GNL LOST IN PUBLIC POLICY WILDERNESS

The Furey Administration’s decision to cut $20 million from funding for offshore seismic surveying, a program ostensibly intended to enhance bidding for explorations rights in the offshore oil sector, is the right one. Unfortunately, the decision is a pause rather than a cancellation.

The distinction is self-evident, but at issue is that the Government of Newfoundland and Labrador really hasn’t spent five minutes on the broader public policy questions of how best to pare the expenses of the Government in pursuit of the balanced budget objective described in the PERT Report.

Cancellation, rather than pause, should have been an easy decision in this case, because more objective industry players, which do not include either OILco or NOIA, will remind that majors and supermajors - Suncor, Equinor, ExxonMobil, Chevron and others - are cash rich again, and more than capable of performing their own seismic programs. Global oil prices are replenishing their coffers, enabling them to pay down debt, buy back shares, and in some cases, double the dividends to their shareholders.

This issue should be viewed in conjunction with Government’s recent referral to the banking firm of Rothschild of an unconfirmed number of assets for valuation. Together, the decisions confirm that provincial public policy remains a haphazard, ill-defined, even kneejerk process.

OPTIMISM IS NOT A PLAN: ADDRESSING NL'S FISCAL CRISIS

Editor's Note: What follows is the text of my remarks to  St. John's  Rotary today titled "Optimism is Not a Plan: Addressing NL's Fiscal Crisis". I am truly grateful for this opportunity. - Des Sullivan

Ladies and Gentlemen:

Firstly, I want to thank Rotary for inviting me. Let me also acknowledge your work supporting an array of projects and commend you for offering an essential platform from which to air important public policy issues.

Having been an intervener at the Muskrat Falls Inquiry with Ron Penney and your fellow Rotarian, David Vardy for the past year, Muskrat might have been an obvious subject for my remarks today. However, a desperately larger issue looms over us…the Province’s debt and deficit which, of course, is inseparable from the Muskrat Falls Project anyway. 

TIME TO TAKE REALISM TO THE POLLS

“An election is no time to discuss serious issues,” suggested Prime Minister Kim Campbell in the 1993 federal election — a comment for which she was mercilessly pilloried. In the current NL election, the Liberals, Tories and NDP have ignored the 'elephant in the room' - our impossibly large debt. One need only look at the thin veil that separates “Direct” from the “Total” debt to wonder why something as basic as fiscal solvency can completely escape mention.

Every accountant in the province knows that, as soon as the Government attempts to “mitigate” the power rates caused by the Muskrat debacle, the bondholders - followed by the Government - will be forced to move most of the so-called "self-financing utility Debt" into the “Direct Debt" column. That's the kind whose repayment depends on taxes and like revenues 

Unless, of course, people are prepared to pay 23 cents per kWh for their power or, failing that, the arrival of the tooth fairy. 

PROBLEM IN THE LONG-TERM DEBT MARKET HAS BALL SCARED

“Paul Davis did not tell the people of this province that we could not borrow long term money. That’s the situation we are currently facing in the province….” - Premier Dwight Ball (VOCM Open Line February 2-, 2016)

I wasn’t sure that I had heard the Premier right; I waited until VOCM had posted Paddy Daly’s Open Line Show on its archive and listened again, and again. Indeed, he did say it: “… we could not borrow long term money…”

Ball seemed apprehensive, even scared. Later, I wondered if he fully understood the implications of what he had said.

This may seem, to some, a very complex issue; but that is true only in its detail. Most people would understand the implications of having their credit card taken away.