Da Legal Stuff...

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Wednesday, April 27, 2011

Promises, No Promises and Broken Promises...

At the start of this election campaign Newfoundland and Labrador Premier, Kathy Dunderdale, sent letters to each of the three main party leaders, Stephen Harper, Michael Ignatieff and Jack Layton. The letters outlined some of the key issues for her Province.

All three leaders responded and the letters were released this week.

If you’re like most people you either don’t have the time, patience or dogged interest to read the responses provided. Fortunately I have no life so I’ve taken the fairly significant amount of time required to fully evaluate the responses and summarize the key results for you. (you can thank me later) :-)

That said there is no replacement for reading them yourself and making up your own mind on what the leaders have actually said, or perhaps as importantly, didn’t say.

The original letters sent by Premier Dunderdale as well as the responses are available here:


Here are my personal takeaways from the responses.

Fisheries Restructuring and Early Retirement:

Harper: No actual promises but says his is willing to talk with the Province going forward, blames other parties for killing the budget which he says would have provided a role for the Province’s in fisheries management. Would continue to support the seal harvest.

Ignatieff: Will work with province on license retirement, fleet rationalization, older worker retirement & retraining programs and assisting in transition of workers to new opportunities. He would also recognize adjacency in the fishery, historical attachment and economic maximization. Promises increased funding for fisheries management and better fisheries enforcement. Would continue to support the seal harvest.

Layton: Would ensure adequate funding is available for DFO. Would establish a Royal Commission to determine why, after 20 years of moratorium, there has been very limited fisheries recovery. Would support a cost shared retirement and license buyout, negotiate better tariff terms with other nations for seafood exports. Are committed to a revised fisheries act that would include the concepts of adjacency and historical attachment. Would continue to support the seal harvest.

Lower Churchill:

Harper: Projects like the Lower Churchill will receive a loan guarantee or other funding if they have national / regional significance are financially viable and lower greenhouse gas emissions.

Ignatieff: Would support a loan guarantee for the Lower Churchill development.

Layton: Would support a loan guarantee for the Lower Churchill development and would invest $375 million from the 3P fund to support construction of the Maritime subsea link.

Federal Transfers to the Provinces:

Harper: Would continue to provide 6% annual increase to provincial health care funding.

Ignatieff: Will continue to provide 6% annual increase to provincial health care funding and convene a first ministers meeting within 60 days of taking office to examine health care needs.

Layton: Will continue to provide 6% annual increase to health care funding and would seek guarantees from the provinces to ensure the integrity of the health care system. Would meet with provincial leaders to discuss health care concerns. Sees the need to provide federal transfers to the provinces on a basis that recognizes each province’s unique challenges.

Child Care Improvements:

Harper: Focus remains on providing incentives to parents with limited support ($250 million nationally) and tax credits for business to create child care spaces. Creation of 25,000 new spaces for each of the next 4 years, improvements to community infrastructure related to child care, creation of integrated community based child care options.

Ignatieff: Would dedicate $500 million to an Early Childhood Learning and Care fund in first year growing to $1 Billion by year 4 of a mandate.

Layton: Would work with provinces to develop a nationwide child care and early learning program.

Offshore Occupational Health and Safety:

Harper: Work with NL to honor the terms of recommendation 29 of the Wells Inquiry (create a separate offshore safety board). Will not commit to improvements in Search and Rescue response times and does not mention basing rescue helicopter in St. John’s region.

Ignatieff: Work with NL to honor the terms of recommendation 29 of the Wells Inquiry (create a separate offshore safety board). Would undertake a review of Search and Rescue response times with an objective of 15 – 20 response times across the industry.

Layton: Work with NL to honor the terms of recommendation 29 of the Wells Inquiry (create a separate offshore safety board). Would re-allocate defense budget dollars to ensure that Search and Rescue response times are brought to international standards (20 minutes) and will look at delays in after hours response times.

Providing 8.5% Hibernia Shares to Province:

Harper: Is open to selling shares to province at fair market values.

Ignatieff: Is open to selling shares to province, no specifics identified on cost or timing.

Layton: Recognizes that the federal government has more than recovered its investment in Hibernia and is willing to work with the province on transferring the shares. Will negotiate with the understanding that the province should be the primary beneficiary of offshore oil. No specifics on time/price.

Future of 5 Wing Goose Bay:

Harper: Will support marketing of the base to other nations for use, committed to contamination cleanup and infrastructure spending. Says he will increase operations but with no specifics.

Ignatieff: Designate 5 Wing as a staging point for Arctic sovereignty including coastguard activities, fisheries and surveillance patrols. Goose Bay would also stage pollution patrols and arctic training.

Layton: Says federal government should honor its commitments to 5 Wing. No specifics provided.

Federal Spending & Presence in Province (federal employment):

Harper: No commitment of anything new and no committment to live up to previous election promise to station a batallion there.

Ignatieff: Would treat provinces equitably. No specifics.

Layton: Recognizes the disproportionate number of federal jobs that have been taken out of the provinces and says that federal presence should be more equitable. Is committed to reversing policies that have led to lower federal presence.

Broadband Access:

Harper: Will work with all provinces to improve broadband and digital services. No specific commitments to NL.

Ignatieff: Identifies goal of 100% broadband access across Canada within 3 years. No specifics.

Layton: Supports Internet neutrality, would end throttling and committed to broadband across country. Would create broadband program financed by wireless spectrum auction revenues in partnership with private industry investment.

Correctional Services (New Prison to replace HMP):

Harper: Recognizes NL’s desire for a new prison to replace Her Majesties but makes no commitment. Simply restates previous statements about being tough on crime.

Ignatieff: Is against U.S. style prisons as planned by Conservatives but is willing to work with province to replace Her Majesties Prison. No specific commitment.

Layton: Would work with province to come to an acceptable financing arrangement on a replacement for Her Majesties prison as quickly as possible.

Well folks, that's my take on it. Remember, this is an election campaign so reader beware.

An election promise and $3.75 will get you a beer at the local pub.

Wednesday, April 20, 2011

Election 2011 – Winners and Losers

Disclosure: The author is currently an undecided voter, is not affiliated with any political party and has, in the past, voted for candidates of the blue, red and orange stripe.

On Tuesday Canadians were afforded an opportunity to witness a rare event in Canadian politics, a campaigning politician, a party leader no less, being completely factual and honest on the national stage.

For those of you who might have missed this singular event or who were unfortunate enough to have witnessed the political spin that quickly followed, let me bring you up to speed.

During a one on one interview with the CBC’s Peter Mansbridge, Liberal Leader Michael Ignatieff was asked about the possibility that a party forming government without gaining the most seats during an election.

The Liberal leader’s response was a rather lengthy, though timely civics lesson that went something like this.

“… (paraphrasing) The party winning the most seats will have an opportunity to form government and seek the confidence of the House of Commons. If the leader of that party is not able to gain this confidence he must visit the Governor General and, if the GG decides to approach another leader, should it be me, I would be prepared to…”

“ (direct quote) talk to Mr. Layton and or Mr. Duceppe -- or even Mr. Harper -- and say we have an issue and here's the plan that I want to put before Parliament, uh you know, this is the budget I would bring in and then we take it from there."

Mr. Ignatieff went on to affirm his earlier statements that under such circumstances, should he gain the confidence of the House he would not enter into any sort of formal coalition that would see members of another party sitting in government but would instead cooperate with the other parties as necessary going forward.

While potentially damaging for him politically, Mr. Ignatieff deserves a pat on the back for both is honesty and clear understanding of the Canadian Parliament.

This is precisely the way the system, developed over hundreds of years, is designed to work.

Unfortunately the incessant Conservative demonization of the word “coalition” in attack ad after attack ad, and directly by Mr. Harper, has led to self serving and baseless fear among a Canadian public largely ignorant of the rules of their own democracy.

For many months Mr. Harper and his Conservative party have been demonizing all opposition parties and doing a grave disservice to the Canadian public by misleading them about how their government actually functions.

With the campaign steaming ahead Mr. Harper’s latest message seems predicated on the belief that his party must form a majority or, should they gain a minority, it would lead to an “reckless coalition” seizing power in Ottawa. This is a position that flies in the face of a truly democratic process - a government chosen by the majority of a nation’s citizens.

If, as most of us have been taught, that the majority of the people should choose their government then which is more valid, a Conservative government supported by a minority of the voting public or a working cooperative that represents the choice of a majority of Canadians?

It’s an important question to ask considering that after the last election Mr. Harper formed government even though his members captured less than 40% of voter support.

It’s even more to the point when you factor in the reality that with less than 60% of the public going to the polls, in reality he formed government with the direct support of about 22%, or only 1 in 5, eligible voters.

Mr. Harper’s position is not only self serving but more than just a little presumptive.

Yes, the polls currently favor the Conservatives, but no matter what the polls or pundits might say, there is no guarantee that following the election the Conservatives will form a government at all.

During an election almost anything can happen, so why has the media bought into Conservative spin with story after story about coalitions? Why haven’t they instead asked Mr. Harper some very salient questions?

What will he do if his party fails win enough seats to form a minority, much less a majority government?

After the election, if his party fails to capture the most seats, and the Liberals or NDP form a minority government will he allow that party to govern? If not, and the party is unable to win the confidence of the House, would he, Mr. Harper, force another $300 million dollar election on the public or would he try, if asked by the GG, to work with the other parties to form government?

I ask these questions because I’m wondering if the Conservative’s convenient aversion to “coalitions” applies only to others or to themselves as well.

Since Mr. Harper has made this bogyman a central issue of his campaign it’s only reasonable for the public to know what his position is.

I realize the media is limited to 5 questions a day while following Mr. Harper’s campaign but this subject might be a good one to push. Why hasn’t it been?

A large swath of Canada’s electorate is turning away from their political obligation and becoming more apathetic with each passing campaign cycle. There are many reasons for this, but I believe a primary reason is the well founded belief that nobody can trust anything politicians say, especially during an election campaign. With this in mind, it’s truly sad that when a political leader is willing to speak the unvarnished truth, without spinning it for electoral advantage, he’s attacked and vilified.

In reality the only winners in any election are the 308 individual MPs who gain a seat in Parliament. Some of those will come from the Conservative ranks, others from the NDP, Liberal, Bloc and perhaps even the Green Party. The parties themselves do not win government but must seek the confidence of a majority of those 308 separate winners.

The saddest result of this utter disregard for the truth is that while no political party actually wins or loses the Canadian public most surely stands to lose the most.

Friday, April 15, 2011

The Lower Churchill - A tale of Two Agreements

Development of the Lower Churchill hydro project is top of mind in Newfoundland and Labrador these days. Thanks to a simple loan guarantee promised by the three major federal parties, not to mention Quebec’s near apoplexy over what amounts to one of many campaign promises that may never be fulfilled.

With a Provincial election slated for October former Premier, Roger Grimes, has also re-entered the fray by re- asserting that a deal he negotiated with Hydro Quebec several years ago was far better than the one his successor, Danny Williams, produced.

As the saying goes, the devil is in the details. Unfortunately details of both agreements sorely lacking leaving many to scratch their heads in confusion.

The current agreement, which is the subject of all those wails of anguish emanating from Quebec, is the Danny Williams edition. It would see Newfoundland and Labrador partner with Nova Scotia on an 80/20 cost shared basis to develop the 800 megawatt Muskrat Falls.

20% of the power would flow to Nova Scotia for the life of a 35 year agreement. Of the remaining 80% just over 300 megawatts would be used inside the Province with the remaining 300 or so sold on the open market. All revenues from those sales would accrue to Newfoundland and Labrador.

At the end of the agreement, the assets, including the Nova Scotia allotment, would revert back to Newfoundland and Labrador to do with as they wish.

It sounds like a reasonable arrangement but there are some, primarily in the Province’s opposition ranks, who question why power rates in Newfoundland and Labrador will be higher than those in Nova Scotia after the development comes online.

There may be some political meat on those bones, but in reality consumer power rates are determined by the utilities and regulators inside each Province and are dictated by many factors that go far beyond a specific project and its limited power output.

It may be an over simplification but essentially the agreement boils down to a simple narrative: Each Province pays a percentage of the development costs and shares a proportionate amount of the power for 35 years. At the end of the agreement the assets belong to Newfoundland and Labrador.

The Roger Grimes plan on the other hand is far less open to summarization, at least not with anything even remotely resembling a simple narrative.

According to Mr. Grimes, he would have developed the larger 2200 megawatt Gull Island site.

That deal would have seen the province borrow the development funding from Hydro Quebec in return for Quebec gaining sole access to the power source, minus Newfoundland and Labrador’s requirement for 300 megawatts or so, under a 30 year agreement.

For the life of the agreement Newfoundland and Labrador would be guaranteed $100 million per year in revenues. At the end the Province would stand to make $800 million each year on the power.

Some this might consider this reasonable, but what do the numbers, as great as they sound, really mean unless put into some sort of context.

Unfortunately context has not been forthcoming from Mr. Grimes. What results is a knowledge vacuum leading to wide spread speculation, not all of it pretty.

Putting aside operating expenses and using a simple approach for comparison, it isn’t difficult to get a picture of the scale of revenues Gull Island represents.
It’s known that Gull Island has a generating capacity of approximately 30% that of the existing Upper Churchill power station. By extension we can assume that gross revenue from the project would be in the order of 30% as well.

Since it’s been said that Hydro Quebec reaps about $1 Billion a year from the Upper Churchill while Newfoundland and Labrador (the owners) receive $100 million for a total of $1.1 Billion a year, at 30% of the size, Gull Island could be expected to generate about $330 million using today’s rates.

Using these numbers, if Newfoundland and Labrador is to receive $100 million a year it means Hydro Quebec would be the recipient of $230 million. Over the 30 year life of the agreement Hydro Quebec would receive only $6.9 Billion in return for financing an expected $6 to $7 Billion dollar project. Newfoundland and Labrador, over the same period would see $3.5 Billion.

Clearly this cannot be the case as rates will rise but the comparisons are valid between both projects.

Many in Newfoundland and Labrador may despise Hydro Quebec, with good reason, but love them or hate them nobody is likely to portray Quebec’s crown corporation as a charitable organization.

They are clearly not in the business losing money, or even investing simply to break even, so obviously Mr. Grimes’ estimates are based on rates far higher than exist today. The question then becomes how much higher might those rates go?

Clearly former Premier Grimes must, by the very nature of his assertions, have estimated that market rates would climb at least 130% over that 30 year period. He couldn’t have said Newfoundland and Labrador revenues in the end would be $800 million a year otherwise. It’s the only way his assertions hold water, well almost, but we’ll get to the other possibility later.

Remember, Gull Island is only 30% the scale of the Upper Churchill but to be worth the $800 million a year in revenues put forward it would have to be 70% the size. Since the river isn’t growing, to get from 30% to 70% only a sharp rise in market rates, at least 130%, would have to take place.

It may sound like a huge increase in rates but actually it’s rather conservative, less than 5% per year on average over the life of the agreement, even lower factoring in compounding affects over time.

This begs the question: If rates rise, even by this conservative amount, how much would Hydro Quebec actually stand to profit beyond their initial investment and a reasonable rate of return?

I’m betting most Newfoundlanders and Labradorians would love to know. Keep in mind that Hydro Quebec has clearly learned from the original Upper Churchill project just how profitable it can be when power prices rise dramatically while purchasing costs remain fixed, in the case of Mr. Grimes’ plan, fixed at $100 million per year for the life of the agreement regardless of market value.

Rising power rates could potentially (and would likely) see Hydro Quebec make far more from its loan to Newfoundland and Labrador than it would at standard borrowing rates. In fact it would likely be a great deal more than the Province would pay in interest by simply borrowing from a more traditional source.

Guesstimating what market rates will be in 6 months is difficult. Speculating with any kind of accuracy what they’ll be in 30 years is impossible. Only two things are certain. Rates will increase and Hydro Quebec wouldn’t guarantee a dollar figure like that without hedging their bets and making sure they get a handsome profit. It wouldn’t make any business sense for them to do otherwise.

In reality nobody knows just how high those rates might rise or how much Hydro Quebec might gain from such a deal but I’m sure it’s something Newfoundlanders and Labradorians would love to know.

Add to this the possibility that Hydro Quebec, under such an agreement, would be the sole creditor on the project. Given the right conditions this would mean they could take possession of the entire asset.

It isn’t hard to understand why the Grimes’ position might be so unnerving to people in the Province.

Of course all of this is all pure speculation based on the limited amount of information provided in those far too rosy snippets put forward by the former Liberal Premier.

For example, Mr. Grimes’ $800 million a year revenue figure (post loan agreement) might not have been based on Newfoundland and Labrador selling its power into the open market at all. He might have been suggesting that Hydro Quebec would continue to purchase the power and simply pay that flat amount as a fixed price to the Province while rates continue to rise and Hydro Quebec’s profits continue to grow exponentially.

Whether or not a fixed price agreement is what Mr. Grimes was trying to sell is a point that certainly requires clarification.

If the Upper Churchill contract taught Hydro Quebec anything it’s that Newfoundland and Labrador might indeed elect a government that would foolishly sign a potentially disastrous fixed price agreement.

That decade’s old contract has also left the people of Newfoundland and Labrador hoping with all their hearts never to elect such a government again.

We can only hope the lessons of the Upper Churchill were not completely missed by former Premier Roger Grimes and others inside the Liberal party of Newfoundland and Labrador.

While the jury is still out on both the Grimes and Williams approaches on the surface the current agreement brings to mind the adage.

“you get what you pay for”.

Mr. Grime’s approach on the other hand, whether rightly or wrongly, reminds me of a far different adage.

“Fool me once shame on you, fool me twice shame on me.”

Tuesday, April 05, 2011

Better a Broken Promise than None at All

Mark Twain once said, “Better a broken promise than none at all.”

I wonder about his philosophy.

With a federal election again sullying the picturesque landscape of Newfoundland & Labrador those promises are flying around faster than a poorly discarded grocery bag in a force 5 hurricane.

After decades of living under the thumb of Hydro Quebec (thanks to the now infamous Upper Churchill Power contract) and after being denied access on Quebec’s grid in an effort to market Lower Churchill power, Canada’s political Czars have finally seen fit to “promise” Newfoundland & Labrador a loan guarantee for development of a portion of the Lower Churchill river in partnership with Nova Scotia.

Or have they?

Let me start by apologizing for the length of the following but as much as the various political machines would like everyone to believe this is a simple matter, it most assuredly isn’t, thus the need to use far more than the 50 words or less the leaders of the parties are so expert at casting out.

To begin, just what have Mr. Ignatieff and Mr. Harper actually promised?

After piecing together various comments from both men, their statements differ depending on where they’re campaigning and in which official language being used, here’s the result.

Michael Ignatieff likes the idea of co-operation between provinces and regions but… since he hasn’t seen all the details he’s only willing to say he stands behind the project and would likely support a loan guarantee.

This may be seen by devout Liberals as a promise but it’s a little too ambiguous to truly pass the smell test.

Speaking of undesirable odors, Mr. Ignatieff also said he would like to see the entire Lower Churchill project developed in future, not just the currently planned Muskrat Falls section. His belief is that other provinces, he specifically identified Quebec, should play a part in developing the remaining, and much more valuable, Gull Island portion of the river.

On this point I smell something very fishy indeed and not at all in Newfoundland & Labrador’s favor.

The question then becomes: After the election, should he win, do Michael Ignatieff’s words indicate that he might try to tie a possible loan guarantee to some form of agreement with Quebec on development of the Gull Island generating station?

After living with the fallout of the existing Upper Churchill contract nearly my entire life (with thirty years to go if I live well into my seventies) I have to wonder about statements like that. Remember it was Ottawa’s refusal to defend the Constitutional right of provinces to access markets that played such a big part in the existence of that one sided contract in the first place.

I shudder consider a scenario where Newfoundland and Labrador is locked into an arrangement that only permits hydro development on terms agreeable to Hydro Quebec and the Quebec government.

As for Mr. Harper, he’s said he’ll provide a loan guarantee, or equivalent funding, as long as the development meets certain criteria.

If (and only if) the project meets a test for financial feasibility, regional development value and greenhouse gas reductions will a loan guarantee be put forward.

On the surface those criterion sound perfectly reasonable but what exactly are the measurements of each and what constitutes a pass or a fail?

These non-specific criteria, though mana from Heaven to Conservative followers, are in fact an off ramp a two year old could drive an eighteen wheeler down.

Repeatedly when speaking about his “promise” Mr. Harper has also crowed about how much the project will mean for regional co-operation and for reducing Canada’s greenhouse gas emissions. He’s even spoken of the virtues of power produced in Newfoundland and Labrador serving as a replacement for dirty power generated in Nova Scotia and New Brunswick. I don’t disagree with any of this but I’m quite struck and very concerned by something he has, almost intentionally it seems, not said.

Not once has Mr. Harper made any mention of Newfoundland & Labrador’s intention to sell excess power into the lucrative U.S. market.

The ability to reach those markets is what Quebec has denied to Newfoundland and Labrador for generations and it’s exactly what every politician in Quebec is railing against ever since Mr. Harper’s “promise” hit the news wires.

Could it be that the Harper Conservatives plan to use, as part of his mysterious approval criteria, the caveat that power generated by the Lower Churchill project, with federal assistance, can only be used to benefit Canada as a whole (read: only sold and used within Canada)?

Such a move would, of course, destroy Newfoundland and Labrador’s energy and financial aspirations and would guarantee that any power not purchased in the Atlantic region would inevitably flow to the end of the line, so to speak. Not into the U.S. at all, but into Quebec.

In such a scenario, any energy not required by the region and locked out of the U.S. market would be virtually worthless to everyone, with the exception of Quebec. A move like this would allow Hydro Quebec to scoop that power up at fire sale prices and re-sell it, inside Quebec boundaries of course, thus freeing up more of Hydro Quebec’s own power for sale elsewhere at a staggering profit.

There is no doubt any conditions of this sort would mean the law of supply and demand will benefit Quebec alone, certainly not Newfoundland & Labrador.

Do such scenarios sound a bit too dastardly for Michael Ignatieff or even for Stephen Harper to consider? Perhaps, but a similar approach isn’t without precedent.

A number of years back Ottawa pulled the same stunt when they sold the then bankrupt Come by Chance oil refinery, also situated in Newfoundland & Labrador. The people of the Province wanted the refinery back online and access to the jobs that would come with the sale. Ever the fair bunch that they are the feds agreed to a sale under the condition that beyond what oil would be produced for use in Newfoundland and Labrador, not one single solitary barrel would ever, ever, be sold inside Canada’s border. It never has and never can be.

At that time it was the Irving family screaming and being placated by Ottawa. What’s to stop Hydro Quebec from doing it this time around?

Adding to the mass confusion around these so called “promises” are statements made by characters other than the federal candidates themselves.

Bloc leader, Gilles Duceppe, has called these “promises” a slap in the face for Quebec and said Ottawa is using Quebec tax dollars to help Newfoundland and Labrador unfairly compete with Hydro Quebec.

Quebec Premier, Jean Charest, has said that it isn’t right for Ottawa to subsidize power rates in Newfoundland and Labrador since Ottawa never helped Quebec develop its power grid.

Ontario Premier, Dalton McGuinty, is screaming blue murder that Ontario tax dollars are being used to support Newfoundland and Labrador. As a result, he says, Ontario wants support from the feds for its projects, the price of which McGuinty will, “…determine later”.

As they say, never let the truth get in the way of a good lie.

Suppose for a moment that which ever party forms the next government actually keeps their promise to Newfoundland & Labrador, without locking the Province into a catastrophic agreement, what would that actually mean?

It means that regardless of what Mr. Duceppe, Charest or McGuinty say, a loan guarantee doesn’t actually require money from any federal taxpayers, no matter where they live. It's like a co-signature on a loan, nothing more.

Consider as well that while crying about subsidization more than 70% of the profits of Hydro Quebec (a provincial corporation) are a direct result of locked in 1960’s prices for energy Quebec resells at a monumental profit thanks to the afore mentioned Upper Churchill contract.

Even developed at the kind of lower interest rates a loan guarantee would bring Newfoundland and Labrador's Lower Churchill project could never come anywhere close to producing power as cheaply as Quebec is getting power from the Upper Churchill, so who is subsidizing whom?

Never mind as well that Quebec’s & Ontario’s grids are fully inside their respective Provinces while the proposed transmission system for the Lower Churchill would cross provincial boundaries and travel under the ocean, which is within federal jurisdiction. Ottawa should play a role.

Let’s also ignore the fact that with the borrowing power of both Ontario and Quebec, at least in the past, has been similar to that of the Federal government meaning loan guarantees of any kind would have had little if any benefit to either Province.

Add it all up and it’s one heck of a situation isn’t it?

So far Newfoundland and Labrador has received little more than weak election promises, no contract has been drafted and no passing or failing grades have been given to the project by Ottawa, yet look at the fuss.

If, even after all the concerns I’ve expressed so far, these promises are actually fulfilled in the end, Newfoundland and Labrador will only receive a loan guarantee which actually costs taxpayers nothing, zip, zero.


It’s here that I have to also admit to being guilty of not letting the truth get in the way of a good lie since I’m willing to wager my substantial penny collection that these “promises” will actually cost taxpayers a great deal, though they shouldn’t.

Just days after the “promises” were made, in order to placate the complainers, agreements have been made on the $2.2 billion dollars (of real taxpayer money) Quebec wants for introducing the HST decades ago.

It’s also been reported that Ottawa will help Quebec with building a new bridge. It’s not yet clear if this will be in the form of a loan guarantee or actual tax dollars but coincidentally the bridge project is valued at almost exactly the same $6 billion dollars or so the Lower Churchill project is expected to come in at.

I can’t wait to see what kind of goodies the Ontario government will milk the situation for over the coming weeks, especially after Mr. McGuinty’s statement that he’ll determine the value of what he wants later.

As I said at the start of this lengthy commentary, nothing is as simple as the political parties would have us believe.

In the end Newfoundland and Labrador may actually end up with nothing from the federal government, not even a simple signature, or perhaps worse, find itself locked into an agreement that destroys its financial future. Either way, you can hang your hat on the fact that Ontario and Quebec will surely benefit from the carrot now being dangled in front of voters in the Province.

As McGuinty, Charest and Duceppe have said in the past few days, this promise will cost a great deal of taxpayer dollars, but they failed to mention that Ontario and Quebec are the provinces that will receive those dollars, not Newfoundland and Labrador.

Based on the numbers being bandied about, by the time this election is over what should have been a free promise to provide a free loan guarantee for the Lower Churchill project will assuredly end up costing taxpayers far more than the entire Lower Churchill price tag itself, with not one penny going to the proponents of the project.

So, was Mark Twain correct when he said, “Better a broken promise than none at all.”?

I’m not convinced, but it’s pretty clear Mr. Twain didn’t spend much time in Canada.

How much does a Quebec stadium cost to build these days anway by the way? Hmmmmmm....

Friday, April 01, 2011

What Kind of Shell Game is Stephen Harper Playing?

What kind of shell game is Stephen Harper playing and why are the political elite in Newfoundland and Labrador willingly stepping up to be conned once again?

During the 2006 federal election Stephen Harper promised – in writing – that if elected his party would exclude revenues from non-renewable resources when calculating equalization payments to the Provinces of Canada. The logic being that since those revenues are finite they should be used to allow Provinces to diversify, pay down debt and grow their economies in preparation for the day when the resources run out. They should not be considered on the same footing as other types of revenue.

It was that commitment which paved the way for several Conservative MPs to be elected in Newfoundland and Labrador in 2006, including the now locally infamous Fabian Manning, who would later stand next to Stephen Harper in the House of Commons and laugh, clap and cheer (literally) as Mr. Harper ridiculed Newfoundland and Labrador over the issue claiming the Province wanted to “Have its cake and eat it to…”.

Even after signing a letter to the Provincial government of Newfoundland and Labrador to the effect, once elected, Mr. Harper walked away from his commitment.

So much for election promises, even ones in writing with a clear and distinct signature (sure looks like Stephen Harper’s to me).

Fast forward to the 2008 election and, thanks to the broken promise, the Province rallied behind Premier Danny Williams, leaving nothing but scorched earth at the feet of every Conservative MP who dared to stand with Stephen Harper. Not a single Conservative was sent to Ottawa, except that is for Fabian Manning who, after losing his election bid, was rewarded with a Senate Appointment (another broken promise by Harper who said he would not appoint senators). One can only surmise Mr. Manning’s appointment was Harper’s way of thanking Manning for his very public betrayal of constituents and his Province.

During that 2008 campaign every elected member of the Newfoundland and Labrador Legislature participated in the ABC (Anyone But Conservative) campaign that drove the Tories out, including all members of the local PC party. Some even campaigned along side Federal Liberal hopefuls, not the least of which was Newfoundland and Labrador’s new Premier, Kathy Dunderdale.

After the broken promises and public ridiculing that flowed directly from Mr. Harper’s commitment on non-renewable resource revenues, the 2010 election campaign has led to a resurgence in Newfoundland and Labrador, not of local politicians willing to stand up and fight, as was seen in 2008, but of the sort of pre-Danny Williams politicians the Province has been accustomed to for generations. The self serving spineless kind.

No worries about broken promises this time around, no siree. Now they all say "...this time is different".

This time Mr. Harper has said he’ll back a loan guarantee for the Lower Churchill hydro project. We don't have a signed agreement and never mind that a few hours before the big announcement on Thursday Mr. Harper told a crowd in Halifax that there was still a lot of details to be worked out and nothing was final, "...this time will be different".

Never the less, Danny Williams is barely out the door and suddenly we find Premier Dunderdale (remember her, she’s the one who walked the campaign trail at the side of a Liberal MP in 2008) is crowing about how great this deal will be for Newfoundland and Labrador.

Fabian Manning (yes, he’s back) has left the senate and is running in his old riding again. In fact former provincial politicians, former Williams' cabinet members no less, are tripping over each other in a scramble to get to the Harper trough in time for feeding.

They’re coming out of the woodwork, but for what?

Do they really believe that Stephen Harper will keep his promise, even after Quebec has publicly said, time and time again, that they do not want Ottawa to help with the development of the Lower Churchill Project?

Just this week Gilles Duceppe called it a slap in the face to Quebec.

I can picture what the next few months will bring, it won’t be only Fabian Manning standing in the House to cheer on Mr. Harper as he belittles NL over this latest commitment, it’ll be all the Conservative MPs the people of Newfoundland and Labrador might be foolish enough to send to Ottawa.

Here we are, barely a week into the 2010 election and, with Williams now out of the picture, the political hacks from Newfoundland and Labrador are once again showing their true colors, looking out for number one.

It’s too bad they can’t show a little intelligence and moral fibre. It might not serve their greed and avarice but it's something that might serve the Province far better.

At this point one can only hope the voters of Newfoundland and Labrador, if not the politicians, are willing to stand by their principles.