BUDGET DEFICITS AND COMMON SENSE

“May you have sensible leadership”, is a mantra that ought to replace our copious use of the Chinese proverb, “May you live in interesting times”.  Most of us don’t recognize good leadership until it disappears; appreciating it only in the context of more recent comparisons or with the hindsight of history.  Naturally, we always hope for the energetic and visionary type, though its arrival is as fleeting as an apparition in a warm mist. I’ll take the sensible kind any day.  That will keep us on course in case the visionaries never arrive or we are unlucky enough to be visited by the quixotic and absolutely reckless.  Regrettably, the latter group recently got elected.  “What is in their wine?” seems a suitable, if somewhat immodest, question.

A recent MQO Poll plotted the Dunderdale Government’s popularity in free fall, since the last election.  A 19 point difference separates the MQO numbers and the popular vote of the 2011.  The figure offers proof, not only of how strongly the Premier basked in the afterglow of the Williams firmament, but how irresponsibly she squandered the goodwill of election night. 

DON’T KNOW A COD FROM A SCULPIN. LUCKY!

Speaker: Order Please, Order Please, The Honourable Member for Blustery Bay.

Honourable Member: Thank You, Mr. Speaker.

I rise today on a point of personal privilege.

Mr. Speaker, a few days ago, the Member for Windy River South rose in his seat to decry the recent appointments, to the C-NLOPB.   

What did the Honourable Member say, Mr. Speaker?  He stated that neither of them know a ‘cod from a sculpin’! 

As if, Sir, ‘knowing a cod from a sculpin’ is some important induction or even a precondition for senior management positions of this government and its Agencies.  I will demonstrate that, not knowing a cod from a sculpin, is neither important nor even desired within this Administration.

Sir, I harbour the strongest suspicion that most Honourable Members, including the Honourable Member for Windy River South, wouldn’t know a ‘cod from a sculpin’. 

Some Honourable Members: Hear, Hear.

Member for Blustery Bay:  Indeed, Sir, if I might speak plainly and without any disrespect, I expect you, too, Mr. Speaker, would make the same claim.

The Great Revolutionary from The Shore

Since the sanctioning of Muskrat Falls my relationship with Uncle Gnarley had returned to a more normal state.  Once a week we would share a 'wee dram' while he proceeded to educate me on some of the finer aspects of the liberal arts.  These discussions, as one sided as they may be, were always a welcome diversion from everyday life.  As I was driving down the shore I wondered what would be the topic of this evening’s discussion.

I opened the door and saw my old friend hanging, what appeared to be, a framed picture on the wall. 

"Nav... as usual your timing is excellent.  Tell me if this is level to the mantle?"

"Good to see you too, Uncle Gnarley.  It is level, but what is it?"  It was clear that this was no portrait; it seemed to be a legal document of some sort.

Faster than a Hammer Squad

Against a backdrop of massive risks and severe criticism of the $7.8 billion Muskrat Falls Project, the NL Government has ignored it all and is pushing full steam ahead. This is despite the fact that a key player in this development, SNC Lavalin, is under a massive cloud of suspicion with allegations that several of its senior executives have engaged in some very dodgy business dealings, misappropriating millions of dollars to influence big contract awards.

You may well ask: Why should this make any difference to the NL Government when nothing else seems to slow their gamble of NL’s future?

SNC Lavalin may book  ±$600 revenue from the Muskrat Falls Project for engineering, procurement and construction management services (EPCM). EPCM companies generally take no risk on cost overruns or schedule, but have an enormous impact on the outcome and success of a project.  No doubt, this is the case with SNC Lavalin on the Muskrat Falls Project.

Given this situation, trust and integrity are absolutely vital.

MQO Poll Darkens Dunderdale’s Destiny

The recent MQO Poll, on the performance and popularity of the current Dunderdale Government and the other two Parties, has been dissected by others.  A few additional observations are on offer.
First, to state the obvious, the NDP strength in the St. John’s area is the main story with 48% of those polled indicating support for that Party, if an election were called, against 35% for the Tories and 16% for the Liberals.  A three way split greets the Tories in the rural areas, giving them a slim lead (37%), against 34% for the Liberals and 28% for the NDP. On a province wide basis the Tories and the NDP are in a statistical dead heat with 36% indicating support for the PCs, 35% NDP and 28% Liberal.

As to which leader would make the best Premier, Dwight Ball is a washout in St. John’s (12%) against 37% for Premier Dunderdale and 51% for Lorraine Michael. In rural districts, Dunderdale is on top with 51%, followed by Ball 30% and Michael 19%.

The numbers, should they stay the same or deteriorate further, suggest the Government is in trouble, Dwight Ball is in a tough spot (even if the Liberals’ rural roots are still strong) and the NDP is the real challenge to the current leadership. The Government’s advantage, chiefly, is that it is still early in the mandate.

The Auditor General is Full of sh’Shakespeare

June 1, 2012:  Premier Kathy Dunderdale announced, today, the appointment of a new Auditor General for the Province of Newfoundland and Labrador.
 

ACT I: The Fairy Tale A-G

Eight months later…..

(The Auditor General, preening in front of the mirror, is getting ready for his first Press Conference).

 

A-G:           Mirror, mirror on the wall

                  Who is the most courageous one of all?
                 You, my dear A-G, you are the most courageous one of all;

Holeass:   But, there are so many others even more courageous! 

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.

A CHRISTMAS SURPRISE

Uncle Gnarley is no Scrooge.  He has a conscience often fettered by doubt. As much as he likes to be hopeful, he despairs that his fellow man will ever see beyond his own front yard. He is gruff and direct though he is never mean spirited. He neither fears Christmases’ past nor those yet to come.   Indeed, his cantankerous manner belies an insouciant spirit. 

The old man had gone to bed early on Christmas Eve. Usually, I have to kick him upstairs when he stays over; conveniently, Christmas serves to justify repeat testing of our favourite single malts. On this occasion, a Balvenie, a Dalwhinnie and an Oban 14 year old, were expected to add flavor to the evening and gravitas to the matters under debate.  Only the latter, a big bodied malt with a nose of smoke, citrus and other flavors received ample tasting, when Gnarley announced he would retire and let Santa do his work.  Perhaps, the last few days of computer tutorials, compounded with the rather arduous hike to Petty Harbour, on Tib’s Eve, had worn him down in both mind and spirit.  I did not attempt to discourage him; he restated his Christmas felicitations and went upstairs.  Within minutes I could hear him snore.

As is usual, when Uncle Gnarley stays over, I bounded out of bed early to make sure preparations for an early breakfast were started, as I did, again, this Christmas morning. I especially wanted to get the coffee brewed, expresso strength, just the way he likes it.  Passing by his bedroom door, I was startled to hear guttural noises and a strange rustling of the bed; it did not resemble any of the sounds with which I associated Uncle Gnarley.  Remembering his early retirement from our festivity, and thinking him in distress, I opened the door in a hurry.  In an instant, I felt some of the same terror which seemed to have overcome our favourite guest.  

What the Members Opposite Don’t Understand

Excerpt from Hansard: Address by Premier Kathy Dunderdale, Private Members Motion in support of sanctioning the Muskrat Falls Hydro Project.  House of Assembly, Wednesday, December 5, 2012.

“...Mr. Speaker, I am not placing the fortunes of the people of Newfoundland and Labrador in to some foreign entity over which we have no control. Nalcor is owned by the people of Newfoundland and Labrador, Mr. Speaker. They work for us, Mr. Speaker. Nalcor works for us, and let me tell you, Mr. Speaker, that Nalcor is a regulated company and they have a regulated rate of return set by the PUB. Everything they earn beyond that regulated rate of return either gets reinvested on behalf of the people or returned to the government of the people. You see, Mr. Speaker, this is some of the challenge, because even the basics of how energy is managed here in this Province is not well understood by the people opposite”.

SOME HON. MEMBERS: Hear, hear!

Note to the Premier: 1. Nalcor is not ‘regulated’ by the Public Utilities Board (PUB). Newfoundland Hydro Corp. is the Crown owned regulated Utility. 2. Newfoundland Hydro is not permitted to earn any return over the “regulated rate set by the PUB”.  Any utility charges in excess of the regulated return are ordered returned, to the ratepayer, by the PUB.  3. You were heard on an open line program suggesting that Newfoundland Hydro built the Churchill Falls Hydro Project.  Not true. The correct answer is BRINCO.

Some further comment is necessary.

Faux pas, such as those, could be overlooked as minor matters of misspeak, but for the fact that they are a frequent occurrence by the Premier and often, too, by her Minister of Natural Resources. 

Opposition Members seem to accept this unfortunate reality. The media, too, are inclined to let the public make their own judgement. Problem is, basic errors, such as those noted above, suggest that the Premier simply does not know her file despite having been the energy Minister and one of the leading spokespersons on Muskrat Falls.  

 This item is not about the cut and thrust of politics when Members of Opposition parties exchange barbs and insults across the floor of the House of Assembly.  This subject addresses the question of whether leading politicians are up to their jobs.  

One cannot be allowed to forget the Government's early and deliberate strategy of obfuscation.  It had a very specific purpose: fend off the critics.  It confirmed this hypothesis: the Premier and her leading Ministers don't really understand the intricacies of Muskrat, they know that and they have to keep it a secret.

The strategy grew legs as Muskrat’s questionable entrails were exposed and as its rationale changed.  When one justification stretched credibility too far, another was inserted, and kept active as long as it had staying power with the public. It began with the proposal that power could be exported profitably.  When that blew up, it was replaced with the prospect of power for new mines; later the mantra was economic diversification.  

The essence of today’s media, the ten or twenty second sound bite, erodes any necessity for depth of knowledge or even the most basic analysis.  The Premier and her two Ministers used the limitation with great success. 

Their favourite and well-rehearsed scripts include a plethora of innocuous lines scripted by PR types: “we need the power”; “Nalcor says Muskrat is the lowest cost option” or “the ratepayer will enjoy stable electricity rates for fifty years”. The politicians knew (or ought to have known) that Demand and the price of oil, and a plethora of other “known unknowns”, to quote a former U.S. Defence Secretary, were well beyond anyone’s ability to calculate. 

And, what happened when they were confronted with any question of complexity and demand for more detail? They deferred to Nalcor….Nalcor are the experts, Dunderdale said.  The leadership is off the hook!

Politicians ought to understand the very matters to which they are obligating Government and the taxpayers. 

When did it become acceptable for the political leadership to defer to senior bureaucrats for any purpose other than occasional technical details? 

The very notion that the CEO of Nalcor could be sent to the airwaves, week after week for over a year, to conduct the Government’s communications campaign and to deal with what the Premier and her Ministers are unable to comprehend, has no precedent in the annals of the political history of this Province, whether the Tory or the Liberal version.     

To the same point, that the media fundamentally failed to challenge the political leadership, and to have them justify Muskrat Falls, without deference to Ed Martin and Nalcor is, I believe, the single greatest media failure of the entire Muskrat Falls ‘debate’, not that you can grace any phase of Muskrat’s unveiling with that interactive and engaging term.

That said, the most basic failings of two key agreements, the Federal Loan Guarantee and the Emera Sanction Agreement, are as unknown to the people of the Province today, as when they were first announced. Why would our politicians care if they know they will never have to explain?

Perhaps that is why the Minister of Finance feels completely fearless that he can go on the public media and be glib about returns on Muskrat Falls.  He knows that neither the media nor anyone else has access to independent numbers that might prove that he is 'full of it'. 

The media are easy targets.  It is unfair to lay on them the shortcomings of a preoccupied or disinterested public or, for that matter, the failings of politicians.  But, on major issues whose impacts are significant, the political leadership must be held to account. They must, as a bare minimum, be challenged and be required to show proof that they understand their files and that they are not mere puppets of smarter, more knowledgeable and controlling bureaucrats whose interests may vary with the public interest.    

The comments of the Premier, recorded by Hansard, and noted in the introduction, are not misspeak, or ‘slip of the tongue’.  They reflect a Premier, who knows little of the facts underlying the complex issues for which her Administration is responsible; they represent a mindset that feels empowered enough to say whatever comes to mind, even if it is totally inaccurate and off-the-wall.  The Premier knows she will not likely be challenged by anyone, that she is free to pillory offending critics.

Hansard awaits enrichment by the Province’s First Minister and her key Ministers.  Many of us have no such expectation.

LABOUR SHOULD HAVE NEGOTIATED THE FEDERAL LOAN GUARANTEE

Undoubtedly, the public sector unions are worried as they prepare for labour negotiations with the Provincial Government.  Its not as if they are going to the bargaining table with the NHL Owners, though.  Given the absolutely terrible Federal Loan Guarantee (FLG) and the Emera Sanction Agreement, Dunderdale and Kennedy negotiated, I'm convinced the Government will sign anything as long as the Unions promise them they won't miss the party, afterwards.  An opportunity for the Premier to make a big speech should be worth an extra point or two.  I am being only a little facetious. But, had the leadership of NAPE and CUPE negotiated the FLG, they would have handled the Feds and Emera, too, much better.  

One lawyer wondered aloud why the Premier would attach her signature to a document that is so “full of holes”, you could “drive a Mack truck through it?   Another made the more academic comment that the FLG “is an unfinished agreement which, in law, makes it no agreement at all”.    

Not surprisingly, we might ask, why would the Premier sanction the Project now, given the weak position it places the Province, as it strengthens the hand of Emera and the Feds? It is quite legitimate that the Government of Canada, as Guarantor, would want certain protections, but the FLG, in its current form, requires that all final decision-making is passed over to an Independent Engineer (IE).  Emera, on the other hand, gets complete flexibility to “opt in” and to take no risk.