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Sunday, August 21, 2011

Vision - A Casualty of Drive by Politics

The most common definitions of “Vision” include:


1. The faculty of sight;
2. Intelligent foresight;
3. The manner in which one sees or conceives of something;
4. A mental image produced by the imagination.

That’s something every Newfoundlander and Labradorian would be within their rights to jot down, seal in an envelope (or place in an email) and send directly to every candidate running in October’s provincial election.

History tells us the world’s most respected leaders aren’t remembered for their ability to win office or hang onto power but for being visionaries and for their ability to engage the public in making their dream a reality.

Where are the visionaries in Newfoundland and Labrador today?

Talk to the average politician and you’ll discover most can’t see past the next poll, next election or next fiscal year. Vision, true vision, extends beyond those false parameters. It reaches far into the future, perhaps to the next generation, the generation after that, or even beyond.

Visionaries recognize the present for what it is, the future for what it can be and are capable of laying the building blocks that inspire others.

As a people why are we so easily accepting of announcements about “slightly lower” unemployment rates or achieving an “average” Canadian wage? Instead we ought to aspire to having the lowest unemployment and the highest wages in the Country.

It goes without saying that we won’t reach such lofty heights overnight, in fact we may never get there, but if we don’t aim for the target we’ll never come close to hitting it.

Take our natural resource, the province, regardless of which party is in power, has always developed those resources in exchange for the direct revenues (royalties / taxes) they produce and for the limited number of jobs extracting them creates. Why?

Why hasn’t government ensured that every ounce of benefit is squeezed from the resources around us and why haven’t our leaders, past and present, been able to understand that those resources are a diverse package of interrelated opportunities rather than a series of independent revenue streams?

Maximizing benefits doesn’t have to involve a heavy handed approach that might scare investment away and the benefits reaped don’t have to flow directly from selling the resource itself.

Legislation forcing industry into a position where profitability is unduly limited or which unfairly places social obligations on them isn’t the answer either. A far better approach is to create an environment where industry itself can see the economic advantages of increasing its presence in the province. This would require a government that understands how the different pieces of the puzzle are interconnected and can be leveraged.

As an example, based on public statements by NALCOR it would seem that rising oil prices will continue to drive up power rates until such time as Muskrat Falls energy is available. At that time rates will stabilize. They won’t fall mind you, but stabilize.

Based on this it appears higher rates charged (due to the cost of oil) will remain in effect even after the oil is no longer needed, ultimately providing additional revenues to NALCOR when Holyrood closes. After all, when those costly oil purchases are no longer necessary the revenue has to go somewhere.

Likely those hundreds of millions of dollars, along with earnings from selling power outside the province, will be used to repay the development costs of the project and provide a healthy return for NALCOR and the province.

This might seem reasonable enough from a traditional business perspective but NALCOR isn’t an independent business and the power they sell is directly linked to the local economy and to every individual and business in the province.

Newfoundland and Labrador, compared with other Canadian jurisdictions, is somewhere in the middle of the pack when it comes to power rates. According to NALCOR our province isn’t the only place rates are rising and after Muskrat is complete, even with the higher rates, we will continue to sit somewhere in the middle of that pack. This makes me wonder, why is that good enough?

Why are we willing to settle for being “average”?

As part of a longer term view, considering the size of the investment - and its associated risks - perhaps a more visionary approach to Churchill power should be considered.

There’s a difference between thinking inside the box and thinking outside it. In fact it’s been said visionaries don’t even recognize a box exists.

Might the province be better served by cutting power rates as much as possible once the expense of Holyrood oil disappears? This is not to say taxpayers should subsidize power rates, that NALCOR shouldn’t make a profit, or that the loans shouldn’t be repaid, the question is how high those profits need to be and what the plan is for paying down the debt.
We may have a unique opportunity here since NALCOR isn’t developing the project as a privately owned company or publicly traded corporation. As such it shouldn’t have the sole goal of maximizing profits. Its owners are the taxpayers of the province. Ultimately any corporation is responsible for achieving the long term objectives of its shareholders, in this case the citizens of Newfoundland and Labrador.

When it comes to the Lower Churchill, perhaps we should ask ourselves if our primary intent, beyond keeping the lights on, is to reduce debt quickly, increase profits for NALCOR and government, grow the economy and related employment or pursue some combination of the above.

Perhaps the answer is to eliminate the debt quickly and then drop power rates as low as possible while ensuring the future viability of the corporation. Perhaps not. Who knows, but if we examine all our options, including the eventual repatriation of the Upper Churchill , might we be able to focus our efforts on one day making Newfoundland and Labrador the lowest cost jurisdiction in Canada, hell why not in all of North America, for access to clean power?

If we could eventually reach that target what might it mean?

Clearly it would be a welcome reprieve for rate payers in the province and would go a long way toward easing the burden of the less fortunate among us, but what about the bigger picture?

Low rates would obviously reduce the cost of doing business here. If the costs were low enough that alone would increase the profitability of existing enterprises and improve their ability to expand, hire new employees and even increase wages.

With less focus placed on direct profit from our energy reserves and more on offering the lowest possible rates, major industrial players now content to harvest resources and ship them elsewhere for processing might find themselves able to do that processing here at a lower cost and for increased profit thus creating more employment and provincial tax revenue.

It’s often been said that our remote location and distance from world markets is a barrier to developing a manufacturing based economy. There may be some merit in that but with the Northwest Passage, the most sought after shipping route in the world, beginning to open up could our location at its Eastern gateway actually benefit to us in the future? When it does open up, if the infrastructure necessary to take full advantage of low cost renewable energy were put in place, including for the use of Upper Churchill power, what might it mean to the province 30 years from now?

Secondary processors who use our iron, copper, oil or other valuable resources to produce consumer goods around the world might eventually come to recognize the province as a unique location with abundant resources and cheaper power than they can find elsewhere. How many jobs would that create?

Perhaps stimulating industry and employment in this way would generate provincial revenues far beyond existing levels. This broadening of the provincial tax base might even enable a visionary government to lower personal and business taxes. It might result in us becoming one of the lowest cost places to live in Canada while ensuring we are even more attractive to business, guaranteeing the cycle of growth continues to expand.

In the long run such an approach has the potential to be far more lucrative for the people of the province and for government coffers than the status quo.

Picture a future where Newfoundland and Labrador is recognized as a strategically situated treasure trove of raw materials that has the lowest cost power in North America and perhaps even the lowest tax regime. A place with a diversified economy where well paying jobs are abundant and the provincial treasury is flush with cash.

Of course this might sound like a pipe dream and in reality the entire idea is nothing more than rambling on my part. I wouldn’t pretend to know if such a scenario is viable or not but at least it’s a concept, the germ of a direction, the seeds of a vision that extend beyond the next few months or years or even my own lifetime and certainly beyond the next election. In other words it’s far more than any of the parties are putting forward.

With an election on the way we should all question where the long term vision is for our province. What about the fishery or the forestry sector. Where do we want to see our health care system and our schools a generation or two from now and how do we plan to get there? All of these components are intertwined and need to be part of an overall vision.

We may have a small population in Newfoundland and Labrador but we are also blessed with a vast array of renewable and non-renewable resources and a population that I truly believe is willing to work for a brighter future. In fact I’d argue that any government unable to satisfy the needs of our small population, while surrounded by such vast wealth, doesn’t deserve to hold office.

At this point in our history what we need is a visionary leader bold enough to set aside political expediency and take the reins firmly in hand. Unfortunately the closest thing to vision we’ve seen from any of the political parties are promises likely to expire the morning after the polls close. Hardly inspirational.

1 comment:

oceansedge said...

I fear, that one of the reasons we never seem to have any politicians with vision is that vision is a hard sell to the people.

Visionaries are rare, thus we tend to lack them in the general populace as well; and the general populace tends to be more concerned with what the gas price is going to be next Thursday then 10 years from now (for example). And to a certain degree that's fair, it's hard to worry about the long term future of Newfoundland, when you're worrying if your wages are going to keep up with the rising costs of housing in St John's.

People don't want to hear, vote for, see or welcome vision they're a lot less concerned about tomorrow than knowing that today might be a bit better. Those that have the vision know that. They know it's a tough sell and often they just plain have the fight to be heard the effort to share the vision beat out of em. Remember Don Quixote waas mad.