The Thick of It: environment minister version

Environment minister Charlene Johnson.

Think Nicola Murray but without the gravitas.

The province’s environment minister might still be wrestling to find a way to deal with a tire recycling program.  Her only solution to the piles of tires thus far has been shipping them to Quebec for burning.

Johnson might be struggling to sort out the waste management strategy she and her cabinet colleagues photocopied in 2007 from their Liberal predecessors’ version from 2002. 

Yes, friends they just pushed back all the implementation dates by a decade.

Charlene and her colleagues may have buggered up the Abitibi expropriation such that the public is on the hook for cleaning up three of five sites needing remediation.

The sustainable development act may be lost under someone’s desk.

But Charlene knows what it is to be a minister responsible for protecting the environment.

Consider her comments about calls for greater protection for woodland caribou, creatures she has under her jurisdiction:

"I know there [are] calls to have no harvesting at all within the core areas and the buffer areas, but then there would be no logging industry," Johnson told CBC News.

So there’ll be $15 million of study. That’s despite the fact that a decade-old study by government scientists showed that logging within nine kilometres of caribou can seriously affect the animal’s behaviour.

And in her latest round, Johnson thought a bottled water ban in provincial government offices was risible.

Yes, gentle readers, she didn’t just give a straightforward answer.  Charlene thought that ridiculing the New Democrat leader was the right way to go:

Mr. Speaker, I have to say I am absolutely shocked. We are dealing with an oil spill in Louisiana. We have all kinds of fishery issues that have been before the House. There are health issues, there are other issues in environment and I am getting asked questions about banning bottled water in government -

It is not to say that we do not take the issue seriously, Mr. Speaker, but I would certainly suggest that there are a lot of other issues, particularly in the environment that we can address.

Mr. Speaker, I just had a scan around government the other day. There are offices where meetings are held in government that there are no sinks. So, what is she proposing that we do not have anything to drink?

At the very least, we should all be thankful.

Thankful, that is, because even if Charlene is confused about what ocean it is that sits offshore (Hint:  it isn’t the Gulf of Mexico), then at the very least, Charlene knows that compared to the crap-load of major policy issues that have been sitting on her desk for years without any serious attention, bottled water in government isn’t actually the most pressing issue.

That is, not the most pressing even if it would be probably the easiest one of that back-log for her to deal with.

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BTDTGTTS Update:  As someone reminded your humble and now increasingly forgetful e-scribbler, Newfoundland and Labrador already had a ministry like Nicola’s with her “fourth sector” initiative.  We still do.

It’s called the minister responsible for Penny Rowe, errr, the volunteer sector, currently run by Dave Denine.  The first minister responsible for liaising with Penny used to rattle on about the fourth sector, which is a term penny used to use all the time.

BOHICA Update:  Meanwhile, the environmentalist minister landed a major gaffe on Tuesday which is likely to do wonders for the ongoing negotiations and legal action over Abitibi.  Things that were TARFU and FUBAR just went to the final stage, BOHICA. 

Charlene, quoted in the Wednesday Telegram which is sadly not online: 

“Our only concern is that the environment be brought back to the state that Abitibi found it in when they came here to use our resources.  We don’t even ask what the cost is.  As long as we’re fine with the way they’re doing it, that cost is really Abitibi’s responsibility.”

Charlene, God love her little socks, likely thinks that the big evil old company got here in 1905. That is the year on those leases which Carlene and the crowd in the House of Assembly voted to tear up a couple of years ago.

Unfortunately, the woman should actually read the backgrounders on the files she has stacked up on her desk. 

If she did, she would know that Abitibi arrived in the province in 1969.

Not 1905.

Two years after the first Summer of Love.

So basically, Charlene just said that it is government policy to restore the only land in the province Abitibi still owns back to the condition in was in 1969.  Would she like the original pollution restored then, in the places where,as the prov gov already acknowledged, the company has cleaned up a bit? Let’s hope not.

So that’s Botwood sorted out back to the year Sesame Street started.

Then there’s Stephenville.

Abitibi didn’t get that land until 1979.

And by that time both the US Air Force and the provincial government had been peeing on it for the better part of three decades.  First there was an air force base and then there was the infamous linerboard mill.  Huge disaster – at least financially – which shut down in 1979 and left both a contaminated site and a gigantic debt load for the taxpayers.

Then Abitibi bought it for a dollar, at the behest of the Peckford administration.  Abitibi, meanwhile, diverted a brand-spanking new Valmet paper making machine from its original destination of Grand Falls and set it up at the old linerboard building. 

Poof:  the long-awaited third mill, made by splitting one of the others in two.

Now since 2005, Abitibi has already levelled the building the linerboard crowd put there.  So strictly speaking, they’ve actually put the site back in the shape it was just after the Americans frigged off - 1967.

That’s even better than Charlene said the government wanted.

And yet Charlene accuses others of not understanding what is going on.

As Ron Stoppable once said, this would be so cool if it wasn’t going to hurt us.

Big Oil has L’il Buddy available for offshore fight #cdnpoli #oilspill

If the oil companies operating offshore don’t like environment minister Jim Prentice’s plans to toughen up environmental and safety rules offshore, they might well be able to count on a very potent ally:  Newfoundland and Labrador Premier Danny Williams.

As BP told you last May, under section 5.1 of the Hebron fiscal agreement, the Government of Newfoundland and Labrador is obliged to side with the oil companies in fighting any regulatory change if the industry feels the changes “might adversely affect any Development Project” of the Hebron field.

David Pryce, vice-president of operations for the Canadian Association of Petroleum producers is quoted in the Globe cautioning against what the Globe and Mail described as “potentially punitive regulations”:

“Don’t be too quick to respond, and don’t be too restrictive. That’s a concern for the industry,” said David Pryce, vice-president of operations at the Canadian Association of Petroleum Producers in Calgary.

“The fact that there is this concern, and there are a lot of people talking about could it happen here, the [concerns] are do we get a response that’s beyond what’s needed here.”

On Monday, Danny Williams told the provincial legislature that offshore production operations here meant that an accident might be less likely to spill oil onshore compared to the incident in the Gulf of Mexico. During Question Period, Williams said:

From our own perspective, as recently as this morning, we have looked at just exactly what the situations are in the North Atlantic. It is a general understanding that because the offshore sites are significantly offshore and well east of the Province that the situation that could arise in Orphan Basin or Jeanne d’Arc or the Flemish Pass is that there is a lower likelihood that oil would actually come ashore in Newfoundland and Labrador. Now, that is not to say that it would not.

As well, we are dealing with a heavy crude oil out there, so from a fishing perspective, there is less likelihood that it would affect the fishery although it would certainly affect the gear. However, having said that, I am not trying to minimize the circumstances under any situation, we will make sure that we monitor this very closely and that we adopt the best practices in the world.

Only the Hebron oil field will produce heavy crude.  The others all produce oil of roughly the same weight relative to water as the oil currently leaking in the Gulf of Mexico (API 34).

The Government of Newfoundland and Labrador  - through its wholely owned subsidiary NALCOR - is a direct partner in offshore development with ownership stakes in one of the producing fields and with stakes in two projects under development, including the massive Hebron project.

While Prentice has no direct say in regulating the offshore, he appears to be echoing sentiment in the federal government for strong offshore regulation.

Under the 1985 Atlantic Accord, the Newfoundland Offshore Area is regulated through the Canada-Newfoundland and Labrador Offshore Petroleum Board.  The board is a joint venture between the the Government of Canada and the Government of Newfoundland and Labrador.

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AbitibiBowater moves Stephenville and Botwood properties to subsidiary

As part of its re-organization plan, AbitibiBowater sold its two properties in Newfoundland and Labrador (Stephenville and Botwood) to a subsidiary company on April 27, 2010.

The company is in receivership with Ernst & Young acting as receivers.

The Government of Newfoundland and Labrador did not object to the arrangements.  The provincial government was represented by Weirfoulds LLP. The arrangements do not alter the environmental orders or the appeal of Judge Clement Gascon’s March 31 decision.

However, the move appears to limit the number of orders affecting AbitibiBowater from ones affecting five sites in the province to only the two that the expropriation act left with the company. 

The cost of clean-up  at Botwood and Stephenville is listed in a report for the court by Ernst & Young as being potentially in the “tens of millions of dollars.” 

The provincial government did not release the cost estimate prepared by its consultants for all five sites, including the Grand Falls mill.  A document filed with the court by Ernst & Young dated February 19 did not establish a clear estimate of the costs involved.  It put the base case estimate as being in the mid to high eight figures and the worst case as being several times that.

The receivers have the power to sell the properties or to make an arrangement to deal with the environmental issues.

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AbitibiBowater files reorg plan

Complete text of AB’s news release [paragraphing changed for legibility;  otherwise, spelling and capitalisation as in original]:

MONTREAL, May 4 /CNW Telbec/ - AbitibiBowater Inc. ("AbitibiBowater" or the "Company") today announced that the Company and certain of its U.S. and Canadian subsidiaries, currently under creditor protection, have filed with courts in Canada and the United States a Debtors' Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code and CCAA Plan of Reorganization and Compromise in draft form (together, the "Plan"). These filed documents are available on the Company website, www.abitibibowater.com.  [The Canadian documents can be found here.]

The Plan is a framework for the final forms expected to be filed in the near term and is not being filed for the purpose of soliciting votes and remains subject to finalization. The Company intends to file with the courts an amended Plan containing more detailed economic terms, along with disclosure documents and proxy materials providing information on the Plan and voting procedures.

A classification scheme and resultant forms of recoveries for all Company creditors is proposed in the Plan. It specifies that non-disputed pre-petition secured, administrative, debtor-in-possession and other priority claims would be paid in full in cash, or satisfied as otherwise agreed, at emergence. Unsecured claims would receive a pro rata share of equity in the reorganized company upon emergence, subject to certain conditions. Details on the extent of recovery for unsecured creditors will be outlined in forthcoming disclosures. The Plan also provides that the Company's current common stock will be cancelled and holders will receive no recoveries.

"The filing of these documents is an important step in AbitibiBowater's creditor protection proceedings and a precursor to a key milestone we intend to reach in the near future with the filing of the Plan's disclosure documents and proxy materials," stated David J. Paterson, President and Chief Executive Officer. "While we recognize the consequences this Plan outlines for our current common stockholders, this result was necessary in order to meet our overall obligations to creditors and effectively restructure for the future."

Before emerging from creditor protection, the Company must secure adequate exit financing and complete efforts to address labor [sic] costs and pension issues, as well as satisfy other conditions set forth in the Plan. Prior to emergence, a new Board of Directors will also be designated for the Company. The Plan will ultimately require approval by the creditors and the courts.

More information about AbitibiBowater's restructuring process can be found at www.abitibibowater.com or by calling toll-free 888 266-9280. International callers should dial 503 597-7698.

AbitibiBowater produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 22 pulp and paper facilities and 26 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION AND USE OF THIRD-PARTY DATA

Statements in this press release that are not reported financial results or other historical information of AbitibiBowater Inc. (with its subsidiaries and affiliates, either individually or collectively, unless otherwise indicated, referred to as "AbitibiBowater," "we," "our," "us" or the "Company") are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements relating to our: creditor protection proceedings under chapter 11 of the U.S. Bankruptcy Code and the Canadian Companies' Creditors Arrangement Act; debtor in possession financing arrangements and reorganization process; ability to successfully restructure our debt and other obligations; efforts to reduce costs and increase revenues and profitability, including our cost reduction initiatives regarding selling, general and administrative expenses; business outlook; curtailment of production of certain of our products; assessment of market conditions; and ability to sell non-core assets in light of the current global economic conditions and the requirements under the creditor protection proceedings to obtain court approval for certain asset sales; and strategies for achieving our goals generally. Forward-looking statements may be identified by the use of forward-looking terminology such as the words "should," "would," "could," "will," "may," "expect," "believe," "anticipate," "attempt" and other terms with similar meaning indicating possible future events or potential impact on our business or our shareholders.

The reader is cautioned not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. These statements are based on management's current assumptions, beliefs and expectations, all of which involve a number of business risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to the following:

(i) risks and uncertainties relating to our creditor protection proceedings including, among other things:

(a) risks associated with our ability to: continue as a going concern; stabilize the business to maximize the chances of preserving all or a portion of the enterprise; develop a comprehensive restructuring plan in an effective and timely manner; resolve ongoing issues with creditors and other third parties whose interests may differ from ours; obtain court orders or approvals with respect to motions filed from time to time, including court approvals for asset sales; obtain alternative or replacement financing to replace our debtor in possession financing arrangements and restructure our substantial indebtedness and other obligations in a manner that allows us to obtain confirmation of a plan or plans of reorganization by the courts in order to successfully exit our creditor protection proceedings, especially in light of the current decline in the global economy and credit conditions; renew or extend our current debtor in possession financing arrangements and/or accounts receivable securitization program, as the case may be, if the need to do so should arise; successfully implement a comprehensive restructuring plan and a plan or plans of reorganization; generate cash from operations and maintain cash-on-hand; operate within the restrictions and limitations of our current and any future debtor in possession financing arrangements; realize full or fair value for any assets or business we may divest as part of our comprehensive restructuring plan; attract and retain customers; maintain market share as our competitors move to capitalize on customer concerns; maintain current relationships with customers, vendors and trade creditors by actively and adequately communicating on and responding to events, media and rumors associated with the creditor protection proceedings that could adversely affect such relationships; resolve claims made against us in connection with the creditor protection proceedings for amounts not exceeding our recorded liabilities subject to compromise; prevent third parties from obtaining court orders or approvals that are contrary to our interests; and reject, repudiate or terminate certain contracts; and

(b) risks and uncertainties associated with: limitations on actions against any debtor during the creditor protection proceedings and the values, if any, that will be ascribed in our creditor protection proceedings to our various pre-petition liabilities, common stock and other securities; and

(ii) risks and uncertainties relating to our business including: industry conditions generally and further growth in alternative media; our capital intensive operations and the adequacy of our capital resources; the prices and terms under which we would be able to sell assets; the relative volatility of the U.S. dollar and the Canadian dollar; the costs of raw materials such as energy, chemicals and fiber [sic]; the success of our implementation of additional measures to enhance our operating efficiency and productivity; our ability to obtain fair compensation for our expropriated assets in the province of Newfoundland and Labrador, Canada and the possibility that we could lose any or all of our equity interest in Augusta Newsprint Company ("ANC"). Additional risks that could cause actual results to differ from forward-looking statements are enumerated in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009, as amended, "Risk Factors" ("Item 1A"). We filed the Annual Report on Form 10-K with the U.S. Securities Exchange Commission (the "SEC") on March 30, 2010. All forward-looking statements in this press release are expressly qualified by the cautionary statements contained or referred to in this section and in our other filings with the SEC and the Canadian securities regulatory authorities. We disclaim any obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

For further information: Investors: Duane Owens, Vice President, Finance, (864) 282-9488; Media and Others: Seth Kursman, Vice President, Public Affairs, Sustainability & Environment, (514) 394-2398, seth.kursman@abitibibowater.com

@DaddyMillions – local humour hits Twitter

Some wag’s joined the legion of humourists using Twitter to parody and comment on prominent figures.

Yes, lads, someone is tweeting as Danny Millions, an ersatz Danny Williams. Not quite the love child of Malcolm Tucker (@MTuckerNo10) and Jim Hacker but you get the idea.

No sign who is behind it, but it is topical:

Don't worry... there's no chance of an #oilspill off NL's shores. Zip. Nada. End of discussion. Any questions? #beijingsortofthing#cdnpoli

Ok.

So maybe it’s an acquired taste.

Maybe some of the other stuff, like a reference to the subject that got Bob Wakeham in crap last February, would be more to your liking.

In any event, start following if you want.  At least you know it’s there now.

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Hebron deal may affect future offshore spill response #oilspill

Premier Danny Williams assured the people of the province on Monday that his administration will ensure that “the necessary policies, procedures and processes are put in place…” to deal with an offshore oil spill like the one in the Gulf Of Mexico.

During Question Period in the provincial legislature, Williams also said that “the people of the Province can be assured that we will adopt the best practices in the world. As we come to this process now in the Gulf of Mexico, if there are any new devices or methodologies or technologies that are developed, we will make sure that they are adopted in our offshore.”

Williams said that offshore petroleum board “is responsible primarily for any offshore problems. If it comes to any leakages or seepages that come from tankers or ship transports, then that is the responsibility, of course, of Transport Canada.”

Williams also told the legislature that “we are dealing with a heavy crude oil out there, so from a fishing perspective, there is less likelihood that it would affect the fishery although it would certainly affect the gear.”

But as Bond Papers noted exactly one year ago, under section 5.1 of the Hebron financial agreement, “The Province shall, on the request of the Proponents…support the efforts of the Proponents in responding to any future legislative and regulatory changes that may be proposed by Canada or a municipal government in the Province that might adversely affect any Development Project, provided such action does not negatively impact the Province or require the Province to take any legislative or regulatory action respecting municipalities.”

In other words, should the federal government – Transport Canada, for example – try to beef up offshore regulations, the provincial government would be obliged to oppose such changes if the oil companies felt they would “adversely affect” the Hebron development and asked the provincial government for support.

That intervention might be much easier in a situation involving heavy oil if, as the Premier asserted, “there is less likelihood that it would affect the fishery although it would certainly affect the gear.”

Of the fields in production or under development, only the Hebron field contains heavy oil.  The producing fields – Hebron, Terra Nova and White Rose – all pump light, sweet crude of about the same weight compared to water (API) as the oil currently spilling into the ocean in the Gulf of Mexico (API 34).

While prevailing winds and currents may not bring the oil from any of those fields to shore in Newfoundland and Labrador, there’s no public indication of how far across the Atlantic a spill might go and what impact it might have in Europe. 

Williams also did not discuss an contingencies to deal with an oil disaster on the south coast of the island, the coast of Labrador or in a Gulf of St. Lawrence development such as one potentially at Old Harry.

Williams did say that, as far as the provincial government’s offshore equity stakes go,  “the Government of Newfoundland and Labrador stands behind the environmental liabilities no different than the Abitibi situation. When environmental disasters happen, we go to our primary source of responsibility and then the government, of course, is the backup at the end of the day.”

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Abitibi “intended to go bankrupt”': Williams

Newfoundland and Labrador Premier Danny Williams today said that the expropriation of assets belonging to three companies was a “very deliberate move” and that as a result of the expropriation of assets belonging to three separate companies, the provincial government can now “use the value of these assets to deal with the environmental liability which we would have been responsible for because they [AbitibiBowater] intended to go bankrupt in the first place.”

Williams made the comments in Question Period during an afternoon sitting of the House of Assembly.

He said that AbitibiBowater “would have walked away from their responsibilities”.  Williams said the paper company would have gone bankrupt, sought creditor protection or “done what they were in the process of doing and that was trying to sell off those assets to somebody else.”

That’s the first time Williams has linked the expropriation to a failed bid by the provincial government to buy one of those assets, a hydro project at Star Lake which was not supplying power to the mill at Grand Falls.

In another answer to questions from opposition leader Yvonne Jones, Williams described the mill at Grand Falls and the two houses associated with it as “the most valuable piece of real estate in Grand Falls”.  He did not explain why the provincial government intended to expropriate all the other assets and leave  AbitibiBowater with the most valuable piece of real estate in Grand Falls when he had earlier described the expropriation as seizing the valuable assets to forestall their being sold off.

Those assets would have been lost to an irresponsible company that did not give a darn about the people of Newfoundland and Labrador, the people of Central Newfoundland and Labrador. They would not - they would have walked away from their responsibilities. They either would have gone into consumer protection, they would have gone bankrupt or they would have done what they were in the process of doing, and that was trying to sell off those assets to somebody else.

While Williams has been careful in previous statements and made no comments during debate on the expropriation bill, his most recent remarks could weigh heavily against the province’s efforts to fight off a NAFTA challenge and to push the environmental liabilities onto AbitibiBowater.

Williams comments raise the prospect that the expropriation was not done  - as he originally suggested  - because AbitibiBowater breached a 1905 lease.  In a statement to the legislature before his natural resources minister introduced the expropriation bill, Williams said:

Abitibi has reneged on the bargain struck between it and the Province over the industrial development of the Province’s timber and water resources for the benefit of the residents of the Province.

Mr. Speaker, having said that, we cannot as a government allow a company that no longer operates in this Province to maintain ownership of our resources.

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NALCOR takes on Fortis loan payments

NALCOR, the provincial government’s energy corporation, is paying a loan on behalf of the Exploits Partnership, one of the entities affected by the expropriation fiasco in December 2008.

In its 2010 first quarter financial statements (2010 Q1) released on Friday, Fortis, one of the partners in Exploits River Hydro Partnership, said that NALCOR  is making the “scheduled repayments” under the terms of the loan. 

As of March 31, 2010, $59 million remained outstanding on the loan. The statement reads in part:

As the hydroelectric assets and water rights of the Exploits Partnership had been provided as security for the Exploits Partnership term loan, the expropriation of such assets and rights by the Government of
Newfoundland and Labrador constituted an event of default under the loan. The term loan is without recourse to Fortis and was approximately $59 million as at March 31, 2010 (December 31, 2009 - $59 million). The lenders of the term loan have not demanded accelerated repayment. The scheduled repayments
under the term loan are being made by Nalcor, a Crown corporation, acting as agent for the Government of Newfoundland and Labrador with respect to the expropriation matters. [Emphasis added]

Newfoundland and Labrador-based Fortis noted in 2009 first quarter financial statements that the unidentified lender had not sought “accelerated repayment” following government’s expropriation.  The Exploits Partnership (51% Fortis/49% Abitibi) made the scheduled term loan payment in 2009.

The expropriation bill passed by the House of Assembly in December 2008 seized all the generating assets and transmission assets of the partnership and cancelled all leases and contracts related to it.  The assets were used to secure the loan. 

Under a contract with Newfoundland and Labrador Hydro, the Exploits partnership sold surplus power not needed for the Grand Falls mill to Hydro for sale to its other commercial and residential clients.  The 30 year power purchase agreement would have expired in 2033.

There is no indication in the 2010 Q1 statement that NALCOR and Exploits Partnership reached an agreement on all issues related to the expropriation.

The loss of income from the the Exploits Partnership as well as the expiration of a water rights contract in Ontario on another project combined to reduce gross revenue for Fortis Generation 73% from $19 million in 2008 Q1 to $5.0 million in 2010 Q1.  Fortis Generation is the subsidiary through which Fortis partnered in the Exploits project with Abitibi.

Contacted by Bond Papers in early 2009 to clear up confusion created by comments by the Premier and the text of the expropriation bill on the Fortis aspects of the expropriation, a spokesperson for the province’s natural resources department refused any comment on the process as there was a process in place to discuss the expropriation and any compensation.

In answer to questions in the House of Assembly last month about negotiations with Fortis and ENEL - another company affected by the expropriation - natural resources minister Kathy Dunderdale said only that talks were continuing and that “a number of arrangements had been made” in the meantime.

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Stat Porn: April’s Hits

The top 10 Bond posts for April [with links fixed]  as determined by the statporn machines at  feedburner.com:

1. Colbert doesn’t RATE (Municipal politics)
2. Rosy with a chance of goofballs (Economic forecasting)
3. Epic Fail of the Week:  prov gov loses to Abitibi…again (The Fubar File)
4. Crisis at Tammany (Municipal Politics)
5. Western Star raises issue of Danny Williams resignation (Provincial Politics)
6. The Abitibi Expropriation:  TARFU (The Fubar File)
7. Dunderdale on Abitibi/Fortis/ENEL Expropriation:  Oops! (The Fubar File) 
8. The Fragile Economy…two steps back (Economic policy)
9. Just shoot me (humour)
10. Labour Force and Employment, March 2007-March 2010  (Economic analysis)

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How our system doesn’t work

Supposedly the Western Star – the province’s west coast daily – has never liked or supported Danny Williams.

Now before anyone starts clacking a comment just remember that is the official crackberry statement from the Premier’s publicity machine in response to a recent editorial in the Star that suggested the Old Man is getting a bit cranky and might want to consider retiring.

It’s a load of dung but that’s another story.

The Star editors this week could have decided to write an editorial on the revelation that the provincial government had royally screwed themselves and taxpayers with a botched expropriation of assets that used to belong to Fortis, Enel and Abitibi.

Sounds like a logical topic especially for a paper the crowd with crackberries would like you to think keeps a voodoo doll of Hisself that they stick pins into every day during the morning story meeting.  After all, what better story is there for the bunch of Danny-haters at the Star than this.

So what did the Star do with it?

Try this assessment on for size:

The ruling PCs stood in the House of Assembly this week and said the botched the expropriation of the AbitibiBowater properties in this province when they included properties that will likely require millions of dollars in environmental cleanup.

That aside, at least the Tories, to their credit, were up front about the blunder, and said so straight out without trying to couch it in some political song and dance.

Then they turn their attention to what the Star editorialists see as the real villain in this piece,  the five people on the opposition benches:

It’s time they admitted their shortcomings in the process.

It’s the duty of the opposition to challenge the government on legislation it brings before the house, and make sure these kinds of potentially expensive hiccups don’t make it into law.

They were asleep at the switch in this matter — there’s now way around it.
They dozed in their seats, didn’t ask enough questions ... and let the bad legislation become the law of the land.

It should be a lesson for all concerned.

Our system works best when the tough questions are asked ... not when  government gets a free pass.

That last sentence is absolutely true.

We also know our system is not working in this case because the crowd at the Western Star can’t even get a simple fact right.  When they say that the provincial government was “upfront” about the blunder and didn’t couch their news in political rhetoric, well, nothing could be further from the truth.

A good 10 months elapsed between the time the crowd on the Hill discovered the shag-up and the first time they mentioned it publicly in this province.

That’s right 10 months.

But that’s just for this province. 

In Quebec, people there knew of the monumental blunder back in October.  That’s when a Quebec court handling the Abitibi bankruptcy protection listened to arguments in a case involving the provincial government and its ongoing war with Abitibi.

And when the provincial government finally did publicly mention they owned the mill, the news release made it sound like Abitibi had simply abandoned its property and that as a result, the provincial government was doing the noble thing and taking custody to protect the public interest.

None of the government narrative on this issue since May 2009 has been even vaguely close to the credit-worthy actions the Star editorialists invented.  In fact, so great a work of fiction is the premise of this editorial that its writers would be better off handing their resumes to the show driver on Doyle than wasting their time out there in the second city.

As if that hum were not enough for the Humber crew, though, the Star then decided to blame the Liberals and New Democrats. Apparently the whole thing while a government measure could have been avoided if only they had done their jobs.

Well, here’s a simple test:  look around and try to find anyone - any one person – in December 2008 who publicly doubted the wisdom of the expropriation and/or the haste with which it was done.

Go on and look.  We’ll wait until you are done.

No luck?

That’s hardly surprising.  The Western Star,  for example, thought that the expropriation was the right thing to do and praised the legislature – the full legislature, no less – for acting.  Not a peep about the possibility of mistakes or the need to slow down and let the opposition do its job. Not a word about how our system requires a bit of sober second thought, a bit of careful scrutiny lest someone make a colossal mistake of any kind.

If there were two people in the entire province publicly criticising the haste of it, let alone the expropriation itself, then that’s all there was.  We were summarily dismissed by all those, the opposition included, who shared the view that Abitibi, the friggers,  ought to lose all its stuff in the province.  We were discounted by those who trusted the provincial government to be careful and to make sure everything was done properly.  After all, they have never been wrong before.

Your humble e-scribbler singled out the NDP leader in December 2008 to illustrate how little thought had gone into the expropriation bill, but, in fairness Lorraine Michael is nothing more than an example of the views and attitudes of almost everyone in the province at the time.

And in the end, that post concluded, somewhat prophetically, that:

In the future  - perhaps a few months or even a few years - someone will look back on this time and wonder how such steps could be taken.  They wonder how the Churchill Falls deal could have be done, with the concurrence of all members of the legislature.

In the energy bill and now the expropriation bill – as exemplified by Lorraine Michael’s comments - they have a very simple answer. No one bothered to think.

And there it is, dear friends, the simple truth of the matter.  No one bothered, no one took the time to think. no one felt thinking might be even needed.  Let Hisself and the crew look after that.

No government ought to get such a free pass.

But in this case, the government got its free pass, handed to them gleefully by the legislature and everyone else.

The expropriation debacle is the result.

And if the Star editorialists want someone to blame for this fiasco they can look in the mirror.  They needn’t waste much time doing that, though.  There’s enough guilt to go around when it comes to people who let the government have a free pass on this issue.

Then again, for the past seven years that’s what this government has had:  a free pass. They are popular because they are right and right because they are popular as the sock puppets, Fan Clubbers and pitcher plants will tell you. Things worked out when it appeared the provincial government won.  After all, our system can’t be broken if everything turns out right.  Trust in the saviour of the moment and all will be well.  Anyone saying otherwise just hates Danny.

Such ideas seem so foolish now.

The reality is that just as it was in 1969, so it was 40-odd years later.  Back then the three opposition members – Gerry Ottenheimer, Tom Hickey and Ank Murphy – sided with the government.  So too did the province’s editorialists. Fast forward to 2008 and see the same thing playing out all over again.

Our system of government works when tough questions are asked and  when thorough, prompt and complete answers are demanded.  There must be consequences  - even if only in the form of criticism - when the answers aren’t received. 

All the members of the legislature have a responsibility to ask those questions but so too do editorialists and ordinary citizens have an obligation to pose questions and demand answers.

It is the government’s duty to answer them.

Our system of government in this province is not working;  it has not been working since 2003.  The Abitibi expropriation mess serves only to highlight just exactly how great is the risk that people in this province are taking as a result.

And until people  - ordinary citizens and Western Star editorialists alike - start to acknowledge that, the risk that more Abitibi fiascos will take place – or have already - will only increase.

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Underwater duster

ConocoPhillips’ first well in the Laurentian sub-basin turned out to be a dry hole, according to The Telegram.

The company will continue with its exploration program using seismic surveys but there is no word on future drilling plans.

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The King and the Qatar Confusion

According to education minister Darin King, employees at College of the North Atlantic in Qatar will see their contracts honoured, as it would appear, with the mistaken salary numbers in them.

"It's not their issue or their fault as to why the college made an error and entered into an agreement that they ought not to have. So we'll honour the contracts," King said.

But reports from Qatar quote the College president there - Enid Strickland -  as saying:

She said new contracts with the correct salaries were signed at a meeting with the staff yesterday.

“This only affects a limited number of faculty members and some support staff,” said Strickland, adding “and now we have discussed the situation with them and signed their new contracts, everyone is fine.”

So when King said that contracts would be honoured, did he mean the old contracts or the new ones signed apparently on Wednesday, two days after King said what sure looks like the old contracts that existed at the time would be honoured?

To anyone else it sure looks like a case of two completely different stories.

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h/t to comments by One Woman on another post in the ongoing Qatar story.

With friends like that…

Around these parts, the former Ambassador to Disneyland on the Rideau, the successor to the Premier’s Personal Envoy to Hy’s has been know as Our Man in a Blue Line Cab.

That goes back to an old comment by a former minister who said that whenever he visited Ottawa, the provincial representative – Dr. John Fitzgerald – would come to the airport and pick him up and show him around to his various meetings.

Poof!

A name is born.

What started out as a humorous jab turns out to have some disquieting  accuracy in it.  During at least one year on the job, the good doctor took a few cab rides back and forth from the office and his home, 72 such rides if the Opposition has its numbers correct, and then expensed them to the taxpayers:

Mr. Speaker, we requested travel claims for the former Ottawa representative through FOI and we were charged significant fees; however, we did pay for his 2007 travel claims to get a glimpse of his activities. As outlined in the documents, the former Ambassador charged the people of this Province seventy-two taxi trips from his private residence to work. There is nothing in his employment contact that permits such claims and no other public servant is permitted to claim travel to and from work each day.

Now while that is bad enough, Our Man didn’t exactly get what one would call a truly ringing endorsement from the Old Man.  Opposition House leader Kelvin parsons calls Fitzgerald Dr. Feelgood, going back to the  whole cabinet minister driver thing but here’s how the Premier replied to one question:

I had conversations in Ottawa whereby people in Ottawa on the ground spoke extremely – very, very highly of Dr. FitzGerald, who is referred to as Dr. Feelgood by the Opposition. I refer to him as Dr. Sealgood because of all the fantastic work he has done with regard to promoting the sealing industry in Ottawa.

Dr. Sealgood?

Holy crap, what a lame-assed remark.

Poor old Fitzie deserves way better than that, especially if, as the Premier claims, the fellow was doing more than hanging out in the gallery at the House of Commons, being ignored at the Prime Minister’s Office or when he wasn’t scarfing down the canapés at this reception or that.

After all that time in Ottawa and the best thing Danny could do is connect Fitz to the whole seals are better than billions in trade nonsense last year?

There’ll be no Latin words and phrases on facebook from this corner.

No references to Machiavelli.

Because if that’s the very best that the Premier can come up with to defend his loyal advisor, then all you can say is gotterdammerung.

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iQuisling

Apparently, Apple considers an app developed by a St. John’s programmer to be “offensive'’.  It’s a game in which players get to bop seal pups on the head.

So if bopping seals is such an important activity around these parts that it supposedly trumps major trade deals worth billions, and,

If this action puts Apple in the same league as all those anti-seal hunt and hence anti-Newfoundlander and Labradorian people,  

therefore would that make any Newfoundlander and/or Labradorian who promotes Apple products an iQuisling?

iTraitor?

Just thinking out loud.

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Just to let all the mainlanders off the hook, there is some context to this post that may not be readily apparent.  This is neither an endorsement or critique of Apple or of the seal hunt.  If you don’t find it funny, don’t worry about it:  not every joke is for every one.

Newfoundland and the Great War

There’s a new exhibit available online from The Rooms that shows two contrasting things.

On the one hand, it is an excellent example of what can be done using modern technology to make available The Rooms diverse collection of materials and in the process help people to understand the past.

There are video, stills and audio, although the latter seems to be missing from some of the spaces.  The text is simple and crisp which is not surprising given that is written, as the news release announcing this website states, to support the province’s Grade Eight curriculum.  Some of the materials come from within the Rooms while others come from the Royal Newfoundland Regiment museum and and the Canadian War Museum.

In a section labelled ‘Database” both the casual searcher and the dedicated researcher will find a genuine treasure trove.  The website contains scans of the Provincial Archives’ collection of regimental records including soldiers’ individual personnel records.  This will be of tremendous value to both family researchers and to anyone doing work on everything from recruiting patterns to deaths, injuries and illness within the regiment.  The personnel records aren’t censored:  if great-grandfather Jack had venereal disease, the treatment is noted.

There are also some wonderful video “overviews’ or short summaries of major events.  Beaumont Hamel, Gueudecourt,  Cambrai  and Monchy are covered in tidy little summaries of no more than five minutes or so. The narration involves a female voice giving the overview and a male voice reading what appear to be first-hand accounts.

That’s all the positives and they are considerably more than that brief description might suggest.

The negatives are glaring.

The first sentence of the second paragraph is simply wrong: cabinet determined the shape of the country’s war effort, not the governor.  Likewise the third sentence is grossly misleading at best and as wrong as the first sentence of that paragraph at worst.

This is basic stuff and the evidence to prove it is wrong is there in plain sight in the archives at The Rooms.

This point is also crucial to an appreciation of the role played by the Dominion of Newfoundland in the war. A reader who gets to the end of the site and the assessment of the political aftermath of the war would be misled by the introduction into believing the debt caused by the war came as the result of a decision taken by the Governor.

The surrender of responsible government and then Confederation become the result of the war (and Davidson’s decision):

Although many factors influenced Newfoundland and Labrador's choice to join Canada, most historians agree that the colony's involvement in the First War World was a significant underlying factor. Historian Patrick O'Flaherty noted, "It is apparent ... how Newfoundland got itself into financial trouble. It was not mainly through post-1920 extravagances such as ... road building or ... town halls and bridges. Fighting England and France's war with Germany and paying related costs thereafter were crippling expenditures."

And citing Patrick O’Flaherty as a source when others with far better professional historian chops exist doesn’t bolster this profoundly flawed narrative thread.  O’Flaherty’s also wrong in his conclusion which surely doesn’t help.

In the same fashion, the role of sectarian youth groups in providing recruits is grossly inadequate to the point of being misleading.  The groups did not form the basis of the First 500 merely because the unit was raised in St. John’s and these groups were around. Using the cadet corps as the bases of the regiment was an active government policy, a point again established fairly clearly in the government archives.  And if that is not enough, the whole issue of sectarianism and its role in local culture and politics ought not to be simply omitted. 

In short, the whole section on entering the war deserves the scope of the rest of the individual pages on key events.  Four paragraphs doesn’t even come close to being an acceptable minimum as they do not properly set the stage for what comes later.

Another technical shortcoming is the absence of audio in some places.  Yes, there is space for it but some of the spaces are blank.  An excellent set-up showing uniforms – presumably out of the The Rooms’ collection -  would be much easier to understand and appreciate if there was a simple audio file,  as indicated that there was supposed to be.  Again, these sorts of things can tend to be overlooked in government circles as people get busy with other work.

Social historians and those interested in the economic life of Newfoundland at the time will also miss the significance of another small error on a pop-out page that shows the supposedly diminishing medical standards applied to recruits. The 1914 figures cited are for the British Army standard. 

Because he didn’t have a copy of the army medical standards, Dr. Cluny Macpherson conducted the medical screenings of the volunteers in August and September 1914 based on a Royal Navy manual that set the minimum height at five feet two inches. 

Still, even with that lower standard, half the men who volunteered in the first weeks failed to meet them and were rejected.  Just as the rush of volunteers introduced the British Army and government to its people with an unsettling start, so too did the Newfoundland government get to see the deplorable physical state of its young men in the late fall of 1914.

For all that, the positives of this venture – including the fact it exists at all – far outweigh the negatives, as serious as one of them is.  This is good stuff and the people of Newfoundland and Labrador ought to see more of it on other topics.

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  Related:  “Newfoundland and the Great War:  the beginnings”

Fortunately…the Qatar Version

Fortunately for the employees of College of the North Atlantic – Qatar campus -   education minister Darin King always says exactly what he means:

"It's not their issue or their fault as to why the college made an error and entered into an agreement that they ought not to have. So we'll honour the contracts," King said.

So they won’t have to pay back any money they received as a result of  unspecified errors, right?

Well, no.  Apparently, the minister doesn’t have enough information yet to determine what happened.  As a result, it’s too soon to know if the money will be written off.

Unfortunately for those employees, Darin King said exactly what he meant on Thursday, too:

I could easily do, Mr. Speaker, what the Leader of the NDP wanted me to do three or four days ago; washed my hands of it, abdicate my responsibility, walk away, pretend it never happened, write-off the $5 million and perhaps do as my colleague the Minister of Tourism would say, add it to the NDP debt clock. I could have done that or I could have done what the Leader of the Liberal Party asked me to do which was the complete opposite.

Well, Mr. Speaker, we are taking a responsible action here and when we determine what exactly has transpired here, and when we determine the appropriate actions that need to be taken; we will take them. Until such a time as we have the information to draw the appropriate conclusions; I am not prepared to stand here and speculate for a bit of political posturing on the other side of the House. [Emphasis added]

Fortunately,  Darin says they can keep their current contracts, and the pay along with it, until they renegotiate or leave their current position whichever comes first:

“At that time we will make sure the salary and compensation package that’s offered is the one that’s approved, not the one that was offered in error,” King said.

Unfortunately, King told that to the Western Star before he said he didn’t have enough information to figure out what “appropriate actions” need to be taken.

Oh well, at least Darin thinks he’s been clear in everything he’s said.

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Darin, King of Uncommunication

Plenty of people in Newfoundland and Labrador are running around thinking that, as a result of a bureaucratic error,  a bunch of people at the College of the North Atlantic got more in their pay envelopes than they were entitled to receive.

It’s understandable that they believe this or something like it since that is exactly what is implied in the very careful selection of words education minister Darin King used to reveal this issue on Monday:

Education Minister Discloses Errors Made at
College of the North Atlantic’s Qatar Campus

There is that word right there in the headline on the release:  “errors”.

That same idea is also there in the release itself, referring to “salary overpayments”, and “errors” that were “made in determining salaries”.

All through his comments in the House of Assembly on Tuesday, King kept using the word “error”:

I made a release yesterday that fully disclosed to the Province an error that has been made to the tune of approximately $5 million. I also made it fully clear that this is not a decision of government that made this error; …

…we would do an external review for the purpose of trying to determine exactly where the College of the North Atlantic made mistakes that led to the error that has been identified

But then there is a curious statement attributed to the minister in the news release:

"I want to assure employees of the Qatar campus that they will continue to receive their current salary for the remainder of their contract," said Minister King. "We will continue to work with the college as they address this situation and assess the full financial impact of the errors."

Okay.

Just follow this for a second.

As a result of an “error”, people have been overpaid – supposedly – but then there is an assurance that those same people will continue to receive their “current salary” – that is, presumably, the overpaid one – until the contracts expire.

Odd, isn’t it?

It’s odd because what people think happened and what actually occurred are two different things.  All those people are running around believing things that aren’t true  because the news release and the minister’s media lines bury the real story under mountains of obfuscation.

If you confronted King about the news release, he will insist he told all.  Well, he didn’t really do that in the release itself, but between the news release and his subsequent comments, the real story is there;  you just have to dig it out from underneath the vague words and sentences in what is truly a classic piece of uncommunication. 

To find out what really happened, though, you just have to read carefully. 

Take a look at what education minister Darin King told the House on Tuesday:

I also made it fully clear that this is not a decision of government that made this error;  it was a decision made by the College of the North Atlantic which is an arm’s-length corporation of government, Mr. Speaker.

The editors at Hansard mistakenly stuck a semi-colon in there but there is no mistaking that the error was not overpayment. Just take out the mistake in punctuation and read the resulting sentence out loud. 

Poof.

The “error” not a mistake at all.  It was some unspecified decision taken by the people who run the College of the North Atlantic.

But what decision?

Well, that bit too is buried away in another comment King made:

For example, it is only about a month and a half ago, Mr. Speaker, when the former president of the college decided, without the proper authority and authorization, to sign a one year extension to the current contracting tender, …

Poof.

He tried to obscure the relationship between the “error” and this example of him being helpful but that’s just a bit too convenient a bit of timing to be real. 

Put that comment about helpfulness together with the rest of it and a more complete and accurate version of the current crisis appears than the one most people seem to be getting.

All clear now?

King’s two news releases on Monday are a classic example of uncommunication, of concealing crucial information by carefully selecting words and sentences that have fuzzy meanings. It’s like issuing a news release that makes it sound like Abitibi abandoned a mill site rather than admit that the provincial government had shagged up royally and expropriated the thing by mistake.

Oh yes, and it was two releases.

The second one – issued as King scrummed reporters – announced that that president of CMA tossed her teddy in the corner on Friday afternoon citing, among other things, inappropriate provincial government interference in the management of her operation.

Despite the fact King had the resignation three days beforehand, the announcement appeared one and a half hours after the first release in which King claimed credit for disclosures he really didn’t make.  It might just be bungling – Lord knows there’s been enough of that lately  – but there is something about the second release and the timing that screams “uncommunication.”

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NTV news website remake

Until now, NTV News lagged behind every other media outlet in its web presence.

That’s been a shame because NTV News has consistently delivered what you could call industrial strength news:  it’s straight-up and dependable. Unfortunately you’d have to get the live broadcast to actually see or hear any of it.

Not any more.

NTV News’ new website is bright, clean and professional.  The layout gives all the features you’d expect on a current web space and the presentation is such that it should work well on a variety of browsers and platforms. Stories are categorized by different topics so they can be searched a couple of different ways.

Major problem:  all the material is at least a day old.  After 10:00 PM on April 28 and the major stories are all datelined the 27th.  That’s not a killer issue and NTV can fix it pretty quickly.

Peeve:  Comments are closed but the comments space opens up when you click on a video story. That may reflect a staffing decision – comments will need a full-time moderator around these parts.

Major bonus:  NTV is not reinventing the wheel by giving new web content.  They are posting the news stories already filed and broadcast.   That means they can do more with the existing staff. 

That can be a good thing.  Aside from some of the other relatively easy changes they could make, NTV is a very short technical and organizational step away from being able to post new video content to the web in near real time.

And that gentle readers would be revolutionary around these parts.  The Indy went down in part because it tried to push a 19th century concept on a 21st century audience rather than take maximum advantage of the technology available and the skills of employees to beat the competition every time.

NTV’s makeover looks like they are headed in the right direction.

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Just shoot me

This screen cap from the House of Commons broadcast on Tuesday shows the Premier and his communications director in the visitors’ gallery of the Commons during the whirlwind series of meetings with senior federal government ministers and the Prime Minister.

Yes, Liz, the Commons can be a boring place but at least the Old Man was enjoying himself.

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The Abitibi Expropriation Fiasco: TARFU

The Government of Newfoundland and Labrador not only expropriated a paper mill it didn’t intend to seize, but two major houses and land rights over half the town of Grand Falls.

The size of the expropriation fiasco grew in leaps and bounds Tuesday as the House of Assembly started to dissect the budget estimates.  The morning’s revelations during committee meetings livened up Question Period in the afternoon.

Natural resources minister Kathy Dunderdale tried to bluster her way through the questions while her boss – the guy behind the mess – jetted off to Ottawa for what his office described as high level meetings. 

D’uh!.  Premiers don’t have other kinds of meetings.

Dunderdale denied accusations she and her colleagues had tried to hide the expropriation cock-up, claiming it had been revealed in a February 2010 news release.  But, that release tried to make it sound as if Abitibi had vacated the property.

What’s worse, the full scope of the mess wasn’t revealed until this past week in the House of Assembly.

What’s more, the provincial government knew of the expropriation blunder in May, 2009, five months after the expropriation. Not a single minister said a peep about the situation. The major league legal foul-up was discovered, incidentally, by a company retained to conduct title searches on the lands after the bill was rammed through the legislature.

According to Dunderdale in the House of Assembly Tuesday,  the provincial government originally intended to fix the problem by  - wait for it - bringing in a second piece of legislation which gave back the accidentally expropriated bits of land to Abitibi. 

You could not make this up if you tried.

Unfortunately for the hapless Williams administration, Abitibi’s bankruptcy made any amendment to expropriate the mill legally impossible.  That’s no small irony given that the expropriation was predicated in part on the potential that Abitibi would declare bankruptcy and sell off all it assets.  As Premier Danny Williams put it last week in the House of Assembly:

They would have sold them off to some other interest, and we would have been left high and dry and our workers and the environmental issues, none of those would have been resolved; or otherwise they would have gone bankrupt and they would have lost everything and we would not have had anything.

Interestingly, Dunderdale told reporters outside the legislature that the provincial government was “well into the fall” before they realised they wouldn’t be able to introduce the do-over legislation.  While Dunderdale didn’t say exactly when she and her colleagues figured out their legislative option was closed, her admission it might have been in November suggests there is some overlap between the realisation their legislative options were closed and a series of events in a Quebec courthouse.

The provincial government launched a legal application in October 2009 just days after a surprise announcement in Buchans about possible contamination of the community from a long abandoned mine. The legal action was an effort to gain access to Abitibi’s private financial information through a data sharing arrangement between Abitibi and its creditors.

The court dismissed the application and with it the Williams administration’s claim to creditor status, finding, in part, that “…[t]he Motion has merely referred to several press articles in support of an alleged claim against Abitibi for the contamination arising from a closed mine in the town of Buchans. [59] These vague and unsubstantiated allegations are, at this point in time, barely supported.” 

The court also dismissed the province’s claim to creditor standing through an arrangement with unions to pay severance and other payments to former Abitibi employees:

[54] On one hand, the Province alleges, without supporting evidence, that it has made payments to certain former employees of the Abitibi's Grand Falls mill.  Yet, no evidence to establish the nature of the payments made or any lawful assignment of the related claims has been put forward.

[55] Indeed, when one reads paragraphs 7, 8 and 9 of the Motion, it appears obvious that if Abitibi's former employees in the Province claims have been assigned to anyone, it is to an organisation created by the various unions involved, not to the Province.  Its role is simply to fund this organisation.

[56] In that regard, the Motion itself refers to claims that will ultimately be made in the restructuring by an "Assignee".  According to the Motion, this "Assignee" is certainly not the Province.

Within three days of the failure of that application, the provincial government issued a series of nine environmental orders to Abitibi.  They required, among other things, that Abitibi file environmental remediation plans with two months and complete all work within one year.  

Aside from the apparently coincidental timing of these actions, it is interesting to see in a decision on whether the environmental claims were barred by a previous decision of the court overseeing the Abitibi creditor arrangements, the court noted:

[60]  Although the Province publicly announced that the Abitibi Act did not include the Grand Falls mill then still in operation, a review of the Abitibi Act revealed that, whether deliberately or as a result of the haste in which the Act was drafted, the Grand Falls mill site was, in fact, included in the confiscated assets.

Of course that’s all just extra in a situation in which the provincial government’s strategy in seizing the assets went poof with that legal cock-up.  From the briefings given before the bill was unveiled in December 2008 to the Premier’s own public comments as recently as December 2009, Danny Williams intended to leave the company with the environmental liabilities while seizing all the choice assets.

In the end, any compensation for the seized assets would be balanced by the environmental liabilities.  The deal the provincial government hoped to strike would see no money change hands.  The provincial government might wind up paying for the clean-ups, but it would escape any NAFTA penalties and other payments.

As Williams put it on the day the seizure bill raced through the legislature:

If that [the cost of environmental clean-up] is quantified, then that would be offset against any responsibility for compensation. If there is an excess of value over liability, then that would be the amount that would be paid.

That isn’t the way things turned out.

The provincial government now owns the mill outright and will wind up covering the costs of any clean-up on its own. In addition, it will still have to pay compensation for the seized assets.  Even the Williams administration’s own expropriation legislation calls for it to pay compensation.  If the provincial government reneged on its statutory obligation, presumably Abitibi could and would sue.

Then there is the NAFTA claim. Abitibi is pursuing a lawsuit that seeks a minimum of $500 million for what it says was an illegal seizure of assets.

And if Kathy Dunderdale wonders where people are getting the numbers involved, she can just look around.  Her own colleagues have been putting costs on the environmental cost for the past year that come to around $200 to $300 million.

For the numerically challenged, or for those living in denial, that would wind up being $800 million:  $500 million for NAFTA and another $300 million for the environmental work.

At least.

That’s a pretty hefty cost taxpayer’s will have to bear to clean-up someone else’s mess.

TARFU.

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Is the Abitibi Fiasco on the agenda?

The Premier’s trip to Ottawa announced late Tuesday morning is only a surprise if you didn’t know about it in advance.

Regular readers of these scribblers had it yesterday:

When Danny heads off to Ottawa later this week for a round of meetings on a bunch of subjects, …

One item not mentioned on the agenda  - but surely to come up  - will be how the provincial government will repay the feds for the Abitibi expropriation fiasco the Premier will be leaving behind for his ministers to defend. Ministers are discovering the idea of collective responsibility, likely for the first time since the Tories took office in 2003. 

If the provincial government expropriated half the town of Grand Falls by mistake – you could not make up this kind of blunder - you can safely bet they don’t stand a snowball’s chance in hell of winning the claim for $500 million or more that Abitibi levelled against Canada under NAFTA.   The federal government may pay up front but, at some point they will likely come looking for reimbursement from the one who caused the mess in the first place.

What better time to discuss that than when Hisself is in town for meetings?

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Where the money goes – 15 years later

Just to put the Strategic Social Plan (1995) in a bit of context, you should realise that health care spending as a share of the provincial budget has increased dramatically in the past 15 years while other sectors have stayed the same or decreased.

The change is actually quite dramatic – 10 percentage points – from 265 in 1995 to reportedly 36.8% in 2010.  In dollars, spending on health care has tripled in the province since 1995 and the health share of the budget going from $933 million to $2.7 billion in a decade and a half.

This chart compares the 1995 figures from the Estimates with the recently tabled budget. It corresponds to a chart (Figure 2) from the 1995 Strategic Social Plan consultation paper. The light blue line represents the 1995 budget while the purple-blue line is the current budget estimate.

The province’s business development and economic diversification efforts – ITT then and INTRD and Business today – take less of a share of the budget now.  That’s despite government claims that it has a plan to expand the economy and that the plan is in place.

Mind you, the amounts spent have increased.  For example, the cost of operating the departments has gone from about $50 million for the Industry, Trade and technology department to about $66 million spread over Business and Innovation, Trade and Rural Development today. 

The amount available for business investment is also up:  $18 million then compared to $29 million. Even then, though, the province’s business department -  the vehicle through which Danny Williams was once supposed to personally reinvigorate the provincial economy – actually doesn’t do very much with the cash in the budget.  Sure there are plenty of free gifts – like Rolls Royce – or the apparently endless supply of cash for inflatable shelters. 

But as the Telegram discovered two years ago, the provincial government spent nothing at all of the $30 million budgeted for business development in 2007. And earlier this year the Telegram confirmed that in the past three years, less than one third of the $90 budgeted for business attraction was ever spent.

Spending on education is down as a share of the overall budget, even though the amount spent is up from $763 million to $1.2 billion.

Interestingly, the most dramatic decline has been in what the budget estimates call Consolidated Fund Services.  Basically CFS covers all those expenditures that it takes to pay the interest on the public debt, maybe retire whatever tiny portion comes due each year, cover bank charges and  that sort of thing.

As a share of the budget, CFS has gone from 17% to 6.6%.  In dollars we are talking $403 million this year to service the public debt and another $87 million to cover employee retirement plans.  Fifteen years ago, the figures were $544 million and $60 million respectively.

Some bright bunny out there is likely hopping up and down thinking that the big improvement there is due to the actions of the current administration in paying off debt. 

Some bright bunny like innovation minister Shawn Skinner, speaking in the budget debate last week:

Our net debt, that big yolk around our necks that everybody talks about, that big millstone that drags everybody down which was about $12 billion - that is billion with a ‘b’ - when this government took office is now down by $3.9 billion to just under $8 billion. We have gone from a twelve-billion-dollar debt down to an eight-billion-dollar debt in six short years. Now, that is good economic policy I would suggest to you, Mr. Speaker. That is good fiscal policy and that is something that the people of this Province understand and appreciate. I do not have the figures right in front of me …

Well, not exactly.

The taxpayers of Newfoundland and Labrador actually have greater liabilities now than they did in 1995. 

What Skinner mentioned was net debt – liabilities less any assets – and that figure has actually gone back up in the past year.  Why?  Well because the provincial government had to dip into its cash reserves to avoid borrowing money from the banks to cover the $500 million they were short last year.  It’s also a couple of billion or so beyond what it was in the bad old days of the mid-1990s when the provincial government had no where near as much cash flowing in as it does today.

There’s no real point in going into the debt charade Skinner and his colleagues have been foisting the past few years. Regular readers of these scribbles are well-used to the argument.

What we really have to look at are the things that make the cost of carrying that debt lower today than in 1995. 

For one thing, interest rates are much lower than they were when some of that debt was incurred in the 1980s.  As old debt at high interest rates has matured, successive administrations simply rolled it over at much lower rates.  In that respect, the current crowd are doing exactly what the former crowd used to do. It’s a perfectly sensible thing to do when you don’t have the cash to pay debt off.

For another thing, the debt today is pretty much all in Canadian currency.  In the 1990s, chunks of the debt  - upwards of a third of it - were in American dollars and Japanese yen.  The weak Canadian dollar over the years meant that the taxpayers shelled out bundles in order to pay interest in higher valued currency.  Starting in the Wells administration, the provincial government started rolling over that foreign debt and borrowing Canadian.  That has saved the taxpayers hundreds of millions over the years.

For a third thing, the direct provincial debt  - the money the provincial government itself owes – has been dropping again from the high incurred during the Williams administration. Yes, that’s right for all the pitcher plants clogging the local media Internet sites thinking other. 

The direct public debt actually hit its peak of almost $7.0 billion under the current crew.  In fact,  the guy the pitcher plants and Fan Clubbers love to hate – Roger Grimes – left office in 2003 with the provincial government direct debt lower than the direct debt under Danny Williams today:  Grimes = $6.5915  billion versus Williams 2010 = $6.6468 billion. 

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The Abitibi Fiasco: a house divided

Premier Danny Williams  - House of Assembly, April 21, 2010 - on the costs associated with his disastrous expropriation bill:

What we are trying to do, and we have throughout this negotiation, is protect the interests of the people of Newfoundland and Labrador because Abitibi owes us anywhere from $200 million to $300 million in environmental liabilities for the mess that they left us, in addition to the severance for the workers that have paid, in addition to what we as a government have put into Grand Falls-Windsor and the Central Newfoundland region.

Provincial environment minister Charlene Johnson  - House of Assembly, April 22, 2010 - on the costs of Abitibi’s environmental liabilities:

Mr. Speaker, under the act the way that we - under the orders that we issued [November 2009]  we require Abitibi to submit to us a remediation plan. There were five orders: Botwood, Stephenville, Grand Falls-Windsor, Buchans and some logging camps. So, until they submit a remediation plan to us - and they had one year to submit this plan and they have done some work on it in the past. Until they submit that plan and until we are satisfied with the plan to ensure that the environmental liabilities will be dealt with, I cannot give you a firm, actual cost until that comes to us and we are satisfied with it.

 

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Kremlinology 20: Who will replace Danny?

There’s a question that will likely be on the lips of most Newfoundlanders and Labradorians within 12 months.

Even if, by some strange set of circumstances, he decides to subject himself to another two full years of the kind of public ingratitude he’s seen over the past nine months, Danny Williams will likely have an increasingly hard time suppressing speculation about when he will retire and who will replace him. 

People may not have readily accepted the idea that someone in his own inner circle blew away the Premier’s plan to keep his heart surgery secret. But think of events of the past few months -  let alone the bizarre meltdown last week – and you can’t hit the local mall without finding someone wondering how much longer the Old Man will be around.

When Danny heads off to Ottawa later this week for a round of meetings on a bunch of subjects, it might be fun just to kick back and wonder who in the crowd he left behind has designs on his office.

Take Jerome Kennedy, for instance.  He’s got all the buzz of an heir apparent. Aside from the moustache incident earlier the year, Jerome has been trying to change his appearance and, by extension, the appearance of government from one of combativeness and nastiness to something a little more palatable.

But we’d all be pretty naive if we didn’t think Jerome knows already that he will have to present himself as a major change of style in order to succeed Williams. There are likely other things going on out of plain site.  The little political favours for people whose support he will need.  A job here, there and everywhere someone in the public service for his supporters.

Others are likely up to the same thing.

Like Joan Burke.  Creating a new department for her to set up has given her plenty of time to travel around the province meeting with public servants in the day and local Tories in the evening.  She’s reputed to have a war chest as big as her ambition. Plus, the new department allows her to soften up her tough-as-concrete image.

There are probably a few other caucus contenders quietly putting together their bands of supporters. 

Permits and licenses minister Kevin O’Brien at least looks like he has the Grecian formula for a run.  He may well have some cash and supporters left over from his abortive run the year Danny decided to go for it.  O’Brien was party president in 2000 but took a leave of absence as he contemplated taking a shot at the leadership.  Once Danny entered the race, Kevin knew enough to leave it alone.  He’d be a really long shot but then again, any potential candidate can always look to the 1989 long shot:  Tom Rideout.

Then there’s Tommy Osborne.  Scion of the townie Tory power family, Osborne’s name pops up in some conversations about potential leadership candidates after The Old Man leaves.  If nothing else he came out of the Cameron inquiry looking pretty good.  Osborne could  make a mark, even if he didn’t win, and that might be enough:  whoever wins the race will have to reward his or her competitors with decent cabinet jobs or risk civil war. Osborne could enjoy a second career in cabinet and still retire relatively young.

Don’t be surprised if Ross Wiseman or Darin King took a shot at the job or at least considered it. 

Other that that there aren’t any members of the current caucus who seem likely to run to replace Danny.  Natural resources minister Kathy Dunderdale is likely to leave at the end of this term as is finance minister Tom Marshall.

As for the idea of an outsider coming in, that would be a long shot for sure.  Brian Tobin was the last one to try it and win from outside caucus.  But he started making his move quietly in late 1995 and was a politician the whole time. No one has ever come cold  - completely outside elected politics - into the top job in the incumbent party and hence the province.

One name you can cross off your list:  Wade Verge.  Seems his move away from the door was just a temporary, almost cruel joke.  Paul Davis, the most junior member of the legislature and the Tory caucus, now has the plum bit of seal skin vacated by Beth Marshall’s now senatorial tuchus.  Evidently someone really likes Davis.

Kremlinology is an inexact science.

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Strong. Proud. Determined. …or something like that.

For those who didn’t read Maxime Bernier’s speech that ruffled a few feathers in Quebec, Bernier posted the text on his blog.

The speech, titled “For a proud, responsible and autonomous Quebec”, includes tan idea people living an interventionist province – like Newfoundland and Labrador these days – ought to find provocative ideas:

And if we are poorer, it’s not the rest of Canada’s fault. It should be obvious enough that unbridled state interventionism does not lead to prosperity. If that were the case, Quebec would be the richest place in North America instead of being one of the poorest.

Many studies have shown that the less its government intervenes in the economy, the more prosperous a society becomes. The Fraser Institute regularly compares the economic situation in the provinces and states of North America and has found a direct correlation between the level of economic freedom and prosperity. An analysis of 23 OECD countries over a period of 36 years has also shown that economic growth is inversely proportional with government spending. For every additional ten percentage points of government spending as a proportion of GDP, economic growth is permanently reduced by one percent a year.

So, to repeat, the rest of Canada has nothing to do with the fact that we are poorer, as the bloquistes claim. We are poorer because of bad economic policies that made Quebec’s economy less productive; we are poorer because we live beyond our means instead of having responsible policies; we are poorer because the first reflex of much of our political class is to constantly beg for more money in Ottawa instead of taking the necessary decisions that would solve our problems and put our house in order.

Then there’s Max’s endorsement of subsidiarity as a new way to run a federal state.

Now maybe others have pushed that idea too, but the only name that comes readily to mind is Liam O’Brien, the local lawyer who is now a staffer in Ottawa.  Maybe Max and Liam have been having a few chats since max got himself turfed from cabinet.

In any event, the speech is readily available for those who care to read it.  And for what it’s worth note that here is a politician – a backbencher at that – who actually took the time to deliver a speech about the future of his province. 

Regardless of what Max plans for his political future, it’s a model others in this province could do well to follow. Then we might actually have a discussion of ideas instead of seeing the foolishness, nonsense, and just plain crap we’ve tended to get around these parts for the past seven years.

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Bank of Canada gov warns about recovery

From the Globe and Mail:

“Anyone who sits and looks at what happened and says, ‘Well, that wasn’t a Great Recession,’ hasn’t appreciated the scale of what was done to ensure an outcome that wasn’t as extreme as before,” [Mark] Carney told reporters Saturday. “Particularly on the fiscal side,” Mr. Carney added. Anyone who doesn’t appreciate the gravity of the last couple of years “hasn’t thought through or appreciated the scale of what will be required to adjust fiscal back to normal.”

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Dunderdale on Abitibi/Fortis/ENEL expropriation: Oops!

An obviously stressed natural resources minister Kathy Dunderdale admitted to the House of Assembly yesterday that there were problems with the provincial government’s hasty seizure of  assets belong to AbitibiBowater, Fortis and ENEL.

The paper mill itself – originally supposed to be left out of the deal – wound up being left in.  As a result, taxpayers are stuck with a potentially major environmental liability.

CBC puts the Premier’s reaction to the shag-up this way:

Outside the legislature, Premier Danny Williams told reporters he's embarrassed by the turn of events, but he can live with them.

"It was something I wasn't happy with when it happened, but it was an innocent mistake that was made by an official in the department," Williams said. "As simple as that."

That’s bad enough, except adding the mill when you explicitly wanted to leave it out isn’t the only shag up in the whole confiscation.

According to a court decision in Quebec where Abitibi is working through a bankruptcy protection proceeding with its creditors, the Williams administration also forgot to pick up a few of the Abitibi assets in the province that should have been seized as well in the Chavez-esque sweep.

The Legal Genius(es) behind the whole fiasco left out the port facilities at Botwood and the former mill site in Stephenville.

Abitibi closed the mill at Stephenville closed in 2005 after a prolonged battle with the provincial government that included threats by the Premier to expropriate Abitibi’s assets:

"If there's an interested party that can have that mill up and running, we'd be interested in talking to them," Williams said Monday.

"If that requires expropriation, then that's something we'd certainly consider."

In the end no other buyers emerged and the mill closed despite the Premier’s 2003 election commitment that the mill would not shut down on his watch.

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Fragile Economy: now three steps back …and loving it

Not only did the provincial government explicitly refuse to participate in talks that would diversify the provincial economic trade base, its members are proud of it:

PREMIER WILLIAMS: Mr. Speaker, what this government is very, very proud of is we are the only jurisdiction of thirteen jurisdictions in all of Canada who has not gone along with the European Free Trade Agreement which Canada is trying to enter into. We are the only ones who have stood our ground and said we are not prepared to agree unless there are certain conditions. The seal industry, of course, is obviously one; the shrimp tariff is another one. …

But if that wasn’t bad enough, the Premier justified the position by claiming that it had worked in one important respect:

We have been very successful in having the shrimp tariff reduced and, in fact, removed over time. It has made a huge difference to the shrimp industry. [Emphasis added]

The first problem is that “we” – the Premier and his ministers – didn’t have very much to do with lowering the shrimp tariff in the first place.

And the second problem is that “we” did not accomplish this by boycotting important trade talks.

Sure the Premier and his fisheries minister took a much publicised junket to Europe, but there isn’t much sign they did much else except try to take credit for lowering the shrimp tariff back in 2007 before the trade talks were on. Someone else did the work.

By the way, if you take a look at that last link you’ll see this line:

Fishery Products International said about half of its shrimp is exported to the United Kingdom alone.

That would be the same Fishery Products International that had a European trade division “we” helped sell off in the break-up of FPI.

But anyway, not only are “we” no longer one step back, “we” are now not even a mere two steps back.

Provincial trade policy is effectively three steps backward:  headed in the wrong direction, proud of it and then justifying the gross strategic mistake by claiming credit for things the backward-assed policy didn’t do in the first place.

If the first step toward any solution is admitting there’s a problem, “we” are a long way from solving very much when it comes to provincial trade policy.

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