Monday, 28 January 2013

NAPE and CUPE: Kill Muskrat or Run Radio Ads?

Public sector unions need to shut down Muskrat Falls; they ought to have opposed the Project from the very beginning.

Unions now constitute the only organized group that possess the ability to put this Project on hold before it hurts everyone.  It is in their self-interest take such a decision.
Why?  Because, when governments correct for high deficits, public servants are the first to be affected. The process starts with attrition, then claims positions held by those transitioning. If that combined figure is inadequate, Government determines how many additional bureaucrats have to go, no matter how important they may be; then the pink slips go out.  I watched it happen when I was employed on the ‘Hill” and since.

Likely, public servants feel those bad years are behind us; that it’s all downhill from here.  That’s because a lot of people, including the public sector unions are talking that way.  They have ignored the potential fall-out from Muskrat Falls including the problem of cost overruns and the effect of declining oil prices. They cannot imagine the harm one of those problems can cause or the consequences of “the perfect storm”, where all three converge to impact lives and careers.
Muskrat sanction has imperiled not just the current round of labour negotiations, it threatens the Treasury, the status of social programs and it has placed the pensions of current and future retired public sector workers in jeopardy.

I can’t imagine Muskrat Falls has not been a subject of intense discussion inside union offices.  Are these organizations not well funded?  Are they dedicated only to collective bargaining and to settling grievances?  Do they not attempt to identify, before it is too late, public policies that are too risk laden?  Isn’t the decision to try and kill a public policy a better approach than another series of radio ads? Isn't this the job of leadership?
All major groups attempt to influence public policies.  The public sector unions can be credited with having ignored the most dangerous public policy ever advanced in the history of this Province!

Should public sector unions truly demand a halt to the Muskrat Falls Project, immediately?  Yes. 
They should insist that no further expenditures are made before Nova Scotia’s UARB has ruled on the Maritime Link (ML), Emera has confirmed construction of the ML and the ‘Independent Engineer’ has determined that all of the ‘pre-conditions’, to the Federal Loan Guarantee, have been met.  (Likely, you are unfamiliar with those issues, in which case, some of my earlier articles may help).  Yes, that is only the first step. Then, they need to review the whole Project.

The St. John’s Board of Trade urged sanction.  It gave no quarter to warnings of either cost or risk.  Any nod to scrutiny and democratic practice or even concern for social or fiscal policy impacts were never in evidence.  The Board, though, was very public about its position while public servants, far more exposed, were silent.
It is rare that business people and union leaders are on the same side of an issue, especially when their self-interests frequently conflict.  Members of the Board of Trade, though, do not depend on that organization, as do public servants, who rely on their unions to negotiate job security and wage issues. 

Perhaps, NAPE and CUPE did not want to be at odds with the Federation of Labour whose articulate leader has been vocally supportive.
Perhaps, they did not want to be offside with the Building Trades Council; though, why that group (at the very least) did not insist that it follow Hebron, rather than ‘piggy back’ that Project, is baffling.   

Perhaps, they did not want to be contrary to the position of the Federal NDP or to the NDP Government of Nova Scotia.
If they bought the suggestion that Muskrat Falls is an ‘investment’, as the head of NAPE noted on radio, last Tuesday morning, with CBC’s Debbie Cooper, I fear they have been drinking the Premier’s wine. 

I don’t know if any one answer is correct or if they all are.  However, I am confident there will be a big price to be paid by everyone; public servants will pay a disproportionate share.
Let’s have a sober look at some facts.

Figures for the period 2006-2010 show that the number of NL Government employees increased by 2,396 or 26%.  Population growth, by comparison for the same period, was inconsequential!  
Why does this matter? Because, it makes public servants an even bigger target!

Are public servants any less vulnerable following those ‘fat’ years?  I’m talking deficit, the deficit in the pension fund and public debt.
Did the Government get a handle on the public service pension deficit?  No.  It is forecast to be $3.09 billion and it is growing fast.

Was the public debt addressed during this period of high revenues?  Only modestly.  The net debt is still forecast at around $8.5 billion.
What about the deficit? In the current fiscal year, it tripled to $725 million.  Next year’s numbers may be worse.  

Is it against this background that public sector unions enter wage negotiations?  Only partially! 
What about oil prices? They currently have a downward trajectory.  The Government should release any recent oil forecasts.  I read a highly credible forecast, recently, which projected $85 oil before Muskrat is completed!  That’s serious, isn’t it? It is a long way from this year’s $127.00/barrel ‘budget plug’.

Like it or not, from the very beginning, Muskrat was a speculation.  Lower oil prices will undermine Muskrat Falls and starve the Treasury of royalties and taxes.
So, on what basis did the public service unions feel they could give de facto support to that Project?

I don’t know.  But, it is the elephant (I prefer albatross) in the room; it will divide the two sides at the bargaining table.  It will be there this year, next year and for many years to come.  
The Government needs $ 2 billion equity for the Project.  Immediately, it has to fund Muskrat contractors, from its cash, in the hope and anticipation that Emera and the Federal Loan Guarantee will materialize.   In addition, it will need a billion dollars, and possibly more, to fund its share of equity of offshore projects. 

The Government sent a reported $664 million to Nalcor this year alone; but, bear in mind that, in 2006, Nalcor was told, by the Williams Government, to keep the other revenues it receives, revenues that are normally earmarked for program expenditures.  
The Government cannot afford all these expenditures, run huge deficits and face the likelihood of big cost overruns on the Muskrat Project, too.  Not without slaying the livelihoods of an awful lot of people. It simply can’t be done and most certainly not in a declining oil price environment!  

Should the public sector Unions have been monitoring these activities and put their foot down on Muskrat Falls, last year?
I think so.
 

Let me be clear.  This Blog is not about offering advice.  It is about opinion. Mine. Anyone or no one need share it.  So, I will add this view.  Aside from all the admirable goals for which unionism stands, it will contribute nothing to its charter if it claims its share of the economic ‘prize’ even when it is a witting party to the  collapse of the ‘whole deck of cards’.  


Today, a contractor is digging a giant hole at Muskrat Falls where the generating station will be located.  Soon, this Project will be beyond stopping.  NAPE Radio ads will not cure the fallout or sate the needs of its membership. 
Halting the Project will require a lot of leadership.  Union leaders will need to make a big decision; little ones won’t do!

A final point.
Piled on top of the many reasons to kill Muskrat Falls, is Emera’s tenuous commitment.  The Halifax Herald, noted as recently as January 10, 2013 the comments of Emera’s CEO, Chris Huskilson, the guy on whom Nalcor is counting to build the Maritime Link and secure the Federal Loan Guarantee. The CEO stated his commitment this way:

“We have not signed anything that would obligate Nova Scotia customers to take this energy. All we’ve done was sign something that creates that opportunity.”
Is that the only irony? Alas, no!

The Minister who piloted the Muskrat file now sits across the table from the public sector negotiators.
Do I hear ‘naysayer’?   

Did someone have the courage to reply, “Shut it down”?    

3 comments:

  1. Yup! The cards are on the table. Will the hand that gets fed go for the bird in the hand or the two in the bush.
    Albatross! The irony being here that shooting (not accepting) this bird will give us much benefit later.
    Perhaps I read to much into a great article, lol!

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  2. Those of us at the epicentre of this fiasco can only hope smarter heads will prevail. With all due respect to the people who will pay the bills, it don't look good. When this Island was a country it drew from the population who inhabited it, they lost it. It looks as if history is about to repeat, except this time nothing will be lost except the spector of, nothing big can ever suceed on this Island. The mainland will bail you out yet again, unless the total resource of Labrador can be mortaged to salvage its economy. This will be a deep scar on the first woman Premier. Make no mistake Muskrat Falls is going down sooner or later, it cannot compete in the open market. It was doomed the day the idea was conceived. My spelling aside.

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  3. Lets not forget. The current financial mess is not the makings of Dunderdale. The seed was sown in 2006 when the Williams government proceeded on 5 years of unprecendented growth in public spending. Only a few people or organizations complained at the time, and NAPE were not one of them. Now we are in a real mess, which the foundation of which was based on Williams, Ed MArtin, and Marshall thinking that oil would trade forever at 150 $/barrel. They were wrong. We need serious cuts. This includes halting Muskrat Falls, and a 10-20% reduction in provincial spending. This may sound harsh.... but we need a reality check. The Williams/Dunderdale regime will be known as decade of squandered opportunity. A future missive for Uncle Gnarley maybe.

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