Ed Byrne redux

Having had a bit of fun with Ed Byrne over a couple of posts, let's take a closer look at the minister and his portfolio.

At the outset, let me say I have known Ed Byrne for about 20 years. We aren't close buddies by any stretch but when we meet, there's no problem in stopping and having a chat about the goings-on around the district in which I live, and he represents, or in general in the province.

Ed Byrne was first elected to the House of Assembly in the early 1990s and served as leader of the Progressive Conservative opposition through the 1999 general election. Despite what was rumoured to be a difficult term as leader, Byrne led his party to a credit-worthy showing against Brian Tobin. The PC s managed to make it a race in 18 seats and in six, it was touch and go right up until the end for the Liberals. By the end, Byrne and the PCs managed to knock off three Liberal incumbents.

Under Danny Williams, Byrne rose to a more prominent profile, if that was possible and quickly established himself as a strong spokesman for his party. He served, as I jokingly said once, as a better leader after he left the job.

Byrne's reward was a large and important portfolio. Natural Resources encompasses onshore and offshore energy, forestry and agriculture all of which continue to make strong contributions to the provincial economy. Byrne has been publicly acknowledged for his strong support of agriculture, a good thing since Kilbride district has a strong agricultural sector.

Taking all that into consideration, it has been surprising to see Byrne have such a low profile on the offshore discussions, a slightly higher profile on aspects of the Lower Churchill, and, as noted in another post putting out a release soliciting bids for a strategy to explore the prospect of wind power as an alternative energy source.

This latter one is particularly strange because it seems to be an announcement of something already in train. At the same time, the province's long overdue energy strategy - a policy to encompass all energy resources would naturally incorporate a component on alternative sources like wind power.

What's up with that?

Speculation is easy. There is a general impression out there that the Premier has taken the big files - Lower Churchill and offshore - because they are big and have a high profile. That doesn't explain, though, why Loyola Sullivan got a higher profile as a spokesperson on offshore revenues than Byrne did, especially since Byrne's Nova Scotia counterpart was a key player in that province's campaign. There is a logical structure to these things and it seemed natural that Byrne should be part of a team approach and be seen to be part of the team.

There is also a view in the political community that Byrne has been tasked with focusing on his role as government House leader. In that job, Byrne's main effort has been on dealing with the Opposition parties and certainly this interpretation seems to be confirmed by the prominent and largely successful job Byrne has done in counter-attacking and attacking the government's political Opposition.

There has also been growing rumours that Byrne is keeping an eye on federal politics. In one scenario painted by the local speculators, Byrne will run in St. John's South-Mount Pearl once Loyola Hearn either retires or takes on a weakened John Efford in the Avalon riding where Hearn's home is and where he maintains his strongest support.

If that comes true, then Byrne would be a formidable opponent. He is young, experienced, articulate and has a strong political organization. Byrne also matches the demographic profile of the riding making him a natural fit.

But all that is speculation.

In the meantime, there are some major policy issues Byrne could tackle in his current job.

First, he could announce development of a comprehensive energy and energy development strategy for the province. The high profile projects like the offshore and the Lower Churchill need to be put into a larger context. That's been missing for a while now and Byrne could be setting out a policy that relate energy development to other factors rather than just talking about a few windmills. For example, future offshore development and encouraging greater exploration will require an examination of economic, labour, environment and safety policies as well as and tax incentives.

Second, Byrne could clear up policy regarding the province's hydro-electric corporation. In the last election, all three provincial parties talked about turning Hydro into something more than it is now. Now 18 months after being sworn in, the Williams administration hasn't done anything on this policy plank other than switch out some of the directors on the corporation's board.

Maybe it's time to re-examine the idea of privatizing Hydro, thereby strengthening the province's private sector and reducing the debt burden on the treasury. Maybe Hydro can be a productive energy Crown mega-corporation with interests in offshore development. Maybe Hydro can use some of its retained earnings to fund environmental projects of the type the provincial government can't fund directly. There are plenty of options but it seems more productive to engage the public in a debate over the future of Hydro in the Big Picture sense rather than in just a chat about wind power.

Third, Byrne could raise the profile of discussions about ending marketing supports for agriculture. This is an industry worth hundreds of millions of dollars annually to the province. Current international negotiations could see an end to market supports to farms across the province and raise the prospect of the industry being swamped by mainland competition. Byrne doesn't have to take one side or the other but he could open up the discussion in the broader public good - better to have participation than to spring something on people. Other provinces have concerns about this issue as well and Byrne could increase the province's visibility on a file most people wouldn't naturally association with Newfoundland and Labrador.

Fourth, Byrne could become a spokesperson for the province's offshore supply industry. They were noticeably invisible during the recent offshore talks except for NOIA's interventions already noted. But the industry needs to be recognized publicly and Byrne is a logical minister to help raise the profile of companies that are helping to make the province the principle beneficiary of offshore development.

Since taking office in November 2003, the Progressive Conservative government has seemed to operate on issues taken in series; first the budget, then the strike, then the offshore, next the Lower Churchill. Given the number of government issues out there, it will take forever to deal with them with government seemingly focused on just one issue after the other.

With capable ministers, it should be possible to manage some files in parallel and get more done in a shorter space of time.

There could be more to Ed Byrne than parrying Liberal and NDP thrusts in the House and in the media.

A tale of two cities, Part Three

Ponder, if you will, the President and CEO of NOIA, one Leslie Galway, walking along the St. John's waterfront musing with Peter Walsh of CBC television on the need to increase exploration for oil and gas offshore Newfoundland and Labrador.

A problem was identified, yet no solutions were discussed.

Now ponder an agreement signed on Friday between the Government of Nova Scotia and the Government of Canada to streamline regulations in the Nova Scotia offshore area. Reducing the regulatory burden without lessening environmental and other needed controls has been a concern for the oil industry for some time. Nova Scotia managed to get it done in time for this weekend's Atlantic Energy Forum, held this weekend in Halifax. Here's a link to a news release from the Nova Scotia government on the results of the forum.

Go visit the Newfoundland and Labrador government website and find any mention last week of the forum. It is possible I just missed it.

It does seem odd, though, that this week - in oil and gas week - the whole business of promoting exploration and streamlining the regulatory process has not been played up more by local industry representatives, like NOIA, and the provincial natural resources minister, Ed Byrne.

Incidentally, who is the guest speaker at NOIA's Oil and Gas Week Lunch this year? Loyola Sullivan, provincial minister of finance and president of treasury board.

A brief musical interlude

Two things prompted this post.

First is the entry on Paul Wells' blog on the issue of applause between movements of a concerto or symphony. Contentious issue this, especially here where you you will sometimes find people applauding vigorously whenever the music stops (even after a long pause) and other times when the audience seems lukewarm in its response.

I still recall the rather odd experience of having an entire church congregation spring to its feet during a performance of the Hallelujah chorus from The Messiah. If memory serves this tradition dates from the inaugural performance when the King, (George III ??) stood during that piece simply because he needed to stretch his legs. Somehow the idea worked its way far and wide including to that performance in - as I recall - Twillingate.

This is a musical place and by and large audiences are extremely enthusiastic and extremely supportive. What else could a composer or musician seek?

The second motive for this post is that tomorrow marks the start of the Kiwanis Music Festival in St. John's. Your faithful blog-scribe will be performing on the evening of 26 February at 8:20 pm along with the other members of the Gower Community Band. That's all I'll say about that.

As a bonus for having suffered through this post to arrive at this point, I am including a link to a collection of musician jokes. Some of these would be funny even to non-musicians. Others might be a bit more obtuse unless one has experienced it.

For example, non-percussionists will instantly enjoy this one, and with good reason:

Q: How do you know there's a drummer at your door?
A: The knocking slows down. (Variation: The knocking speeds up.)

However, those who have never worked with a drummer may have some difficulty getting the full flavour of it.

Since I play the euphonium, I always liked this one:

Q: How do you make a euphonium sound like a french horn?
A: Put your hand in the bell and miss a lot of notes.

Or another favourite:

Q: What's an oboe?
A: Kindling for a bassoon.

Just for the curious, here's a link to one of the leading professional euphonium players in the world, a chap named Steven Mead from the United Kingdom. Those who know me claim there is a resemblance between me and this fellow, but only in the facial features, I can assure you. Those who know me would never suggest for a moment I play like Mead.

Check his recordings (discography) page and you'll get some mp3 links like this one - a well-known television theme in which Mead plays all the parts - or this one, although I doubt it would be considered for a remake of Apocalypse Now. Ditto on all the parts.

Gotta love multi-track recording.

Now we return you to our regularly scheduled programming

Much ado about...

Interesting to see the reaction to a news story on Friday from CBC about the costs of advertising done by the province for the new deal. Some of the tab was picked up by the federal government.

In the interests of full disclosure, it must be noted that I used to work for a subsidiary of M5.

But here's my take on it, anyway, for what it's worth.

The work done by M5 is of the high calibre anyone would expect from one of the major advertising companies in the province and one that holds major accounts in Atlantic Canada. The overall price doesn't seem outrageous or even questionable in light of what was done. It seems to be pretty fair.

By contrast, I could discuss at some length the outrageous charges for some work done for the Hydro project under the Tobin administration or at least billed against the communications account - note I did not include not the stuff done for Grimes.

Was it necessary to do the advertising? Probably not and certainly not in the warm fuzzy approach taken but that is really a matter of choice. If it is what the client asked for and it doesn't cause them any difficulties, why fight about it? I've had clients hell bent on disregarding best advice and those are things consultants have to deal with. Some people over at Fair Deal didn't like it. Ok. That's fair enough.

As for how the work was awarded, there are some constraining factors such as timing that need to be considered. The process of getting quotes might well have taken too long; some companies may not have been able to pick the job up quickly and finish it on time. The real test of the procurement process will be for things like the "branding" project.

I can tell you from experience that government and other agencies and companies often go through all sorts of internal wrangling to ensure big contracts are awarded fairly. Sometimes the suspected preferred bidder gets the work; sometimes it doesn't. But I emphasize the word "suspected" - word on the street isn't always accurate; it is sometimes sheer speculation.

In a properly run competition, there are so many factors to be weighed and government does need some flexibility to ensure that it doesn't fall victim to the low-cost, low-quality trap that sometimes results from a misapplication of the public tendering process. We all know the joke about soldiers commenting that their rifles and helmets were made by the lowest bidder - implicitly suggesting they are therefore of the lowest quality. Well, the same is true for services like marketing, advertising and public relations. Cheapest isn't always best.

So the ads are done, the TV spots have been aired and hopefully the cheque will be cut and the account closed.

Roger Grimes has noted the difference between Danny Williams, Opposition Leader and Danny Williams, Premier when it comes to tendering contracts. It's a fair comment, but again, it wouldn't be the first time attitudes changed in moving from one side of the House to the other for nothing more than a sudden appreciation of the complexity and difficulty of doing things on the inside that appear obvious and simple only from the outside.

Comparisons with the federal sponsorship business are equally overblown. Then again, the whole Gomery inquiry has drawn way too much attention to a raft of relatively minor purchases in the greater scheme of government procurement. It's $100 million against a federal budget of umpteen billion. If the law was broken, the RCMP investigation can sort that out. If administrative procedures were bent or broken, then the internal administrative system of the federal public service should be able to sort that out. Let's move on past the golf balls and neckties. Let's hope that Gomery inquiry doesn't wind up hamstringing the federal government or make it shy to inform Canadians accurately about what it does on their behalf.

There are a bunch of other things to get more excited about in the province and in the country than this particular contract.

Moving CHHC offices: all that is solid melts into air

"Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air. " Karl Marx and Frederich Engels, The Communist Manifesto

Purists will rightly point out that Marx and Engels are talking about the impact of bourgeois economies in producing the conditions necessary for the political awakening of the proletariat.

However, the notion can be applied in another context, namely that constantly disrupting established relationships - whether of people to work, or ideas to the material world - produces the effect of unsettling the foundations on which human society functions.

Political dialogue is no exception.

Modern political discussion, especially as we have seen locally in recent months, often relies on pure emotion divorced from history and any other meaningful context.

Newfoundland nationalists and many others can be easily roused by the symbol of the Upper Churchill without most of them ever appreciating the long history and the particular context in which the Upper Churchill hydroelectric project was developed. Similarly, the Real Atlantic Accord can be assailed on the basis of myth and misrepresentation and even those who authored the agreement can simply discard established fact in the face of current expediency. On this point see anything written or said by John Crosbie in the past five years.

There is more to this than the abuse of history. It removes events from a human context which can be appreciated and assessed and in the process serve as a guide to deeper understanding of current problems or issues. As some wit once remarked, history is not so much what occurred as what we remember. In Newfoundland and Labrador, our memories are exceedingly dim. In a place where so much of our history remains unexplored, the record of what occurred transmogrifies into mythology and in some instances it is deliberately transmogrified by those wishing to influence wider public opinion in favour of or against one cause or another.

Ours is largely an oral culture, as it has been for centuries. There is a well-known communications exercise of whispering a message to one person who whispers it to the next in a long series. The humour comes in hearing first what was said at the beginning and then what emerges at the end after the message has passed through umpteen "listening and repeating" iterations. Such is oral history and oral culture.

Recall how easily Brian Tobin evoked the Upper Churchill in his sham-fight with INCO, or how readily Danny Williams whispered the same words during his recent offsets campaign against the federal government.

All this may overload a simple news release with too much political theorizing but I will take the risk.

Consider the second news release in two days from Liberal Opposition leader Roger Grimes on the federal shares in Hibernia. Grimes states:

"I call upon government to update the people of the province as to what actions have been taken to ensure this important asset is secured. Lobbying efforts should also continue to have the headquarters of the Canadian Hibernia Holdings Corporation (CHHC), the crown corporation that operates this 8.5 per cent share, moved to this province from Calgary. It is an insult that a federally run corporation that makes their profits from our resource is based in Alberta, not Newfoundland and Labrador. This is not acceptable and government should fight to have this office, and the jobs that go with it, transferred to the province."

Grimes is continuing his pseudo-nationalist posturing from his days as Premier. It was Grimes, after all, who funded the expensive and largely vacuous Royal Commission on Renewing and Strengthening Our Place in Canada. The Royal Commission's final report is, in many respects, merely a summary of the standard nationalist complaints about what former Tory cabinet minister Bill Marshall called "the rack of Confederation". Little effort was expended to provide a deeper understanding of this province in its current context or to offer a richer understanding of events like the Upper Churchill contract negotiations. The Accord offset section of the final report is a particularly odious example of fact being twisted and distorted for a purpose other than the furtherance of understanding.

That said, Grimes' releases on the federal Hibernia shares pander to the misunderstanding of a simple subject. Grimes transmogrifies the location of an office, of all things, into an insult, into yet another wound on the scarred psyche of Newfoundlanders (but not necessarily Labradorians) The reality of the Canada Hibernia Holding Corporation (CHHC) office becomes air for Grimes' purposes.

CHHC staff comprise a handful of people, four of whom are traders who, to the best of my knowledge, are engaged in the business of selling oil to generate the revenue from the federal shares of Hibernia production. They work on the Calgary exchange, again as far as I know, but even if that were not true, they are simply located in a city which is the centre of the country's oil and gas industry. Pretentions by Halifax and St. John's are obviously to the contrary.

So what value, beyond the purely symbolic, comes from relocating this tiny office? The answer, in short, is none. The office may bring a handful of new salaries to an already prosperous city and the office itself may generate some modest rental revenue. It would bring no great economic benefit and may well disrupt the simple - and cost-effective - functioning of the office where it is.
As a rule, government salaries produce no substantive economic benefit, as the Tobin experiment of dispersing provincial government offices around the province showed. Relocation was a symbol, but merely of the government's inability to foster economic development outside the metropolitan St. John's region. The expansion of government - as advocated in the revamped Independent - merely serves to increase the taxation burden on the whole society and, more often than not, stifles the imperative to deliver needed services effectively. After all, if the mere presence of the salary is the valuable commodity, then that is all the government need produce. What incentive exists to do something actually?

As for Grimes other issue, acquisition of the federal shares themselves, the overall context needs greater examination to determine if the idea is even feasible. The corporate partners may not be willing to see the simple transfer take place. They might insist that it be transferred but at fair market value. This is something which the provincial government simply cannot afford - without using the new offset money and given that the Hibernia project is halfway through its productive life the chance of recovering the purchase cost plus produce a real profit is slim. Were we somehow to engineer the transfer for a token sum, one can only imagine the national repulsion at such a generous gift on top of what is widely perceived as an already overly generous gift in the January deal.

What we might find, in a detailed analysis, is that acquisition of the shares would produce no substantive financial benefit. In the last scenario mentioned above, it might come at a more significant political price in the long term. Such is the history of this place: long on symbols, short on the practical.

Then we wonder why we are not more prosperous than we are, either economically, or politically.

The simple answer is that we reduce everything to air.

Air is free.

The Life of Brian...

or more particularly the perspective of former premier Brian Peckford has been a curious one indeed.

Take his letter in today's National Post. His defence of the January offset deal reveals an interesting take on recent events and those of his own era as Premier. It also reveals some curious twists of the English language but that is another matter.

Let's take his letter and look more closely at it's contentions:

"It should come as no surprise to the provinces and those interested in federal/provincial relations that equalization payments have been tabulated differently for some time, as they relate to Newfoundland and Labrador offshore oil and gas revenues."

Comment: Peckford begins with a surprising misrepresentation of the deal he signed in 1985. The Real Atlantic Accord actually provides that Equalization entitlement for Newfoundland and Labrador is calculated according to the formula extant in any given year, taking into account offshore revenues under the Real Accord as provincial own-source revenues.

"The equalization formula was first established in the Atlantic Accord, Section 39, which was signed in February 1985."

Comment: Well, to be honest, Brian, the Equalization formula was established in 1957 and has been amended from time to time thereafter. The Real Accord does not provide a formula for calculating Equalization entitlements.

The section referred to here establishes a series of declining offsets - that is supplementary payments - made in addition to revenues and Equalization per se. The offsets in the Real Accord expire in 2011, as Mr. Peckford accepted in 1985, thereby leaving the provincial government with whatever offshore revenues that existed at the time plus any Equalization entitlement and other federal transfers.

"Under that section of the accord, Newfoundland and Labrador received $522.1-million in equalization offset payments -- in addition to offshore revenues -- in the period from 2000 to 2005."

Comment: Since 2005 isn't over yet, and actually the 2005 fiscal year isn't even here yet, Mr. Peckford can't say what the Equalization offset payments under the Real Accord will be for the period he cites. Let's say they are at least that high. Let's also say that they reflect offsets almost equal to revenues collected. In some years, in fact, offsets have exceeded actual revenues.

"What is happening now is an increase in the amount of the equalization the province can keep. No new precedent is being set."

Comment: Well, yes and no, Brian. Let's do the "no" part first. Fundamentally, the new deal theoretically allows the province to gain extra federal transfers. On that basis, it is an increase in the amount that can be obtained by the province but it would be purely a matter of semantics to say the province retains - or keeps - anything at all. Since no province sends money to the federal government, and the federal government does not reduce provincial government revenues, it really isn't a matter of retention or keeping. After all, Equalization si not a right of each province.

As for the precedent, I'd agree this doesn't set a precedent as far as the notion of an offset payment is concerned. Equalization offset payments that were transitional - i.e., fixed term and declining - for offshore petroleum revenues were first established in the 1982 Nova Scotia Accord. They were carried forward into the Real Atlantic Accord.

The structure of this deal, though introduces a whole new concept in offset payments. Rather than being transitional, this deal - on paper - provides a full offset for a particular category of revenue for an extended period. In the case of Newfoundland and Labrador, the total period of offsets will be 20 years if the province qualifies for the second eight-year phase in the new deal.

It also creates a precedent in that a category of revenue held by one province alone is exempted. Previously, the generic solution provided the comparable benefit. In this instance it is hard to argue that a province which derives revenue from a unique source or where it holds the preponderance of a particular type of revenue should not attain a comparable Equalization offset based on local circumstances. The rules should apply fairly across the country, so it is possible that this agreement can be used by other provinces to justify comparable treatment.

"This is necessary given the collapse of the federally managed ground fishery collapsed and the loss of 40,000 jobs (which would be equivalent to 800,000 jobs in Ontario), the doubling of oil prices, the need to catch up to standards near the national average and to fulfill the constitutional provision (Section 36) that states that "Parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation." "

Comment: Blame Canada is a famous sport, but this revenue deal can hardly be considered reparations for the collapse of the fishery. No one has actually fixed blame and Mr. Peckford avoids looking in the mirror to find someone equally responsible for mismanagement of the fishery.

Doubling oil prices is not a reason to increase offsets, either. The higher the price of oil, the more cash flowing to the province under the Real Accord. This is what would truly make the sunshine and have not be no more.

"Without this recently announced improvement, levels of service and levels of taxation in Newfoundland and Labrador would have no chance of being "reasonably comparable." "

Comment: If a province squanders it revenues, no matter how large the revenues might be, then it will have difficulty having sufficient resources to provide services comparable to those available in other provinces. Newfoundland and Labrador history since Confederation is full of examples of provincial government mismanagement, including several notorious examples under the Peckford administration.

The constitutional obligation to provide Equalization to the provinces has been met by the original program, not by the offset payments of either the Real Accord or the January deal. Mr. Peckford knows the rights of this since he helped include Equalization in the 1982 revision of the constitution.

In general, given that Mr. Peckford was originally opposed to any attempts to modify the Real Atlantic Accord, his support of the Williams' deal seems almost hypocritical. His rationale provided in the Post today is more specious than specific.

Ah well, he is writing from the Wet Coast, after all.

Canada Hibernia Holding Corporation

Here is some additional information on the Canada Hibernia Holding Corporation, for those who want to dig a little deeper into this.

The Hibernia Management and Development Corporation website gives some general information on overall ownership of the Hibernia field.

Background information is harder to come by online, although there is plenty in old newspaper files from the early 1990s.

In developing the Hibernia field neither the Government of Newfoundland and Labrador nor the Government of Canada initially took a direct interest. The federal National Energy Program (NEP) and provincial legislation from the early 1980s anticipated that government would legislate a share of any offshore development. The Peckford administration passed legislation in 1980 to create a provincial petroleum corporation that was supposed to provide the provincial government with a means of accessing considerable revenues from offshore development.

The federal Mulroney administration repealed the NEP although it retained Petro-Canada, the federal Crown corporation for a number of years.

While the Real Atlantic Accord does refer to Crown shares, this clause refers to potential shares of the type envisaged under the NEP. In the event, the dismantling of the NEP rendered this clause irrelevant and the federal interest in Hibernia does not fall under the provisions of the Real Atlantic Accord.

In 1992 the federal government acquired an 8.5% interest in Hibernia following the withdrawal of Gulf Canada Resources, one of the original partners. Since no other private sector partners could be found to take up the shares, the project would have collapsed without the federal investment.

CHHC is a small federal Crown corporation which administers the federal shares. It is located in Calgary

As an aside, if you read the NOIA website, apparently only the intervention of NOIA members (one a former advisor to Brian Peckford) and federal Tory ministers like John Crosbie saved the day in 1992. Apparently, the provincial minister of energy at the time, Rex Gibbons, later a chairman of NOIA (!!!!), had nothing at all to do with it. Perhaps NOIA's partisan leanings go back much further than events of the past few months. The link is to an overview prepared for the association's 25th anniversary, less than three years after Gibbons' term as chairman.

Hibernia: No Sale!

Check The Telegram today and the feature story in the business section by Moira Baird.

Baird, known for solid, dependable reporting demolishes the story in The National Post yesterday that Ottawa planned to sell its 8.5% share in the Hibernia project. Next time the Post wants to do a story on the east coast offshore, they might want to make a call to Moira to find out what is going on.

“There’s no plans to sell the shares of Hibernia. Where that story came from in the (National) Post I have no idea, the minister of finance (Ralph Goodale) has no idea whatsoever about it,” [Efford] said Wednesday evening. That's a quote from Baird's story.

Provincial natural resources minister Ed Byrne is quoted as saying he believes the shares should be transferred to the provincial government without going to sale. Again, I would refer Minister Byrne to the position taken by his national leader, Stephen Harper on this point just for the sake of information. The Martin government has made no comment on potential sale or transfer of the shares, other than the comments by federal natural resources minister John Efford in today's Telegram.

Just to give some accurate background on the Hibernia shares, here's a story Moira Baird wrote last year on the Canada Hibernia Holding Company. Bear in mind these figures are for 2003 and before; we will have to wait until later in the year to find out what the current revenue profile looks like with higher oil prices.

The Hibernia shares held by Ottawa have become a source of controversy and a great deal of misunderstanding and misinformation, some of it deliberate, much of it inadvertent. No matter what you hear, put faith in Moira Baird's story before you accept anything to the contrary.

Jan. 20, 2004

OFFSHORE
Headline: Hibernia means millions to feds
By Moira Baird
The Telegram

The Canada Hibernia Holding Corp. - the company that minds Ottawa's 8.5 per cent stake in the Hibernia joint venture - has been earning profits for the federal government since 2002.

You won't easily find the company's annual financial statements in federal documents, though.

By Dec. 31, 2002, the Canada Hibernia Holding Corp. (CHHC) repaid Ottawa's investment in Hibernia - a total of almost $431 million spent between 1993 and late
1997, when first oil flowed from the field.

Ever since, Ottawa's share of the Hibernia revenue has been in the black, earning profits for the federal government.

Just how much profit isn't clear because CHHC's financial statements for 2003 aren't yet available. Since then, the price of oil has risen and Hibernia's annual production limit has been raised almost 23 per cent to 80.4 million barrels of oil.

$237 million in sales

In 2002, CHHC generated $237 million in crude oil sales revenue, according to the company's annual financial statements obtained by The Telegram.

The corporation repaid the remaining $127-million federal investment in the Hibernia joint venture - and also earned a profit of $99.8 million in 2002.

Since Hibernia began producing oil in 1997 until Aug. 31, 2003, the project has generated $180 million in royalties for the Newfoundland government.

On the expense side of the ledger, the Canada Hibernia Holding Corp. paid out $89.6 million in 2002. Those expenses included:

* $56.8 million in depletion and depreciation of the resource;
* $21.9 million in operating costs;
* $5.9 million set aside for future costs of abandoning the gravity-base structure, an environmental liability for six Hibernia partners;
* and more than $1 million in administrative costs.

CHHC is a four-person operation based in Calgary.

The company pays the bills, makes operating decisions with Hibernia partners, sells its share of the oil to the highest bidder, arranges for transportation of that oil to market, and collects the revenue from the sale of the oil.

Although CHHC operates as a private company, it is not required to report quarterly financial statements because it is not publicly traded.

Dividends are paid to the Canada Development and Investment Corp., CHHC's parent company. In turn, it remits the money to the federal government.

New use for old corporation

The Canada Development and Investment Corp. is a little-known Crown corporation that has just one other subsidiary, Canada Eldor Inc. This second subsidiary is responsible for the federal government's liability for nuclear waste and the cost of decommissioning and cleaning up old uranium mine sites.

Other Canada Development Investment Corp. subsidiaries, such as de Havilland Corp., Cameco Corp. and Fishery Products International, have been privatized.

The federal government has five partners in the Hibernia joint venture - ExxonMobil, Chevron Canada Resources, Petro-Canada, Murphy Oil and Norsk Hydro.

mbaird@thetelegram.com

Hydro minister shocked

In the newsrooms of North America, reporters usually fall on the floor laughing when they hear some official say they were "shocked". It's an overused phrase. It is usually closely followed by "appalled" as in "I was shocked and appalled". It's never "dismayed and appalled" or "shocked and bothered". Nope. It's always "shocked and appalled".

In the world of overused and lazy phrases, it stands next to"...and then something went horribly wrong..." in the tool bag of the demons of Reporters' Hell. People who use the phrases too often will get to hear it in the afterlife for a really long time.

VOCM posted this story to their website yesterday, in which the local Natural Resources minister expressed his "shock" at hearing the federal government planned to sll its interest in Hibernia on the open market. He also wanted the shares "returned" to Newfoundland and Labrador, but more on that knee-slapper (<-- another horrible cliche) later.

Anyway, don't bother looking for this story at the VOCM site. It has since disappeared.

"VOCM Province Still Wants Hibernia Shares - Feb 16, 2005

Natural Resources Minister Ed Byrne says he was shocked to learn that Ottawa may be getting ready to sell its 8.5 per cent stake in Hibernia. The National Post is reporting that details of the sale could be announced in next Wednesday's federal budget. Byrne says government has not swayed in its position that the Hibernia shares should be returned to Newfoundland and Labrador. Byrne says he has made a call to federal cabinet minister John Efford looking for answers. Opposition Leader Roger Grimes says those shares would be very valuable to Newfoundland and Labrador. "

More detail on this issue will follow later in the day.

I just have two questions:

1. Has Ed Byrne read the letter from Stephen Harper in which Harper pledges to sell the Hibernia shares for the benefit of all Canadians, if Harper is ever elected Prime Minister? I don't seem tor ecall anyone in the Progressive Conservative party provincially noticing that the national leader wasn't onside with one of the local party's big offshore issues.

In fact, come to think of it, Harper didn't support any version of Danny Williams' offset proposals last year. Harper just criticised the Prime Minister for not living up to the Prime Minister's commitment. (Clue: Harper learned his politics from Penn and Teller - big thing: misdirection)

2. Just who is this guy Ed Byrne and why is he speaking about oil and gas? The Accord file, which is in Byrne's department, was stripped from him and handed to Loyola Sullivan. Byrne couldn't even get a seat at negotiating table, nor could he get a prominent spot in the signing ceremony, as his predecessor Bill Marshall had 20 years earlier. Ed spends more time announcing a strategy to develop a strategy to develop wind generation of electricity than he does talking about one of the biggest files in government.

Byrne has been almost invisible in the past year on major issues like this, except as the government's counter-attack force or as commentator on trivial issues raised by the Opposition.
Hmmm. Maybe that's the answer. Since Roger Grimes has put out a release on the Hibernia shares story and Byrne is commenting on it, maybe it is an issue the provincial government isn't really concerned about. But it is enough to have the minister responsible for hydroelectric power being "shocked" by something.

Sphincter tightening moment

Party house leaders in the Commons are likely looking askance at the action by the federal Conservatives last night in blocking a bill that would divide Foreign Affairs and International Trade into two distinct departments. Bits of their anatomy are tighter today than they were this time yesterday.

Only last week, the Conservative industry critic, Belinda Stronach, had indicated that of course her party would vote for the bill.

From the outside looking in, there isn't any obvious reason for the switcheroo, especially since minority parliaments thrive on some co-operation and predictability.

Swinging back in time to 1979/80, though, we have to recall that sometimes Opposition parties in minority parliaments like to be unpredictable when it comes to budget bills. Elections follow and the incumbent government doesn't always win, let alone win big.

As I busily check my notes, I see a comment by Loyola Hearn telling local media in St. John's that of course the Conservatives will be voting in favour of the new offsets bill.

While normally I am not a pessimist, I won't be trying to cash Loyola Hearn's assurance cheque at any bank. A letter from Ralph Goodale to Loyola Sullivan also doesn't allay my concerns since it reveals bags of loose wording still left in the deal signed on Monday, which, by the way, Premier Williams' has dismissed as having no legal weight.

I will feel a whole lot better when the Governor General nods at the end of the session and signs the enabling legislation.

Until then, I shall remain vigilant to the likelihood that where it can, excrement will occur.

You read it here first! - Amended

Regular readers of this blog will notice the stunning similarity between the agreement signed in St. John's today and the revised version of the December deal posted here a few weeks ago under the title "First we assume a can opener". The language is somewhat simpler but the deal is largely the same.

[Note 15 Feb 05 - There are two additional points I have added. As noted below, one of my sharp-eyed readers caught a mistake of mine in the initial review - in paragraph four and five the province can go on and off the 100% offsets. The Premier's claim is intact, although this arrangement is still less than he wanted and its actual performance depends on the cirucmstances as they occur.

As a second point, Premier Williams apparently dismissed the document signed on Monday as having no legal weight. I am not sure why he would make this comment since it is supposed to represent the agreement he reached. If it has no weight, i.e. no meaning, then why did he bother having anyone sign it and why is he posting it to the government website. ]

Let's take a closer look:

A. The provincial government already collects 100% of offshore revenues.

"2. This document reflects an understanding between the Government of Canada and the Government of Newfoundland and Labrador that:

- Newfoundland and Labrador already receives and will continue to receive 100 per cent of offshore resource revenues as if these resources were on land;

- the Government of Canada intends to provide additional offset payments to the province in respect of offshore-related Equalization reductions, effectively allowing it to retain the benefit of 100 per cent of its offshore resource revenues. "

The first bullet point is an admission for those who doubted it that the provincial government already receives its full share of revenues as provided under the real Atlantic Accord. For all those who argued something else - including Danny Williams - this is a huge admission

B. Once the province is off Equalization it loses the new offsets.


[Note 15 Feb 05: See the appended comments for more on this. One of my sharper-eyed readers picked up a point I missed. Apparently this agreement does make it possible to go on and off the 100% offsets. As I note in the response comment, though, the actual performance of this section in delivering bags of cash to this province depends on the actual performance. I still feel like Emily Litella - 'Oh, never mind."]

In some initial media interviews, Premier Williams suggested that under this agreement, Newfoundland and Labrador could qualify and not qualify for Equalization. If it re-qualified during the agreement, the offsets would be restored to 100%.

Scan the deal and find a single sentence that says that. You won't find it.

Paragraphs four and five provide that once the province ceases to qualify for Equalization in the first eight year period, the original declining Atlantic Accord offsets apply and that for the eighth year, only Part 1 offsets are applicable.

There no provision to restore this new agreement's offsets if the province fails to qualify for Equalization in any year up to and including 2012.


C. The money must be used for debt reduction.

Consistent with Premier Williams' original proposal (not the post-June 7 version), the provincial government commits to using the new revenue to reduce its debt. From paragraph six: "This payment [ of $2.0 billion] will allow the province to reduce its outstanding debt."

D. The only hope for additional revenue under this agreement lies in the second eight year phase.

Paragraph six governs the lump sum payment and provides that no new money is due and payable until such time as the total value of offsets exceeds $2.0 billion. The Accord offsets were already negotiated and do not count as new money under this arrangement. Draw-down against the lump sum does not include the original offsets since it is specifically linked to new payments made under paragraphs three and four.

E. Qualifying for the second eight-year phase is harder.

As noted in earlier posts, in order to qualify for the second eight-year phase, the Government of Newfoundland and Labrador must qualify for Equalization in either year between 2010 and 2012. In addition, its per capita debt servicing costs must not be lower than that of four other provinces.

This two-step provision will be harder to meet than the December proposal's one step qualification criterion.

In addition, the current detailed discussions noted in the post "Counting Chickens" take on a greater significance. Meeting the second condition will depend entirely on the calculation of per capita debt servicing costs. Hence, the wrangling on the definition of that term.

This is a preliminary review of the agreement as released during the signing ceremony.

Having seen this document, it is harder to understand Dalton McGuinty's concerns. It likely also explains the overwhelming emphasis on pride today as opposed to the value of the deal itself.

Whither Canada?

Stop that! Stop that! It's silly.

Surely we live in the end times, prophesied by Monty Python.

The original pilot episode of the Flying Circus (actually aired as the third episode) was titled "Whither Canada?" This was also the title of the final exercise for students at the National Defence College (NDC) at Fort Frontenac in Kingston, On. NDC was a year-long professional study program run by the Department of National Defence for up-and-coming military, naval and air officers, senior federal and provincial bureaucrats and civilian business leaders.

The idea was to bring together future leaders and let them examine Canada and the issues facing the country internally and externally. Students had to write papers outside their areas of expertise and the final exercise was a collection of essays on topics of the students choice built around the theme "Whither Canada?".

Maybe I am the only one who found the humour in that. It was a productive educational program at NDC. I happened to know a few of the students and directing staff (instructors). About 10 years ago, the NDC program fell victim to budget cuts and a commandant who proved more of a magnet for needless controversy than anything else. Something along the same lines has been recreated lately in Kingston and with hope and hard work it can produce the value the old NDC program delivered.

In the interests of full disclosure, I should point out that my company logo is a gryphon (pronounced like griffon), the symbol of NDC. I chose it for good reason since the gryphon is a heraldic symbol of knowledge, strength and vigilance.

That long introduction comes as a result of seeing a CBC story today about Prime Edward Island Premier Pat Binns. Eager to join the Galloping Gimme brigade, Premier Binns is asking Ottawa to exempt the island province's agricultural and tourism revenue from Equalization. CBC quotes Binns as saying that "those industries are special resources that Prince Edward Island has, on par with the offshore oil and gas revenues that landed deals worth more than $3 billion over eight years for his Newfoundland and Nova Scotian counterparts. " It's an attributed comment in the original, not a direct quote.

Now here's the part that just screams for Graham Chapman's Colonel character to stride onto the stage and order a halt to this evident nonsense among the premiers.

Let's point out some obvious differences between PEI potatoes and Anne of Green Gables on one side and offshore oil and gas on the other.

1. Two are renewable resources. Two are not. Non-renewable resources run out, Pat, therefore a province would like to make the most of the revenue while it can.

2. The Government of Canada actually owns two of them; it does not own the other two. [Hint: the federal government doesn't own anything with red hair.] Why should PEI bother with the federal government redistributing its own revenues. (see Ontario Navel Gazing for a clearer explanation) Ottawa doesn't try to tell Pat Binns where he can direct the French fry dollars.

3. The new offshore deals with Nova Scotia and Newfoundland and Labrador actually modify agreements dating back 20 years. The offsets were established under that deal and no one from anywhere else in the country objected back them. Besides, the new deals don't guarantee money in perpetuity and they reflect what most reasonable people would acknowledge are unique circumstances.

That's just three things that come readily to mind. There could be more.

But surely everyone can understand why I am waiting - perhaps in vain - for the next premiers conference to end with a rousing chorus of The Lumberjack Song. [<--Warning: MP3 link]

Ontario Navel Gazing - the galloping gimmes, part deux

There is no small irony that Danny William's greatest contribution to Canada thus far has been to make every provincial premier into yet another beggar for increased federal hand-outs.

The latest in the line is Premier Dalton McGuinty, ably supported by editorial opinion in his province, including the ever-Liberal Toronto Star. Their editorial today is really nothing more than a thinly disguised appeal for more federal transfer payments to Ontario. Dalton is trying to pull a Danny - claim grievous wounds from Ottawa and demand reparations. In Danny's case, he pointed to a bunch of slights, real and perceived. In Dalton's case he is claiming that his province bankrolls everyone via Ottawa. The Star backs him up - of course.

Both Premier McGuinty and The Toronto Star are playing in Ontario on uniquely Ontarian parochial outlooks but there is no mistake that the views are no more factual than the local prejudices that fueled Danny Williams' recent campaign.

But here's a simple perspective that is as unlikely to get any play among the official opinion leaders, read news media editorial rooms - as the fact that Danny Williams most emphatically did not get anything close to a "sweetheart" deal. On that point, flip over to Paul Wells' blog.

Equalization transfers come out of Ottawa's general revenues. That means it includes the revenue generated in Newfoundland and Labrador by the Government of Canada. Unless Dalton has been slipping reflective dye into the local money supply there is no way to prove which dollar in transfers goes anywhere.

If one takes a look at Equalization and similar transfers to Newfoundland and Labrador, the amounts involved are curiously similar to the total amount of federal government revenue generated in Newfoundland and Labrador in any given year. In 1991 and 1994, for example, the government to government transfers are almost exactly what Ottawa collected in tax type revenues in Newfoundland and Labrador. I have the data if anyone wants to e-mail me for the table.

What that means is that the Newfoundland and Labrador economy generated the revenues needed to run the provincial government. We didn't get a hand-out from Queen's Park or Perth to build our schools; if we did, then Newfoundlanders and Labradorians would have a legitimate right to demand a vote in Ontario elections. After all, Newfoundlanders and Labradorians have a democratic right to hold accountable those who provide public services in the province.

Chew on that one for a second, Dalton.

In the case of this deal, Dalton, the revenues are certainly no more than those collected by the Government of Canada from its shares in the Hibernia project. In effect, the federal government has provided about eight years of Hibernia revenues to Newfoundland and Labrador. That's like Ottawa having shares in mines in Northern Ontario and agreeing to ship Queen's Park the cash. Who could find fault with that?

Where the deficit has come in this scheme since 1949 is in the contribution Newfoundlanders and Labradorians should make to the operation of the federal government. Newfoundlanders and Labradorians have contributed to the country in other ways and in other places but the people still living in the province itself should be paying a fair share to run Foreign Affairs and Defence and the Coast Guard to name a few.

In a couple of years time that will happen and no one should be happier than Dalton McGuinty and the Canadians who live in his province.

In the meantime, Dalton McGuinty and Danny Williams should be looking beyond their own borders; they need to get their heads out of their navels or whatever provincial orifice has captured their attention so completely. There are good reasons to reform federal-provincial fiscal relations, but they have nothing to do with Dalton McGuinty's misreading of the recent offshore oil and gas revenue deals. Now that Ottawa has a cash surplus and the national economy is reasonably stable, we should deal with the problem now, collectively as Canadians.

The biggest challenge in doing that is for provincial premiers to break out of their traditional narrow perspective and see that there is more to the country than what they can see from their offices. Other premiers have risen to that challenge in the past and there is no reason why current premiers cannot do the same thing.

The world doesn't end at Port aux Basques

In light of the continent shattering uproar - a bit of sarcasm - over the offshore deals, it is interesting to see the difference between the Nova Scotia government website and the site maintained by the Government of Newfoundland and Labrador.

Flip to Newfoundland and Labrador's site, and you see four links, two of which are to the marketing pieces (print ad and TV spot) that have been produced to sell pride to people of the province. There is a measure of irony there. The other two bits are the standard news release issued by both the federal and provincial government and the Agreement in Principle.

Lots of expensive graphics.

Now try Nova Scotia.

Wow!

Basic information in plain English for Nova Scotians and people from other provinces. There is some background information, a description of what was sought and what was obtained. There is an explanation of why the deal is good for Nova Scotia and for all Canadians.

Then there is the commitment to fiscal responsibility, code for not pissing the money out the door.

Open two browsers and flip back and forth between the two sites. Which one actually communicates meaningful, substantial information? Which one polishes something round for you? Which one plays solely to the local audience and which one communicates to all who are interested in the issue?

(Thinking in that vein, go have another gander at the tales of two cities posts. Note the parallels.)

Which one project cost more to produce?

It's an interesting exercise to look at things in comparison. There is a big communications lesson in there for the people on the receiving end of the communications.

A further tale of two cities

Communications people (public relations and advertising) like to look at the "optics" of things like today's ceremonies in Halifax and St. John's.

Ideally, there is more to it than how things look, but how things look and what gets said can affect impressions and attitudes and those things, especially attitudes, influence behaviour. It's the behaviour - manifested as support and co-operation on core issues - that matters.

In "A tale of two cities", we took a look at the differing positions taken by NOIA, the local oil and gas industry association, and its Nova Scotia counterpart OTANS in the recent talks with Ottawa.

The optics were good for OTANS and decidedly bad for NOIA. Take a look at their respective websites and the news releases. At OTANS, they announced that they would be hosting the Nova Scotia signing ceremony. OTANS chairman Tim Brownlow is quoted as saying:

"OTANS is pleased to be able to host this historic event," says Tim Brownlow, Chair of the not-for-profit association. "We look forward to continuing to work with both levels of government to promote the development of the local offshore industry." [Emphasis added]

"Nova Scotians now understand they can truly benefit from the potential wealth the offshore brings to our province, ... We are seeing the start of a new era of economic opportunity in this region. Both Prime Minister Martin and Premier Hamm deserve all of our thanks and credit for their efforts on this agreement."

Now flip over to NOIA. The release notes that a great many NOIA members had attended the ceremony, as they had attended the ceremony in 1985.

President and CEO Leslie Galway said "Today's signing ceremony has indeed signified a new beginning and a new path for Newfoundland and Labrador as indicated by Premier Williams. We will now be able to invest today for our future, and it is only fitting that Newfoundland and Labrador's oil and gas industry has been recognized as an important and vibrant part of that future."

What Ms. Galway is referring to there when she mentions "the industry" is simply the provincial government revenue coming from oil and gas production, not anything her members have done. After all, the whole focus on "principle beneficiary" has little if anything to do with the efforts of her members. The oil and gas revenues come primarily from members of the Canadian Association of Petroleum Producers (CAPP) - those are the people who drill the holes and pump the oil and gas.

No mention either of the Prime Minister and the Government of Canada in Ms. Galway's' words of praise; there was an earlier mention of "vital individual roles in making today's signing a reality". The Prime Minister better not let that go to his head.

After the brief release, there are a few photographs of the ceremony, finishing with a picture of Ms. Galway shaking hands with the Premier.

To really drive home the difference in the two ceremonies, note the Prime Minister's remarks. In Nova Scotia, he praised OTANS and drew attention to the substantive benefits of offshore oil and gas development. The PM talked about local jobs, local business, exports and innovation as being the substantive benefits of the industry. He talked about promoting Atlantic Canada's oil and gas resources to the G7 finance ministers in 1995.

Both NOIA and OTANS have the same mandate: to promote development of the region's oil and gas industry and enhance their members' participation.

One of most significant aspects of offshore oil and gas that got lost in the past year's rhetoric has been the role played by local industries in bringing jobs and investment to the province. People seem to have forgotten the remarkable development of locally-based companies that have proven time and again they can deliver services of the best quality and at competitive prices, to the oil and gas industry around the globe.

Based on the optics of today's ceremony, which one delivered on its mandate for its members?

Lies, spin, and bull*** - now a book

When you are searching for a book to read, try this one by Princeton philosophy professor emeritus Harry G. Frankfurt. His 1986 essay "On bullshit." is now available as a small 67-page book.

"One of the most salient features of our culture is that there is so much [bull]. Everyone knows this. Each of us contributes his share. But we tend to take the situation for granted. Most people are rather confident of their ability to recognize [bull] and to avoid being taken in by it. So the phenomenon has not aroused much deliberate concern, nor attracted much sustained inquiry," said Frankfurt, in a New York Times interview.

Buy one and put it on your gift list for someone you know.

It should be required reading in political science and public relations course across the country.

Counting Chickens

Coming Monday is the signing of the offshore revenue deal.

Everyone is cheering.

Some are scowling.

But according to the Saturday Telegram, discussions are still underway to reach agreement on some key definitions. The story isn't posted but I am giving a link anyway. Maybe you could send an e-mail and let miller Ayre know what you think of The Telegram's skimpy website. Ever hear of letting people subscribe, Miller?

One of the details is finding a common definition of debt. Appears that some provinces measure it differently, including some things and not including others. This is similar to a story floating around Ottawa and St. John's a week or so ago that there was a side deal being negotiated that limited where the province could spend its new cash. I doubt that is true, but The Telegram story does indicate there are still some potential difficulties in finalizing this agreement.

It stands in contrast to the original Atlantic Accord. Provincial Premier Brian Peckford accepted Brian Mulroney's offer in June 1984 without so much as questioning the placement of a comma. After the federal election later in 1984, the federal and provincial governments started what ended up being six months of detailed negotiations.

They debated the details of the deal to ensure that the goals set for them by cabinets - not the Premier or prime Minister alone - were met. One former provincial negotiator insists that the provincial team was worried the final version didn't meet key criteria established by cabinet and so a deal would fall through.

Is there a chance this could all fall through? Not really.

Is there a chance some details might not be as revealed publicly so far? That's a bit more likely, especially in the the workings of the provisions of how a province goes on and off Equalization and hence the offsets.

The original Atlantic Accord took nearly two years to navigate the House of Commons - that's with a majority government firmly committed to the deal. While no sign has emerged of a serious threat to getting a bill through the Commons to enact this deal - when it comes - there is always a possibility in a minority parliament of odd things occurring. Might some of the details be changed or amendments made, especially ones that open options for other provinces?

As the hoary old cliche goes, "the devil is all in the details".

And like another cliche, there is no point in counting chickens before they are hatched. It isn't like counting crows.

That's what makes the advertising schpeel the province has produced all the more smarmy, all the more chalushisdick.

Let's see what the thing actually looks like before we have a party. Better to know how many chickens are actually in the hen house before we start dropping any on the barbie.

Pride Day

Apparently Monday is to be Pride Day in Newfoundland and Labrador.

Look for lots of messages from the Premier on how the Accord fight restored our pride and how the deal will make us a "have" province. This is the message he has been carrying since that fateful Friday in Ottawa. Lots of things to be proud of.

Lots of hype.

Lots of spin.

Usually a good sign of nothing of substance, or a concerted effort to distract attention from something else.

Expect to see both print ads and television spots, some of which will run nationally. The production cost and media buy will likely stretch into the six figure range - that's hundreds of thousands of dollars. Is anyone in the province not in favour of the deal? Will a few ads change Dalton's mind?

Now this is completely separate from the "branding" campaign advertised over the weekend. The province is seeking bids from companies interested in promoting Newfoundland and Labrador as a great place and a great place to do business. Target, the internationally successful local marketing company already has done the research component. Let's see who actually gets to do the leg work.

As for the Pride Day event at the Fairmont, I have had a raft of e-mails and phone calls inviting me to attend. The contacts were not from the provincial government, of course. They have been busily contacting all their supporters as well as issuing formal invitations to people - apparently without having reserved or designated seating for many. So we may well wind up with a giant game of musical chairs on Monday morning. There are likely no more than 350 seats available; more than that showed up at the airport in a storm on short notice to welcome Danny the Conquerer home from Ottawa.

And running underneath it all will be yet more of that venomous partisan attack on John Efford, initiated by Danny and Loyola and taken up with such enthusiasm by their minions. The chorus of "boo"s at the political rally disguised as a news conference a week or so ago was just a small taste of what some political low-lifes are likely to do on Monday. Regardless of John's performance or what you may think of him personally, the whole spectacle of the Terminate John campaign and the flag nonsense are definitely something not to be proud of.

The galloping gimmes, Part 1

No surprise, really, that a number of other provinces are now seeking some type of Equalization side deal. The Globe and Mail and The Telegram are carrying similar stories about Dalton McGuinty complaints regarding the recent agreements between the Government of Canada and Nova Scotia and Newfoundland and Labrador.

Over at the National Post, pact-checking fell apart in their Saturday edition. The front page story on the supposed revolt turned Danny Williams from a Tory into a Liberal. Maybe that explains why the Post has been criticizing him so harshly. They got his party affiliation wrong so they just instinctively went on the attack.

He's the actual quote, which, oddly is STILL posted on Sunday morning: "Newfoundland Premier Danny Williams, who like Mr. McGuinty is a Liberal, rejected Ontario's concerns, noting that "from our own perspective, we've never objected to special funding for other provinces."

Williams is the Premier, not Tom Rideout who, until 1985, sat as a Liberal MHA before the lure of a cabinet seat caused him to run to Brian Peckford's side. There's a whole column (already written eons ago) about Newfoundland politicians and their penchant for party-switching. Not to worry about Danny Williams, Posties. He's so Tory he makes former Peckford cabinet minister Bill Marshall look like a Marxist.

Paul Wells is claiming credit for having pointed out this potential backlash some weeks ago. He rightly notes that no one objected until now, simply because every successful precedent strengthens the case for a special deal for Ottawa cash. To be fair Paul, McGuinty actually did complain about this whole side deal back in mid-October. In fact, it was his letter to the PM, PM, that led to the October federal offer to Newfoundland and Labrador containing a so-called cap on the offsets. McGuinty's position is a little different than the one taken by, say Saskatchewan or even British Columbia, but more on that to follow in a later post.

As for McGuinty's supposed endorsement of the Williams proposals earlier on, Paul does link to a CBC St. John's story. I say supposed because the whole thing was grossly over-rated by Premier Williams himself when he claimed to have the enthusiastic support of almost all the other first ministers, save the Pm himself and Bernard Lord.

The hand-written note from McGuinty was hardly high-level first ministers' official correspondence - McGuinty's office couldn't even find a copy of it in their files when media started looking for it. In this whole exercise, of course, the public has never seen any proof of the endorsements Premier Williams claimed to have. McGuinty's was the first to surface and looked a bit more like a case of "the weather is here; wish you were beautiful" throw-away platitude than a hearty endorsement for the Danny Juggernaut.

I still wonder if the note from Ralph was on a beer-stained napkin from the local steak'n'ribs place. If you wipe off the rib sauce you might be able to decipher the scrawl. Most of the rest probably looked alot like McGuinty's, if they existed at all. It doesn't really matter now though, since Danny has his deal - or does he? [See "Counting Chickens", coming later on Sunday]

On a more substantial point, though McGuinty is just flat-out wrong. He is quoted by Canadian Press as saying "[T]here was a principle that said no have-not province could have a fiscal capacity that surpassed that of the people of Ontario," said McGuinty. "In this particular case, that is exactly what is going to happen and that's unacceptable."

Under the January deal, dear Ontario Premier, the Equalization offsets stop flowing when a province ceases to qualify for Equalization. Right now that point is 10% lower than the per capita fiscal capacity of your province and it has been in that range for most of the past 50 years. So there is no fear of Newfoundland and Labrador surpassing you using Equalization and the offsets. This province will go off Equalization and likely exceed Ontario fiscal capacity the old-fashioned way - by out-performing Trillium Central on a per capita basis.

At least get your facts straight, Dalton; better still, stop listening to John Crosbie. He habitually gets it wrong even when talking about a deal he helped craft. Under the old Accord offset arrangement, a province could get offsets after it had ceased to qualify for Equalization. You and your predecessors never uttered a peep about that.

Why all the fuss now?

I am John Crosbie's spleen

For those who have been paying attention to the former federal emissary to Newfoundland and Labrador, John Crosbie's interventions on the Atlantic Accord dispute have been curious.

For example, here is his column from Atlantic Business Magazine. Take this paragraph as typical:

"The difference between the June 5th agreement and the proposal outlined by Minister Goodale is in the range of $4 billion. Total provincial un-clawed back revenues during the projected 21-year-life of the Hibernia, Terra Nova and White Rose Fields, based on an estimated future price of oil of $35 per barrel, would be $6.5 billion. If the present regime continues, NL will receive $2.1 billion over the 21 years when all presently known oil resources would be completely used up. If the federal suggestion of the "Ontario cap" is carried out, Newfoundland would receive another $400 million over the 21 year period. The overall division of the revenues from the offshore would then be 38 per cent for NL and 62 per cent for Canada. Clearly such an act of federal treachery and promise breaking would remove from NL its one opportunity ever to become a "have" province, as would be the case for Nova Scotia."

To be fair, at the outset, this comment from Mr. Crosbie is based solely on the October offer and Mr. Crosbie likely had to meet a printing deadline well before the December offer was made. That's one of the hazards of trying to comment on today's issue in a medium that doesn't allow some flexibility to meet for changes tomorrow or the day after.

That said, Mr. Crosbie did know certain things when he wrote the paragraph excerpted above that make his comments dubious. For example, he knows full-well that the deal he helped to craft in 1985 gave absolutely no commitment that federal and provincial revenues would be divided into any set of proportions. What he calls "federal treachery" is not something that happened since 1993 when the Liberal Party took power in Ottawa. The "treachery" to which Mr. Crosbie refers is his contained in his own deal operating as intended.

As a further example, Mr. Crosbie has known from the start that his new interpretation of "principle beneficiary" is decidedly not what was intended by the signatories to the Accord.

Yet further, Mr. Crosbie knows full-well that he makes an utterly false contention when he states that over the course of 21 years the provincial government will receive only $2.1 billion of the %6.5 billion of projected provincial revenues. As Mr. Crosbie himself described this contention in 1990, it is "absolutely, utter nonsense".

Leap ahead in time to Crosbie's assault on the Globe and Mail, this time mounted from the pages of the Sun chain. For purposes here, I'll excerpt some of Mr. Crosbie's historical and other facts and comment on them one by one:

-Extract begins-

Other historical facts that our Ontario-centric Toronto intellectual elite don't remember, if they ever knew them, are:

- Canada first took an interest in claiming our offshore resources on the east coast in 1961; [This assumes that as a matter of law, the Province of Newfoundland and Labrador owned them in the first place. What occurred was a dispute, like all disputes, in which resources were claimed by two parties, both of whom had a claim. Neither the Newfoundland Court of Appeal nor the Supreme Court of Canada accepted the proposition that the offshore resources ever belonged to Newfoundland and Labrador.]

- The Trudeau government made a reference to the Supreme Court of Canada, which decided in March 1984, that the undersea and undersoil resources off east-coast Newfoundland were owned by Canada and not Newfoundland, just as Canada had earlier owned the resources under Alberta, et. al. [For his own partisan reasons, Mr. Crosbie neglects to mention the reference by the Government of Newfoundland to the Supreme Court of Newfoundland Court of Appeal. Mr. Crosbie is also fully aware, or ought to be aware, that the legal status of the resources beneath the ground in Alberta and Saskatchewan was and is fundamentally different from the situation offshore Newfoundland and Labrador. Both courts found in favour of the federal government having legal jurisdiction, which is different from ownership.]

- It took from 1961 (mostly under Liberal governments) until the Mulroney government resolved these disputes via the Atlantic Accord signed on Feb. 11, 1985; [Mr. Crosbie neglects to mention the numerous efforts to resolve the ownership dispute and develop the fields by mutual agreement between the federal and provincial governments. Among other issues, it was the provincial government's insistence on pursuing the ownership argument that held up a deal during the Peckford administration. Such was not the case in Nova Scotia.]

- The Accord recognizes "the right of Newfoundland to be the principal beneficiary of the oil and gas resources off its shores." [Indeed it does, Mr. Crosbie, but the term is undefined in the Accord. That said, the definition Mr. Crosbie offers of the term is radically different from the benefits provided to Newfoundland and Labrador by a landmark agreement. His new interpretation does not match the public statements made by Prime Minister Mulroney and Premier Peckford when this historic agreement was signed.]

-Extract ends-

Note that nowhere in his Sun spewing does Mr. Crosbie go back and point out his revenue clawback argument from ABM and elsewhere continues to exist under the January deal he praises.

Mr. Crosbie concludes his tirade against what he calls "central Canadian control-freaks" by encouraging them to "cease to promote incorrect, unintelligent, insensitive, ill-informed and biased views that ignore the history of the problems."

Would that Mr. Crosbie took his own advice, we might be spared his ahistorical, partisan ad hominem rantings. His own presentations are no less incorrect or ill-informed and the result of his interventions have been no less insulting to the intelligence of his readers across Canada than the opinions of others he presumes to criticize.

A tale of two cities

It was the best of times. It was the worst of times.

For those who aren't familiar with the oil support business, there are two associations in Atlantic Canada representing businesses that supply goods and services to the offshore oil and gas industry.

In Nova Scotia, there is the Onshore/Offshore Technologies Association of Nova Scotia or OTANS. Here in Newfoundland and Labrador, we have NOIA - the Newfoundland Ocean Industries Association.

Now NOIA is the older of the two organizations, and while they publicly might deny it, there has always been a bit of a rivalry between the two. NOIA likes it place as the senior organization and the NOIA leadership gets edgy whenever it looks like OTANS is doing better than NOIA.

So it is no surprise that as details come to light of the two signing ceremonies on Monday - St. John's and Halifax - NOIA should be a little uneasy. According to some unpublished reports, it appears that OTANS is playing a prominent role in the Nova Scotia ceremony, as well should the organization that represents one of the significant ways in which that province is the "principal beneficiary" of the Nova Scotia Accord.

Over here, NOIA can come and show up with rest of us in the great unwashed mass at the ceremony in St. John's.

Now there could be many reasons for this difference. For one thing, the event in St. John's is being controlled by the provincial government. The One Who Was The Fight doesn't really need to share much of the spotlight as he claims his prize. In Nova Scotia, the whole offshore Accord fight has taken longer - Danny would have gotten nowhere with Jean Chretien any more than John Hamm did - and has been conducted with much less vitriol than the campaign from here. But more importantly, the minority Nova Scotia government will likely want to spread around some of the glow of victory to as many groups as it can.

But in the long run, aside from this ceremony, OTANS might well wind up much better off than NOIA.

In Nova Scotia, OTANS took a professional approach to government relations recognizing that long after this racket dies down, OTANS still has to maintain healthy positive relationships with both the federal and provincial governments. It has to do that in order to represent its members best interests. Check OTANS news release section on their website and you'll see plenty of releases on OTANS representing its members interest on this file or that. That's exactly what OTANS members pay membership dues to see happen.

What you won't see is what you will find on the NOIA site in October: two news releases in which NOIA blatantly sides with provincial government. In fact, the releases could have been written not by NOIA staff as one might assume but by someone working in the Premier's Office. They are full of the same blatant misrepresentations that characterized the provincial government's campaign. That was after the October Incident, the first of the great stormings, and as it turns out, a deal that wasn't apparently as bad as it seemed given the January deal.

Then there was The Ad: a full page ad complete with the NOIA logo in which the Newfoundland offshore association threw its entire support behind the provincial government and against the feds.

I wouldn't be surprised if Government of Canada officials in all the agencies on which NOIA depends moved telephone messages from the NOIA leadership farther down the pile and took just a bit longer to answer its letters.

The way bureaucrats look at things, the political fight was for the political types; the rest of the world can make arguments in private but never ever step into the bear pit of politics in public. It just isn't done among the people, public sector and private, who do the leg work on all sorts of files. They work quietly. But once you start taking sides you get treated differently because you have become different. For bureaucrats, it's ok to deal with private sector types ("us" dealing with "not us"), but it gets hinky when someone becomes political. It isn't okay for "not us" to become "them".

In the political offices, the response might be much chillier - and justifiably so. If nothing else, NOIA's endorsement of the province's campaign to rewrite the Accord's beneficiary provisions proved that NOIA places a higher priority on provincial government revenues than on the interests of its members in getting guaranteed offshore work. In that light, why should the Government of Canada be overly concerned about whether local industries are getting their rightful share of the Accord benefits? After all, their industry association doesn't think guaranteed local industrial benefits is part of making Newfoundland and Labrador the "principal beneficiary" of offshore oil development.

To cap it all, NOIA was one of the first interest groups to rush forward with its hand out looking for, well, a hand-out from the new federal transfer. How exactly does provincial government cash benefit NOIA members in their core interests? So far no one has stepped forward from NOIA to explain their logic.

If that wasn't enough, here's the release from NOIA issued once a deal had been reached in January. The language is very interesting if you look at the "principal beneficiary" comment and the mounds of praise heaped on the provincial government [read "Danny Williams"] for "steadfast leadership" in becoming "principal beneficiary". Even typing the words, I have a hard time fighting the hoover-like suction. Look at the slight praise for the Government of Canada. Talk about back-handed compliments!

Once NOIA stepped into the political bearpit, it stopped being a non-partisan representative of its members interests and took sides in a heavy-weight political dispute.

It would be a surprise if the mouse tangled with the elephants and didn't pick up a scratch or two.

Meanwhile in the White House...

Here's a curious story from the Globe today on the recent discovery of an accredited White House reporter who turns out to be some guy working under an assumed name for a Republican activist from Texas. How the guy got accreditation as a bona fide journalist is beyond me. Toby and CJ would never let that happen.

There's a word in the story I have just discovered is my new favourite word in English: pseudo-journalist.

According to the Globe story "[o]ver the past month, there have been disclosures of three separate instances in which government agencies have given lucrative contracts to conservative, pro-Bush commentators to provide consulting services and write positive articles on the administration's pet policies, including education changes."

The sound you hear is me shaking my head in dismay at the depths to which some people in politics will sink.

Bill Rowe on Cable 9?

Now lemme see how this goes:

1. New programs in the works including a call-in show on Rogers.

2. Bill Rowe resigns in Ottawa.

3. Bill Rowe tells CBC that he intends to revive his media career.

4. Bill Rowe used to host a call-in show.

5. Bill Rowe likes Danny.

6. Danny likes Bill.

7. Rogers Cable loves Danny.

Hmmmmmm.

Speculation can be fun.

The Cable Guy

The Premier's speech to the Empire club is apparently being carried numerous times by the local Rogers cable system, according to a news release from the provincial government.

Make sure you don't miss it.

And for those who don't want to patronize Rogers Cable, for some reason the Premier's Office neglected to notice that the Empire Club website has the speech (or will have it) posted on their website.

Two questions though:

1. Why is this release coming from Government and not from Rogers Cable? The government information service is there to provide information to the public and media on government activity not private sector business schedules. Can NTV get Survivor broadcast times up there now?

2. Has the Premier placed his Rogers' shares in a blind trust or is that file still open?

Does Bas need a job?

Word today that Bill Rowe, former Liberal Party leader, novelist, Rhodes scholar, cabinet minister, brown envelope slider supervisor and radio talk show host has apparently packed in his gig as Newfoundland and Labrador High Commissioner to the Evil Empire of Canada.

A free beer to anyone who can find any tangible, verifiable, credible evidence that Rowe accomplished anything at all during his brief tenure. His own overweaning self-adulation nor any superlative compliments from the guy who appointed him don't count. Nor will I accept that Bill picked up the Premier at the airport a few times, let Loyola sleep on his couch, or made coffee at federal-provincial meetings as proof of a job well done. Attending receptions is not proof, either; that's a perk or a pain depending on your perspective. Nope, I want to see a file finished or even significantly advanced.

I recall back in the dark ages when I served in government that someone in the bureaucracy tossed up this idea of having a permanent office in Ottawa. As a naive young fellow I thought it seemed like a good idea on the face of it. After a bit of consideration though, I realized that we taxpayers already have a raft of people who get paid to work with Government of Canada on our behalf, day in and day out.

One more body siphoning a salary and living expenses out of my pocket wouldn't help any.

I am still not convinced it has or will.

But there's a beer in it for anyone who can prove me wrong.

Wangersky on The Opposition - -(Not quite) 'nuff said

Read Russell Wangersky's column in the Tuesday edition of The Telegram.

I don't think anything more needs to be said.

Addendum (10 Feb 05)

Interesting to see the Fair Deal site has opened a thread on this issue and linked to this site (tip of the hat, back.)

The comments that follow are worth reading. Aside from one blatantly myopic one, it would be useful for the Official Opposition to have a look at posted opinions. True they aren't any kind of scientific sampling but these people have obviously taken some time to write carefully considered observations. Think of it as a free focus group session, guys. Fair Deal thread on Grimes

In search of strategic strategy for strategizing

A few years ago, B schools across North America started teaching "strategic" planning and every group under the sun needed a "vision" and a "mission" and a "strategic plan". Consultants made millions working on the documents, most of which I'd venture got tossed on a shelf right after the weekend retreat or "planning session".

Now we have a government that seems to be spending all its time working on plans and strategies.

Ed Byrne is the latest one to announce a call for proposals to develop a strategy, this time on wind generation of electric power. Nice idea.

Too bad Hydro has been supporting demonstration projects since 2001 trying to see if it is feasible to generate significant amounts of wind power in the province in a way that is environmentally safe.

"In recent years, there have been some advancements in technology that could lead to opportunities to reduce the cost of producing energy by wind power. As such, we believe that it is in the best interest of the province, the ratepayer and for current and potential wind power proponents, that we step back to review the current situation to determine how best to proceed."

Psst Ed. Here's a free suggestion. A radical concept.

Let the private sector keep developing test projects. If they are feasible, then let the private sector fund and develop them and feed the power into the Hydro grid. Let the environment department keep monitoring the projects and making sure they are environmentally sound.

I the meantime find something else to announce besides yet another study and proposal for a strategy.

It's a bit like the joke about The Method actor, seeking his "motivation" to walk across the soundstage toward the camera. "Don't worry", yells the director, " I'll tell you when you get here."

What's the strategy, Ed? I'll tell you when you get here.

Paul Wells take on Danny

Don't count on too many people circulating this link.

It's Paul Well's "BackPage" column from Macleans this week. It doesn't praise Danny. It can't be misconstrued - taken wrongly - into praise for the Wunderkind.

"Danny Williams could have had this deal in October or December. He preferred to pull cheap stunts in return for cheap votes. This is the man in whom Newfoundlanders and Labradorians have put their trust. One wonders why they are celebrating."

Wonder if Paul is coming on Monday for the signing ceremony?

Jack's Math - revised and revised again

Ok, I may have misheard this clip today, so I will check it out and post a correction if need be. [Yep, I did. So I bought The Telegram today and got a better set of quotes.]

Jack Harris, the province's New Democratic Party leader issued a news release today calling on the government to bring some good news in the upcoming budget. He noted, among other things, that the offshore deal just announced will mean the provinces books will be balanced on a cash basis this year and that over the next eight years provincial government oil revenues will be a total of about $4.6 billion. [He said $4.9 billion, and I gather he was referring to the offsets if we go the full eight years in the first offset phase.]

Excuse me, Jack? I must have misheard you. [Yeah I did, but actually what he actually said doesn't change the rest of this post.]

Even before a deal was signed the provincial government estimated its direct oil revenues would be a total of $4.94 billion. That's the total from October. When Wade Locke added up his numbers based on US$32 per bbl (barrel), he came up with an eight-year figure of $5.2 billion.

Now that was without any new cash from Ottawa.

So, Jack, if we add the $2.0 billion in the new cash, the provincial government is going to have about $7.0 billion over the next eight years. That works out to be around $875 million per year on average. [If we accept Jack's idea that we get the full offset (Dream on, there buddy), then the total oil revenues plus offsets is actually........$1.25 billion per year, on average, over eight years. Of course, regular readers of this blog know the figure is likely closer to $875 million.]

And that is without considering Hebron/Ben Nevis and without the added revenue from Voisey's Bay and without the added revenue from restructured federal provincial financial for health and social programs.

Jack was right to point out that the government's finances are not in crisis, thereby acting like a proper Opposition Leader. (Why exactly was Roger Grimes out defending Fraser "Mario Andretti" March today anyway?) But Jack, b'y, at least get the math right on how much money the provincial government will have to spend.

If you put it in proper context, any idiot can see the Premier can be fiscally responsible and implement some much needed preventative health care projects like the school lunch program.

If it looks like the place is cash poor, and you are working from an equally wrong assumption, then you only fall into the trap carefully laid by that fountain of fiscal fooferah, the Minister of Decimals Loyola Sullivan: he can just dismiss you as another irresponsible leftie ready to spend us into the ground. Then he'll put everyone back to sleep with a recitation of the current budget projections, line by thousands of lines to the nearest fraction of a percentage.

(Revised 09 Feb 05)

Addendum (10 Feb 05)

Jack Harris made a guest appearance on Out of the Fog on Wednesday evening and it was repeated on Thursday. Watch for it again over the weekend. It's worthwhile to see Jack's solid performance despite the shortcomings discussed below. With a bit of work, the NDP could actually start to climb in the polls if Jack can keep it up.

A couple of things stand out. First of all Jack very clearly and concisely laid out his points in a way anyone could understand. He divided the debt into different chunks and explained his point in a way that you couldn't help but see where he was going - in a sensible level headed direction.

Second, the only one who wouldn't buy the logic was Krista Rudofsky who seems increasingly smitten with our Premier. Her tone betrayed a sketpicism seemingly the result of having swallowed Finance department news releases whole.

It's getting to the point where the CRTC should review the local cable access license for Rogers to see if they have crossed over a line on bias. If they try and pass themselves off as a current affairs or news show, then maybe there are some laws about truth in advertising that apply.

Does anyone remember Krista's fawning interview with the Premier back in January when she asked, breathlessly, "What can we do to help you, Premier?" or words to that effect. That was just one of several examples where she has failed utterly either to grasp the subject in front of her or ask the Premier or Loyola Sullivan or any Tory cabinet minister anything other than a question designed to let them slide through their prepared talking points with ease.

Danny has been on the show so often you'd swear he still owned the station. Out of the Fog is starting to sound a bit like the old Conversations with the Premier farce done eons ago with Joe Smallwood. The Premier would pull into the parking lot having been driven in by chauffeur from Roaches Line. While the car idled, a reporter would run out, stick a microphone through the open window and let the tape run as Joe pontificated about whatever was on his mind.

I once asked a reporter who had done the old Smallwood schtick and a later version done by Tobin on what he thought was the difference between the two. "With Tobin, I got to ask questions," came the reply, full of all the dry-wit experience of a seasoned and professional news veteran. There's a lesson there Krista could use because there is a difference between asking a question and feeding one.

Thankfully, Poor old Jack brushed off the light-weight questioning and got back to his point time and again. A seemingly frustrated Krista dropped it.

Any kind of bias in a public program interviewing political figures is unacceptable.

Period.

Fraser should be on TV

Law and Order has been on the air since 1989.

CSI and all its spin-offs has been around for something like five years.

Fraser March needs to watch more TV. If he had, he would have known you can get the lugs from your phone to find out who you called and where you called from.

Make it easy Fraser: apologize and clean up your act or resign.

I am starting to think that Fraser and John are getting political advice from the same person.