Upper Churchill Newfoundland - what needs to be undone

It is estimated that the Upper Churchill Hydro project has created roughly 22 billion dollars for Hydro Quebec to date. Newfoundland's share is about 1 billion. Not exactly a balanced deal. Let's face it, not even close. What is the real cost of this deal?

If you consider that Newfoundland is 11 billion dollars in debt, and a mere 50% share of the Upper Churchill would have Newfoundland without any debt, then you start to get the idea. The biggest problem with the Upper Churchill is not the damage that it has done so far, which is huge to Newfoundland's development, but where it leaves us for the future. Consider that the Lower Churchill development  is estimated to cost 7 billion - without the underwater cable transmission system. Then consider that the province is already 11 billion in debt. Then consider that there are only 500,000 souls in Newfoundland. Then consider that the population is aging faster than almost anywhere else in Canada. Then try not to consider the number of people that are leaving for the rest of Canada. Makes you wonder how Danny Williams copes!

The deal with Quebec has left Newfoundland starved of the revenue it needed to build the province up, and retain, if not grow, it's population. Yes oil has been developed, which has added to the provincial coffers, but likely won't undue by itself the damage of the last 40 years. Hard to get those years back.

Here's the kicker. Frankly, we aren't hearing the truth and the whole truth regarding the Lower Churchill development. The province of Newfoundland will likely not be able to do this project on it's own. Approaching financiers at this time, and in the state of our books, well let's just say we would not be the most attractive investment out there. The international bankers would view Newfoundland much the same as an extremely in debted family seeking a million dollar loan to start a business. Our largest resource is in the clutches of our biggest competitor for the foreseeable future. Oil is a good, but highly volatile resource given its cyclical nature and environmental concerns (the least of not being off shore drilling right now). They would likely say "we see where your going with this ...but, you have too high a debt to income...sorry". We need to prepare ourselves for this reality should we choose to let Hydro Quebec continue with its shabby deal.

Things are starting to look like they did in 1969 when Brinco, out of desperation, signed the deal with Hydro Quebec that sunk the province financially. We now have a Premier who is desperate to industrialize the province, but is stuck without a major backer/customer. The thought actually scares me, but recent media reports seem to imply a flirtateous eye is winking at Hydro Quebec. Surely, and I haven't heard the ice forming below, it would be a cold day in hell before we would do that to the province again.

If we hope to get financing from the international community, or at home in Canada for that matter, the financial fundamentals of the province must be sound. Sound means reducing debt, rationalizing spending, a Newfoundland-first procurement policy, but just as importantly increasing revenues. Not by way of taxing whats left of the economy to death, but recapturing what is otherwise bleeding away to push up Quebec's economy. This isn't being anti-Canadian. This is becoming masters in our own house. Not as separatists or radicals, but in self-defence of the Newfoundland way of life.

Simply put, we need to take back the Upper Churchill - period. Without it we won't get a cent. If we are to be a Hydro Power in the international sense, then we need to utilize what we have. Hydro Quebec, by whatever means, must be convinced to rip up the Power Contract and renegotiate the power of the Upper Churchill. No other province, and I've lived in alot of them, would tolerate the raping that Newfoundland is recieving at the hands of Hydro Quebec. Nor should they. Even Alberta unilaterally changed its oil royalty program with the big boys, although I believe they have been convinced to change that policy. There is, however, a big difference between Hydro Quebec and say Esso. The bottom line is that if Newfoundland must throw the switch on the Upper Churchill, and deny Hydro Quebec any power from that point, then so be it. To carry on with the Power Contract of 1969 is economic suicide for Newfoundland, without question, the results of which will be seen when Newfoundland tries to raise the money to develop the Lower Churchill. All that evil needs to grow is for good men/women to turn a blind eye.

Chateau Lake Louise gets 6 months to prove it’s not wasting water

Dawn Walton
Calgary — From Monday's Globe and Mail Published on Sunday, May. 23, 2010 7:51PM EDT Last updated on Monday, May. 24, 2010 1:08PM EDT

The Fairmont Chateau Lake Louise now has until the end of the year to show Parks Canada that it is not wasting water from the emerald-blue lake in Banff National Park from which it takes its name.

But based on preliminary water use data, Ottawa says it is “definitely encouraged” that the posh Alberta hotel may be on its way to having its water woes under control.

The Globe and Mail outlined how the hotel’s water distribution system had lost nearly 510,000 cubic metres of water taken from Lake Louise between 2003 and 2009, prompting a probe by Parks Canada.

According to records submitted to Ottawa, 21 per cent of the lake water drawn by the hotel’s aging treatment plant had vanished from the metered distribution system on average each year between 2003 and the fall of 2009.

In 2008, a member of Parks Canada’s Advisory Development Board raised a red flag about a $7-million plan to upgrade the hotel’s water-treatment plant and reservoir. Brad Cabana noticed what he viewed as a large gap between the amount of water drawn from the glacier-fed lake and the amount of water used by the hotel. He subsequently resigned, citing “environmental negligence.”

Despite expectations that the new water system, which is supposed to be more efficient and measure every drop of water used by the hotel, would be operational by last fall, Parks Canada revised its expectation to the end of February, 2010. Now hotel officials said the plant, which treats water for use by hotel guests and sends waste water for treatment, won’t be fully online until June 1.

Parks Canada and its Advisory Development Board, which is supposed to involve Canadians in what projects go ahead in the Rocky Mountain parks, has given the hotel six months to show that the water use situation in the UNESCO World Heritage Site has improved.

“This is now really a state-of-the-art facility as it relates to the water treatment system and the distribution system,” said Gregor Resch, general manager of the Fairmont Chateau Lake Louise.

Although the hotel says water production numbers for September, 2009, through February, 2010, were not collected as the old plant was taken out of service, Mr. Resch is confident progress has been made based on data available so far.

In March, there was a 26.5-per-cent water loss rate, which the hotel blamed on burst hydrants and metering problems at the beginning of the month, and in April the discrepancy was 12.7 per cent.

Experts say well-run water systems have loss rates of 8 to 12 per cent. The hotel says it has been told 10 to 20 per cent is acceptable.

“Parks Canada is definitely encouraged by these early results,” said Pam Veinotte, superintendent of the Lake Louise, Yoho and Kootenay field unit. “However, we must see a sustained trend based on accurate data in order to determine that the discrepancy has been reduced to an acceptable level and that this issue has been completely resolved.”

Mr. Cabana said the early results show promise.

“[My] goal was in the beginning to protect Lake Louise as it could not protect itself,” he said. “I think that we have succeeded.”

Quebec - It's time for a new deal for Newfoundland

Hydro Quebec, the two words that have become synonimis with Newfoundlander's sense of their place in Canada. Although I personally believe that is not an accurate statement of the relationship, it is easy to understand why such feelings have developed over the years.

You have to go back to the early days. The devisive debates and then the vote on joining Confederation. A Premier desperate to prove to Newfoundlander's the wisdom of that decision. A province that was economically and industrially empoverished in comparison to the rest of the country. Newfoundland gave a monopoly, not unlike the monopoly Hudson Bay Company once enjoyed to develop the great unknown wealth of Canada, to Brinco - a private consortium to develop Newfoundland and Labrador's water and power potential. While the government in St John's saw the potential to begin the industrialization of Newfoundland, it is clear that Brinco was seeking only to convert the monopoly to profit.

The development of the Upper Churchill, to provide hydroelectric power, became the sole focus of Brinco, and Hydro Quebec it's sole partner. No other potential business partners were available to finance the project and, unlike say Hibernia, the federal government did not step forward with any loan guarantees. That left Brinco at the mercy of Hydro Quebec, and of course Newfoundland at the mercy of Brinco. At a time when Newfoundland needed a hand up to join the more industrialized ranks of provinces, Hydro Quebec turned on her.

The nationalistic Quebec government, using Hydro Quebec as it's instrument of choice, dictated terms to Brinco. Hydro Quebec even came back after the intial agreement was signed and added further prejudicial clauses that essentially left the people of Newfoundland without the benefit of their own resources. The basic hi-lites of the deal being: an extremely low price for the power - even by 1969 standards; automatic renewal clause of the agreement in 2016 that does not even require further signatures; a 37.5% stake in the Corporation that runs the Upper Churchill; construction of almost all the equipment used in the project done in Quebec; transmission lines designed to meet Hydro Quebec's specifications; a 99 year renewable lease on the Upper Churchill; and so it goes. In other words, if you want us to use our money, our loan guarantees, and you want us to buy the power we will take everything. The kind of deal you find abhorant if it were conducted between separate countries, let alone fellow provinces. The irony is that even if Newfoundland chooses not to renew the deal in 2041, Hydro Quebec still gets 37.5% of the profit from any new deal Newfoundland may find.

If that didn't make your blood boil consider this: Quebec has earned approximatley $22 billion on the deal to date. Newfounland has seen $1 billion. Consider that Newfoundland's current debt is $11 billion dollars. If Newfounland would have been even 50 - 50 partners with Hydro Quebec on the Upper Churchill, and recieved half of that 22 billion, Newfoundland would be debt free today. Conversely, the Upper Churchill agreement made Hydro Quebec into the player it is today - doubling its corporate size.

Several Premiers have since tried to undo this "deal with the devil" in the Courts. The lawyers of the day apparently ensured they had every angle taken care of - including a clause stopping Newfoundland from raising taxes on the power until atleast 2016. And, just to cover all their bases, the Quebec government has filed a complaint over the border between itself and Labrador which, if successful, would see Newfoundland lose the Upper Churchill - plant and all. Oh brotherly love.

The answer lies in politics. During the sixties and seventies Quebec sought to become "masters in their own house". Instruments like Hydro Quebec assisted in that effort, but it was politics that allowed the instruments to be deployed. Quebecers instinctively, and through substantial practise, have mastered the art of wedge politics within Canada. Their biggest success in this regard is their ability to not have those same politics used against them. One of the only successful attempts to do so was the recent failure of Hydro Quebec to take over New Brunswick's power utility - a move that some might say eerily resembles the nationalistic expansion policies of Gazprom in Russia.

If the answer lies in politics, then the silver bullet lies in the Constitution. The Government of Newfoundland might as well forget pursuing the Americans for help, as they will likely turn the whole matter on its head for their economic advantage - if they even choose to get involved, which is unlikely. Newfoundland's best hope lies in the Constitution, and more specifically the "notwithstanding clause". Both documents were not even envisioned in 1969. The not withstanding clause allows a province to override legislation, or create legislation, that is within its jurisdiction, but contrary to certain constitutional principles. Ordinarily, I would not advise, nor approve of such a measure. However, the Government of Quebec, as represented by Hydro Quebec, has stepped way over the line in it's treatment of Newfoundland, and by association the good people of Newfoundland and Labrador.

Harper Government's idea of Transparency

I have been watching, like many people, all the apparent breaches of transparency in this government over the last..let's say six months. I have to pinch myself to make sure I'm not having a bad dream. This is a Prime Minister who's early political career, and even his rise to office, were all centred on the populist Reform Party. Born in the prairies, Reform was meant to address all the undemocratic ills of the Federal Government, and return civility (or start some) and transparency to Ottawa. Am I the only one that remembers this? I doubt it. Yet in the last six months we have witnessed, amongst others: the proroging of Parliament; the refusal to release documents regarding the Afghan Detainee issue;  the apparent political summary execution of the Minister of...well Jaffer's wife; and the public announcement from the Commissioner of Access to Information that her Office was being muzzled. Wow, Reform you say. I don't think even Mulroney got away with that - not that he necessarily sought to.

That brings me to today's blog. As some of you may or may not know I have been fighting with the Federal Government, as well as the Chateau Lake Louise ( the big high-end resort in Banff National Park) over the environmental abuse of Lake Louise. Lake Louise is internationally recognized as one of the most beautiful and prestine lakes in the world. It has been given World Heritage status by the United Nations, and is a protected site by both National and International law. That being said, Lake Louise has been environmentally abused by the Chateau Lake Louise now for atleast a decade. Apparently, according to a Senior Warden in the Park, the Chateau was caught dumping sewage into the Lake in the 1970's, and fined. A recent access to information request on anything to do with this incident resulted in a nil return from the government. According to Parks Canada in Ottawa no such records exist. Interesting. Could be that the Warden, a life long employee at the Park was mistaken, I guess, although you would think that someone would  remember something like that.

Then, as a member of the voluntary Advisory Development Board for Banff, Kootenay, Yoho national parks I discovered massive water losses from the Chateau's operation over the last ten years. Essentially, the Chateau takes water from the Lake, treats it, and then consumes it. The production number should be very close to the consumption number or there are water losses somewhere in the system. I found that, by the Chateau's own numbers, that 510,000 m3 of water was missing as of 2008. To put it into context, that is over 25,000 semi tanker loads of water in seven years. During the following stories in the Globe and Mail, and then other National and International media another allegation arose. Several previous employees of the Chateau's water department came forward with the revelation that the Chateau was dumping waste water (treated water not put through the sewer treatment plant) directly into the Creek. Well that is the quick version of events.

Then yesterday my first set of documents finally arrived from Parks Canada under the Access to Information Act. The request was simple: Any and all documents on the water and sewer distribution systems at Lake Louise. One wouldn't think National Security was involved. Sounds like a fairly straight forward request considering the history of the ongoing struggles to get the Chateau to stop abusing the resource. Apparently not. What I received was an 10" by 14" envelope with 43 pages of documents. Unfortunately, 39 of the documents were completely blank. Nothing. Not even a sentence. There was more ink on the Afghan detainee documents shown on TV. What an absolute slap in the face to Canadian Democracy. Reform you say. Transparent you say. What a mockery. Of course I will appeal to the Commissioner, and hopefully some sense will be seen. Apart from the issue of "who is wagging who's tail?", apart from where is the protection for such a site as Lake Louise, where are the basic Canadian's rights?

Mr Harper if this is your idea of democracy, freedom, and liberty - well, your time of accountability is coming. Hopefully, the cost to this country of ours, not just yours, won't be too steep. As the old saying goes:
"Power. Use it, but abuse it, lose it."

Newfoundland's Debt Anchor

Who new Newfoundland had a debt of 11 billion dollars? I mean outside of Newfoundland that is. Other than being the best place to live in Canada, I would say discovering this debt was the second biggest secret in the country. Coming from Saskatchewan, where their debt of 6-14 billion(depending on who you speak to and what they include as debt) is a constant source of political bemoaning, it was interesting to note that Newfoundland's debt did not appear to be that big of a talking point. Considering Saskatchewan's population is roughly twice that of Newfoundland, and let's say the their debts are roughly equal, people here ought to be pretty concerned.

The cost of serving that debt was enormous and acted as an anchor on the development of Saskatchewan's economy. It was not until the 100-145 dollar per barrel oil that Saskatchewan's economy started to take off. That, and a large investment of Alberta dollars seeking to buy cheap properties up, and flip them for Alberta sized profits. Of course now that they have doubled the price of housing there, and the oil has dropped, Saskatchewan has leveled off economically. That being said, they did start paying down debt with the goal of eliminating the debt. They know that with the growing elderly population, their tax base to support this debt is declining rapidly, and dumping all that debt on the relatively small working population will only cause another exodus to Alberta or elsewhere.

Is there a lesson for us in all this? I say yes. Some of the biggest economic/demographic traits of Saskatchewan are: rural people leaving for the cities; many people working in Alberta; low prices in the farming sector combined with higher input costs (such as fuel); high taxes; inability to attract new people including such critical sectors as health; an over reliance on the provincial/federal government civil service for well paying jobs; and generally people fighting over what they can get their hands on.

Sound framiliar? As a new comer I can only speak from recent knowledge, but what I have seen so far is a very similar path for these two provinces. In Saskatchewan the labour (read government worker) movement is constantly at war with the "right wing" political parties (read anyone who doesn't support them getting on-going increases in pay and benefits). I like to say that when there are only crumbs left these two fight like dogs for their bit. I hope Newfoundland does not share this futile trait with Saskatchewan. If it does, the ability to reduce the provincial debt will be impaired - to say the least. As we can see with Greece, most recently, and the world in 2008/2009, debt is laying waste to our ability to grow. As they say in business, if you are not growing, you're dying. Newfoundland needs to seriously look at creating a debt payment fund and stick to it. Each year pay down what we can, especially when the Canadian dollar is so high. We likely incurred the debt when the dollar was .65 - .85 US. Now at par we can pay down 20% more debt with  the same Canadian dollar.

One thing is certain, at 11 billion dollars, Newfoundland's debt will be an anchor around our neck. If we hope to break the cycle of below average wages, higher than average taxes, and a massive untaxed black market, then the debt has to be the number one priority. Some will say that the economy won't grow without the government (read us) dumping the dollars in. The truth of the matter is a real economy is a private enterprise driven organism. High debt equals high taxes equals less disposable income equals an unhealthy place for business to be.