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.
US computer engineer & industrialist (1955 - 2011)
Sunday, November 28, 2010
It seems that there are those in the province that are resigned to allowing the Power Contract of 1969 to expire naturally in 2041. I disagree. The economics of that issue can not be ignored for another thirty years. Some are suggesting that a large tax will be placed on the power delivered after the renewal term comes into force in 2016. They argue the lost revenues can be made up while utilizing Hydro Quebec's transmission system. On the surface that sounds like a reasonable idea. However, it is not utilizing the economic dependancy that Hydro Quebec has developed on the Upper Churchill. In other words, it allows Hydro Quebec to continue on relatively strong until 2041 which is not in our long term interest as a competitor.
The proof is in the numbers. Hydro Quebec purchases power from the Upper Churchill for $0.0025425 cents per KWH until 2016. When the agreement automatically renews in 2016 the price will be $0.0020000 cents per KWH. Hard to believe, but yes, we will be receiving 20% less for the power until 2041. The cost of the profits lost by that reduction over the life of the contract, at today's rates and without inflation, will be between $71 billion and $95 billion. A staggering figure of lost revenue.
The real question is how important to Hydro Quebec is the Upper Churchill. Again it's in the numbers. You will hear many people, especially in Quebec, say Hydro Quebec has a surplus of power and is bringing on new power generation all the time. That while it's nice to have the 5428 MW of power from the Upper Churchill it's not the end of the world if they lose it. Those people base their assumptions on the quantity without looking at the profitability.
Hydro Quebec's average cost to produce power from it's many plants and dams is approximately $0.06 cents per KWH. That does not include transmisssion and distribution costs. They receive our power for $0.0025425 cents per KWH. Translation: It takes 25 James Bay Dams to equal 1 Upper Churchill Falls - profitability wise. Further translation: Hydro Quebec can not lose the Upper Churchill or all the profitability of their corporation will be lost. They will be forced to try and raise domestic Quebec rates to make up the difference, which in turn would be taxed back by the federal government in equalization transfers.
A larger problem would be debt sustainability. Most Hydro Quebec projects are built on 35 to 50 year projections of revenue and costs. All their financing, primarily through bonds, are based on those projections. The corporation's credit ratings are similarily affixed. In other words, the loss of profitability effects all the corporation's operations - nationally and internationally.
Conversely, NALCOR could strike at the heart of their chief competitor early in the game. Gain the upper hand on the long term battle, and be in position to compete on a much better fiscal footing. Strategically, it is as important to stop your competitor as it is to try and advance yourself. Hydro Quebec certainly understands this principle.
Friday, November 26, 2010
"The primary and absolute condition is that all energy that will enter Quebec becomes property of Hydro Quebec. That condition ... has always been the same, and we will never negotiate from another basis. We will never permit, under any condition, others to build a transmission line on Quebec territory, or let others transport the energy produced at Churchill Falls whatever the destination of that energy, whether it be to the United States or the other provinces." Le Devoir, 1965.
"And they think Newfoundland and Labrador are being irrational and disruptive to the national fabric."
Brad Cabana, Rock Solid Politics, 2010.
Wednesday, November 24, 2010
Montreal Gazzette, 30 March, 2010 : Pauline Marois, Leader of the Opposition in Quebec: " Every time we raise hydro rates, it lowers transfer payments from Ottawa."
Montreal Gazzette, 19 November, 2010: Jean Charest, Premier of Quebec: " They (Newfoundland and Labrador) can ask for it (subsea cable subsidy), but they know Quebec is opposed to it because it would be an intervention in the market."
Montreal Gazzette, 19 November, 2010: Nathalie Normandeau, Minister of natural resources Quebec: "...has received assurance from federal minister Christian Paradis that Ottawa will not directly fund the construction of transmission lines."
Tuesday, November 23, 2010
Sunday, November 21, 2010
Like their ancestors before them, the bedrock of Quebec's modern economic prowess pushes forward into the world to carve out their place. The push to overcome harsh environments, survival, linguistic challenges and a never ending need to prove themselves to the world may sound like the New France of old, but it equally reflects the corporate culture of modern Quebec. The need to master and conquer all before them. That leads us to today.
Power Corporation of Canada, Hydro Quebec, Casse de Depot et placement du Quebec, GDS Suez, Areva, Transcontinental Media, and so on. Massive corporations, operating on an international basis, and controlling more and more economies - strategically. They are also all French. They also all share members of their boards and often have a part ownership of each other with the exception of Hydro Quebec and the Casse which are controlled by the government of Quebec - although the government of Quebec is highly "influenced" in it's operation and makeup by these corporations. Total Oil of France, partially owned by Power Corp of Canada, will likely be a player in Quebec's offshore future - if it has one. It is already active in the Alberta oil sands - recently taking over a smaller Calgary competitor for a large ownership of a tar sands project. The Casse has taken over Hydro Quebec's Gas Metro, now Valener, freeing it of the costs of a gas industry in decline, and taxes. SNC Lavelin, another Quebec multi-national followed suit and sold it's shares this month to the Casse. Hydro Quebec, through it's subsidiary Hydro Quebec International, has bought controlling interest in distribution lines and power generating facilities in the US, Australia, South America, Panama, and China. Most recently, the day after Premier Danny Williams announced the Lower Churchill project, North East Utilities, the largest utility in New England (in the process of getting bigger by taking over NSTAR -Massachusetts largest utility) made formal application to build a massive transmission line from Windsor Quebec to New Hampshire. A message of sorts.
In the bigger picture, GDF Suez (France) is in the process of taking over International Power (Britain) with the assistance of an American corporation's 7% proxy vote. The new corporation will be easily the world's largest utility. Unfortunately, it will also be in a strategic partnership with Hydro Quebec - making an already monolithic Crown corporation even more monopolistic. The nimble, and seemingly well coordinated Quebec corporate class has shown itself to be world class players, and that must be recognized.
That brings us to the Lower Churchill deal. Newfoundland and Labrador, as represented by Premier Danny Williams, is bucking this trend. One could better describe it as a tidal wave. A brave stand by a brave man. A bravery that most people of the province don't fully understand, but should. Even though Danny is a wealthy man, his funds are coffee money for these other people. That is why Quebec scoffs at the government here and it's deal. However, that scoffing is superficial. A people that want to be the DeBeers of energy do not want any players in the market other than themselves. They cannot set the rate the market will pay if another is under selling them. If they cannot set the market then they cannot predict the serviceability of their debts. If their revenues decline, then their debt serviceability declines and their bonds get downgraded. If their bonds get degraded their debt servicing costs go up. Then the cycle keeps repeating itself to the point where the massive monolith collapses. Make no mistake, this is their main concern.
The problem for Newfoundland and Labrador, as illustrated by Hydro Quebec's alliances, is that it does not have a large enough strategic partner in this sector. It is not tied into the corporate circle if you will. The large oil corporations are willing to come in and develop the oil/gas resources, but have not been involved in developing the province's hydro power or it's distribution. Emera, Newfoundland and Labrador's strategic partner, is a small and publicly traded company. As such it would be an easy target for any one of Quebec's alliance to take over - hostile or otherwise. It would seem a logical move on Quebec's part to have any smaller power distributor, which agrees to do business with NALCOR, taken over by another larger friend. While Newfoundland and Labrador may have the resource, Quebec may have the friends to stop it's distribution rendering it useless. Do not be surprised to see a takeover attempt of Emera in the coming year or, even better for Quebec, after the deal is finalized. This is one of the reasons Hydro Quebec normally takes a controlling interest in it's distributors.
What Newfoundland and Labrador desperately needs is a very large friend in the jungle. An international corporation large enough to withstand the other alliance, and with access to the US market. An access that can be defended and guaranteed. Perhaps some of the oil corporations with large investments in the offshore might be a logical choice. After all, if you can learn one thing from studying Quebec's economic development, alliances are based on intertwined interests based in the province and projecting outwards.
Until then, I fear, Newfoundland and Labrador's government will be subjected to a covert, if not overt, campaign by those that wish to see Quebec's monopoly stay in place. By way of example, The Telegram has been assaulting the Premier, without balance in it's editorials. The Telegram is owned by the previously mentioned Transcontinental Media - Montreal. The Liberal Party of Newfoundland has recently signed on some major Conservative talent for it's public relations. The former Liberal premier of Newfoundland and Labrador, Roger Grimes, has suddenly come out of the woodwork to attack Premier Williams. The aforementioned Power Corporation of Canada is publicly known to be the source of primary influence within the Liberal Party in Canada. Although, Jacques Parizeau's brother, and Bob Rae's brother have sat on it's board of directors. As does the Conservative's Don Mazinkowsky.
Then of course there is the CBC, with it's head office in Montreal, that has been at the forefront of attacks on the William's government on many fronts as of late.
In the end, Newfoundland and Labrador deserves to control and exploit it's resources without interference. The people here have suffered through the economic enslavement of the Upper Churchill contract for too long. If Quebec wants peace, and to carry on, perhaps it should recognize the imperialist approach taken toward Newfoundland and Labrador was a historical misjudgement. Perhaps they should re-open the Upper Churchill Falls contract and renegotiate the rate to at least a 50% share of the profits on that power. Such a gesture would go along way with the people here - and likely the Premier. After all, hydro is just one source of energy. This battle will rage through all parts of Newfoundland and Labrador's economy to the unnecessary detriment of many of Quebec's companies and interests. Perhaps Quebec should go to it's own perceived grievances and realize that we should "do unto others as you would have them done unto you."
Thursday, November 18, 2010
This is not the massive octopus that is Hydro Quebec, GDF Suez, and Enbridge. Put in another way: the Quebec government, the French government, and natural gas. You see Hydro Quebec is not just a little power company minding it's own business in northern Quebec. In reality Hydro Quebec is a huge multi-national corporation, with strategic partners that are foreign to this country, and are involved in: electrical power, natural gas distribution, banking, telecommunications, and even small water companies. Despite being prohibited from operating outside Quebec by their founding charter, Hydro Quebec owns several American power companies. They get around this by owning holding companies such as Noverco, Meg Holdings, and the list goes on. They own American companies such as Bucksport Energy (Maine), Green Mountain Power (Vermont), and Vermont Gas Systems (Vermont) among others. In the same week as Hydro Quebec made an offer to purchase New Brunswick's power utlity GDF Suez purchased a Montreal electrical company that will supply all of Hydro Quebec's power transformers up to 100 MVA. Not to mention the 800 million dollar liquified gas plant near Quebec city that GDF Suez is planning on building.
No our little deal is nothing like that. We do not have a foreign country involved in our strategic alliance. What we need is OUR federal government to come in and do the right thing. This is where you come in Mr Harper.
We expect, and when I say we expect - I mean we expect, the federal government to satisfy it's national obligations to the Province of Newfoundland and Labrador. Those obligations are: to provide the requested funding to subsidize the construction of the sub-sea cable links as per the joint provincial request for said subsidies; to provide loan guarantees for the construction of the project; and last, but NOT least, complete it's obligations under the New Dawn Agreement between the Province of Newfoundland and Labrador and the Innu peoples of the province. This must be done without delay.
You may ask why should the federal government become involved, and why should it offer up the loan guarantees. Simple. This Province is owed atleast that. It has been living under a draconian agreement since 1969 that has taken 22 billion dollars from the economy thus far, and will take a further 75-90 billion dollars before it expires in 2041. The federal government, despite the usual separatist politics, should have stepped in years if not generations ago to right this wrong - but chose to turn a blind eye. Now the inevitable result of that policy is here. This current deal is the best case scenario for Canada now. Should the federal government not follow through, and do the right thing, I suspect Newfoundland and Labrador could be in the balance. There is such a feeling of treachery in the province that should the federal government side with Hydro Quebec (Quebec) on this issue the end result would be catastrophic and tragic.
Mr Harper, rise above the politics, rise above your connections, and do the right thing by the people of Newfoundland and Labrador. Do it now.
Monday, November 15, 2010
In Newfoundland and Labrador the boiling point has been reached between the government and doctors. The doctors claiming to be under paid compared to others in the region and country. The government claiming their offer is more than fair. Those are the essential battle lines. Issues such as quality of life, working conditions, and doctor shortages being implied symptoms of the primary cause - money or lack thereof. According to Canadian Medical Association Journal (CMAJ), figuring in all forms of income for doctors, whether salary or fee for service, doctors in this province are 6.78% less than the national average of $224,875 (2008/09 numbers). Dr. Lewis, President of the Newfoundland and Labrador Medical Association, states the doctor's offer would result in an eighty million dollar increase to the existing three hundred and thirty million dollars currently spent on physician's compensation - or a twenty five percent hike over all.
The problem with just throwing money at the problem is that it does nothing to fix the problem. If that were the case Alberta would have no problems - but they do. It seems the issue is not fixing the problems inherent within the health care system, but rather supplying enough funds to keep the bandaids in place. Not a good solution for anyone in the long run. Afterall, even doctors will one day need a doctor they can count on. If all things, even the medical field, are driven by financial reward, and if financial reward is determined not by what you make, but rather what you keep, then perhaps a thought outside the box is in order.
For starters, the cost of living in Newfoundland is far below that of most of the country. A home that would cost you $150,000 here will cost you easily $350,000 elsewhere in Canada. Consider that the cost of borrowing for a mortgage normally doubles the initial cost of the home and the dollars become even more significant. The costs for insurances, groceries, utilities, recreation and property taxes are either much less or competetive with the rest of the country. Certainly, personnel costs and salaries are much less. From a business point of view, the overhead here is very competitive. Then factor in the upcoming and ever growing industrial resource build up of Newfoundland and Labrador. One of the few, very few, provinces with a "boom" unfolding for atleast a generation. Sounds like a good place to be, and as good a place to do business.
Medicine is a business afterall. It is a calling - without doubt. However, strip all the warm and fuzzies away from it and healthcare is a business. Perhaps the solution to our current labour strife, and a very possible answer to some of our recruitment issues, lies in a business approach to the matter. Whether it be personal or business income the truth is the bottom line. Not so much necessarily in what we make, but rather in what we keep. In a word - taxes. Perhaps the solution lies in an outside the box approach to taxes - provincial income taxes to be precise. By way of example, Alberta has a flat income tax of ten percent. Whether your income is 30,000 or 300,000 it's 10%. So for a physician, who would normally make anywhere from 220,000 to 450,000, that is significant when compared to a place like right next door in Saskatchewan. In Saskatchewan that same doctor would be paying in the range of say 36 %.
Perhaps our government could pass legislation designating physicians a "strategic service" and offer them a break on their provincial income tax. Make their provincial tax even less than Alberta's - say 5% flat. That would save the average physician more money than the current raise request. It would entice other doctors from different jurisdictions to practise here. The people of Newfoundland and Labrador would likely view it as a necessary step to help retain and grow the essential service that doctors are. This approach emphasizes the business advantage to doing business here for doctors. More money thrown, simply to be clawed back by higher tax brackets, federally and provincially, does nothing to improve the doctors bottom line, and therefore their morale. Let's think outside of the box, and move forward, as we are in almost every other aspect of Newfoundland and Labrador society.
Tuesday, November 9, 2010
Some or all of these arguements may have an element of truth, but how do they manage it? How does the government of Quebec keep coming up with claims over this or that? What is the basis for their grievances?
Purely and simply - it's poker. They are the best political poker players in the country, and they are playing against people who for the most part don't want to offend them by calling their bluff. Often, it takes a Quebecer to call the bluff of the government of Quebec. A few instances: Prime Minister Trudeau invoking the War Measures Act and putting troops on the street in Quebec; and Prime Minister Chretien stating that if Canada can be divided then so can Quebec. That one got the separatists so riled up they proclaimed that Quebec's territory was sacred. This is the line of thought I wish to follow.
Is Quebec's territory really sacred? Based on what? While prior to the Conquest of "New France" in 1760 there was no Quebec. Quebec was formed by the British in 1763. The inhabitants were granted the use of their language and civil code. Those that did not want to accept British rule were given eighteen months to leave. That was the eternal birth of the Province of Quebec. A small strip of land running from Montreal to the large opening of the St Lawrence to the Atlantic. That was the "sacred" territory. Whatever other territory that may have had a French presence in New France was given to Britain, by France, with the exception of St Pierre and Miquelon - which remains a French possession to this day. So that part of the Treaty of Paris has been respected.
The Quebec Act of 1774 further enlarged the territory. However, losses of territory during the War of Independance and the creation of an Upper and Lower Canada again split the new territory - esentially in half. Again, the sacred territory of Quebec was decided by Britain and reduced and enlarged at will.
The modern growth of the territory of Quebec really happened in 1898 with the creation of the Quebec Boundaries Act, passed into legislation by the Parliament of Canada. A second edition of this Act was passed by Parliament in 1912. Modern day Quebec's "sacred territory" was therefore permitted by an Act of the Parliament of Canada. Remembering Prime Minister Chretien's comment on Quebec's divisibility, it is easy to see that should the Parliament of Canada decide to rescind the Quebec Boundaries Act, the entire portion of territory granted in that Act would revert back to the Crown - Government of Canada. Many argue that it is completely illegal for Quebec to separate in any case, but there is no question that a national Parliament can rescind it's own legislation.
The problem with telling a lie is that bigger and bigger lies become necessary to explain the first. To give it legitimacy. To make it historical. That brings us to another more present myth. The Old Harry oil field. Located some 80 kilometers from Quebec's Iles-de-la-Madeleine this 29 kilometre long oil/gas field is becoming central to a dispute over provincial maritime borders. Only one problem. There are no provincial maritime borders. There are no provincial maritime economic zones or maritime territorial waters. None. Another bluff by the government of Quebec. Another lie told to the people of Quebec by their government, and it's separatist opposition. The government of Quebec refuses to sign an accord with the federal government, as every other province must do, should they wish to explore for offshore oil and gas. It insists the federal government must recognize Quebec's sole jurisdiction to it's territorial waters. Of all the guff!
Then there is Quebec's arrogant assertion that it does not recognize Labrador as a part of the Province of Newfoundland and Labrador. Unfortunatley, for Quebec, that issue was legally settled. The dispute over Labrador was between the then countries of Canada and Newfoundland. Unable to reach a compromise they submitted the dispute to the Privy Council of Great Britain for arbitration, and in 1927 it was reaffirmed by that body that Labrador belonged to Newfoundland. When Newfoundland and Labrador entered Confederation in 1949 the Terms of Confederation recognized that territorial fact. Yet the government of Quebec continues to place Labrador as part of Quebec on it's website.
Here's were the poker comes in. The very nature of a bluff is that you have nothing in your hand, yet you want others to believe you do. Here's what happens with a bluff. Your opponent folds blindly, or he calls your bluff and you must eat humble pie and lay down your cards. Despite any purported agreement on maritime boundaries for the provinces between the Maritime provinces, Quebec, and the then Leader of the Official Opposion Mr. Stanfield (1964), no such agreement could exist without a constitutional amendment or an Act of Parliament at the least. Therefore, to say this group defined the boundaries, as Quebec argues, is akin to saying some folks got together at Tim Horton's and came up with the deal. It has no legal, or even logical basis in fact. The oceans belong to Ottawa from the low tide mark out. The Supreme Court decided it. Hey Quebec, wake up! Your bluff has been called. Newfoundland is exploring for natural gas and oil at Old Harry with the permission of the federal government. It is not sawing off it's nose to spite it's face. There are no sea borders for provinces. Deal with it or lose out altogether.
The same goes for Labrador. It was stripped from France before there was a "Quebec" by force of arms. It was granted to Newfoundland by Britain. It has been recognized by the British Privy Council, the Parliament of Canada, and the Government of Newfoundland and Labrador. There is no debate, and your recognition of the facts is not required. I suspect that should the time ever come that Quebec hopes to separate, and I hope it never does, that the Government of Canada will call your bluff too. Afterall, should they rescind the territorial expansion act, Newfoundland and Labrador might very well inherit all of current day northern Quebec, and all it's bounty therein. Did you hear that Mr. Ducceppe? Oh sorry I forgot you are in Europe promoting and getting the world ready for Quebec's separation.
Wednesday, November 3, 2010
Seems to me that recently our Premier made it official that Hydro Quebec (read: government of Quebec), was no longer a player in future hydro development in Newfoundland and Labrador. Coincidence? Perhaps. It does seem though that they have a lot of scores to settle with the Premier. First there is the oh so close loss in the gamble to take over New Brunswick's hydro utility, thereby permanently shutting Newfoundland and Labrador out of the hydro business. That failed. Thank God. Then there is the secret little letters going to Ottawa to try and prevent two maritime provinces from coming together and building a sub sea cable with federal help. That was exposed. Quebec's motives bare for all to see. Then there was the promise of a new and agressive approach toward Quebec on the renegotiation of the upper Churchill Contract. Finally, the declaration at the PC convention that Newfoundland and Labrador, and Nova Scotia were going it alone in the Lower Churchill. Perhaps there is also the chance that France's hydro giant may lose it's bid to build a nuclear plant in New Brunswick now that a "friendly" government is in place there? That will not make them happy.
Sounds like a stretch, but is it? The remaining value on the Upper Churchill agreement for Quebec is about 73 billion dollars with zero inflation based on today's rates. The Lower Churchill will be less, but still significant. Then factor in Newfoundland and Labrador's early exploration and drilling on the disputed Old Harry site. Again billions at stake. The numbers start to get into the hundreds of billions. Is it a stretch to say that perhaps the government of Quebec, and their supporters, have launched a war of their own on Danny Williams? Do they see him as the only wall between them and Newfoundland and Labrador's resources. Is this a covert attempt to destroy the reputation of the Premier and cause some sort of "regime change?"
No? Well explain how it is that of all the politicians in Canada, our Premier is being singled out as a bully. Their is a certain premier who is refusing to respect the will of his people and is ramming an HST down their throat - despite a legal democratic challenge. Isn't he a bully? There is a certain Prime Minister that fires people out of caucus and party without legal cause. Is he a bully? There is another Premier to the west that tries to stop our province from recieving funds through a federal funding program to the detriment of our people. He must be a bully? The list goes on. So why target our Premier?
Danny Williams, a man of his own wealth, does not need politics. He did not need the publicity of politics to be known. He did not have to subject himself, and his family, to the rigour of public life. He did so soley out of his concern for the future of our Province and her people. Pure and simple. The rarest of politicians. The people love him for it, and, just as importantly, for what he and his government have achieved on their behalf. At 85% popularity Mr. Williams is in a stratosphere of his own. Perhaps he would not have such a high popularity in other provinces where personal sacrifice and monumentous achievement go unappreciated. This is Newfoundland and Labrador, and these qualities are seen and appreciated. At 85% Premier Williams has his place in history as the most popular politician in Canadian and probably North American history. That's history. Not just the last month, or the last year, that is as in history! An achievement that other politicians can only fantasize about. His place is assured not only in Newfoundland and Labrador's history, but also it's folklore. In other words, he is a folk hero to the people here.
Personally, I believe the people of Newfoundland and Labrador should hold a huge rally in St. John's to show support for our Premier. To send a message to those that are trying to undermine him, and what he stands for. We will not tolerate the personal attacks on our Premier. You won't influence us to turn against him. Our ties are stronger than your will to break them. Let's rally for the Premier not out of hero worship, but out of solidarity with him, and against those that are trying to divide and conquer Newfoundland and Labrador's people and their destiny.