Dunderdale and Company: The Deliberate Debt Plan

For anyone with a modest knowledge of economics it is clear the Lower Churchill development, as it is currently proposed, makes no financial sense. The power such a structure generates cannot be sold for a profit anywhere - other than the Island of Newfoundland. The only reason it can be sold at a profit on the Island is the trapped consumer group that needs power to live - Newfoundlanders. Of course that means a rate hike of at least 250%. Think that is overstating it? Consider that current projections have the cost of producing the power at 14.3 cents a kwh. Then add the 25% guaranteed return on operations that the government disclosed this week to the three main players. Then add the average cost overrun for dams of this nature - another 25%. Dams in general have cost overruns of 56%, but hydro dams are normally lower. That does not include cost overruns incurred on the sub-sea links. Bottom line is that a Newfoundlander now paying $200 a month for power will be looking at a bill in the $600 - $700 a month range. Of course that only holds true if our population stays the same, and we know it's declining.

Bottom line is the Lower Churchill is a financial nightmare in the making. So why do it? It can't be for economics - or can it? The big, and I mean huge, elephant in the closet is the equalization renegotiation of 2013. The federal government is facing a messy fight with provinces such as Saskatchewan and Alberta that want to pay less and are reducing or eliminating their debts versus provincial governments trying to abuse the system for their own gain. Governments that fall into that category include Quebec and now apparently Newfoundland and Labrador. For those thinking Quebec's strategy has been working remember Quebec is now the third most indebted political entity on the earth - per capita. The general strategy appears to be: "If we spend it fast enough, increase our debt to GDP ratio, we will qualify as have-nots while having all the benefits of haves." A strategy born from being a have-not for so long, but showing none of the maturity and responsibility that comes with its new found status - pun intended.

While that strategy may be successful in reducing or eliminating this province's contributions to the equalization program, it will kill the economy here through debt and taxation. The lack of fiscal responsibility of the Dunderdale government is already causing distortions in the economy. A really telling one was the announcement by Minister King of his disappointment with the private sector for not hiring first year apprentices. This provincial government has initiated a program to pay 90% of the wages for first year apprentices - yet very few takers. The problem is a lack of economic stability beyond the oil sector. Businesses are not spending as their confidence in this government's economic policy is paper thin - not enough for them to go out on the limb and hire these young people.

In many ways the Dunderdale government's approach to "managing" the economy resembles the efforts made by the old communist governments of the past. Five and eight year plans. Virtual control of the economy by massive growth in government. Trying to create an economy based on ideology as opposed to demand. In general, trying to control the economy and its growth rather than reducing its economic impact and allowing the private sector to breathe. The Lower Churchill falls mega bust falls into this way of thinking. We know from history that communist governments fell when the people finally lost confidence in their ability to properly administer the economy. Will we have to wait for things to get that bad here before we stop this destructive waste of our precious resources?

The Newfoundland PC School of Politics

There comes a time in every government's life when it's usefulness has outlived it's welcome. A time when arrogance becomes so common place as to become the political culture surrounding it's operations. It's not normally a sudden thing that announces this transformation, but rather a number of instances that crystallize a perception that a government has become "old and tired". This has certainly become true of the PC Party of Newfoundland and Labrador, and more precisely the government they lead.

Just take the last few months - since Danny left to be exact. Parents losing kids over failed IQ tests. A botched appointment to the CNLOPB, and then the lies to try and cover it up. The Auditor General's Report with it's numerous points of governmental spending abuse, and general indifference to the rules governing it's operations. Of course there was the Parson's Pond fiasco,with a $25million price tag, when Nalcor drilled the two most expensive holes in this province's history. That little exercise made Ms Dunderdale's comments laughable when several weeks later she proclaimed "Nalcor knows what it does" in defence of the Lower Churchill development. The list goes on and on proving a week is a long time in politics, and three months can be a century.

As bad as those issues were, and remain so to this day, it is the comments of Ministers Jackman and Wiseman that have really blown me away. Mr Jackman's remarks on the MOU studying the long term feasibility of this province's fishing industry were disgraceful. Remarks that in any other government would have instantly resulted in his resignation. His callous comments that the government need not put any more money into the fishery as most fisherman will lose their boats in the next seven years was cold in the extreme. Then last week he proclaimed that shrimp and lobster fishermen should really get their collective act together as he was getting really tired of their protests. He actually referred to them as a "right of spring". He went on to say that what was really needed was "some leadership". What Jackman fails to see, but almost everyone else does, is that rural Newfoundland and Labrador is tied to the fishery. As the fishery goes, so goes the rural. So is he saying leave the rural areas to their own demise? That he's not about to even bring the issue to Cabinet because his buddies are far too busy discussing issues of real importance - like a dam and the black gold. That the poor old fishermen will have to die a slow and painful death, because frankly he has better things to spend the money on. That is what I call being out of touch with the rural part of the province, and it hasn't gone unnoticed.

Then there is Mr Wiseman. This week, as Minister of the Environment, he proclaimed that rural boil water orders in the province were the responsibility of municipalities, and his government was not to blame. He accused these small councils of not doing their part in treating their water properly - in some cases shutting off their chlorination systems. What he fails to grasp is that it is a provincial government's responsibility to ensure these systems are running. Perhaps the government's attitude is that "if we don't have to enforce it we don't have to pay for it". After all, if they were to insist it be done properly then they would be approached to give the funds necessary to make it happen. Out of sight out of mind if you will. That is also ignoring the fact that Municipal Operating Grants have been frozen since 2006, and were only given a one time increase this year of $6 million. Most of these rural communities have a disproportionately high number of low income families and seniors on fixed incomes. Their ability to pay huge tax increases to do the necessary infrastructure work in their communities is not there. With hands tied things slide. This is the story of rural Newfoundland and Labrador. Blaming the victim is becoming the story of this government.

In a way it speaks to the above average ability of Newfoundlanders and Labradorians to suffer at the hands of their own politicians. The part that turns my stomach is the above average ability of this province's politicians to treat their own citizens with such contempt, and then smile as if they are somehow doing us all a collective favour by gracing us with their presence. It is a height of arrogance you won't see in too many other parts of this country - well, not for long at least. When things get that bad governments get replaced. This coming October it is time to end the arrogance, and start a plan that builds the whole province for her people's benefit. Note to the PC Party and your way of doing things - school is out.

Should the federal Liberals join the NDP?

All federal political parties had a historic night on the 2nd of May, 2011. The Bloc was nearly wiped out, and it's Leader lost his seat. The Green Party elected it's first member of Parliament - it's Leader. The Harper Conservatives finally were awarded with a majority after several minority governments. The NDP reached historic new heights with 102 seats, and were able to secure the Office of the Official Opposition - also for  the first time. The Liberals suffered their worst loss ever, including the loss of their Leader's seat, and Official opposition status. Historical night all around.

The question immediately came to the fore: Should the Liberals amalgamate with the NDP to form a new unified left? The pundits all seemed to fall in line with that idea. The night of the loss they called for a new "Liberal Democratic Party" as it were. Bob Rae came on TV that night and seemed to endorse the idea of giving it at least some consideration. I believe, however, that entire idea, including it's premises, is completely wrong.

First of all, Liberals are not socialists. If they were socialists they would already be in the NDP or some such movement. They are traditionally the menders of conflict between Quebec and the rest of the country. It is in this way they really earned their title " Natural Governing Party". At times it required them to take a tough, and politically unpopular stand in Quebec, like the Clarity Act. They wrapped themselves in the flag, and were proud to declare they were not the "waiters to the provinces". They championed social justice and the "Just Society" - enshrining such in our Constitution. At the same time they were a Party of business ensuring Canada remained a player in the world. Jean Chretien, by way of example, led many trade missions throughout the world and signed free trade agreements. His Minister of Finance, Paul Martin, made tough and unpopular decisions to eradicate the deficit that was a main stay point of contention with the then populist Reform Party. In general, they were viewed as the Party of balance. The national interest was safe in their hands.

Contrast that with the NDP. They share in some ways a social justice message with the Liberals, but beyond that a common thread is hard to find. Proponents of a Liberal Democrat merger argue it would end vote splitting as if this were the reason for the Liberals loss. That the two Parties shared the same constituency, and their individual existence doomed them to split their own vote forever. They argue it represents the same problem the Reform and the Progressive Conservatives faced a decade ago. This logic is flawed.

Firstly, the Reform and PCs were from the same family. It was not so much a unification as it was a reunification - a burying of the axe if you will. A marriage of the Harris Ontario Tories and the Harper Reformers. The fallout was directly related to the historic PC loss that resulted in going from the largest majority ever to two seats nationally. A catastrophic loss that wiped out the PC base from coast to coast - despite the efforts of Jean Charest to reverse it's effects.

Secondly, and far more importantly, the NDP are not here to stay in these numbers. Their victory in Quebec centered around their leader Jack Layton. A man who has committed not to run in another campaign, and who's advancing years and poor health would seem to rule out another run. They have a caucus that is now dominated by Quebec. Many of these Quebecers are dedicated to Quebec sovereignty. The Party born of prairie populism is now dominated by people who wish to see the destruction of the country. Their own long term MPs, and some new ones like Ryan Cleary, will find themselves in a Party they can no longer recognize. The new Quebec wing will dominate the NDP. The NDP itself is actually in danger of a catastrophic split. If all these new MPs, 60% of all MPs in the NDP now, decide to leave they would form the Official Opposition. In terms of power politics you can be sure that fact has not escaped their French lieutenants. A new, and powerful position for separatists within a federal party. At the very least, inexperience and separatist leanings are bound to create ongoing political chaos for these folks.

It's time for the Liberal Party of Canada to take a deep breath. What they suffered was a political loss. Bad to be sure, but not fatal. Every Party suffers a loss from time to time. They need to take time to see why they have failed. I, for one, believe the answer is fairly obvious. The big losses started happening with poor leadership choices. Sorry, but that is the history. If you want to be real then you have to get real. Poor leadership choices resulted in loss of political discipline. Loss of political discipline created a perception of weakness, which resulted in a massive loss of credibility. At a time of choice people are going to turn to the Leader who they perceive has credibility. They consider the perception of the Leader as the primary factor in their decision. Just look at Duceppe vs Layton in 2011. It was Jack mania and Gilles is a dinosaur. The key for any Party is that their Leader is not perceived as yesterday's man. That is the political reality facing the Liberal Party of Canada. It needs to choose the Leader of tomorrow, and not an appendage of the past. Then it needs to rally around that Leader and exercise sound Party discipline around it's founding principles. The ship of sensibility in the stormy waters of right or left fanaticism. The Canadian people will look to them again for prudence in the not too distant future.

Reading the tea leaves in Newfoundland and Labrador

It's the kind of morning where you don't know whether to laugh or cry. On the one hand, this province essentially rejected the Harper government and Ms Dunderdale's exercise of "influence". On the other hand, we have a majority federal government that was rejected by 60% of the electorate and essentially is without representation from the two most nationalistic provinces in the country. I am pleased at the election of Judy Foote, our local Liberal MP, but concerned that the federal Liberal Party lies on the rocks.

The biggest political story from our province had to be the failure of the Dunderdale PCs to influence the vote. In fact, going over the numbers from 2008 and today's, the federal Liberal vote was essentially untouched. The Conservatives did increase their vote, but not at a significant cost to the Liberals. Case in point, the Random-Burin-St. Georges riding. The Liberal vote remained virtually the same - in fact it increased by 400. The Conservative vote almost doubled, but not at the expense of any other Party. The NDP vote essentially remained the same. So the bottom line is a vote representing 18% of the overall vote came out to vote, whereas in 2008 it stayed home. Essentially, that analysis happened throughout most of the Province. St. John's Mount Pearl saw 20% of the Liberal vote bleed to the NDP candidate Ryan Cleary - an exception to the overall trend. In Labrador, the Liberal candidate lost 26% of his vote, but the Conservative candidate benifitted from 2100 votes that did not show up to vote in 2008.

Looking toward the future I see conflict. The Harper Conservatives are, after all, a marriage of the western Reform movement and the Harris Conservatives of Ontario. The Progressive element of the old Party is either gone or marginalized. We now have a dangerous combination of an idealog in the drivers seat, and an extremely polarized electorate. Then add to that the two most nationalistic provinces in Canada rejected that government. Then focus on the silent iceberg laying in wait - the renegotiation of our equalization formulas in 2012-2013. Despite all the talk of gun registries, etc., the real fights happen over dollars and cents. Quebec will be angling for taking more, the west will be angling for giving less, and so it goes. Again, the danger is the two most nationalistic provinces are essentially not in the government federally, so their provincial governments will come more to the fore. In our case that is the Dunderdale government. The thought "lambs to the slaughter" comes to mind. In Quebec's case it will mean the Parti Quebecois - a separatist Party that is more or less guaranteed to win the next provincial election there. It should have been a major point of anxiety for everyone to envision a right wing Harper majority negotiating with a left wing, separatist Party in Quebec. Apparently, that thought did not factor into the Ontario thinking process.

It's odd that Ontario did not play it's traditional role as a bridge for Quebec to the rest of the country. Instead it threw it's lot in with the old Reform Party crowd. Is that an act of self-preservation on their part? Is that Ontario's way of choosing sides so it won't rattle the goose that laid the golden egg - Fort MacMurray? With massive provincial debt crippling Quebec and Ontario, and costs going through the roof, did Ontario decide their collective interest lay with the boys from the West? Sounds like it to me. Again, a dangerous shift for the unity of the country. Don't get me wrong. The folks out West are Canadians like the rest of us. The problem is when the historical, internal, political culture and national rhythms fracture so goes the ties that bind. This is the real danger of last night's vote. I see us sleep walking toward that conflict - eyes wide shut.

One last thought. If an NDPer had to win last night, Ryan Cleary is a man who will stand and fight for Newfoundland and Labrador. I wonder though, speaking of the two most nationalistic provinces, how a man so passionate and sincere about this Province will fare in a caucus dominated by soft nationalistic MPs from Quebec? It may well be a litmus test to my theory of this oncoming national divide.