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)

Sunday, March 25, 2012

Up the NDP

So Thomas Mulcair is the new leader of the federal NDP. Like Dick Cheney, and on the same day, the NDP received a heart transplant. The fiery Irish/French politician, lovingly known in Quebec as the "Grizzly Bear", puts an air of combat into a Party best known as a forum for the feel good.

On a strategic note, Mulcair ushers in a historic new era to Canadian politics. Last year the NDP took second party status from the Liberals based on a near complete victory in the province of Quebec. An accurate analysis of that victory is Quebecers got tired of being on the outside looking in as was the case with the Bloc Quebecois. Being perhaps the greatest pragmatists in Canada they decided to instead capture an otherwise weak federal Party, and get themselves back into the power equation federally - on their terms.

Having captured the traditional home base of the Liberal Party, Quebec, and having placed a Quebecer in charge of the Party, Thomas Mulcair, the NDP are now within striking distance of becoming the new Liberal Party federally. To be successful they will have to make further inroads in Atlantic Canada, and Ontario. They are positioned to do that. Take the one small example of Jack Harris. Harris is a strong personal and professional confidant of former Newfoundland and Labrador premier Danny Williams. He backed Mulcair's leadership bid, and the ex-premier himself gave a videotaped tribute to the late Jack Layton. During his tribute he singled out the work of his old buddy Harris - who just happened to be backing Mulcair. And so it goes.

Bottom line is Mulcair's NDP will be a much different breed than Layton's NDP. This NDP will be aggressive, relentless, and determined. It will target the old Liberal territories to form a new power base that will challenge Harper's Ontario/West power base. Expect to see Newfoundlanders like Ryan Cleary and Jack Harris taking on a far more public profile in the government. Look to see the NDP focusing on issues of importance to Quebec and Ontario. Look to see Mulcair woo soft Liberal or small "L" Liberals over to the NDP by naming them as "progressives." Hard to argue that title: "I'm not a Progressive! I'm a Regressive!"

Quebec politicians in general have always understood exactly how the ebb and flow of Canadian politics work. They above all other Canadians have a sense of it all, and they know how to work it. Mulcair is no different. Look for him to make the Liberals in the House of Commons look like the retirement club. Will the Liberals react properly? Can they reach within the ranks to discover a politician that can lead them back to victory in their traditional base of support? Hard to say. One thing is certain though: The NDP has put a man in charge that can do that, and is aiming for all the Liberals traditional support base. As a partisan that is not NDP I find the obvious facts unfolding on the ground disturbing. As a political observer I have to say that this historical move appears underway. For better or for worse.

Friday, March 16, 2012

The Stunned

Simply put - the stunned. How else can you describe the political gong-show of the last two weeks in Newfoundland. We have the on-again off-again budget that has been postponed until the federal budget is announced for starters. This provincial government loves to crow how it is the example of fiscal management and the Captain of the good ship "Have Province". Yet, it is so dependent on the federal government's moves that it must wait until the federal budget comes out first?

Then, Kathy Dunderdale announces a sweeping 3% cut across the board, to reduce government spending, which would total well over $200 million in cuts. A day or two later she states well actually essential departments like health and education won't be cut. Fair enough,  but not across the board by any means. Then a day later she says there will not be any job losses except through attrition of retiring employees. Then she says well actually one third of the 2600 contract employees will be laid off - which would be just over 800 people. The next day she says it will be well less than 800 people laid off. Somewhere in the midst of all these "clarifications" she announces the actual dollar cuts will not be almost $300 million, but closer to $100 million. The casual observer is left scratching their head and wondering if the Premier: A) Is being fed disinformation by the finance department; B) Is making up major policy on the fly; or C) Forgot to take her medication for the last several weeks.

That brings us to the opening of the House of Assembly. The most shuttered legislature in the country, that last sat some 9 months ago, finally opened to great expectation last week. Just after the provincial election in October Dunderdale made the following statement defending her government's decision not to open the House until March:
"We need legislation to bring to the floor of the house of assembly. It's not going to be ready in time"
Yet, there is no legislation to speak of being brought forward by the government. So the House sat empty for five months after an election so the government could prepare major legislation for presentation, but the government didn't draft any. They did not even have a budget ready. Nothing.

The circus continued once the House opened with what can only be described as an embarrassing lack of talent on the government side. Jerome Kennedy, leadership wannabe and Danny Williams yes man, proceeded to make a complete horses arse out of himself. He viciously attacked Liberal member Jim Bennet for leaving a threatening telephone message on a ministers answering machine. He read the transcript of the message in the House for the record. He attempted to have the Speaker censor Bennett for threatening a minister. The gist of the phone message: take care of a cancer patient who needed transport to chemo or he would "vilify" the minister on open line radio. My God! Bennett apologized, but that was not enough for the morally outraged Kennedy. Course then Russell Wangersky wrote a blistering column on the sheer hypocrisy of Kennedy's moves and all seemed to fade away .

The other clown this week was Darin King, Minister of Fisheries, and along with Kennedy, pretender to Dunderdale's throne. His petty antics in the House can only be measured against his childish antics on Twitter. Whether it be the pseudo intellectual bravado of quoting Shakespeare by Kennedy, the questionably rabid attacks on Dale Kirby by another intellectual great MHA Paul Lane, or the pontificating Darin King, Twitter has become a permanent record of foot in mouth disease for this government. The latest beauty came today with King issuing an actual press release   chastising the Opposition for, among other things, not asking him enough questions on the fishery. My personal favourite is this little gem of wisdom included in the press release:

"I ask you all to be hon. members in this House and if you are going to come forward, you present information that is factual and that is accurate and present information that shows where you stand on issues, not trivial press releases calling the minister to resign because he made a joking comment to ministers in this House. If you want to be taken seriously, you do not put those kinds of press releases out. You tell people how you would do things differently and you challenge me to ask me how I can improve things, and I will certainly do that.”

Apparently, King didn't recognize that his own press release had not one shred of any "doing things differentley". It was in fact a use of government resources for partisan political purposes - which given enough research one may find is in breach of government policy.

Unfortunately like Muskrat Falls, the fishery, or any other matter of significance to the future of the people of Newfoundland and Labrador, this government's strategy is to " baffle with bullshit". Put disinformation out there. Put out enough foolishness. Rob the debate, or the actual institution, of any real credibility so the people have nowhere to seek leadership. Eventually they will give up in disdain, and get on with their lives leaving all those big, bad decisions to the people that know best - the PC Party of Newfoundland. It's a strategy of deception that is so low as to barely qualify the goings on as democratic in any way. After all, democracy is not simply limited to the actual practice of getting elected. It's also about how you handle the people's business in the following years of your mandate. Don't believe that? Ask Brian Mulroney or better yet Kim Campbell.

The PC Party of Newfoundland has dragged the process down into the gutter. Perhaps it is a place they feel most accustomed. Perhaps it is a place they feel at home. The rest of us were looking forward to reasoned, and seasoned debate on truly crucial issues facing the province. The kind of issues and decisions that reverberate for generations. What did we get? The stunned.

Sunday, March 4, 2012

Build It and They Will Come

2003 marked the official entry of Danny Williams as the Premier of Newfoundland and Labrador. I say official, because prior to 2003 Williams was behind the scenes engineering a revolution of sorts in the province. Through his personal and professional relationships with the likes of Brian Tobin (Liberal Premier) and Dean MacDonald (former business associate and then head of Newfoundland and Labrador Hydro) he began orchestrating the downfall of the Liberal Party and the rise of his Progressive Conservative Party.

His revolution was firmly based in Newfoundland nationalism, but its primary goal was economic development. A not-so-silent revolution of sorts. Tobin, MacDonald and Williams had a common goal in mind - develop Labrador as the mining mecca of Canada. To do this they had to create the conditions to attract foreign investment capital into the province. The common limitation to their goal was a lack of infrastructure. Labrador had the raw resource base, but lacked: rail capacity; ice-free sea port capacity; and plentiful cheap electrical power.

Tobin tried to satisfy the power need by entering into an agreement with Quebec's Lucien Bouchard to develop the Lower Churchill. The deal fizzled out. Tobin left office, and Grimes took over. Grimes reached a deal with Quebec to develop the Lower Churchill. Dean MacDonald, the head of Newfoundland Hydro resigned over it, and that deal fizzled. Williams took over, courted Quebec for a deal and then advocated the new, much reduced Muskrat Falls development. Not to be outdone, Quebec announced its own Plan Nord to develop its half of the Labrador trough and other areas of northern Quebec. Its stated goal: to develop the north for mines of all kinds. The cost: $85 billion at a minimum.

Tobin took over Thompson Consolidated and created a railroad as well, which he promised other mines in the area could use to ship their raw ore to port. That port is located in Quebec, and just a few weeks ago the federal government committed $55 million dollars to expand the port to handle iron ore exports to the markets of Europe and China. The last part of the puzzle is the power - Muskrat Falls.

Meanwhile, Williams has been busy as well. Since his premature resignation as Premier he announced a mega $5 billion development on the Avalon which basically aims to increase the size of the capital by the size of Gander. It all sounds exciting and positive - except for reality.

The problem is history, or perhaps the denial of history. Newfoundland's history over the last 40 years has been massive outmigration to Western Canada, massive growth of the gross public debt, a strong abhorance to "outsiders", and recently a massive infusion of oil revenues into capital projects rather than the retirement of debt. Williams plans stubbornly ignore all the lessons the rest of the world is currently being taught - that runaway public spending equals disaster. It ignores the effects of hyper inflation on housing markets, the resulting high consumer debt leveraged against those artificially inflated home equities, and the collapse when those artifically high priced homes meets the reality of people's ability to carry the debt. It ignores the lack of a properly trained work force to execute the grand design.

Williams and company ignore the lack of capacity, human and otherwise, to realistically carry off the plan. Their blind march toward profit ignores the peril at which they place the province's population and its debt load. It could be compared to putting 1000 volts through a breaker capable of handling 100. What happens? The breaker trips and there is no power. We've already just witnessed some of these trips: the loss of the $100 million Hebron module; and the shut down of the yards in Marystown. To put it simply, the eyes are bigger than the stomach. The skilled workforce does not exist. While Newfoundlanders are famous for being jacks of all trades, the problem is they are masters of few. Many of those with specific trades have left the province. They have bought homes out west. They have families there. Their children in many cases are born out west, and know nothing of Newfoundland other than Nan and Pop live there. They are not planning to return, no matter the spin, with the possible exception of some people coming back to retire. That is retire, and not to work.

A big reason for the workforce remaining in the west is frankly money. They  make more money out west, and their taxes are far lower - so they keep much more of that money. They aren't surrounded by the politics of Newfoundland that they understand all too well, and they do not want that life for their children.

Of course Newfoundland could look for new immigrants to the province, but there is a problem with that as well. Frankly, Newfoundlanders don't trust outsiders. People not born in the province are referred to as mainlanders, or come from aways (CFAs). The message: your not one of us. Not exactly the environment that will attract people to the province, and likely a primary reason why Newfoundland has historically been unable to hold onto those newcomers. A recent news article referred to the inability of the Clarenville area to keep new doctors beyond a year or two. The people responsible for recruiting doctors to the area stated that more Newfoundland trained doctors were needed as immigrants won't stay past two years. A better approach would be to change the attitudes of Newfoundlanders toward those new immigrants it will need just to survive - let alone grow.

Adding to the problem - the provincal government's 20% plus expansion of the civil service in the past 5 years. In a serious case of robbing Peter to pay Paul, the provincial government has flooded the ranks of the civil service denying manpower to the private sector. It has also increased its fixed expenditures to the point that cutting government spending will have to involve cutting jobs, which in turn will lead to labour unrest in the union dominated province.

Complicating all financial aspects of Newfoundland's ambition is the debt. Current annual interest payments on the debt are $890 million on average. By comparison, Saskatchewan, which shared top place for economic growth with Newfoundland in 2011 at  3.9%, had interest payments of just $405 million. Furthermore, its population is over twice that of Newfoundland. Bottom line is that while both provinces have seen record natural resource revenues in the last 5 years, one has paid its debt down significantly while the other has essentially spent the money as it has come in. Newfoundland's gross debt has actually increased over the last 5 years. The provincial government simply uses the value of new schools, hospitals, etc  and subtracts their value from the gross debt to come up with the "net debt". It reports that "net debt" has decreased, but in reality overall debt has continued to grow.

As if that were not enough, the offset payments to compensate Newfoundland for revenue losses on equalization, due to the new found oil wealth, end this year. That is going to cost the Treasury about $500 million a year as Newfoundland starts to finally pay the bill of a "have province". Then there is the renegotiation of the equalization agreements starting in 2013. The federal government has already indicated it will be cutting health transfer increases by 50% in the coming years. For a province that receives 23% of its revenues from the federal government these cuts directly affect the bottom line.

To say that Newfoundland and Labrador is chasing its own tail right now may be an understatement. Essentially Danny Williams and company have lit their own province on fire. A cocktail of massive public and private debt, hyperinflation in costs, below average wages, higher than average taxation, aging/declining population, lack of the necessary skilled work force, intolerance of newcomers, and a stubborn refusal to skillfully deal with any of it. The perfect storm of what you don't want happening to your economy.The same people who just years ago touted Ireland and Iceland, as examples of successful island nations taking the world by storm, now never mention them. Why not? Both places are now economic basket cases failed by their inability to see through their own hype. Failed by the fragility of the foundations their economies were based on. Here in Newfoundland, our political and business leadership have placed us on this same path. They tell us: "If we build it they will come." Will we be like the rest, and ignore our obvious limitations, with the same result?