The Freedom to Speak

Supreme Court of Canada, 2009:

The Supreme Court has named the new defence "public interest responsible communication" to reflect that the defence is available not just to the press, but "to anyone who publishes material of public interest in any medium."

The Supreme Court agreed with the submissions made by Blakes on behalf of the Toronto Star that "the current law with respect to statements that are reliable and important to public debate does not give adequate weight to the constitutional value of free expression." The court agreed that the traditional law of defamation too greatly favoured protection of reputation, stating that "defamation lawsuits, real or threatened, should not be a weapon by which the wealthy and privileged stifle the information and debate essential to a free society."

The Feds outplay NL PCs again

Chess on the federal level is not a game that our PC provincial government is effective at - to put it gently. Rather than realizing it's playing against an opponent, the Newfoundland and Labrador government acts as if the game only flows one way.

Take the request Ms. Dunderdale finally made to have a meeting with the Prime Minister. The Premier made accusations the federal government had failed its "humanitarian duty" to send a helicopter to participate in the Winters rescue mission in Labrador. There is an assertion by the provincial government that there was a two hour window that a federal chopper could have made a difference. Of course that assertion ignores the time for a chopper to travel from say Gander to Labrador and back. Forget the complete lack of common sense of that assertion for a moment.

Instead, think of the intelligence of singling out Peter MacKay for her wrath. Not only is he a primary factor in the dolling out of all that federal cash she is constantly on about, he is also one of two "founding fathers" of the new Conservative Party of Canada. The ruling party. The majority party. Does she not understand that it was Leader Peter MacKay of the Progressive Conservative Party of Canada that struck the deal with the Alliance's Harper to form the Conservatives? Does she understand the terms of that deal? Does she wonder why he has escaped so many bad hits on him as a Minister? For Harper to fire Peter MacKay would be like Harper setting fire to his own house, and unlike Ms Dunderdale, he's not likely to do that. So why attack him to get your issues on the table? In the first year of a federal majority government?

Then, as if to compound the injury, Dunderdale says:

"I have no authority to institute an inquiry into the federal government's activities to have access to the kind of information that we would need," Dunderdale told the house of assembly in March. "I can call on the federal government for such an inquiry [and] that may very well happen."

Except, and here we go again, the feds know how to play chess. So, the one MP that Dunderdale could have criticized fairly safely, Peter Penashue, comes out today and says no problem. Specifically, he stated:


"We would not be in a position not to co-operate...This is a legally initiated process and everyone would have to co-operate...Everyone knows that if you call an inquiry, everyone has a legal responsibility to participate."

In other words, checkmate. The feds are more than willing to participate in the inquiry. They recognize the province's right to hold such an inquiry, and they've placed the ball right back in Dunderdale's court while she waits for a call back from the PMO on her requested appointment. Bottom line is the feds know that land search and rescue is a sole provincial jurisdiction, and that if they were to dispatch the air assets to participate then they would be unable to fulfill their sole jurisdiction - sea search and rescue - should a call come in during the same time. They know that no inquiry will be able to find any differently, and that the province will be found in its usual position: trying to cheap out on spending on its core functions and blaming Ottawa for the shortfall.

To compound the troubles, MHA Paul Lane spilled the beans prematurely that the Premier had requested an appointment. Now the humiliation watch is on. How long will it take for the PMO to get back to her with an appointment time and day? How long will the appointment be? Now she is at the complete mercy of the PM, which is not the way it should ever be.

It reminds me a lot of the Old Harry issue. The day before the federal election the feds grant Quebec an offshore accord that directly attacks Newfoundland and Labrador's oil and gas interests in the Gulf. Does the provincial government make it an issue in the federal election? No. Does the Premier, or even better the House of Assembly as a whole, file a formal protest to Ottawa? No. The response was:
“We haven’t seen a lot of the details that might be included today, but we’re told that that dispute resolution process is included.”

So the first rule of federal combat is you give no ground until you see all the details. The details of this deal essentially placed the Old Harry basin into a kind of suspended animation. A no-man's land. Why does that matter? Well first of all, it took 18 years to come to a resolution with Nova Scotia, who we get along with, on the dispute between the two provinces on the maritime boundary between them. Secondly, it essentially killed all exploration in the area. Corridor Resources, which had been actively seeking financial partners so it could explore its licence on the Newfoundland side of the line, had to essentially give up in 2012. Corridor never stated it publicly that I'm aware of, but it's hard to get serious investors to inject cash where there is instability in jurisdiction. That instability did not exist as much as when the feds gave Quebec exactly what it wanted. So now Quebec has all the time it needs to set up its offshore oil and gas industry while Newfoundland and Labrador loses revenues for up to twenty years - potentially.

It is mistakes of maneuver, of exercising power properly within Confederation that constantly plague the provincial governments here. It's not that Confederation does not work for Newfoundland and Labrador, it's the inability of the provincial government to play properly within Confederation that's the problem. Danny Williams made the same mistakes. The only reason he won a short term reprieve on off shore oil revenue was the minority position the federal government was in at the time. Other than that he would have been just another casualty of poor play. Disagree? Look no further than his botched attempt to covertly install his communication director on the CNLOPB as Vice-Chair. You could even examine that poor preparation before Igor, and the subsequent hat-in-hand aftermath for military assistance and funding - again after the fact.

Kathy Dunderdale is not capable of playing with the big boys in the federal government - let alone getting a result that favours the province's people. It's not just her though. It was the man in the chair before her as well, and so on. The finger also points to the senior "advisers" that normally surround a Minister/Premier. It would appear that Newfoundland and Labrador politicians are concerned about one thing and one thing only - hold onto power for as long as possible, to dish the cash to as many friends as possible, and if it happens to benefit the common man... well... we can spin that as well. The focus is purely on the hold of power and not on the greater good. It's not unique to the current crowd for sure. The difference being we should know better by now. Newfoundland may be an island in the physical sense, but the vision needs to look past that. The over the top corruption and self interest that blinds the provincial government in Newfoundland and Labrador belongs in the past, and a focus on playing the game in Confederation, for the benefit of all its citizens, needs to become the focus of the future.

Dunderdale's Dithering

“The amount of influence we have is certainly now on the table for examination. There is no question about it.” Kathy Dunderdale, 17 May, 2012.

Those bewildering remarks came from Premier Dunderdale in response to the federal government's decision not to expand the role of the Goose Bay military installation that had been promised. She indignantly screeched at the cameras her utter dismay, her complete confusion, and her total contempt for the Minister of Defence Peter MacKay. She even put in a not so subtle threat to the Prime Minister:
"For me, at the moment, it’s a Minister MacKay problem.”

Dunderdale proclaimed, in an indignant rampage, that Newfoundland and Labrador had been let down once again by the dastardly federal government. She questioned what it would take to get the federal government to do her will:
"What is it that we have to do down here to get your attention?" she said. "We try to cooperate, it doesn't work. We vote for you, it doesn't work. We don't vote for you, it doesn't work. What is it?"

And in those remarks lies the mentality for all to see. The simple, fatal flaw that has befuddled Newfoundland and Labrador politicians since 1949. The truth of the matter is that the corrupt, disloyal, divisive feudal politics used by Newfoundland and Labrador's politicians doesn't wash in the greater Canadian political culture. Not because it is unique or cultural, but because it is the type of politics that most people in Canada want to see banished to the annals of history.

The Premier's attempt to manipulate a campaign promise some 6 years old to play the victim card illustrates the point well. Feeling political pressure on the Island she abandons her own, very public, alliance with the Prime Minister and in the process fans republican/separatist feelings in the province with the tried and true strategy of: "they screwed us again". Not over some life or death issue like say the Marine Search and Rescue Centre (I was at the protest in St. John's, but didn't see her..). That happened too close to her deal with Harper, and she didn't want to jeopardise the Muskrat Falls loan guarantee. Not over the feds agreement with Quebec which recognized their jurisdiction over Old Harry - one day before the last federal election. No, she picks a six year old campaign promise, and attacks Peter MacKay instead of the man who made the promise - Mr. Harper.

Instead of taking responsibility for a political arrangement that she freely entered into, Dunderdale blamed the federal government for failing on their end of the deal. In that way Dunderdale managed to live up to the most ancient political trend in politics - lack of accountability. She then fired a verbal assault on Peter MacKay that didn't even make the national news - and when has it happened that a premier attacking a federal minister hasn't made the headlines? And what does she have to leverage over the federal government's head if they don't listen? Absolutely nothing. She has no cards to throw on the table. She doesn't even know how to create cards to throw on the table. Her whole strategy is: "I'll huff, and I'll puff, and I'll blow your house down."

Course the feds are likely sitting back and having a good laugh. After all, a Premier with no cards that sets her own house on fire is hardly a going concern for the federal government. The feds are cutting across the board. They are applying their own brand and view of fiscal federalism - which they are entitled to do as a majority government (not an endorsement by the way). They are going to get grief from every provincial government. The key difference is most provincial governments aren't going to try and manipulate that in order to excite the provincial separatism that may exist in their jurisdiction. They aren't going to try and alienate their own people from their country. They aren't going to equate loyalty and citizenship to the dollar. They aren't going to commit the disloyal, some would say treasonous, act of taking flags down from government buildings.

They realize that they are stronger as one, despite the ideological differences. They understand budgetary decisions as they make them as well. To commit the despicable act of lowering flags, and alienating people from their own country only serves to isolate the province. It does not create allies in the rest of the country - unless you count Quebec separatists. It makes you look small, petulant, and childish. It makes you look untrustworthy. Without trust you can count on repeating this little diddy over and over again:
“The amount of influence we have is certainly now on the table for examination."

Newfoundland and Labrador - To be or Not to be?

The capacity to borrow, or pay debt, is the number one issue driving the world financial markets. It has been for some time. What plays into that? The first is demographics. In a world economy based on consumption of goods the larger your base of consumers the better. However, the age groupings of those consumers, their family sizes, etc also come into play. Secondly, the ability of those consumers to consume is crucial. Large, older populations that have reached their ability to pay for goods they have consumed, or are consuming, renders them somewhat irrelevant to the financial markets of the world that need to expand to remain relevant.

These are the primary reasons why the previously very third world countries of Brazil, India, China, etc are now the new engines of world consumption. They have large, young populations that have relatively low debt levels and similar expectations. International corporations, financial and otherwise, understand that the future is there. The Western World, the "old frontier", has essentially reached its limit of borrowing capacity compared to that which it produces - so its on the decline. You can see it everywhere in Europe, and we saw it dramatically in the US in 2008 til present. We even see it in Canada as a kind of microcosms of the world. Alberta and Saskatchewan, fired by resources consumed in the developing world, have experienced wage inflation which has in turn created housing inflation. That inflation has led to property equity increases, on paper, that have not been earned or paid for. Meanwhile, Ontario, Quebec, and for the most part Atlantic Canada decline.

Thomas Mulcair, federal NDP leader, recently referenced the situation as the "Dutch Disease". Essentially, the rationalization of the national economy toward resource based inflation that in turn causes a massive loss in traditional industries. The "petro dollar", created by high fuel prices, leaves most of your other industries unable to export internationally. It's very political in Canada's case as it pits region against region. So while Mr. Mulcair was 100% right in his analysis, the Premiers of British Columbia and Saskatchewan attacked him for saying it.

Newfoundland and Labrador reflects both of these realities. While on the one hand it has realized offshore oil wealth that has fueled one third of all government spending in the last five years, on the other hand it has all the negatives that are affecting the rest of the western world. It has the worst demographic/age outlook of any political jurisdiction in the western world - and that's saying something. It has fifty percent of its population dispersed over its rural area. Despite its new found oil wealth the majority of its population works for between $10 to $15 dollars per hour in non-unionized sectors. Its government and resource based, unionized labour sectors, inflate the average wage levels - deceptively so. Its property values have increased in the Avalon area, and Labrador, allowing homeowners to leverage new debt on "sudden equity", while its rural areas suffer stagnation or decline in real estate values - thereby restricting the amount those people can borrow.

Then there is the case of the Newfoundland and Labrador government. It has seen its general revenues, driven by oil/mining and high taxes, swell. In 2001-2002 the government held, at the end of the fiscal year, $ 510.2 million in cash and temporary investments. These funds were invested at between 1.00% and 4.85%. Its gross debt was $10.65 billion, minus $1.73 billion in assets, for a net debt of $8.92 billion. Its unfunded pension liabilities, for public service pensions, was $3.391.6 million. Its revenues for the year were $3.9 billion and its expenses were $4.5 billion. The population for 2001 was 512,930 with an average age of 38 years of age.

Fast forward to 2011-2012, and the oil boom province. At the end of the fiscal year the government held $2.21billion in cash and temporary investments. Theses funds were invested at between .20% and 7%. Its gross debt was $13.1 billion, minus $5 billion in assets, for a net debt of $8.1 billion. Its unfunded pension liabilities, for public service pensions, was $2.67 billion. Its revenues for the year were $8.13 billion  and its expenses were $7.53 billion. The population for 2011 was 511,036.

It's easy to see that in the last decade government revenues and expenditure have risen substantially. This despite the decline in population, and the fast aging population in the western world. It is also noticeable that the cash on hand at the end of the fiscal years has dramatically increased. Its also interesting to note that despite the one time $2 billion payment given to former Premier Williams on account of the Offshore Accord, which had to be directed to debt (unfunded pension plans) by agreement of the parties, that the unfunded public pension liability has actually substantially increased since 2005 - when the payment was received. It's also shocking to note that, despite all the oil revenues, the province's gross debt has actually grown by almost 30%.

The bottom line is that the government of Newfoundland and Labrador has just been undisciplined - period. It has ignored the very real international, and even national, financial lessons provided in the last many years. It follows the financial thinking of making the books look good to the banker, while hiding the many inherent weaknesses its lack of financial discipline has had on the province's true financial picture. The Conference Board of Canada recently stated that Newfoundland and Labrador's offshore oil revenues would decline rapidly after 2020 - eight years from now. Despite this, offshore oil revenues are not being used to retire debt. In fact that debt has grown - and will continue to do so. It has taken the rather childish position of "having money in the bank" as opposed to funding its unfunded pension plans. It has tried to leverage its money to super inflate certain sectors of the economy like hydor, mining and oil, while watching the majority of the economy suffer "all of the costs of inflation but none of the benefits."

A final, but telling example. The province had, at the end of 2011, an equity investment of $1.28 billion in Nalcor - its energy crown corporation. It claimed assets worth $2.6 billion. It made, on operations, a total of $77.5 million net. Contrast that with the Newfoundland and Labrador Liquor Corporation.  The province had a total equity position of  $62.3 million. It claimed total assets of $91.6 million. It made, on operations, $132.013 million - of which it turned over $132 million to the province's general revenue fund. Nalcor did not return one cent to the fund. Given that the province intends to proceed with the Muskrat Falls Hydro development, and the estimated price tag for that is between $5 billion - $8 billion (financing costs not included), and given the rate of return on investment to the people of the province of Nalcor's operations, and given the overall financial and demographic picture of the province as laid out above, one is left questioning the credibility of the government's position. Sinking clear profit (oil) into a business that can not produce a substantial return (Nalcor) is the worst thing that could happen to the people of Newfoundland and Labrador.

After all, would it not make more sense to arrange a power purchase agreement with Hydro Quebec to supply power to mining developments in Labrador? The infrastructure would then be in place for the 2041 hand over of the Upper Churchill to the province at a much reduced cost. The mines would get their power and the province would get their royalties. Let's not forget the average life span of an iron ore mine is 25 years. In the mean time, precious oil revenues could be used to pay off the provinces debt, which includes a number of large borrowings at 10% interest carrying forward for the next thirty years. Eliminating debt would also allow the province to reduce or even eliminate provincial sales taxes and gasoline taxes. That would encourage both public and corporate participation in the economy for the long term, and not just on a mega project by mega project basis. It would also place Newfoundland and Labrador in an enviable position nationally and internationally of being one of the few places left in the western world that has the capacity to consume debt - should it choose to.

Sadly, this is a tipping point in our history. A once in a historic lifetime opportunity to fundamentally alter the province's future, and most importantly the lives of the people that live here. A moment in time when real discipline could transform the province from a state of survival to the place to be. As I see it, we are half way through that moment in time and the important (beyond window dressing) fundamentals of Newfoundland and Labrador's economic future have been badly misplayed. The incessant, childish one-up-man ship approach of the province's political characters is only upstaged by the delusional dreams of those that are duty bound not to lead their people into this kind of future. Accountability is screaming its absence - at all levels.

Muskrat,Mines, and Railways - Liberally Speaking

Liberal Yvonne Jones has portrayed herself as a fierce critic of the Muskrat Falls deal in the past. As Liberal leader she attacked the ruling PCs for the costs to the public purse of such a venture, and the enormous impact it would have on electricity rates for the population. Her political life centered around an almost "consumer advocate" role in the House of Assembly, and on the airwaves of the province. Wow, do some things change.

Since stepping down from the leadership, two months before the 2011 general election, Ms. Jones' critique of the Muskrat Falls deal has become rather muted. To be fair to her, the Liberal Party in general has, for the most part, begun treating Muskrat Falls as just another issue amongst many, as opposed to the issue with some others in the background. It's an interesting turn of events.

Of course with Ms. Jones sudden decision to step down from leadership came amid many rumors. Some bloggers floated rumors of a backroom deal involving Dean MacDonald http://tinyurl.com/88zhlp5, and even the provincial CBC reported on it http://tinyurl.com/89tvsfe . Essentially, the story was Ms. Jones was offered money and a future major position if she resigned from the leadership. Ms. Jones denied it, and for a few weeks the story went away. Then, she resigned due to ill health brought on by a long struggle with breast cancer. Having met with Ms Jones at this time while involved with the Liberal leadership, I can assure you she was quite fatigued from her illness.

In the subsequent, and hurried leadership process, Kevin Alyward was chosen as leader. Brian Tobin, the former premier and iron ore executive, held two major fundraisers in Toronto and Calgary to modestly fund the Party's campaign in the subsequent election. Mr. Alyward did not win his seat, as most of us didn't, and resigned shortly thereafter as leader. Dwight Ball was then appointed by the Party's Board as interim leader.

A few weeks ago the provincial Liberals kicked off a Party "renewal" process. Who is the primary focus of this process? Dean MacDonald. A man with corporate and personal ties to companies hoping to profit from Labrador mining. A man heavily linked to both Danny Williams, who now sits on the board of Alderon Mining (the Kami mining project in Labrador) and Brian Tobin ( the former president and part owner of Thompson Consolidated - a Labrador mining operation). Two men that have been obsessed with bringing electrical power, one way or the other, to the mining developments of Labrador. In Tobin's case, a failed agreement with Lucien Bouchard, the former Quebec Premier and separatist, to develop the entire Lower Churchill in conjunction with Hydro Quebec. In Williams' case, the Muskrat Falls project currently under development.

The key to successful development of the mining properties in the Labrador Trough is of course abundant, cheap electricity to power them, and adequate railways to move the product to port for export. Quebec's own Plan Nord (North) calls for the construction of a major railway to move raw product from northern Quebec to its southern ports. The cost has been estimated at $5 billion dollars for the railway alone, which has caused Quebec's Liberal government to attempt a public/private partnership for its development. That being said, if Quebec proceeds with Plan Nord, and actually expends the projected $85 billion dollars necessary, a railway would be a necessity to make the entire project feasible in any way.

The question is does Labrador face the same issue? Ms. Jones made some commentary on the issue this week to provincial media:

"The Liberals say serious consideration should be given to the construction of a Labrador Railway System. Liberal House Leader Yvonne Jones says the province need only look at Sept – Iles, Quebec to see the potential benefits. Jones says the town is booming, thanks to the QNS and L Railway, put in place to transport minerals from Labrador. She says when the Iron Ore Company started in Labrador West, Sept-Iles was a fishing community with a few hundred people.

She says today the community has about 50-thousand people, with an industry that has expanded around the mining sector."

The truth of the matter is Ms Jones comments reflect a troubling double standard. On the one hand she advocates against the massive cost involved with Muskrat Falls - or used to - and on the other hand she advocates for massive costs to build a "Labrador railway system". On the one hand she argues that Labrador's mines should not be used to export minerals to foreign jurisdictions for secondary processing, and on the other hand she says there is a need for a railway to "transport minerals from Labrador". Her comments seem to insinuate that a Labrador or Newfoundland port could also be constructed to emulate the success of Sept-Illes, which would necessitate even greater expense for construction of port facilities. All told, the construction of a Labrador railway system, apart from the privately held one that currently exists in Labrador, and the construction of a new port could easily total twice the cost of the construction of Muskrat Falls.

The big question is where does all this come from? Did Ms Jones have a conversion on the road to Damascus? Is she now solely focused on creating some sort of "greater Labrador" with no serious consideration of the cost? Has she come under the influence of the corporate Williams and MacDonald? Has the provincial Liberal Party been muzzled as an effective opposition to Muskrat Falls by the influence, financially and otherwise, of Williams and MacDonald - hoping for a return to power? Is Jones falling into line with the mining companies and advocating for their needs as opposed to the needs of Newfoundland and Labrador citizens? Is it all of the above? It's hard to say.

One thing is certain, the cash that should be going to build promised hospitals, ferries, roads, etc is being held back to fund the down payment on Muskrat Falls. Anyone that opposes that strategy comes under attack. Even the PUB's decision to refuse a green light for Muskrat Falls was attacked as "baffling". It's curious to note all the folks that used that term in the last few weeks: Danny Williams, Kathy Dunderdale, Dean MacDonald, Ed Martin, and Jim Prentice. What does Jim Prentice, the Calgarian executive of CIBC World Markets Inc have to do with Muskrat Falls? Well, besides the fact that CIBC may be interested in the financing of some of this debt for Muskrat Falls, how about the fact the CIBC World Markets was a partner in Persona Communication with Dean MacDonald. Just a thought. In any case, it has become crystal clear that the march of business interests in the Labrador Trough is well underway. The only question left: Who is willing to sell their soul and who will stand and be counted.