BEGGING THE AUDITOR GENERAL TO SHOW COURAGE (PART II)

There is little doubt the A-G is deeply concerned over the state of the Province’s finances. In his 2014 Report to the House of Assembly, gravitas is expressed over our dependency on petroleum revenues, the structural deficit, the growing debt, a declining GDP, and other issues.  

Premier Davis would have us believe recent Administrations have exhibited sound fiscal stewardship and there is no need for change. The truth is the Williams’ years, and since, have been marked by a level of financial recklessness that is not only repugnant; it will take years to repair.   

The purpose of this Blog is to not just chastise unwise and undisciplined politicians.  It seeks to illuminate serious public policy issues. The A-G's Report needs plenty of light.

The statements that follow are extracts from the 2014 Auditor General’s Report, specifically Chapter I entitled “Comments of the Auditor General” and Chapter 5, “The Financial Condition of the Province”.  I think those selections represent his most prescient “observations”. (Click on this Link and go to Chapter 5 for more details.)

In my concluding comments I beg, yes, beg the Auditor General to display the utmost courage and uncloak Nalcor CEO Ed Martin and the Muskrat Falls project. First, the Auditor General has the floor:

A-G's REPORT IMPORTANT BUT NOT COMPLETE (PART I)

The Report of the Auditor General for the year ending March 31, 2014 is important for the observations he offers regarding the state of the Province’s finances.  He delivers comment (but no conclusions) on the impact of oil on revenues, the pattern of government spending and how the lack of fiscal discipline is resolving into a serious structural deficit. It is a story told in charts and graphs more than as a written narrative.     

The Report comes as the world price of oil has experienced a 25-30% hair-cut.  Many wonder how the Government will curtail public spending without injuring the economy. Yet, everyone knows the time has passed for the easy method of fiscal restraint.  

The A-G’s Report deserves two very different comments.  

One relates to its incompleteness, though that is partly the fault of the Department of Finance, on which the work is based.  The second is why it is important; a matter which will be dealt with in a subsequent Post. 

THE TORIES: DEATH COMES SLOWLY

The Tories’ loss in the CBS by-election reflects what provincial polls have been telling us for a long time. The Party is unloved and that is being kind.  Premier Davis has done nothing to differentiate himself or his Administration’s approach to either communications or public policy from that of his recent predecessors.  

Does he not want to disassociate himself, at least, from the Dunderdale era?  Does he not understand voters are still distressed by that time?

For all the reasons that are well-known, this by-election was important to the Government and to the P.C. Party. Hoping that the bleeding was at an end and having called by-elections in Trinity-Bay de Verde and Humber East, the Premier might have wanted to proclaim: “Remember, Remember the 5^th of November”! Having lost, he has no rallying cry. The voters are not inspired.  Even the most ardent partisans make no claim that theirs is a Party of renewal. 

The problem is illuminated by CBC political “Point” man, David Cochrane, who chalked up the loss to the Tories being out-hustled by a resurgent Liberal Party organization; except Cochrane has merely identified a symptom, not the source. 

PREMIER DAVIS: TEAR DOWN THAT WALL

Last week a retired Swedish geoscientist, industry leader, consultant, Professor, and internationally recognized expert on “Quick Clay”, Dr. Stig Bernander, spent three days studying what he described as a “live” land mass on the lower Churchill River. He was able to personally view, on the ground and from the air, a great many landslides and see physical evidence of active movement over a large area including the "North Spur". 

He spent another four days editing his notes, selecting photographic evidence and lecturing at the LSPU Hall and at Memorial University on the dangers of Nalcor relying upon “outdated” geotechnical analysis of the problem.

Quick Clays are unique, sensitive glaciomarine clays.  The clay deposits, at the North Spur as elsewhere, occurred when sea water levels were much higher.  They are unstable clays. Their peculiar characteristics are known to cause landslides.  When Quick Clay is subjected to sufficient stress, the material may liquefy. (Locally, some call the clays "pug".)

When a person of the stature of Dr. Bernander, having no connection to this Province, is troubled enough to perform this public service, pro bono, you have a right to think there is cause for concern.

Rissa slide, Norway

When the Vice-President of Nalcor, Gilbert Bennett, shows up at Dr. Bernander’s lecture at Memorial University, not to welcome the man or to acknowledge his internationally accepted engineering models for assessing landslide risk, not even to ask him a question, but only to express umbrage against the Professor, you know the Corporation has gotten far too used to not being challenged by competent third parties.  

THE ‘ROCK’ STAR OF “QUICK CLAY”

The biography of Dr. Stig Bernander reads like that of a ‘Rock’ Star except in his case, he is better known for his work with clays rather than rocks, especially “Quick Clay”.  Some of this “sensitive” material is present at the North Spur, the projection of land creating the natural dam at Muskrat Falls.  It is one of the issues which threaten the viability of the project.

Dr. Bernander, you ask?  Who is he and why would you be interested? I will get to those questions in a moment. First, what are “Quick Clays”?

Quick Clays are unique, sensitive glaciomarine clays.  The clay deposits occurred when sea water levels were much higher.  They are unstable clays. Their peculiar characteristics are known to cause landslides.  When Quick Clay is subjected to sufficient stress, the material may liquefy. At Muskrat Falls, Quick Clay could undermine the structural integrity of the North Spur. Remediation is potentially a money pit.  It is a public safety issue, too.

One of the best known and large Quick Clay landslides occurred at Rissa, Norway.  The slide was videoed as it progressed. The event is as exciting as it is horrifying. If you choose to follow the Link, just be patient for the first couple of minutes and the Rissa video will demonstrate why Quick Clay should be taken very seriously. It is the perfect primer in advance of Dr. Bernander’s Lecture. 

Bernander is neither politician nor bureaucrat. He is a scientist; one with long industry experience.

OIL REVENUES: DON'T WORRY. BE HAPPY!

Bobby McFerrin’s light-hearted lyric “Don’t Worry, Be Happy” seems perfectly suited to Dr. Wade Locke’s analysis, as he explained it to James McLeod of the Telegram last week, on the future of oil.  Dr. Locke is an Economist and Professor at Memorial University.

Indeed, why would we worry when the ass is coming out of the Provincial Budget!

The slide in the world price of Brent Crude, closing at US $86.16 per barrel on Friday October 17^th, is a significant event and not because people will save money at the gas pumps. 

Since oil’s decline began just a few weeks ago, a host of oil producing nations including Saudi Arabia, Iraq, Venezuela, and Russia among others, whose budgets rely on $100 plus oil, have expressed concern that they will feel the sting of lower revenues. While none could forecast the exact day or week that a major correction on the markets might occur, all knew it was coming.

The fact that the U.S. will become energy self-sufficient by 2030 or earlier is old news.  Unlike the Saudis, few oil producing nations have maintained a rainy day fund.

Newfoundland and Labrador is just as reliant, on a relative basis, as many of the countries mentioned.  Oil directly generates 33% of the Province’s budgetary revenues.  The figure does not reflect proceeds from corporate, personal taxes and HST associated with offshore related jobs, construction and services. In fact, oil’s impact on the Treasury may represent as much as 50% of revenue or more when the labour pool doing the round trip to Fort McMurray is assessed.

LEADERSHIP WOES OF THE CONSTABLE PREMIER

Premier Paul Davis knows the sting of political whiplash. Just four weeks ago he experienced the euphoria of victory.  Minutes after his investiture, he discovered no honeymoon awaited him with either the pundits or the public.

It is not Davis’ fault the Auditor-General chose to dump the HVP Report on him, rather than on Tom Marshall, who is as much deserving of blame as Nick McGrath. But Paul Davis is entirely responsible for not ordering a deeper investigation into its odious contents.

As to his other decisions, what does it say about him that he would elevate an uncouth backbencher, Keith Russell, and award him Ministerial status?

The public may not understand the importance of political convention vis a vis the unelected Ms. Manning, but the Premier should.  

Similarly, even a police constable should know that changing the Department of Justice to the Department of Public Safety is akin to replacing an ‘ideal’ with a ‘cop car’. 

THE LIBERALS: NO WAY TO TREAT A LADY

Last week, the public saw Premier Paul Davis appoint an unelected female Minister of Public Safety arguing, among others things, the Government suffers a gender deficiency.  

Meanwhile, an intelligent and successful woman, a fine communicator, the MHA for Fortune Bay-Cape La Hune, Tracey Perry is left out of the Davis Cabinet.  She failed to make the list of the Williams, Dunderdale and the Marshall Cabinets, too.  

But the Tories aren’t the only ‘lug heads’ in politics when it comes to promoting women and levelling the scales of gender equality.  The tricks played by the Liberals in the District of Humber East, to discourage Corner Brook businesswoman Donna Thistle from running, do little to give the Party a legitimate claim to enhancing female representation in the House of Assembly. 

It seems Thistle was a cause celeb when the Liberals thought her a sacrificial lamb.  But when Frank Coleman’s departure from the P.C Leadership also removed him from a planned by-election, the Liberals decided they didn't want a political neophyte to challenge the Tories in the District after all. 

A-G's REPORT INTO HVP UNDERMINES HIS OWN OFFICE

At the outset, let me state that anyone knowledgeable of how government operates will not be pleased with the Office of Auditor General let alone his Report into the Humber Valley Paving (HVP) affair.

I have read the Report.  I am quite certain this is the stuff of Judicial Inquiries. One should be called forthwith. 

How Premier Paul Davis responds to the findings will constitute the standard of integrity that will mark his Office. 

The A-G’s Report, despite its shortcomings, leaves little doubt that the public purse was of secondary importance alongside the Minister’s political imperatives in advance of Frank Coleman’s nomination for the P.C. Leadership.

I cannot remember a time when a Cabinet Minister presided over such evidence-based proof of an abuse of power.  Though the Premier denied having been informed in advance or that he was a party to the cancellation of the contract, it bears remembering that Premier Marshall stated, following the revelations, he believed Minister McGrath made the right decision. Perhaps, now the media will stop eulogizing his short tenure and acknowledge his terrible lack of judgement. We should all be grateful he is gone.

Still, questions remain which the quick resignation of Nick McGrath do not resolve.

This Post should be entirely about the Minister and the other parties who played supporting roles in an affair that stinks.  Instead, my comments are directed towards the Auditor General, the necessity for which, I find disconcerting.  I am sure I will get back to the subject of Nick McGrath later.

DELEGATED CONVENTIONS: REPLACING EXILARATION WITH BOREDOM?

Two weeks ago, delegates to the P.C. Convention and those listening in, via radio and television, got to experience their first delegated leadership convention in 20 years. Some had previously participated in one or more. They likely took for granted Steve Kent’s move to Paul Davis following the first ballot results. Not so the newbies who seemed quite surprised by the drama that unfolded. For them, it seemed, shifting loyalties produced a range of emotions.

Welcome to the delegated convention!

Imagine there were five or six contenders or more; think the surprise, the sense of excitement, disappointment, as hopes are dashed and promises once assured are replaced with those to higher placed and more likely successful contenders. Think of the sense of fear when the votes of a candidate who is dropped are up for grabs.  Will candidate X ‘release’ his delegates? Will he deliver his (sic) delegates to another contender, as did Steve Kent asked his supporters? How many will follow? (In case you were wondering, Kent’s arrival on the platform to thank his delegates and encourage their support of Davis constituted a breakdown in the protocol of Convention management.)