Here's to the crazy ones, the misfits, the rebels, the troublemakers, the
round pegs in the square holes... the ones who see things differently -- they're
not fond of rules... You can quote them, disagree with them, glorify or vilify
them, but the only thing you can't do is ignore them because they change
things... they push the human race forward, and while some may see them as the
crazy ones, we see genius, because the ones who are crazy enough to think that
they can change the world, are the ones who do.

Steve Jobs
US computer engineer & industrialist (1955 - 2011)

Monday, October 17, 2011

Newfoundland and Labrador's Three Solitudes

It was the best of times. It was the worst of times. Newfoundland and Labrador's financial windfall from oil since 2004 filled the coffers with over 7 billion dollars. Corporate and personal income tax takes over the same period swelled the treasury. Hyperinflation in the housing market, centered exclusively in urban areas, drove massive new home construction. A belief that Newfoundland and Labrador, as Danny Williams coined it, was Canada's "newest and coolest province". An almost nationalistic pride swelled the chest, and a belief that this province could well do without the encumbrances of Confederation filled the lines of its many radio talk shows.

Yet, as all these good times unfolded, the worst of times were also hammering away at the province. Rural Newfoundland continued its slide as out-migration drove people to urban centres, leaving behind as it did abandoned homes and separated families. The population continued to gray as the massive hole in the province's demographic charts, left by the out-migration of young people to the West in the 1980's and 1990's, came home to roost - as such occurrences always do. The nearly 200,000 souls that left chose the West as their new home. It's where they chose to have and raise families. It's where their children refer to as home. They are not here to support the retirement of their parents or grand parents.

Those left behind in rural Newfoundland are a mix of the very elderly, and the remnants of a once proud fishing industry. The fishery people subsist on a tiny income from the very short fishing season, a ridiculously low quota of fish, and most importantly the now permanent unemployment benefits they receive for the remainder of the year. The elderly subsist on the bare CPP pensions they receive. The lucky are the elderly that worked for mainland companies and have a bit better pension. The economic activity, such as it is, is primarily fueled by housing in the "hub" communities. The housing is fed not by any real economic growth, but rather a need for the aging population to be closer to medical facilities and doctors - and provincial spending on "hub" recreation and health facilities. So ridiculous, and unsustainable, has this "boom" become that housing in a small hub like Clarenville is now on the same cost footing as Calgary.

Any person who has lived off the Island knows the end result of this type of "economic boom". Eventual market saturation. Subsequent halts in construction. Immediate declines in property values. Major unemployment and personal financial chaos. The always too familiar out-migration to the West.

Rural Newfoundland is the saddest of the three solitudes. Its fate sealed in demographic numbers that impact its ability to reproduce and consume. Its roads left to fall to pieces - almost exaggerating the point the government believes further investment is futile. Its fishery soon to be dealt the cold, ruthless hand not seen since the days of resettlement. Rural Newfoundland is the tragic solitude.

Labrador is the alienated solitude. For generations it has given its wealth to other parts of the world - in many cases literally given it. Its mines and dams have fueled whatever real economic activity has happened in the province. The decisions that have affected her have almost always been dictated by St. John's and its boys club. A palpable resentment has resulted and been in evidence for many years now. Separatist movements have come and gone. Politicians dedicated to redressing these wrongs have come and gone. Yet still she sits with unpaved highways, and unfinished hospitals.

The government is now putting some money into Labrador as it realizes the provinces future economic wealth lays in Labrador's lands. The question is: Is it too little too late? Will Labradorians be emboldened by their new economic successes? Will they tire of St.John's old refrain that we are one province, yet the benefits of their toil seem to go in one direction? Will they grow closer to Quebec, and its new "Plan for the North"? Will they want to go it alone and be masters of their own house? Hard to say, but one thing is certain - Labrador as the second solitude will be wanting its resources to enrich Labradorians. That is a future certainty. Labrador is the alienated solitude.

Of course that leaves St. John's - the last solitude. The great bastion of power, wealth and influence in the province. The cultural centre. The economic centre. The political capital. It has been in the past, and continues to be, all of these things. The decisions of its backrooms, and prominent families have always directly affected the other two solitudes. It encompasses the classical Newfoundland relationship of "merchants and fishers". It takes and it gives as it sees fit. It directs the exploitation of the province's resources and it directs the many cycles of resettlement - past and current.

Its concern is for power. It often makes critical decisions with short-term gain at the expense of long-term gain. Whether it be the premature exportation of salt fish to the Americas, which destroyed Newfoundland's reputation as a quality fish exporter. Whether it be the Upper Churchill deal rushed into so Brinco could avoid bankruptcy. Whether it be the current Muskrat Falls agreement that despite all common sense is being rushed through the corridors of power. Whether it be the frittering of one time oil revenues at a time of massive debt. No heritage fund. No major debt retirement or even a plan to eliminate it. The only significant debt elimination that has occurred in the province was the $2 billion Danny Williams received from the federal government in offset payments. The kicker here is that the government had to apply the $2 billion to debt as part of the agreement, so they put it toward unfunded pension liabilities.

Yet despite its current oil wealth, St. John's continues to pry every cent out of the federal government that it can. Perhaps old habits die hard. Perhaps the precedent was set when Ottawa paid out Newfoundland's debt as part of the agreement to join Confederation. Whatever the reason, St. John's has historically attempted to spend at will and have others cover its expenses. St. John's has always taken care of itself before it looked at the needs of the other two solitudes. That trend continues to this day. Look past the rhetoric of "all for one and one for all". Look where the dollars are spent. Look where the government facilities are. The health facilities. The legal facilities.

St. John's has always been the centre of power - unapologetically so. It sees itself as the centre of Newfoundland and Labrador's universe. It has ensured, by fiscal policy, that as the population retreats in the rest of the province that it will be the centre of the population remaining. It has thereby ensured that the majority of political seats in the House of Assembly will be in its geographical area. Just as it builds hockey rinks in its new suburbs while 258 boil water orders become permanent in nature in the rest of the province, it takes care of its own first. The old "overpass" slogan arises. Before there was an overpass it was "Townie vs Bayman". Another is "Merchant vs Fisher". For all these reasons, historical and current, St. John's is the selfish solitude.

There you have it: the tragic solitude; the alienated solitude; and the selfish solitude. This is Newfoundland and Labrador today, and yesterday. This is not Canada's "Newest and Coolest" province. This is the latest chapter in a story that remains the same.

Saturday, October 15, 2011

Into the Valley we Travel

My apologies for the lack of blogging over the last little while, but as some of you may know I was quite involved in the general election here in Newfoundland and Labrador as a Liberal candidate. From the beginning I want to say that that in a democracy we vote for the government of our choice, and I respect that. On October 11, 2011 the people of this province returned the PC Party to power with a strong majority, and my district of Trinity North saw the PC incumbent returned to power with similar numbers to his 2007 victory. In my own case, I finished a distant third - which continues a trend for the Liberals in this district since 2003. The NDP candidate finished a strong second, but the PCs won the district with a plurality in the high 50% range. That was the story here.

The rest of the province witnessed a frenzied battle in the St. John's area between the NDP and the PCs. The NDP also witnessed some limited success in the urban centers of the rural areas. The Liberals were able to capture some old Liberal districts in rural Newfoundland and Labrador. In a twist of irony and fate, the Liberals retained official Opposition status largely due to the dogged speedboat campaign of Randy Edmunds in Labrador - a seat won by determination and not spin.

The question now presents itself: "Where to from here?" The answer is really nothing has changed for the better. The day after the election the Bank of Montreal forcast a decline in GDP in our province this year to a low of 1.3% growth in 2012: . That immediately raises questions on the sustainability of government spending, and expansion of the provincial civil service and operations - among other things. Those numbers, combined with our existing debt situation, tend to indicate the PCs will be forced to reign in their rather NDP style of government intervention in the economy.

Of course the Muskrat Falls project has been touted as a potential driver for the economy by this government, and even Jim Prentice of CIBC. However, this is where financial reality collides with flights of fantasy. A story released today  outlines some of the economic challenges facing Muskrat Falls. We often hear openline hosts commenting that Newfoundland and Labrador could be the richest province in the country if it developed its resources. We often hear these same people refer to Nalcor as a world class utility company. However, like much of the bravado heard here from politicians and openline pundits, reality is something completely different. Nalcor is not a world class utility. It is barely a regional class crown corporation. Its sales, revenues and debt load relegate it to the "wanna be" category. Despite the talk of Newfoundland and Labrador's wealth it should be a wake up call for people to realize that this province only contributes 1.5% toward Canada's overall GDP. Ontario and Quebec both contribute well over 20% each. Its GDP would have to grow by over 2000% to approach richest province status.

Despite the spin of "New Energy", the reality is Newfoundland and Labrador is running out of energy - in terms of youth that is. While Kathy Dunderdale showcases herself as an example of the new energy, the reality is she is reaching senior citizen status. In other words, she may have got herself into better shape, but she is only six years away from her first CPP cheque. Most of her Party is in the same position. For that matter, so is much of the province. For those of us who have studied demographics and Newfoundland and Labrador's aging population, it is no surprise that the first two quarters reported for this year show declines in population here. The reality is this province will witness a massive loss of people through death in the next 19 years. We will also see birth rates continue to decline from their low today of 1.3. The result is a shrinking population that will decline below 500,000 by 2015, and reach approximately 400,000 by 2030 - 19 years away.

The economy, Muskrat Falls and our population all have one thing in common - denial. Like the frantic, loud beats of traditional Irish/Newfoundland folk music, the provincial government here desperately tries to mask the structural realities of our island with such nonsense as "New Energy". Rather than confront the realities, it chooses to mask them in quasi-nationalistic jingles. To state these realities is to be considered negative and to invite mass ridicule. We've heard it before: "You don't count"; "traitor"; "political prostitute"; and so on. All of it said to preserve the crumbs of what is left for those that desire to be enriched from them. All of it to detract, and deflect from the sobering realities that face our society - like the music itself.

In a recent discussion with one Editor, the term "fight" was brought up. I asked:"Where is the fighting Newfoundlander?" The Editors reply:"It has been gone for ten years." While it is easy to see the motives of those in power that wish to consume those last crumbs for themselves and their friends, it is less easy to understand the willingness of the people to follow them down that path. The path that leads us into the valley.