The Politics of Churchill Falls Power

Although recent public comments by Newfoundland and Labrador’s Minister of Natural Resources, Kathy Dunderdale, led to a scramble to clarify what was going on, there are still positives to be found in her clumsy statements.

This week Minister Dunderdale left the impression that Newfoundland and Labrador was contemplating legal action against the Federal and Quebec governments related to the lopsided Upper Churchill power contract. This afternoon she clarified her position in front of the media.

Since coming on stream decades ago, the estimated direct revenue to Newfoundland and Labrador, from the Upper Churchill hydro electric project in Labrador, is estimated at $1 billion. In that time Quebec has garnered $19 billion, plus untold secondary revenues from business and industry attracted to that province by the abundant power. Ottawa has also been greatly enriched by the taxes generated there.

The situation has long raised the ire of the people of Newfoundland and Labrador and has become a rallying point for anti-Canadian/Quebec sentiments over the years.

In a press conference this afternoon, also attended by Newfoundland and Labrador Justice Minister Jerome Kennedy, the official line was that the Williams government was in fact not considering direct legal action at the present time but was instead investigating ways to assist the Labrador Innu in their recent demands for redress over lands lost during the decades old development.

In the past Newfoundland and Labrador tried on several occasions to re-open the one sided contract, at one point bringing it to the Supreme Court of Canada, without success.

However in recent years new evidence has come to light that, at the time the contract was inked, a board member for Quebec Hydro also sat on the board of the company developing the project in Newfoundland and Labrador. As a result it is believed Quebec Hydro had inside information to the effect that the project was only weeks from bankruptcy if a deal, any deal, were not signed immediately.

The federal government of the day, which had the authority to prevent Newfoundland and Labrador from being put in this precarious situation, refused to support requests to wheel power to markets through Quebec at fair market rates, leaving Newfoundland and Labrador at the mercy of the larger province.

The resulting contract has seen Quebec reap massive profits and in coming years will actually see Quebec Hydro utilize Upper Churchill power at a fraction of the obscenely low price it has been paying for decades. An amount that was below market value even 40 years ago.

Last week the people of Newfoundland and Labrador once again relived the facts of the situation when a spokesman for the Labrador Innu Nation publicly stated that new developments being planned for the Lower Churchill River, and requiring the agreement of the Innu people, would be blocked unless full redress for land losses from the earlier project were forthcoming.

Premier Williams noted that his government was not in a position to make good on losses suffered by the Innu since Newfoundland and Labrador itself had also suffered greatly from the situation and had not received any redress from the real beneficiaries of the project, Quebec and Ottawa.

It was these events that precipitated today's press conference. A scrum in which the Ministers noted that, rather than persuing legal action against Quebec and Ottawa, the Newfoundland and Labrador government was assisting the Innu in their efforts to determine which levels of government were libel for compensation, revenue sharing or other forms of redress to the native group. In doing so they also intend to factually determine who has benefited from the project and to what degree.

The Ministers said any legal action that might be taken would likely be initiated by the Innu people, not the province.

There are two old sayings that quickly come to mind in this situation.

"A smart politician can fall into crap and come out smelling like a rose" and “You don’t butt heads with native peoples during an election campaign”.

It seems clear Premier Danny Williams must have heard both of these sayings at some point in his life and took them to heart.

While the next election in Newfoundland and Labrador is still several years away, there is an axe perpetually hanging over the head of the current government in Ottawa. As a result the timing couldn’t be more fortuitous for the Innu people or the government of Newfoundland and Labrador, which already has Stephen Harper firmly in its crosshairs.

Over the years it's always been easy for the governments of Canada and Quebec to downplay, brush aside and laugh off any concerns around the Upper Churchill, or anything else, expressed by the people of Newfoundland and Labrador. The Labrador Innu may not be as easy to dismiss without a public backlash.

In one politically astute move the Williams government has taken a potential negative and turned it to their advantage.

The situation, which initially appeared to be the start of a battle between Williams and the Innu leadership has instead provided an opportunity to work in partnership and to very publicly support the Innu in their efforts. It also allows Newfoundland and Labrador, working with the Innu, to finally put the true story of the Upper Churchill project on the lips of the Canadian people. Something that has never before happened.

By assisting the Innu people the government of Newfoundland and Labrador finds itself in a position where it can once again legitimately begin delving into the circumstances of the Upper Churchill contract, and its ramifications, without the appearance of acting in its own self interests.

The Innu, in support of their cause will be better able to apply public pressure on the Federal government than the province ever could. The Innu have the ability to gain far more sympathy over the Upper Churchill, via the national media, than Newfoundland and Labrador would.

They can also assist themselves, as they already have, by threatening to block the development of power on the Lower Churchill. Electricity desperately needed in power hungry Ontario and the Maritimes.

For the Innu, the people of Newfoundland and Labrador and the Williams government the situation, as ineptly as it was handled by one Minister this week, may yet prove to have an big upside. For the Harper government and for the national perception of Quebec the opposite is true.