Has Harper sold Dunderdale down the Churchill River?

Did Kathy Dunderdale and the PC caucus of Newfoundland & Labrador shoot themselves in the collective foot during the last federal election campaign, or will Stephen Harper repay the favour given him by the Premier, if not the NL voters, and honour his committment to back the Lower Churchill project?

If the Dunderdale government plans to ride a federal loan guarantee for the Lower Churchill into the next election they’ll need to have it signed, sealed and delivered before voters go to the polls. That might prove difficult, if not impossible, to accomplish before the October ballot with news out of Ottawa today that the guarantee will not be included in next week’s federal budget.

During the federal campaign Kathy Dunderdale threw the entire weight of her caucus behind Conservative candidates, even going so far as to appear at a Harper rally in St. John’s where the PM announced his backing for a “loan guarantee or equivalent financing”. Now, with the federal budget slated to be delivered next week it’s been revealed that the guarantee won’t be included.

A source inside government has told the media that the PM is still behind the deal and will make an announcement once negotiations are completed, but is that good enough for voters? Will that statement alone carry Dunderdale through the next election or is the public in Newfoundland and Labrador far too suspect of Stephen Harper to accept his assurances?

If the recent federal election returns were any indication it would appear that the latter is true. That could be very bad news for the Dunderdale government.

With no loan guarantee in place she had better hope the legacy of the William’s government provides her with enough momentum to overcome what could prove to be a gaping hole in her election platform.

According to a government source, "It (the guarantee) will be provisioned for and accounted for going forward but (while it won't be in the budget) it doesn't have to wait until the next budget to go into effect."

Perhaps this is true and Harper simply wants to avoid the huge fuss with Quebec that would surely come from highlighting the agreement in the federal budget. If that’s true however, and the guarantee doesn't require parliamentary approval, why is it that during the election campaign he told voters that in order to ensure the loan guarantee (or equivalent financing) a majority Conservative government would have to be elected. Otherwise, he said, the opposition parties might side with Quebec and vote against it.

Liberal MP, Gerry Byrne, (no doubt as much to score political points as get at the facts) has raised the issue in recent days as well. According to Byrne, “They were the ones that said it needed parliamentary approval. Now they're suggesting it's an order in council done by cabinet that can approve the Lower Churchill loan guarantee. So they're either lying now or they lied during the election campaign. The bottom line is we were misled."

Hard to argue with that logic regardless of the source.

Whether political rhetoric or not, Byrne also said he believes the government has no standing authority to offer such a loan guarantee without parliamentary approval.

"I've got a formal question presented today to the parliamentary budget officer to confirm or refute that understanding." he went on.

I'm sure many newfoundlanders & Labradorians will be interested in the response provided to Mr. Byrne's question.

Although the provincial government has said in the past that a loan guarantee (or equivalent funding) is not essential to development of the Lower Churchill project, such a guarantee would save provincial taxpayers hundreds of millions in interest expenditures.

With initial work on the project now underway money is already flowing out the door. The provincial legislature is now on summer break until the October election and the Canadian Parliament, once the budget is passed, will also be taking its summer break. Under those circumstances the odds of finalizing any sort of agreement before the next provincial election is low at best.

It’s a difficult situation the Dunderdale government must surely be considering after hearing this news today.

As Gerry Byrne pointed out today, the absence of Muskrat Falls in the budget should raise alarms, especially as the federal government has signalled it will include other campaign spending promises in the budget

One of those expenditures is the more than $2 Billion dollars in compensation to Quebec for implementing the HST many years ago. A promise widely seen during the campaign as Harper's way of placating Quebec over his Lower Churchill promise, making it even more concerning that the promise to Newfoundland & Labrador will be excluded from the budget while the one to Quebec is there front and center.