a quiet, peaceful, civilized life-style and a reputation for hospitality.

It has been proven in the past that Newfoundland and Labrador is a desirable destination for business and personal travel. We have to build on this reputation by improving facilities and services, and by developing the potential of adventure tourism, events-related visits, conventions, conferences, seminars and executive retreats, and emphasising the attractions for students, writers and researchers, naturalists, artists, artisans, performers and others engaged in both professional and amateur cultural activities.

The achievement of this objective will require a concerted, aggressive effort by both Government and the private sector. Tourism and culture are complex industries, involving the mandates of various government departments both provincially and federally, and further development will require active partnerships between industry associations and individuals, government agencies and departments, communities and municipalities.
At the present time, the essential components of a vibrant tourism and culture industry are spread through the departments of Development, Municipal and Provincial Affairs, Environment and Lands, and Enterprise Newfoundland and Labrador. Consolidation and co-ordination of government activities is necessary.

Strategy Statement. The Province mil implement programs to ensure that Newfoundland and Labrador is developed into an internationally known destination of choice in the vacation and business travel industry by promoting our natural advantages, expanding and improving facilities and services, and enhancing and promoting our cultural resources.



Actions. The Province will

61. Establish a new Department of Tourism and Culture. This new department will include the Tourism Branch of the Department of Development, the Cultural Affairs and Historic Resources divisions of the Department of Municipal and Provincial Affairs, the Parks and Wildlife divisions of the Department of Environment and Lands, and the Crafts Industry activities of Enterprise Newfoundland and Labrador.

62. Through the new Department, immediately initiate a consultation process with representatives of the tourism, cultural, environmental, and recreational sectors to develop and implement a comprehensive Tourism and Culture Economic Strategy. This joint task force would build on the extensive research and consultation of the Economic Recovery Commission, the O'Flaherty Report and other sources as required.

63. Give priority to the development of special year-round events of national and international interest within the Province, such as unique festivals, cultural activities, tournaments, historical observances and celebrations.

64. Assist the John Cabot (1997) 500th Anniversary Corporation to maximize the economic benefits to be realized from the international activities associated with the 500th Anniversary of John Cabot's landfall.

65. Initiate private-sector and other partnerships to develop further primary destination areas, especially those which offer multi-season potential.

66. Give priority to the development of winter recreation attractions, particularly further development of the Marble Mountain area as a major skiing destination area; and the development of cross country skiing, snowmobiling and dog-sledding events.

67. Expand the national and international conventions and meetings trade through promotional contact with societies, organizations and corporations, and encourage the development of facilities and services for business meetings and executive retreats; where possible, meetings and conventions should be coordinated with special events and observances. The success of these efforts will  likely create a demand for additional facilities to be provided by the private sector.

68. Recognize the western region of Newfoundland and Labrador as a specific cultural destination to maximize the economic benefits from its unique attractions, such as the two UNESCO World Heritage Sites (L'Anse aux Meadows and Gros Morne) located within a few hours' drive from each other, the 4,000-year-old Maritime Archaic Indian burial ground at Port au Choix, the Basque whaling station at Red Bay, the historic Grenfell Mission headquarters in St. Anthony, the Stephenville Festival of the Arts, French heritage festivals in the St. George's-Port au Port region, and other events and attractions of cultural importance.

69. Further develop the fine arts school at Sir Wilfred Grenfell College in Corner Brook as an Atlantic Fine Arts Centre of Learning, for the development of drama, music, folklore, visual arts, writing and associated disciplines.

70. Seek a Cooperation Agreement in Cultural Industries with the Federal Government.

71. Transfer administration and control of Arts and Culture Centres to appropriate regional or community organizations.

72. Implement programs to facilitate the development of adventure tourism. Research and other initiatives will be undertaken in the areas of marketing, training and upgrading standards of quality and performance. Legislation, regulations and policies will be reviewed to remove constraints which restrict further development of this activity.

73. Give priority to the revitalization of recreational fishing on the salmon rivers of the Province - an activity which can become one of the major contributors to the tourism industry if developed fully. Management of these rivers will ensure that maximum economic benefits accrue to the adjacent communities. The new Department of Tourism and Culture will play a leading role in the development of all recreational fisheries.

74. Eliminate unnecessary and unfair regulations which limit opportunities to develop and promote attractions and services; and improve regulations which enhance the quality of tourism and those which protect the public, the environment and the wilderness resource.

75. Participate in industry's implementation of an accommodations grading system and a human resource development program focused on improving the quality of our hospitality services. Emphasis will be placed on training, enforcing occupational standards and certification through licensing and assistance programs.

76. Ensure that funding assistance for new tourism activity will not be detrimental to present operations.


77. Extend the operating season of selected provincial parks and historic sites in response to tourist demand, and request the Federal Government to take similar action for facilities falling within their jurisdiction.

78. Seek Federal Government participation in the establishment of a National Wilderness Park in Labrador.

79. Pursue improvements in the quality of the Gulf ferry service operated for the Federal Government by Marine Atlantic and seek a reduction in fares.

80. Implement a new highway signs policy to address current industry concerns and provide dear direction and information for travelers.

81. Increase production and enhance the quality of crafts through expanded community college programs and additional field instruction.

82. Through adequate research and development of products, effective promotion, provision of operating capital for producers, and the establishment of marketing agencies (retail and wholesale) within and outside the province, ensure that craft production and marketing are integral components of the tourism and culture industry.

Energy


Energy represents a large and growing component of the provincial economy. It is a critical part of virtually every production process, and its price, availability and reliability are of the utmost importance to economic progress. Factors affecting energy thus influence our productivity and competitiveness, especially the heavy industrial users of electricity. Its price and availability also affect the standard of living of the Province's citizens.

Total energy demand in 1990 was equivalent to about 20 million barrels of oil. Increases in the residential and transportation sectors were offset by a substantial decrease in the industrial sector, attributable to a decrease in mining and manufacturing activity. Overall, refined petroleum products accounted for 65% of energy consumption, electricity 27% and wood fuel 8%. Transportation is the largest energy-consuming group (42%), followed by industries (29%), residential use (20%) and commercial establishments (9%). It is estimated that the direct contribution of the energy industry to the Province's Gross Domestic Product (GDP) in 1990 was in the order of $571 million, or 7%.

Strategy Statement. Government mil work to ensure that efficient energy resource management is used to strengthen the contribution of energy to overall economic development objectives.


Action. The Province will

83. Undertake a thorough review of existing energy policy to ensure that it is consistent with changing local, national and international economic conditions. An important aspect of this work will be to consolidate the many components into a comprehensive and integrated energy policy document.

Electricity Generation


Under current demand forecasts, there will be a need for an additional supply of electricity to the island portion of the province as early as 1996. Given the anticipated demand estimates and the lead times necessary to bring a new supply on line, Newfoundland and Labrador Hydro recently called for proposals for the supply of 50 MW of capacity from small hydro sites for that time frame. Decisions about these additional sources will have to be made within a year or two.

One option for meeting the shortfall beyond the year 2000 is the development of the Lower Churchill River hydro sites, including a transmission link from Labrador to the Island. The National Energy Board shows the Lower Churchill River development as ranking number one in economic priority among 45 identified energy projects in North America. This option would provide an assured long-term supply of electricity to the Island for the 21st century and would accommodate any feasible industrial activity in Labrador but is dependent on an agreement between Newfoundland and Labrador Hydro and Hydro Quebec.

Because of uncertainty associated with the Lower Churchill development, it is necessary to consider a strategy to meet the anticipated supply shortfall in case that development is delayed or does not proceed. In either case, to meet its requirements the Province would have to rely more extensively on other alternatives, such as other hydro developments, alternative energy developments and/or expansion of the existing Holyrood oil-fired plant. In addition, the Province will have to pursue improvements in energy efficiency and cogeneration, primarily as a means to improve the competitiveness of local industry.

Strategy Statement. The Province's objective is to ensure the development, generation and distribution of electricity in the most economical and efficient manner, to ensure that the balance of supply and demand is maintained and to maximize economic benefits to the Province from energy projects.


Actions. The Province will

84. Continue to pursue development of the Lower Churchill River so as to maximize economic benefits to the Province and provide residents with a long-term supply of electricity at a stable price.

85. Through the Department of Mines and Energy and Newfoundland and Labrador Hydro, prepare a plan for energy efficiency and the development of various energy sources to ensure the future balance of energy supply and demand for the Province.

86. Amend the Electric Power Control Act to broaden the mandate of the Public Utilities Board, including giving the PUB the authority to review agreements such as that envisaged for the Lower Churchill River Development.

87. Put in place policies to maximize electricity generated from small hydro developments as a means of increasing economic development and reducing dependence on imported oil.

Petroleum


The current policy of the Province with respect to onshore and offshore petroleum resources is to encourage and promote development in a manner which maximizes economic benefits to the Province. Presently, however, prospects for offshore oil and gas are uncertain because of such factors as the withdrawal of Gulf Canada from the Hibernia development, low prices resulting in low cash flow to industry, and competing projects elsewhere in the world.

For Hibernia, the best scenario is that the remaining owners will find a new partner and that the project will be finished with a production start in 1997. The worst is that the current difficulties experienced with Hibernia will not be overcome. In other offshore projects, the Province should see the start of development on at least one and possibly other fields, such as Terra Nova, Whiterose and Hebron, by the year 2000 or shortly thereafter.
Though the present level of exploration is low, the geological potential of the Grand Banks area is significant and future drilling is expected to find additional commercial-size fields. The offshore and onshore areas of the Province's west coast also offer some promise, as evidenced by the interest in land sales and seismic surveys in the past two years.

Strategy Statement. The Province will encourage both onshore and offshore exploration and development opportunities through all measures available to it, including the continuing development of a regulatory framework sensitive to changing economic conditions and global competition for investment.


Actions. The Province will

88. Develop and implement competitive generic royalty regimes for both onshore and offshore petroleum production.



89. Work with the Federal Government towards identifying and eliminating constraints in the current land tenure system for the offshore area.

90. Actively monitor and provide advice and direction, as required, to the Canada-Newfoundland Offshore Petroleum Board to maximize the use of goods and services provided from within the Province.

91. Insist on having appropriate input into employment and industrial benefits plans as a prerequisite to the start of individual oil exploration programs and new oilfield developments.

92. Aggressively pursue supplier development initiatives and ensure that full and fair opportunity to bid is provided for contracts related to petroleum exploration, development and production.

93. Develop a program to ensure that onshore and offshore petroleum resources are promoted in an effective manner.

94. Ensure that the employment and industrial benefits from the Hibernia project production phase are maximized.

Energy Efficiency and Alternative Energy


Energy efficiency and alternative energy can play an important role in the state of the Province's energy supply in the 1990s. The Department of Mines and Energy, in consultation with representatives from the private sector, has prepared a ten-year Strategic Plan for Energy Efficiency and Alternative Energy. This plan will improve the efficiency of energy use in Newfoundland and Labrador through new technologies and better operating practices for vehicles, equipment and buildings. The plan also encourages the development of local alternative energy resources, such as waste wood, peat and small hydro developments.

Strategy Statement. The Province will develop its alternative energy resources and promote energy efficiency as a means of contributing to its overall energy requirements, to lessen its reliance on imported petroleum products and to create new business opportunities.


Actions. The Province will

95. Implement the recommendations of the Strategic Plan for Energy Efficiency and Alternative Energy. Some of the key actions of this plan are

• to establish a diverse program of measures, ranging from information dissemination to legislative changes, to reduce costs through energy efficiency improvements and the use of alternative energy sources, with the aim of improving the competitiveness of local business and industry;
• to continue to promote, through support for energy research and development, alternative energy technologies and engineering studies, and economic development of the province's vast peat resources; and
• amend regulations to facilitate the development of hydroelectric and other potential energy sources by independent power producers.

-srbp-

Change and Challenge: Chapter Six - Enhancing our resource industries

Paging Dr. Freud #nlpoli

Moya Greene, head of the Premier’s Economic Recovery Team, told municipal leaders last week that the provincial government spends almost $2.0 billion less on health care than it actually does.

Weird.

She said the government spent 25% of its budget on health care.  VOCM reported it: “Greene says healthcare is about 25 per cent of the province’s total expenditures, and that it is a conversation we have to have.”

The actual share in 2019 was 42% and the forecast share in 2020 in 37%. You can find the figures in the budget tabled in the House of Assembly at the end of September.

This is a really bizarro comment since Greene is already well into her job of sorting out both government overspending and re-organizing the economy.  She should have a handle on all numbers. 

After all, Greene and her provincial recovery team will deliver a preliminary report by the end of February. Sure she’s not due to have the whole thing finished until April, but the first deadline of February is really only about three months away, if you allow an interruption for Christmas.

But that’s not the only weirdness.

Wanted: an entrepreneur

There's no small irony that Bond Papers has been serialising the 1992 Strategic Economic Plan these past few weeks and at the same time, Brian Dobbin takes a swipe at Newfoundland and Labrador as he pulls his cash out of the Independent.

The irony is not so much in Dobbin's rant. That after all is a fairly typical BD one, built as much on myth and fantasy as anything else.

The the truly striking contrast is between the reality of government policy since 1992 and the policy advocated by a supposed entrepreneur.

Dobbin:

To do this we need government support financially for those dreamers who will create the industry that will give our children rewarding lives here when the oil runs out …

or in another spot:

I don’t expect our board will accept that kind of capital expenditure in the future on something they rightfully see as the province’s job.

The job of government in Brian Dobbin's universe is to spend scarce public cash on private sector business ventures. How novel an idea in the history of this place.

In order to do this, we must do away with the current system of government, according to Dobbin and replace it with something else. We'll leave aside Dobbin's laughable claims that this is a "barren place to try to grow significant industry."

By contrast the 1992 strategic economic plan is built explicitly on the premise that the bright economic future of our province would be built on a foundation of innovation from the private sector. Novel ideas, backed by sound business plans, would succeed.

There'd even be government money handed out by professionals. These people, removed from the partisan influences of the day would assess projects and invest in them where some others might not.

Gone though, would be the days Dobbin pines for, the days when limitless millions were poured into one ludicrous scheme after another based on the direction of a premier elected safely for a lengthy period and a blew to hand pick whomever he wanted to sit in cabinet.

Gone would be the rubber boot factories. Gone too the cucumber plants and the oil refineries bolstered by public cash either as direct investments or as loan guarantees. Gone was any suggestion that the role of government was to prop up the local business sector

Gone too would be any suggestion that it is the responsibility of the people of Newfoundland and Labrador to pay cash to a private company so that rich foreigners could come here at a discount.

Yet, that is what Dobbin advocates and with as straight a face as there is.

Give it some thought.

Then realise that what Dobbin advocates is what his country-men and -women rejected in 1948. They rejected a small country dominated by local business interests in which the economic affairs of the country were arranged to the benefit of the handful and the detriment of the majority.

Some will undoubtedly see right away the familiar message wrapped now as it was then in a flag of patriotism. Let no one forget the connection between a certain brand of local patriotism and certain narrow business interests.

Give that some thought.

As a last word to young Mr. Dobbin: Best of luck in your future ventures.

At least, we won't have to put up with yet another self-proclaimed nationalist slagging off the province and its people at the drop of a hat.

-srbp-

Change and Challenge: Chapter Four - Creating a competitive edge (3)

Income Security Reform

During the past ten to fifteen years the Province's labour force has become strongly dependent on the income security system, particularly unemployment insurance. In many respects the current system is an inappropriate system of income security for a province such as Newfoundland and Labrador. While the Government is committed to ensuring basic income security for all households, our dependence on the present unemployment insurance system must change. As part of its strategic economic plan, the Government is therefore committed to working with the Federal Government to reform the income security system so that it encourages enterprise, education and employment, while continuing to provide basic income support.

It is important to recognize that the dependency on unemployment insurance is a national issue and not just a provincial concern. The Federal Government recently decided that unemployment insurance in Canada would be funded solely from contributions by employers and employees.

Employers and employees in this Province, however, contribute significantly less than the benefits received.

The unemployment insurance system was originally intended to provide temporary income to people seeking alternative employment who had lost their regular jobs in the work force. The system was not designed to provide basic income support, or as supplemental income for short-term, seasonal jobs. The present downturn in the economy has pointed to weaknesses in this system which must be addressed and corrected.

Strategy Statement. The Province will work with the Federal Government to ensure that the inevitable changes to the current income security system are designed so that basic income support is provided to every household, and that weaknesses in the present system are corrected to encourage the economic growth that is needed to reduce dependency on income security itself.

Actions. The Province will direct the Economic Recovery Commission (ERC) to undertake the following action and programs:

18. With support from other provincial agencies and in consultation with community groups, to work with officials from Employment and Immigration Canada to design an alternative income security system that both protects the income needs of Newfoundland and Labrador households and provides strong incentives for work, education and self-employment. The ERC will make recommendations to governments for implementing an alternative to regular
(non-fishermen's) unemployment insurance as a pilot project by 1993.

19. In consultation with other provincial and federal government agencies, the fishermen's union and the private sector, to design and recommend an Industry Stabilization and Insurance Program for Fishermen.

20. In consultation with appropriate federal, provincial and community-based agencies, devise a strategy to ensure that any short-term job creation projects that may be necessary during the interim, until a new system of income security is established, will provide meaningful work to participants and contribute to the long-term economic development of the Province.

21. Establish a Newfoundland and Labrador Conservation Corps which will channel funds into socially useful activities that will both contribute to environmental enhancement and provide valuable work experience and training for its members.

Labour Relations

There is a clear relationship between a positive labour-relations environment and a productive, viable economy. Our society has come to expect and demand certain employment standards to govern the relationship between employer and employee. It is now the challenge of labour, employers and Government to create a workplace and a workforce that is also productive, competitive and responsive to the current economic and social changes and pressures.

The importance of a positive labour-relations climate and the necessary partnership between Government, employers and labour were emphasized during the public consultation process on the development of this strategic economic plan. It was also observed that adversarial labour relations exist in Newfoundland and Labrador and that their existence impedes economic development. Participants in the consultation process suggested that the province can move forward to resolve its economic problems only if Government, employers and labour work cooperatively to address these problems and seek solutions.

Government supports the view that a stable, positive labour-relations climate is essential if we are to attract new investment in the province as well as to ensure a vigorous and competitive environment for existing businesses. A review of recent figures on work disruptions and person days lost because of work stoppages indicates encouraging signs of improvements; the statistics also show that there is no appreciable difference in work stoppages in the public and private sectors.

Because this Province has the highest proportion of unionized workers of all provinces in Canada, the operation of the collective bargaining process is particularly important here. Its flexibility allows it to represent workers' interests better than strict government regulation of the workplace. It also allows for the development of labour contracts appropriate to different workplaces. Too much direct regulation would result in reduced competitiveness and would destroy the appeal of collective bargaining in a system that should be responsive to a variety of needs.

Employers and workers together share the responsibility of creating a viable labour-relations environment; however, there is also an important role for Government. For example, our legislative framework requires government involvement before a strike or lockout can occur. The role of Government in this case is to provide services that can facilitate and encourage better communication between workers and employers. The recent preventive mediation program of Government underscores these important principles, but it is essential that the employers and workers themselves recognize their role and responsibility in the process. Mediation and conciliation may be effective in averting or reducing conflict but cannot help if parties consciously ignore or avoid these services.

A positive commitment by all parties involved is essential to successful labour relations and cannot be legislated or imposed by Government, though it can be encouraged and facilitated. Unions, workers, employers and Government must meet the challenge of continuing to improve labour-relations practices, especially when the economy, the composition of the workforce and the workplace itself are undergoing rapid and fundamental change. Recognition of the need for change provides a unique opportunity for improving the labour-relations climate.

To ensure that we can compete in an ever-expanding global marketplace employees and employers must work together. The challenge is to create a positive labour-relations environment which satisfies the aspirations of workers, minimizes work and family conflict and produces a well-trained and committed work force. Maintaining a balance between competitiveness and employment security must be a shared responsibility of labour, employers and Government. All three must recognize the conflicting pressures of global market forces and a growing demand for fundamental workers' rights and the collective bargaining process.

During the public consultation process, reference was made to the Province's other role as a major employer and the need to review the present policy of having different collective bargaining regimes for public and private sector employees.

Government can make an important contribution to the challenge unions, workers and employers face by increasing services that help the parties work together and by making all employers and employees aware of the importance of their own commitment to improved labour relations. While there is a clear link between a positive labour-relations environment and a productive business environment, it is equally clear that it takes a commitment from all parties to make it work.

Strategy Statement. The Province mil work to develop a stable, positive labour-relations climate to maintain and attract investment to the Province and to ensure a vigorous and competitive environment for economic development. Special emphasis will be placed on the development and use of innovative dispute resolution mechanisms and other workplace practices to minimize disruptions and enhance productivity for the mutual benefit of employers and workers.

Actions. The Province will:

22. Convene, within six months, a joint labour-management consultative committee, with both public- and private-sector representation. This committee will bring labour and management together at the provincial level to develop broad strategies for responding to restructuring and adjustment issues, to investigate and propose appropriate policy and program reforms (including new and innovative methods of dispute resolution), and to review the recommendations of the Background Report on Labour Relations to the Royal
Commission on Employment and Unemployment which are not yet implemented.

23. Appoint a Cabinet committee to address matters involving public-sector labour relations and Government's role as the major employer in the Province.

24. Establish, during the next year, tri-partite committees of employers, employees and Government for each major sector of the economy to develop a better understanding of, and to discuss and advise on, labour matters. These committees will meet regularly with the appropriate Cabinet Ministers to ensure improved communication among the interest groups.

25. In consultation with management and labour, establish a Labour-Relations Education and Research Centre which will develop new skills and strategies for effective collaboration, communication, mediation, arbitration, health and safety planning, grievance procedures, conciliation and collective bargaining. This Centre will be associated with a post-secondary institution which will adopt as its area of specialization the new mandate for labour-relations education.

26. Ensure there is a partnership between business and labour to provide information on the role, importance and mechanisms for positive labour relations at the secondary and post-secondary educational institutions.

27. Allocate additional financial and human resources to the promotion and delivery of the Preventive Mediation Program.

28. Undertake a thorough review of legislation relating to labour relations; consolidating all collective bargaining legislation will be considered.

29. Establish immediately a labour-management cooperation fund to provide cost-shared financial support to projects jointly sponsored by labour and management, such as those related to improved communication, productivity or labour relations.

-srbp-

Change and Challenge: Chapter 4(4)

Spending the future

" [The change in the province's financial outlook] That's very dramatic...Some people are going to stand back and say 'Oh yeah, that's just because your very lucky. That's because the oil prices have gone up.' Well, no. That's part of it. But we had a tough budget, a prudent budget. We've managed the province, fiscally, very tightly."

Premier Danny Williams
Quoted in "Cash boon may fund province's infrastructure"
by Rob Antle, The Telegram, 22 October 2005, p. A3

Premier Danny Williams is absolutely correct.

The provincial government's financial state is a direct result of oil and gas revenues. High oil prices have produced a boost beyond what the Real Atlantic Accord, the offshore royalty regimes and development at Voisey's Bay would have produced anyway.

Unfortunately, the premier's positive comments may have two unwelcome results. First it may make it seem as though the province can afford to increase spending in a number of ways. Second, his comments divert attention away from the fundamental failure of the Williams administration, two years into its mandate, to produce integrated plans to address the province's financial windfalls in a way that will yield the greatest long term benefit.

Let us deal first with the overall financial situation.

The Premier stated that the "consolidated deficit [this year] could be down in the range $100 [million], $200 [million] range" from the $492 million accrual deficit forecast in March. The Premier proposed to spend at least some of this money on infrastructure, especially in rural Newfoundland and Labrador.

Let us be clear: the $492 million shortfall forecast in March 2005, indeed all the accrual deficits forecast by the provincial government, include significant components that are made up of several unfunded liabilities.

The Premier's comments come from adding into his calculations the huge amount of money coming from the offshore. This year it is reputedly in the range of $400 million beyond what was projected. The provincial government's own figures, used by economist Wade Locke, showed that the province's offshore revenues would be $600 million this year. This was based on oil at about US$15 per barrel lower than current market prices.

His comments about the improved financial situation are also based on growth in the province's economy (gross domestic product or GDP), as well as changes to the structure of the debt that themselves reflect long term efforts by successive administrations since 1989.

On the face of it, the debt to gross-domestic-product [GDP] ratio seems greatly improved. In 1991, for example, the province's total debt was 65% of the provincial GDP. Its accrual debt was approaching 100% of GDP.

In Fiscal Year 2004, by contrast, the total debt was 44% and its accrual debt was about 50% of GDP. This change was entirely due to growth in the provincial economy. Little if any debt was retired in the intervening 13 years; in fact the provincial government and its agencies owed more money in 2004 than in 1991.

One substantive positive change, however was the reduction of debt held in foreign currencies. In 1991, almost half the province's direct debt was held in expensive foreign currencies and much of the debt was held at high interest rates. This greatly increased the amount needed to service the debt, that is, to make the interest payments. By FY 2004, less than 22% of the debt was in foreign currencies and government continued to roll over its high interest debt in lower-rate loans. Such is the improvement that in 2004, the province was paying slightly less to service its debt than it was a decade earlier yet the total debt (not accrual) was actually $2.0 billion more and debt servicing accounted for 13% of total government expenditures compared to 15% in 1994. Looked at another way, in constant dollars, the provincial government is actually spending less on servicing its debt than it was in the early 1990s despite owing almost 40% more.

An increased debt load with what are admittedly transient increases in both the economy and provincial revenues do not make for a windfall. Nor does it support dramatic increases in program spending or capital works.

Consider as well that in his remarks to the Telegram editorial board, Premier Williams spoke of spending the supposed windfall on public infrastructure around the province, especially in rural Newfoundland and Labrador. In 2004, infrastructure cash was supposed to come from a new transfer payment from the Government of Canada designed to offset Equalization losses.

That deal, when it was finally signed, actually did not effectively double offshore revenues, as the Premier had originally sought. Instead, it added a single lump sum payment of $2.0 billion. That money sits collecting interest at a rate of about $5.0 million per month, with no publicly announced plans on what the government plans to do with either the $2.0 billion or any of the $60 million in interest coming from it.

Against this backdrop, one must look at the Premier's comments with some degree of concern. The provincial government still has no coherent plan for tackling the long-term financial issues identified by PriceWaterhouseCoopers. There is no commitment to paying off debt.

The "revitalization" of rural Newfoundland and Labrador, embodied in the Williams administration's Rural Secretariat is merely a slightly revamped version of the ruralist approach of the previous Grimes and Tobin governments. This was simply a collection of short-sighted efforts to avoid dealing with the substantive changes coming to much of Newfoundland Labrador as a result of changes in demographics and in the economy.

One of the last acts of the Wells administration, in December 1995, was to approve release of a discussion paper on a Strategic Social Plan [SSP] for Newfoundland and Labrador. While the incoming Tobin administration scrapped the planned release and ordered copies destroyed, some have survived. The introductory essay describes the looming changes in simple and compelling detail.

Beyond the outmigration resulting from the collapse of the cod fishery and the then-anticipated economic growth from oil and Voisey's Bay (see the conclusions of the 2002 provincial report linked above), rural Newfoundland and Labrador would change dramatically from what it had been. A chronically low birth rate would produce an internal migration from small coastal communities to larger centres. Changes in the fishery would reduce the number of workers there and, if allowed to take its natural course, the fishing industry would dramatically lower the number of people employed while increasing the earnings of those involved. Overall, the workforce would be smaller than the non-working population - the so-called dependent population - for the first time in many decades.

Newfoundland and Labrador is not alone in this respect. Quebec is in much the same situation, as the recent Quebec Lucide manifesto reveals.

At home, we have a curious mixture of action from the provincial government. On the one hand, the provincial government's raw materials sharing plan for the crab industry reflected yet another attempt to forestall changes that demographics and economics would otherwise produce in Newfoundland and Labrador. This echoed the actions of both Brian Tobin and Roger Grimes.

At the same time, Premier Williams comments to the Telegram echo the Strategic Economic Plan [SEP] and the real Strategic Social Plan of the Wells administration. His description of regional hubs and a focus on local strengths as a means of diversifying local economies around the province are lifted almost word for word from the SEP and comments by Clyde Wells.

What appears to be missing from the Williams administration is a clear-eyed vision of the province's challenges and of its solutions. Both the Wells SEP and SSP had such a vision, derived not from the Premier's Office or Clyde Wells' own predilections but from intensive discussion among the province's own people. That the development vision survives today as core economic development policies from the Williams' administration is testament to its fundamental strength.

Before the Premier starts spending any of the windfalls he has coming this year and over the next five years or so, he might want to actually produce an integrated economic and social plan. The many promises of plans contained in the last Throne Speech, indeed all the promises of plan that have been made since October 2003, do not add up to very much of anything at all.

The clock is indeed ticking and before we spend the future of the province and its people, the Premier and his administration might be well advised to climb up and tree, see what the future may bring and set the province on the course.

A little straight talk often times goes a long further than singing one's praises to earn both proper recognition for the good job done already and continued support for the journey ahead.

Spending the future (2005) #nlpoli

" [The change in the province's financial outlook] That's very dramatic...Some people are going to stand back and say 'Oh yeah, that's just because your very lucky. That's because the oil prices have gone up.' Well, no. That's part of it. But we had a tough budget, a prudent budget. We've managed the province, fiscally, very tightly."

Premier Danny Williams

Quoted in "Cash boon may fund province's infrastructure"

by Rob Antle, The Telegram, 22 October 2005, p. A3

Premier Danny Williams is absolutely correct.

The provincial government's financial state is a direct result of oil and gas revenues. High oil prices have produced a boost beyond what the Real Atlantic Accord, the offshore royalty regimes and development at Voisey's Bay would have produced anyway.

Unfortunately, the premier's positive comments may have two unwelcome results. First it may make it seem as though the province can afford to increase spending in a number of ways. Second, his comments divert attention away from the fundamental failure of the Williams administration, two years into its mandate, to produce integrated plans to address the province's financial windfalls in a way that will yield the greatest long term benefit.

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.

The ghost in the turbines

The Telegram makes an interesting observation in its Thursday editorial on the energy plan:

How refreshing it is to hear a government making plans that consider a time that they might not be in office, as well as the time that they are;

to have a government looking at the long-term needs of the province, as well as addressing the sort of short-term needs that get governments re-elected.

How refreshing indeed, although it's doubtful Telly publisher Miller Ayre would acknowledge the most significant approach of the type. That would be Challenge and change, the province's strategic economic plan issued in 1992. It laid the groundwork for much of the economic success of recent times.

Challenge and change marked the first time in the province's history any administration had adopted a comprehensive plan to guide development well after the administration that implemented it had left office. The 1992 SEP was so successful that it has survived through every subsequent administration. The Progressive Conservative's 2003 Blue Book even contains a precis of the SEP as one of its chapters.

The Telegram editorial also endorses the energy plan's assumption for continuing high oil prices, saying "[a]ll in all, any forward-looking plan has to operate with some inherent assumptions, and a continuing high price of oil is probably a better bet than anything else."

A better bet than anything else? There's a highly debatable point and an odd conclusion given that the editorial also notes that the infamous Churchill Falls contract contained a low price assumption that proved wrong.

In the case of Churchill Falls, the assumption was that electricity supply would keep power prices low. A huge and unexpected upsurge in demand, when increased oil prices suddenly meant home-heating with electricity was more economical than fuel oil, blew those assumptions right out of the water.

The old Telegram editorialist four decades ago took a decidedly more cautious view of that agreement. Here's a sample of thinking at the time, in the form of a scan of one editorial. Click on it to enlarge the picture. You should be able to pick out the last two paragraphs.

Great promises of revenues to the provincial treasury all without a shred of paper or any detail to demonstrate how it would work. A call for the legislature to be opened to debate the deal and see what the deal between BRINCO and Hydro Quebec looked like.

Interesting that 40 odd years later, another editorial team was willing to take an administration's word for the riches to come, but with the knowledge of the earlier circumstance.

As much as we've decried the use of Churchill Falls as justification for just about anything in this province, it's a bit hard to avoid it in this case: the Telegram invoked the spectres in the turbines and then ignored the rattle of their chains.

-srbp-

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.

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-

The Williams oil and gas corporation - institutionalising dependence

When Danny Williams released his Blue Book, it appeared to contain a contradiction. Thanks to Rob Antle's story in yesterday's Telegram, the contradiction is now more apparent.

The first chapter of the Blue Book copied almost word for word the Wells' administration Strategic Economic Plan (SEP). The SEP aimed to correct two fundamental weaknesses in the Newfoundland and Labrador economy, namely excessive dependence on a handful of major resource industries on the one hand and a shortage of local, accessible capital to support economic activity. Since Confederation, the latter weakness had been addressed by federal transfer payments which had resulted in another form of dependence.

In some respects, these twin dependencies were historic issues. The pre-Confederation economy depended on the fishery, forestry and mining with the former being prominent. Local manufacturing was dependent as well, although before 1949, it relied on protectionist tariffs to keep Canadian manufactured goods out. Such was its level of dependence that within three months of Confederation, most of those manufacturing enterprises collapsed in the face of more robust and efficient business elsewhere.

The SEP identified entrepreneurship - the growth and development of the private sector - as the mechanism by which the Newfoundland and Labrador economy could be strengthened and the twin dependencies eliminated.

By contrast, the second chapter of William's Blue Book dusted off industrial development policies from the 1970s and 1980s with its focus on oil and gas as the means of generating cash for the provincial government. The Peckford administration viewed oil and gas as the sole means of financial salvation for both the Newfoundland government and for its society.

Peckford passed legislation to create the Petroleum Corporation of Newfoundland and Labrador, with its legislated 40% share of each offshore development. Coupled with that, the legislation mandated that companies involved in the local offshore would be local companies. Through these legislated requirements the province would develop an oil industry that would ensure, in the words of both Peckford then and Williams now, that maximum benefits would flow locally from local resources.

The fundamental contradiction between these two approaches is that while the SEP is based on private sector entrepreneurship and increasing international trade for local products, the Peckford and now Williams approach is focused on state ownership of industry and on local markets.

A genuine contradiction would exist if the Blue Book embraced the philosophies underpinning the Wells and Peckford approaches. It does not. Rather, Williams appears to be focused on control as an end in and of itself. For example, take this phrase dealing with prospective hydro development: "I'’d like to see us own the lion'’s share of the Lower Churchill...". The provincial government already owns the "lion's share" and can claim rents from electricity as a matter of owning it.

What Williams is talking about here is owning and controlling the company which generates the electricity.

Consider as well, the rest of that section of Antle's story: natural gas should be brought ashore in Newfoundland and Labrador by pipeline so that "we have control of the pipeline so that it'’s not being compressed or liquefied and going in a God damn boat and going on down the coast somewhere."

In the absence of any demand for natural gas within the province or any demonstrable advantage to converting the province to gas, an entrepreneurial approach would support selling it to someone who wants it. Better to ship it to the United States in whatever way produces the best price than to spend money bringing it to a place that has no use for it. Revenue from that sale can support public services like health care. Privately owned local companies can own the ships that move the gas to market. Expertise in gas production and shipping, potentially using new technology, can give the local private sector a competitive advantage such that it can gain even more business around the globe than can be obtained purely within Newfoundland and Labrador.

A government dedicated to developing the private sector would create a climate in which local companies can exploit local resources thereby generating wealth. Government's share of that wealth through economic rents and other taxation would give sufficient revenue to deliver government programs and services.

In the Williams approach, the state - the provincial government - is merely a corporate entity with all the tools necessary to achieve local, i.e. provincial government, control.

The struggle for the Williams government is the struggle for control. He acknowledges that his supposed opponents are larger than government: "if you go up against Hydro Quebec, if you go up against Inco, if you go up against ExxonMobil, they'’re a lot bigger than our government is. That'’s the grim reality of all of this." His next comments identify the solution - build the hydro corporation such that it can "take on" the biggest out there.

The result of the Williams approach is difficult to predict. Certainly, in the short run, he may achieve considerable political success. He may be able to turn the energy corporation into a Mother Hen that will wrest a portion of economic developments for itself and then distribute these among local companies. The resulting jobs may carry with them votes.

In the medium- to long- term, though, the Williams approach cannot address the chronic, historic problems in the local economy. Over the past 25 years, Western economies have disposed of state-owned enterprises since they are notoriously unable to produce wealth as effectively and efficiently as the private sector. The ones that survive, such as Quebec's hydro corporation may be models for the Premier, but they are models from the past. They are models which are limited to very specific and primarily local activities. In short, they are expensive and ultimately wasteful of what in Newfoundland and Labrador are scarce cash resources.

The Williams Mother Hen approach - if that indeed is what emerges - will simply promote
dependence of local companies on state subsidies, either directly or indirectly.

The Premier's plan may not succeed simply because the hydro corporation is actually not the entity Premier Williams describes. Newfoundland and Labrador Hydro remains a government department in all but name and is almost the antithesis of a private sector corporation in which the board of directors would have the authority to run the company and set its own lines of business.

On the face of it this is obvious: the impetus to change hydro to an energy corporation did not come from its own board, complete with a business plan. It is entirely the plan of this particular administration. The board will not resist. The Premier alone holds the de facto power to appoint or remove directors and he has shown repeatedly his willingness to replace dissenters with his own personal retinue.

As such, the new energy corporation will likely be quickly recognized as an anomaly in the developed world and surely one which violates the Organization of Economic Co-operation and Development's guidelines for the governance of state-owned enterprises. Even if one leaves aside for the moment the nagging and very serious question of how the new energy corporation will find the cash to support the Premier's ambitions, one can readily see how companies such as Chevron may be very reluctant to enter into any arrangements that would see its long awaited return on investment siphoned off into a provincially owned company with no experience in oil and gas and no capital at risk. These companies are not Fishery Products International.

International companies may well become increasingly reluctant to invest in this province as the Williams' approach becomes better understood. International capital seeks stability and predictability as well as a fair and transparent regulatory regime. In the case of the offshore, it appears from the Premier's interview yesterday and his previous comments on the offshore board that he intends to change the rules as he sees fit, when he sees fit.

Premier Williams may succeed in creating some measure of the control that he finds satisfying personally. On another level, however, all he may succeed in doing is ensuring the chronic problems in the Newfoundland and Labrador economy continue into the future, at best unaltered and at worst supported by the very mechanisms of control which he is seeking.

In reforming the hydro corporation, he may well be using the elements of plans laid by previous administrations to cement in place the very circumstance they sought to change.