Monday, 27 November 2017


“Another Way Forward” is a policy document recently released by the NL Employers’ Council. It is a response by the province’s largest business organization to our desperate fiscal crisis. It purports to contain suggestions for a “better way forward” than the one released last year by the Ball Administration.

High on the agenda of the Employers’ Council is a reduction in taxation on both business and individuals, cuts to government programs and services, and a reduction in public sector employment by attrition. 
The NLEC concludes that “government could remove more than a billion dollars in spending and we would still have:
1.       the largest spending per capita

2.      the highest paid public service and

3.      the highest spending on health and education of any province in Atlantic Canada.”  

Giving further definition to those conclusions, the NLEC document cites statistics from the Conference Board of Canada which makes several assertions. Here are some:

1.       Government could reduce spending by $1.1 billion and we would still be the most expensive government in Atlantic Canada. 

2.      Wages in the core public sector are 28.6% higher in NL than in the rest of Atlantic Canada.

3.      Government spends more on sick leave than on road construction.

4.      Government could reduce health care spending by $473 million and still have the highest per-capita health care spending in Atlantic Canada.  

5.      $103.6 million in savings could be achieved by reducing the number of educators and NL would still have the highest number of educators per student in Atlantic Canada. 

6.      In 2014-15, per-student University spending in NL was $8,360 higher than the Atlantic Canadian average.

The NLEC proposes that the Government reduce overall spending by $1.1 billion by 2022.

On balance, I would judge the NLEC Plan thoughtful and well-intentioned; a good beginning. Indeed, notwithstanding our high-spending ways, the average person might see the NLEC Plan as a fairly draconian recipe for expenditure reduction.

Draconian as it may seem, however, I suggest that the Plan nonetheless avoids a full discussion of the depth of the crisis and, hence, offers only an incomplete remedy. The issue is important because some, including this Blogger, believe that the provincial debt has already reached the tipping point of what is manageable. 

Richard Alexander
Presumably, the NLEC believes that ALL of the money borrowed to finance our debt — including the shortfall in funding to keep the Muskrat Falls project solvent — must be repaid from general revenues.  

If the business group expects “rate mitigation” or a major write-off of the asset to be funded via an asset sale (i.e. NL Hydro, offshore oil related royalties, shares in CFLco), then the Plan is completely silent on the question. 

The omission of “rate mitigation” — estimated to cost between $400 and $500 million, depending on whether you accept the Government’s or PlanetNL’s figure (which, by the way, is supposed to accompany 17 cent per kWh power and its associated impacts) — puts a big question mark on the whole NLEC effort.

Spared from the Plan but invoked by the Council’s Executive Director, Richard Alexander, in the Q&A session with the media was the word “bankruptcy”, confirming that that level of concern is actually uttered in some business boardrooms, even if softly.

This Blog has rarely been complimentary to the business community, their behaviour around Muskrat being akin to mindless ‘boosterism’; the group as a whole seemingly oblivious to the harm inherent in bad public policy. In contrast to the St. John’s Board of Trade, the NLEC is far more expressive of what thoughtful, constructive, skilful and rational people can contribute.

The NLEC is fortunate to be headed by Executive Director Richard Alexander, whose public policy skills would have been pilfered by a smarter government long ago.   

The NLEC, as an organization, represents the largest — and some of the most profitable — corporations in the province. It is true that they have been sounding alarm bells on the fiscal front for some years. But they also possessed the intellectual and financial capacity (especially Fortis Inc. and NL Power) to expose the risks of the Muskrat Falls project… and they didn’t, knowing nevertheless that the Williams/Dunderdale Administrations were taking us into an abyss.

And while we are clearing the decks for a larger conversation, it is important to note that any plan of austerity hurts not just those on the left of the ideological spectrum with whom the business community is typically perceived at odds, but it hurts those on the right and in the centre, too.

To its credit, the NLEC went outside the province to employ the economic analysis of the Canadian public policy group, “The Conference Board of Canada”. Corporate Research Associates also conducted interesting opinion research on the fallout from high taxation  — though, to be frank, I found the questions to be leading and therefore to artificially bolster the NLEC’s quest for lower taxes.  The full text of “Another Way Forward” is found at this Link.

The NLEC proffers the view that, while the current government did not create the fiscal problem, its ‘tax and spend’ approach is not just counterproductive but will inspire both companies and individuals to leave the province.

The document notes that: “In the 2016 budget government increased taxes and fees to citizens by nearly $900 million. At the same time the government increased spending by $223 M.”

The public opinion surveys attempted to give expression to how many people reacted poorly to the Ball government’s tax plan, and to that extent they have value.

When the results of the question contained in the Exhibit (above) are dissected based on age demographics, not surprisingly the younger folk — the earners — indicate the greatest propensity to leave the province.

The NLEC counsels a reduction in personal income tax, the deficit reduction levy and the gas tax. There is a self-interest component, too. It wants a reduction in corporate income tax and the payroll tax. The hit to government from those tax reductions is estimated at $322 million which the group proposes would be implemented by the third year of a four-year strategy.

Taxation, and especially the payroll tax, has long been the NLEC’s bugaboo.  While no one likes taxes, especially when they are a comparatively higher than in most other jurisdictions, they are hardly a new experience in this province.

Indeed, notwithstanding poll results that indicate that people and businesses may vote with their feet, I find that the emphasis on taxation constitutes a weakness in the NLEC’s alternative plan and undercuts the urgency of the fiscal crisis — something no one should toy with at this late date.

To phrase the point differently, as at the outset: if all that we owe must be repaid, tax cuts on the scale NLEC that proposes will not be possible — certainly not without a major asset sale and possibly not even then, given the uncertainty of the market value of some of those assets — and the public should be ready to fight any such attempt anyway.

Lower taxes constitute the mother of all “motherhood” issues. Every group claims that they are essential to attract business and investment. But no group — including NLEC — has shown which businesses, prior to Cathy Bennett’s 2016-17 tax package, were attracted to this province over the past decade, except by the feeding frenzy of a megaproject environment.

Equally, this resource-based economy is expected to behave exactly like those far more diversified. The implication is that their success is due to a low-tax strategy, an argument having dubious underpinnings.

Truly, can NL be compared with the far more diversified economy of Ireland when demographic and geographic factors are considered? Admittedly, the case is hard to prove, but it is incumbent on the NLEC to show that cuts in spending — in order to facilitate tax reductions — will not chew away at the “bone” of NL society as opposed to just the “fat” of the bureaucracy and whatever government touches.

That said, additional Exhibits featured in the presentation offer testimony to the pervasiveness of our fiscal condition — especially the lack of spending discipline. The next six Exhibits from the NLEC document tell their own convincing story:

The Exhibits reveal an economy which has been completely distorted by a megaproject environment overlain by a decade of unbridled government spending, low interest rates, a lack of political leadership and the expectation that OPEC, not local restraint or common sense, will continue to finance (as JM characterized them) our ‘drunken sailors’.

The NLEC’s “VISION” — as the Plan is billed — seeks changes that will “make Newfoundland & Labrador the most attractive place to live, work and do business in Atlantic Canada.”

That would seem wonderful if NL had time on its side. But successive governments and Muskrat Falls have run down the clock on our ability to keep on borrowing.

Apart from the cost of “rate mitigation”, the NLEC makes no reference to the amount borrowed annually for capital account - borrowing for which is "rolled over" without regard for the lifespan of the assets financed.
It also does not make clear if its numbers reflect several years of forecast reduction in GDP. It notes the Government’s reliance on high prices for oil, but it makes no accommodation should those prices reverse their modest upward trend. It acknowledges that debt servicing exceeds what we spend on education but it fails to show how, in a low inflation environment, we can pay down the debt in order to get those interest costs down.

The NLEC may have been attempting — like the government — not to shock a tender public; that by giving emphasis to a combined plan of tax reductions and cuts to public sector jobs they would have a better chance of gaining public support for their ‘less spending, less taxation’ initiative.

There are some who might agree with that approach. But when do we explain to the public the dire state of our fiscal crisis?

In truth, when reducing government spending is considered — along with the cost of “rate mitigation” — a figure of around $2 billion is appropriate for the chopping block. No one wants to contemplate the human cost associated with a problem of this proportion, but the number should, at least, give focus to how badly people have been misled.
Also, well worth reading:
The NLEC should redouble its effort. The best parts of their proposal — and there are many — should not be dumped because the plan has shortcomings.

Besides, there is no other group in the province that has made such a serious attempt to address the issue as has “Another Way Forward”: not Memorial University, not NAPE or CUPE — the latter awaiting more ‘unsustainable’ wage improvements from a government lacking the spine to say “no”.  

Newfoundland and Labrador has just witnessed a decade in which governance has run the gamut from looney to corrupt. The public deserves to be told of the predicament, else there will be no urgency for change. 

“Another Way Forward” contains the “start” of a credible path and evidence of one organization’s capacity to tell truth to power.

How can the Plan be improved?

One hint: the NL Employers' Council - as do others - needs to address the culpability of the Federal Government in the creation of the Muskrat Falls mess. Ultimately responsible are Williams, Dunderdale and senior executives of Nalcor. But only those who have stayed tuned out from the beginning will deny a federal role in the debacle.


  1. The voice of the NLEC is critical in this province, to balance the socialist leanings of many advocacy groups. I agree with your assessment that Richard Alexander is also a very effective communicator.

    However in their "another way forward" the NLEC do themselves a disservice with their calls for lower taxes.

    The problem we face has to be solved with both massive reductions in expenditures, and also maintaining the current taxation level (with several key points of relief.

    It has been a while since it was posted but I believe JM's work on the budget was perhaps the most balanced, and detailed view of how to try to put this province back on tract. It was well researched, and went into a nauseating level of detail. You should consider reposting the link now that the issue is finally starting to bubble to the surface.

  2. A thoughtful and important analysis from UG as usual. Although it is true that any analysis is better than none, this formula by NLEC is both self serving as you point out and does not deal with the MF unfolding fiasco and the unchecked control of Nalcor spending and lack of transparency.

    At the root of the failure to inform the public to the impending fiscal disaster has been the overwhelming of regulatory function and democratic oversight by a defacto feudal oligarchy. A megalomaniacal narcissist ended any vestige of democratic function. The bloated public sector are whipped and fear speaking truth to power. Until these democratic deficits are addressed with bold action from some quarter, the public will continue to be misinformed and victimized by the secrecy.

    NLEC tax reduction plan for industry is laughable given the miserable royalty schemes NL has managed to negotiate. A savagely progressive personal income tax plan with a break for middle and lower income earners would stimulate the economy, a tax break for the 1% will only make them richer as we have seen since the 1980's.

    As UG points out NLEC and their kin were silent while the MF dollars flowed like wine and Nalcor became a defacto unaccountable state within a state with an open chequebook. Fear not the flight of this class of well positioned co-conspirators. They have not served NL well and deserve a larger share of the painful results of their complicity. The middle and lower classes, the chumps in this sad affair, deserve a break.

    The PUB needs its full power restored and protected from future political interference. Nalcor needs to be dismantled, the assets returned to democratic oversight and regulatory control. An act to rescind the Nalcor secrecy and a forensic audit (completed in 6 months) should be followed with an inquiry that looks at all the MF issues including the spur engineering and contracts including who are the agents that facilitated them.

    If David Vardy's warning is to be heeded and MF will be unaffordable to operate even if it is completed it needs to be shut down now and the asset liquidated now to save untold billions.

  3. Today Uncle Gnarley dissects the policy brief from the NL Employers’ Council. The brief is heroic and laudable, albeit self-serving. It is self-serving in seeking lower taxes for its members. It is heroic and laudable in that it does attempt to light a candle in the midst of the enveloping gloom. The sage Uncle notes that lower taxes have done little to attract footloose industry. He makes a very valid observation:
    Lower taxes constitute the mother of all “motherhood” issues. Every group claims that they are essential to attract business and investment. But no group — including NLEC — has shown which businesses, prior to Cathy Bennett’s 2016-17 tax package, were attracted to this province over the past decade, except by the feeding frenzy of a megaproject environment.
    The Council has mobilized national policy expertise to buttress its case, which is a good thing.
    The fundamental point is that we cannot spend ourselves into prosperity although we can spend the province into abject penury. Muskrat Falls has not been challenged by the new government. My colleagues and I met with Premier Ball when he was in opposition to advise that a new Liberal government should undertake a full benefit cost analysis of the project. We proposed a stop/go analysis like that being undertaken for Site C by the new BC government. The prospect of shutting down the Muskrat Falls project and eliminating jobs was too daunting. But, at $500,000 per job Muskrat Falls fails dismally. With likely strong consumer resistance, as measured by demand elasticity, demand for power will drop precipitously when rates double. The policy brief ignores the elephant in the room at its peril.
    The Council ought not to be scolded for their blatant self-interest. Instead they are to be commended for trying to jump start a debate which we must have in this province and which concerned citizens such as Edsel Bonnell have been prompting. Hopefully, the Council’s brief will encourage others to speak out. Will the Council be emboldened by the Uncle’s stern admonition to take their brief a few steps forward. Will they broaden the scope of their brief to encompass the impact of Muskrat Falls? What will they say about the restricted terms of reference for the Inquiry? What will they tell the Commissioner?
    Will they invite known dissidents into their midst or will they eschew contrary views, as did the Board of Trade, in responding to the outrageous request from my colleague Ron Penney and me when we asked the Board to invite us to tell the other side of the Muskrat Falls story, the side which the Nalcor CEO, Ministers of the Crown and other cheerleaders failed to address? Our request to the Board was soundly rebuffed. We will be watching the response from the Council with interest.
    David Vardy

    1. Maybe the council and the board of trade dread rocking that boat load of Emera investors.

  4. Muskrat Falls is not affordable and completely useless and needs to be shut down. Even in Alberta, they are looking at an alternative energy projects of less than 1 cent per kilowatt hour. NL will either declare bankruptcy or see thousands of the most productive and young families leave for much, much lower energy locations.

    And our government is useless as is the current PCs.

    1. I agree I don' think any of my children will live here let alone find reasonable employment. I'm encouraging all of them to leave. I would like to have grand children and if my children live hear I don't think they will be able to afford the costs of raising a family. I won't be staying here either. When my children finish school I will follow them. I would rather take a few trips every year than struggle to heat my home, pay higher taxes, air port fees (which i think are the second highest in Canada) which in itself is scandalous, feul, prices, food prices, car prices and a multitude of, other things. Our rural communities and their aging populations are on the verge of collapse over the next ten years and with increased out migration, driven by Muskrat Falls the avalon region won't be far behind. Our housing prices will also collapse, returning to 1990 levels which will further punish many young families. The future is not bright my friends. Maybe a noted economist can refute my predictions, if so, I would love to here it.

  5. Can we please agree to properly distinguish between Newfoundland Power (not NL Power, which doesn't exist) and NL Hydro (which exists)?

    Thank you.

  6. Proof that Muskrat power has low marketability?

    The just completed Transmission Line will also be redundant, and rust away. Stranded assets cost a lot, well into the future.

    1. Thanks Robert this is an excellent overview of the convulsive changes in energy supply and tumbling cost. It correctly points to MF and Site C as hopelessly outdated and uneconomic relics of a bygone era. Where competitive "market based" supply is used renewables and battery storage now win on cost and reliability.

      Robert the rusting Transmission Line you refer to was crafted by SNC Lavalin using the same playbook as for Site C and MF. Massively overdesign an unneeded project, short circuit regulatory function, pass laws restricting access to info and make Rate/taxpayers the chumps with take or pay contracts.

      " three unprecedented pieces of legislation (Bill 19, 36 and 50) that squarely limited public dissent on transmission issues and concentrated all decision making power in the provincial cabinet" is virtually identical to the Bills passed in NL to launch MF into the void.

      Andrew Nikiforuk did a great expose on the transmission scam.

      It is well worth a read for the similarities of three provincial governments that were seduced, some think were complicit, in unneeded megaprojects with a fraudster with skills well honed in the third world.

    2. I have recommended Nikiforuk to many for years. He, along with Pembina Institute, Ecology Action, etc. have been a sobering influence, rarely heeded by the Hydro-bent Engineers, working at cross purposes with provincial power corporations, abetted by politicians of the day, promising jobs, jobs, jobs. Site C will in all probably carry on like Muskrat, because "I'm all right Jack" Labour want to get overpaid; Engineers/Tech/ working as contract clerks, Dirt movers with their powerful machines destroying habitat, M & E trades installing and maintaining obsolete, expensive equipment, which have no purpose.

      Maybe, with all the low cost Renewable Energy in Canada's Solar/Wind district, AB, SK, can finally shut down the fossil fuel generation, (Boundary Dam CCS, etc).

  7. I noticed as well that the NL Employers seemed to ignore the fiscal problem related to Muskrat Falls. David Vardy estimates an extra cost of $800 million per year. Perhaps the Employers were embarrassed about their lack of engagement on Muskrat and some of them have made and continue to make a lot of money on that project at the expense of the rest of the people.

    Eight hundred million spread over about 200 thousand ratepayers or taxpayers is $4 K per year each. If it goes on the electrical bill it is after tax and if it is added to taxes it is before tax. After tax based on any kind of average income and above would mean incremental earnings of a minimum of $6K and $8 K for many. About half of the incremental taxes would be sent to Ottawa. This is the first important aspect that should receive serious policy scrutiny. Do not increase electrical rates here anymore than the Canadian average rates most of which are on the way downward. We have to obtain it from another means or the damage will be even greater.

    The second point is that the Federal Government didn’t do any more analysis than Wade Locke in granting the loan guarantee which is simply inputting Nalcor’s assumptions and numbers into a basic economic model. I think a key piece for the inquiry should be to drill into the Federal due diligence as well as that of the Investment Banks. One the lead underwriters who syndicated the loans was TD and according to one of Russell Wangersky’s columns, TD admitted to using the loan guarantee as the basis for the loans. An expert witness could use the industrial and marketing databases that were available at the time which would have clearly pointed out the extreme risk of capital overruns and the dropping market prices for electricity. (Note that Investment Banks spend millions to have access to significant industrial and market information). Using that information the inquiry counsel should be able to extract from TD and Goldman Sachs, the syndicated bankers, the fact that the loans would be highly unlikely to have been provided without the guarantee or failing that punishingly high interest rates.

    If the financing is proven to have come only as a result of the loan guarantee then there is a case to be made to unload some of the loan guarantee onto the Federal Government. David Vardy had suggested writing down the Muskrat Falls asset to its real value of about $4B. This would leave the Federal Government to pick up the tab on $3.9 B plus whatever share of the Emera debt that is written down. NL would still be responsible for the remaining $4 B plus the borrowed “equity” of $4.7 B and counting. This is not ideal but much better than our current situation and may make the millions spent on the inquiry worthwhile for the general population.

    As much as I would like someone to go to jail for commercial fraud it is not going to save this province from bankruptcy.

  8. It's a good thing the salaries are high - how else would people survive since the cost of everything here is triple any other province? Not to mention the extra taxes/fees/levy's/everything extra we pay just to live.

  9. "One hint: the NL Employers' Council - as do others - needs to address the culpability of the Federal Government in the creation of the Muskrat Falls mess. Ultimately responsible are Williams, Dunderdale and senior executives of Nalcor. But only those who have stayed tuned out from the beginning will deny a federal role in the debacle."

    Des this is just typical of the NL provincial Conservative "Blame Ottawa For Our Mess" attitude that has been floating around the St. John's capital city since Frank Moores. Muskrat falls was conceived, deceived and pushed down our throats by our very own provincial Premier who was nothing more than a con artist and bully when it came to his agenda and to try and pass it on to anyone else like Ottawa is nothing more than a warped truth. The state of relations between Ottawa and St. John's was dismal when DW was in power as his nemesis Stevie Harper was in Ottawa and I doubt if this whole situation was cooked up in the manner you say it was. Look in the mirror and start taking responsibility for the actions that have we have arrived at. It is us who elected him-not Ottawa.

  10. Anonymous 06:15, well said, we elected the people who made these decisions and we have to accept responsibility and live with the consequences. DW will go down as the worst premier in our history and I hope his Galway development goes bust so he can feel some of the pain he's about to inflict on the rest of Newfoundland with his poor decision making.

    1. DW was NL's Donald Trump.

  11. Hate to rain on blame Ottawa thing but I was born and raised on the mainland and one kid has already left so could leave in future. But there should be fairness. If I go to the Maritimes I benefit from equalization but pay here as well as for MF which benefits NS. The feds had a horse in this race. MF is part of the international GHG commitments. Why should be NLers be the only ones to take this on the chin

  12. I visited Ottawa in 1997.

  13. You have got to be kidding!

    Everything that the Employers Council says is self-serving. The people speaking here are always putting the blame of the Muskrat Falls Project on the shoulders of Danny Williams, Kathy Dunderdale and the other P.C. politicians. You confidently have forgotten that this project would never have gone ahead except that it was cheered on by the business groups including The Board of Trade and the Employers Council.

    These people saw the benefits to themselves of between $500 million and $1 billion per year injected into this Mega-Project and the thousands of high paying jobs it entailed. They had no concern about where the money came from: whether directly from creating deficits in each year’s budget or borrowed over a 50 year period.

    As always, their only objective was self-serving growth in their businesses. Believe me the business community made quite tidy profits from 2012 till now off the public monies spent on this project.

    The present liberal government has no intention of shutting this project down, Why??? Not because they haven’t figured out that it is a boondoggle. The hidden reason as to why it will see completion, which has never been mentioned here, is because the same business groups which cheered its announcement will continue to profit until it is completed,

    Sure there is fat in the public service. Problem is; it is not the fat ( middle and upper management ) that gets cut but the essential organs that get removed. Check out what happened to the College of the North Atlantic in the 2013 cuts. Instructors and the resulting programs comprised the majority of the positions removed followed by support staff. The middle and upper management actually increased substantially in numbers.

    Those of you calling for further cuts should investigate what happened during the last round of cuts which by the way continues with a policy of non replacement of vacancies. As it goes: “Be careful what you wish for you just may get it.”

  14. Just to be the contrarian in this demonizing of the public sector, consider for a moment one other Stats Canada number-the unemployment rate. For October this province's unemployment rate was 14.5% with the closest to that being PEI at 10.3% and all other provinces being under 9%. So we have the highest rate by a considerable margin. Since, by Mr Alexander's argument, we have too many public servants then the lack of employment must originate with the private sector. So here we have the poorest performing private sector (albeit by one measure -the unemployment rate) in the country criticizing the government's performance. Brings to mind a saying involving a kettle, a pot and the colour black.

    I am anything but a defender of this administration for no end of reasons. However this condescending attitude and superficial analysis by a business group who have virtually no understanding of the challenges of government ( everyone - business and the public want lower taxes and more services,more handouts please ) is not helpful. They are all too quick to accept government help and to seek more of it which is simply a way of saying don't give money to union members but give it to us - the definition of hypocrisy.

    To close on a lighter note with a question to illustrate the limitations of extrapolating the efficiency of things on $/1000 population or similar metrics.
    If it takes Kathleen Wynne 52 weeks per year to govern Ontario's 14 million people then why can't Dwight Ball govern this province's 0.5 million people in
    2 weeks?

  15. One of the problems with moving forward with policy initiatives is that there has been so little accountability for the politics, people, and processes that got NL into this mess in the first place. It's all too easy to forget how popular Danny Williams and his risky policies were among such a large cross-section of the electorate, from unions to business leaders, both before and well after Muskrat Falls was announced. There is more than enough blame to go around, but everyone seems to want to insist that it's all someone else's fault. If the NLEC wants to influence future policies, then it should start by taking more responsibility for the role of NL businesses in supporting Williams's failed policies.

    1. It is because NL failed to have a viable Energy Strategy moving from fossil fuel, starting in the 1980's, Muskrat and other mega dams, long transmission lines were thought the way to handle the growth in base board heating on the Avalon. Not much has changed, NL does not seem to have a Renewable Energy strategy even today. Ask yourself who are advising the Gov. of the day on energy strategies? Who gets elected to perpetuate the continued dependence on such power supply and transmission systems?

  16. See what I mean when I talk about Tory-mindedness?

    Both Liberals and PCs in NL and elsewhere suffer the same affliction.

  17. For those individuals complaining about the NL Employers' Council, please offer some alternatives of your own. It does not help the debate to simply shoot the messenger, offer some concrete solutions to get us out of this mess.

  18. The entire political system needs to change, the party system is so flawed. Can someone explain how a self serving political party has the best interests of the public at heart? We need leaders and decision makers at the helm, professional managers who have no other interests than making the right decisions in terms of cleaning up this mess. Mr Ball's only decision was to raise taxes, the most cowardly of decisions. We need a new system, eliminate the party system and elect professionals to manage the Dept of Finance for example with a mandate to balance the books and run no deficits.

    1. Hear, Hear, at the Root of NL's fiscal problems is the Party System which perpetuates this never ending cycle whereby politicians have to try and serve Two Masters...Your Party... your Constituents and at the same time remember the 'hand that feeds you'. No matter the Party in power this is the 'never ending cycle that exists and is inherently flawed. It's long past the time when this way of gov't is out the door.There has to be a better way!!

  19. Elect 1 MHA per district to handle constituency matters only, no party system. Elect a 10-12 person committee/board, no party lines to manage all the departments and legislation. Have recall legislation to protect against ineffective members of the board/committee. Crazy idea yes, but why continue using the current system when it has so famously failed for the past 60+ years. Why do we keep expecting a different result from this DOG of a system.

    1. There is a much better system to think about while you have radical thoughts.

      First a glance at the roots of the problem in NL. NL has never moved beyond the rigid feudal class system that characterized your colonial past. Allegiances to ones class is still more important than the political colours one wears red, blue or orange. Only if one acknowledges that does the puzzling political dysfunction come into focus.

      The radical solution of course is to create a democracy in NL. A democracy (rule by and for the people remember?) is transparent and accountable, both totally absent from politics in NL currently.

      You currently have a state within a state that is totally and haughtily above scrutiny with an open chequebook of the public's treasury. How was this allowed to happen? Nalcor is the face of the political dysfunction and needs to be opened to public scrutiny, the bills giving them free reign with the treasury and destroying transparency rescinded, a forensic audit conducted and Nalcor finally dismantled.

      You need a democracy where you elect ACCOUNTABLE politicians who allow regulatory protections of the treasury to proceed in TRANSPARENT public processes. A wildly radical idea I know, perhaps enough to have the emperor have another run at me!

      Solutions will never emerge if you collectively continue to quake in fear from the fulminations of the naked, and by now demonstrably ugly emperor. Will anyone step up and tell the world that? Or will you continue along that Gall Way?

    2. I have to agree with you that the present system is not working. I think you may be onto something there. Elect an MHA from each district and elect the Cabinet ministers and deputy ministers based on qualifications. The MHA's would have to represent the people in each district and not the party or industry.

    3. The influence of groups like the Employers council and Labour groups would have to be curbed also. It was partly the influence of labor and the contracting businesses that brought us muskrat Falls.

      As a side note, on CBC last night they gave a report that it could be upwards of 13 years before any royalties other than the ROI of $800 Million Nalcor (a measly $10 million/year) invested would kick in. What a dismal failure that deal was. Short term construction jobs in exchange for possible upwards or $10 Billion in royalties. The deal Brian Tobin signed for Floating Production systems is the best development deal we could have signed in this province ever. Terra Nova alone may give us more royalties than Hebron.

  20. Precisely why the current party system is so flawed, their primary mandate is to make short term populous decisions that will get them re-elected. Making sound financial decisions for the long term will not get you re-elected under the current flawed system. We need to develop an economy built around private sector investment and innovation instead of taxing ourselves to death in order to pay for our bloated public service dominated economy. Sadly the right long term decisions will never happen under the current system.

  21. It is clear that the White Rose Project and the Terra Nova Projects set the gold bar for royalties. Hebron is just another long example of Williams insular view of the world hurt us. The man was a disaster as premier... an absolute disaster. He made Smallwood look like Warren Buffet.

  22. We need a group of independent minds to assemble and design a whole new system. Then start rioting in the streets until we force change.

    1. At last, anarchy!
      It may be the only way left, but I'd like to see someone propose more rational ways to solve the problem, to get out from under the MF thumb.

    2. Simple solution; Develop an Energy Policy, based on reduced carbon footprint. Get the Municipalities to buy into promoting buildings energy efficiencies, transportation efficiencies, (Live Work neighbourhoods, pedestrian/bike lanes, public trans), Industrial/Institutional hubs, etc. It is because NL had no such policy that Muskrat was allowed to exist.

  23. I agree with Anonymous 07:57, Williams was a disaster. His entire motivation as premier was to falsely super inflate the economy with massive construction projects , massive public service hiring binge and wage increases. All with Galway development in mind.

    1. How DW secured Galway land (on the QT) for pennies on the dollar prior to leaving office warrants investigation. Will it happen??? NO! NO! NO! Anyone who attempts to do this will automatically be threatened with a lawsuit which has been his modus operandi from day 1.
      He and his appointed puppet will go down in history as he and she who forced this province to its knees, all to feed his monumental ego while setting the stage to promote his business interests. MF would never have seen the light of day if there was known sufficient power to light up Galway. That, coupled with spite for not getting his way with Quebec is why we are in the situation we are currently in.
      Whether or not laws were broken will never be proven unless a forensic audit is commissioned and the threat of lawsuits will not rule the day.
      Third world dictatorships have been mirrored here and even though not in office now, still weilds the influence over how this province is being run.
      Viable alternatives for the next election would be (in my opinion), people like David Vardy, Des Sullivan and Cabot Martin--people who are level headed and reputable. They could set up another party which would not be influenced by party politics. The system we are under today is not working and has pretty well bankrupted us.
      David, Des and Cabot are you up to the challenge?

  24. Danny's pride, Joey's redemption.

    Can anyone tell me the value of the Churchill falls generating station as an asset? I was attempting to explain to a friend that while muskrat may cost 12.5 billion, it will be worth far less, I've read as low as 2 billion - which simply did not compute in his brain. I was thinking that I could use the output vs. value of the UC as a comparison - IE how could an 800MW facility be worth 12 billion if the 4000MW UC is only worth 10?. Would this be a sound approach?

    1. The Upper Churchill is a 50+ year old asset. It generates 33,000,000 MWhr of Energy. At 40$ per MWhr that would be about 1.32 Billion a year in revenue. However, you have to reduce the line losses (10%) and then by Nalcor's own admission remove about 30% for transmission costs. That leaves about 831 Million in revenue. Now HQ already own 35% of the Upper Churchill, so we would be left with about 540 million annually. Take 20 million in operating costs off of that, and say another 20 million in maintenace, we would make about 500 million annually if the power could be sold on the open market.

      Put a EV of about 8 on the asset (due to its age) and the NL Ownership of the UC plant is worth about 4 Billion (maybe as much as 5 Billion on a generous day).

      Interestingly the UC cost 1 Billion in 1969. Inflation adjusted its 7.2 Billion in todays dollars. 65% of that (to reflect NL Hydro ownership) is 4.6 Billion so pretty much aligned with the above EV calculation.

      Muskrat Falls is worth much less that 12 Billion if it was not for the monopoly it enjoys.

    2. may wish to take a look at the story of the Come-By-Chance oil refinery.

      This would be a very good example of what you were trying to explain. Newfoundland's contribution was never repaid but the debt still sat on our books.

    3. Good cost analysis. Generally for major utilities capital recovery, (Revenue requirements), a 10% annual discount rate would appear to be appropriate. At completion in 1969, the economics would suggest that capital recovery in the order of $100 $150 million in revenues, annually would represent a profitability on capital investment. But we understand that HQ was able to return a revenue stream in the order of $1B annually, from UC. The built facilities will probably be producing well into the 21st century. Would you care to comment?

  25. "Focusing on retaining current construction jobs, a red herring;"

    Could this apply to Muskrat also?

  26. The Upper Churchill - or any asset - has to be valued on a cash flow to capital basis. With 24 years left in the UC Renewal contract - in which electricity is priced at 2 tenths of a cent per kWh - and otherwise only 300 MW of Recall power to NL, what's the asset worth using discounted cash flow methodology? What is Muskrat worth if the revenue it generates can't pay for O&M costs let alone debt servicing? Put a different way, if you have two identical buildings both under long term lease; one is rented at $1.00 per sq. ft. and the other for $20.00 per sq. ft. - are they worth the same? For starters, you better think about the time value of money! You are not as rich as you think.

    1. So, how many times over has UC paid back it's capital cost?

    2. At about 1200MW capacity, Nfld island hydro is worth about 3 billion, including transmission and thermal generation.
      At about 500 MW avg from MF, suggests MF at 1.25 billion. While MF is new and the isalnd hydrois aged , suggest MF is woth more, but MF is not proven reliable, neither the North Spur not transmission, and has very high operation cost So, if on the market, I assume a value of market of only about 1 billion, also needing stability of the North Spur, and arrangement with HQ on water flow.
      Not a pretty picture. If it worked as intended with 900MW leaving
      MF (MR + UC , at peak times) allowing island hydro to NS, then the value may be more than 1 billion, maybe 2 or 3 guess.
      So at 12.7 cost , a loss of 9.7 to 11. 4 billion
      Did DW say he would put his own money into this if he could? I suppose he could make a cheque to the prov govn to help pay the debt. It would be tax deductible. But even Danny Milllions would hardly make a dent. Better he insist on Galway being a model Green project, with mandatory high standards, (call it Galway Green) and put MF on ice, and promote island wide customer efficiency , with incentives (even for Galway homeowners). A chance in hell he takes this advise.

    3. Winston that sounds like a campaign plan. You should think about running. I have a slogan for you,
      A chicken every pot,
      A mini split in every attic.