A Closer Look at Reid's Questions on Hebron

What follows are a number of questions presented in a letter from the provincial opposition leader to Premier Danny Williams. It seems that after much internal discussion and planning the Liberal party has finally come up with an official list of questions surrounding the Hebron memorandum of understanding (MOU).

It’s unfortunate for the Liberal party that in taking so long to put their list of queries together most of the questions have already been asked by the media, pundits and analysts but at least these questions are now being asked in a quasi-official manner, even it some of them are clearly intended to score political points rather than inform the public.

Personally, I’m impressed with the fact that the Premier has moved the Hebron project forward, but with that said, there are indeed questions that should be answered.

I suspect some of those questions, as presented in the following letter, cannot really be answered at this point in time. They will likely have to wait until the final agreement is ironed out. Others asked by the Liberal leader are purely political in nature. There are few however that can and should be answered to the satisfaction of the public.

Here are the questions asked by the Liberal leader (with a few of my personal comments added for good measure of course.)

1. Why is your government refusing to release the MOU?

Patriot Comments: Purely a political question intended to score points. A response on why the MOU is not being released would not answer whether or not the MOU is a good one. It would simply add ammunition to the Liberal election machine. Not a good start Gerry.

2. Why did you agree to freeze the royalty rate paid by the oil companies at one percent until payout?

Patriot Comments: An answer to this question would be nice but I think everyone has already settled on what the answer is, everyone except Mr. Reid of course.

Essentially one of the big stumbling blocks to the negotiations was the equity stake the province wanted. Since one or more of the partners had to give up 4.9% of their equity in order for the province to get a share. It’s likely this step was taken to offset investor concern and help mitigate the risk by ensuring a faster return on investment. I’m not sure if I agree with the approach or not but that’s most likely the reason. I don’t see any big mystery there.

3. How much money has been left on the table by compromising on the royalty regime and allowing a one percent payment until payout?

- If the generic royalty regime with an increasing royalty rate from 1% to 7.5% until payout is applied, similar to White Rose, hundreds of millions of extra dollars will flow into the provinces coffers in the early years of production. What impact will your compromise have on the amount of money that could have flowed into provincial coffers in the first ten years of production?

Patriot Comments: This is not only a bit of a loaded question, it’s a fully loaded one.

I agree that we should all be made aware of the expected difference between what provincial revenues would be under the old regime and under the new one but that’s not what Gerry asked.

He began the question by pre-supposing that we would lose money. Notice the phrasing, “How much money has been left on the table”.

He then asks the difference to provincial coffers in the first ten years. That number could be very misleading to the public rather than serving to clarify the real numbers or the government’s position.

Clearly revenues will be less in the first few years, during the payback period. 1% has to bring in less revenue than 7.5% but that doesn’t necessarily mean that over the life of the project the province won’t actually come out ahead. The enhanced royalties at the end have the potential to recoup that money or even provide additional revenues. It’s all dependent on the price of oil.

By loading the question the way he did it’s clear what is motivating Mr. Reid here and it isn’t a quest for the truth.

4. What will the province lose in royalties if the price of oil, after payout has been reached, is less than $50 a barrel?

- There has been much discussion regarding the Upper Churchill contract and the exclusion of an escalator clause. If only people knew when that agreement was signed that the price of electricity would jump so dramatically during the 1970s; however, analysts did not predict such an increase in the price of electricity and the province has lost significant revenues ever since.

Your Hebron MOU proposes a super royalty regime that kicks in once oil reaches $50 a barrel. However, should oil decline below $50 a barrel, the companies do not have to pay this royalty.

The province has stated that to achieve this super royalty, sacrifices had to be made on the generic royalty and hence a one percent frozen royalty payment until payout. What safeguards have been built into this MOU to protect the people of the province should oil prices drop?

Patriot Comments: Finally, a valid question, it looks good on you Gerry.

Industry analysts predict that the days of cheap oil are over and reserves around the world are shrinking. They also predict that the reduction in supply will drive prices higher not lower. That being said, anything can happen.

Prices could drop before the enhanced Royalties kick in.

Over the next decade or so peace could be declared in oil rich nations, dictators may change their minds about big oil, new discoveries under the melting ice caps of the north could increase supply or the worlds newly discovered interest in “green” technology may cut the demand for oil. With these factors at play there is some risk to waiting until the tail end of the project for enhanced payments.

Perhaps the real question should be: How much of the expected $16 billion actually falls into that risk area?

5. When will the project reach payout?

- With so much of the royalty revenue dependent upon when this project reaches payout, what time frames has your government used in its calculations? We all know that this is somewhat dependent on the cost of developing the project and the price of oil, but could you provide a breakdown on the criteria government has used in making this projection?

Patriot Comments: Two good questions in a row. If you keep this up you might win me over yet.

Although this may not be the most important point to be addressed, in my opinion, it’s likely one that’s at the front of most people’s minds and one that deserves an answer. Who wouldn’t want to know when the royalties will be flowing in?

6. How much will government have to invest in up-front costs related to the 4.9 percent equity position?

-Government announced an investment of $110 million to purchase the equity stake and an unknown amount in go-forward development costs. Some have pegged this cost at as much as $300 to $500 million for construction and development related costs, bringing the potential total cost to upwards of $600 million. Can you provide the actual figure and the analysis that government has completed to get its figure?

Patriot Comments: Sorry Gerry but you almost had me with the two previous questions. Now you’re losing me again.

The project was initially pegged at between 5 and 6 billion dollars. It’s easy for anyone to figure out what 4.9% of that amount is. As for any further estimates of cost, they would be highly speculative right now.

Now that the project is back on track the Hebron partners have made it known that they are re-evaluating the cost model, until that is done not even the developers can put a precise number on the project.

Everyone knows the province will have to contribute 4.9% of the cost. Providing you, as the leader of the opposition with numbers like 200 million or 400 million, that would essentially have to be pulled out of thin air, only serves to provide you with a political football to kick around.

Until the new cost estimates are in place you know as much as anyone.

I’ll tell you what, why not just do what everyone else is doing. Multiply $5 billion by 4.9% and then double the result. Somewhere in there you’ll likely come across the number you’re looking for.

7. How long will it take for government to recover its up-front investment?

- An estimated $600 million is a lot of money to put forward in up-front costs without any immediate return on investment. How long will it take to recover this investment before any real money flows into the provinces coffers?

Patriot Comments: This is a sad and repetitive question. In question 5 you already asked when the payout of costs is expected to happen. Clearly, as a partner in the project, the province will recover its investment costs at the same time the other partners will. An answer to question 5 will answer this as well. There is really no need to even ask this question.

8. What risks has the province been exposed to related to liabilities such as environmental clean-ups or cost overruns because of the equity position?

- The province has a 4.9 percent equity stake in this project and will be responsible for 4.9 percent of the overall costs. This would include 4.9 percent of any cost overruns or 4.9 percent of any liabilities, such as an environmental clean-up if there was an oil spill. Has government included any of these factors in deciding the profitability of an equity stake, or is this a decision that accepts risk and hopes that nothing goes wrong over the life of the project?

Patriot Comments: Once again Gerry another sad question.

I think it’s clear to everyone by now that by owning 4.9% of the project the province shoulders 4.9% of the cost and risks.

Nobody has tried to hide that fact.

The reality with any project is that the developers work to limit risk as much as possible. With that done, if something happens you deal with it.

Should the province have taken on that risk? That’s more of a political question than one about the MOU itself and I believe in your subtle way the point you’re trying to make here is that it shouldn’t have. Clearly you are not trying to ask a legitimate question.

On a brighter note (not that an environmental incident could really have a bright side) but even if some sort of environmental disaster cost $100 million dollars to clean up, and those are very rare indeed, the province would only be on the hook for 4.9% of that, or less than 5 million dollars.

Considering that some analysts expect the cost of production to be around $3.90 per barrel and the market is currently in the $70 range there is wiggle room to be had.

9. Apart from the GBS (which is captive to this province and will be built at Bull Arm),what percentage of other fabrication work will be completed in this province?

- At your press conference, you refused to put a figure on how much work will be completed in Newfoundland and Labrador. During White Rose, government stated up front that over 80 percent of the total work would be completed in this province. At the end of the project, over 85 percent of work that could be completed in this province was completed in Newfoundland and Labrador. Can you provide a concrete figure on the work percentage for Hebron, the breakdown of the calculation, and if not, why not?

Patriot Comments: You’re winning me back again Gerry. Not a bad question.

We should find out how much work will take place here, if our yards and local companies have the infrastructure, capabilities and manpower to step up to that work we should know if it will be done here, although it may still be far too early for “concrete figures”.

10. How much of the FEED (front-end engineering and design) and other detailed engineering work will be completed in this province?

- In the past, we have heard vocal critics such as Mayor Andy Wells state that no FEED or other engineering work should be done outside the province. This announcement certainly hints that a significant majority of engineering work will be completed outside Newfoundland and Labrador. Can you please provide the percentage of FEED work that will be completed here; provide a breakdown of how this calculation was done; and why we are allowing a significant portion of this work to be done elsewhere?

Patriot Comments: Oh Gerry, you sneaky little so and so.

Once again you’ve presented a loaded question that draws conclusions and then builds on them.

Your question is based on what you call “hints” in the MOU announcement. You then use those “hints” as fact and make the leap of asking why a “significant portion of the work” will be done elsewhere.

I agree that if the work can be done here at a reasonable price then it should be. I, like most people, would like to know how much of it will actually be done here, but you have presented the question in a way that pre-supposes, based on “hints” that a significant portion won’t be.

Be careful Gerry, your political agenda is starting to poke through again.

11. How large will the Gravity Based Structure (GBS) be in comparison to Hibernia?

- We have spoken with some industry analysts who state that the GBS to be completed for this project at Bull Arm will be one third the size of that for Hibernia. Is this true, and if so, will only one third of the workforce be required? Can you provide an analysis that shows the true size and work requirement to build this GBS? How many work hours will be required and what will be the peak years?

Patriot Comments: Not a bad question, I’ll give you 75% on that one Gerry.

The question about work levels needs to be answered but I'd bet it's far too early to give precise numbers.

Where you fall down in your question (and I’ve heard you make similar comments to the effect in the media) is in your supposition that a GBS one third the size might only require on third of the workforce. That’s likely not true.

If it takes a woman nine months to have a baby does that mean nine women can have a baby in one month?

12. How much of the topsides work will be completed in this province and where?

- You stated at your press conference that more fabrication tonnage will be completed in this province than either the White Rose or Terra Nova projects. Both White Rose and Terra Nova were floating vessels, whereas Hebron-Ben Nevis requires a GBS. The weight of the concrete alone would satisfy this requirement, but certainly does not provide any work commitments for topsides fabrication.

- While the smaller GBS will be built at Bull Arm, there does not appear to be any commitment for all the topsides work to be completed in this province. You have already stated that the major process module will be built outside the province. Can you provide a breakdown of what percentage of the topsides work will be done in Newfoundland and Labrador and where? What is the estimated tonnage of the topsides? How many person hours of work will be required? What percentage will be within the province? What components?

Patriot Comments: Once again, some of these detailed questions may not be answerable at the moment but questioning whether the MOU calls for the topsides to be built here is a valid and very important question that should be answered.

It might well be too early in the process to identify exactly where in the province that would happen or the exact amount of work it would generate but I suspect I know why Gerry asked for specific locations. I’ll clarify that during my comments on the next question.

13. How much work will Marystown get?

- We know Bull Arm will get the GBS work, but there is no real commitment to topsides work anywhere. What percentage of work will be undertaken in Marystown? What percentage will be undertaken at other sites in the province, e.g. St. Johns Dockyard?

Patriot Comments: Again, I suspect information around precisely what work will go to what yards is not even available yet. I assume that determination of this sort of detail will require discussions with management at these facilities to determine if they have the capability to do specific work, if they have other obligations that would prevent them from taking part and how much they would charge. This latter point, the cost, is something that would require a detailed project plan and the preparation of estimates for a yard to even make a guess at.

I would think that a simple answer from government confirming that pieces of work X, Y and Z will be done in the province should be enough of a response to answer any concerns the public might have.

The only reason I can imagine that Gerry is looking to get information on specific yards and what they’ll be doing is if he hopes to sway voters in those areas that may not be slated for Hebron work at this point.

As a final note:

Gerry, I give you credit for at least getting a few solid questions out there but in the end your political biases have once again shone through. By the way, I know it’s silly, but why 13 questions? Couldn’t you have come up with at least one more? Better yet, you could have left the repetitive and politically motivated ones out altogether. Or was the decision to go with 13 a subtle attempt by you to wish some sort of bad luck on Williams, the MOU or the project itself? Naw, you can’t be that desperate can you?

Debt Reduction Petition

I'd like to take a moment to ask my readers to consider a petition put forward by some folks on the west coast. They believe the best way for then entire province, not just the Avalon area, to benefit from the Hebron development is to use a portion of future revenues to pay down our crushing provincial debt and free up funds now used to service interest obligations to our creditors.

I have placed a direct link to the petition at the top of our Web Talk links section (left side of this page) for anyone interested in supporting it.

A special thanks goes out to one of our readers, Glenn, for bringing this petition to my attention. I'm happy to support it I am also pleased to add my name to what I hope is a growing list of signatures.

The following article identifes some of the thinking the proponents have put into this campaign. I hope the authors of the following are not offended that I edited their words for length. If you would like to read the entire text (and the petition can also be accessed at their site) why not pay a visit to: http://portauxbasquesonline.ca/Forums/showthread.php?t=6451


Debt Reduction:

The Hebron oilfield MOU signed last week by Premier Danny Williams and the Hebron corporate consortium is arguably the most important fiscal understanding in the existence of NL to date as well as its future.

Based on earlier estimates and considering other known factors, Minister Kathy Dunderdale's predictions of 16 billion dollars in NL direct revenue may be a fairly good estimate.

If the whole of Newfoundland and Labrador is to benefit equally from the non-renewable resources this province has to offer, regardless of geographic proximity, there is only one common goal which equates us all, our provincial debt.

Currently at around 9.6 billion or so, we have the highest per person debt in the country and twice, yes that's 2 times or double that of the next worst province, our neighbours Nova Scotia.

Our debt is estimated to cost our treasury around 509,027,700 in servicing (interest) costs for fiscal year 2007-2008, that's half a billion dollars a year. In comparison, the 2007 provincial budget allotted just over 1 billion dollars for the whole education dept. in NL. That's the amount the province spends on anything and everything that you can think of when it comes to primary, secondary and post secondary education, student loans and anything to do with learning, even the libraries are under this department.

This debt we carry is the Albatross around the neck of NL. It is preventing industry from locating here since the debt a jurisdiction holds is a key measure they use when deciding where to go, especially when it means billions in capital investment which most of the future projects in NL require.

The Hebron deal gives us a chance to dream big, to set the big goal and to set a plan for the future, both short and long term. We need to look at the debt as a mortgage and the Hebron deal as a means to pay off our mortgage over a 25 year period so we are indeed, to coin a popularly used phrase, "masters of our own house."

As mentioned above, we are equally responsible for the debt we hold, just as we are equal owners of the resources of NL regardless of proximity. This is why I believe eliminating the debt is the fairest and most equal way for all Newfoundlanders and Labradoreans to share in the good fortunes of our non-renewable resources.

If we demand that our politicians legislate into law that 50% of all direct government revenue from the Hebron project goes against paying down the debt for the lifetime of the project, that's 8 billion of the 16 billion dollar figure estimated by government. Remember also that when this debt is paid off it frees up half a billion dollars a year to be spent on education, roads, healthcare, the environment etc. Every single year going forward after the debt is paid off.

There is an election coming up and this is as good a time as it's going to get to achieve something like this collectively, especially for those ridings off of the Avalon.

As a final note, I have used the phrase "direct revenues from Hebron to province" since the Hebron value to the province "indirectly" is roughly worth another 12-15 billion dollars. This revenue is in the form of personal income taxes those employed in the project will pay, wages the workers will make and spend here at home, the NL sales tax on all goods and services provided for the project as well as many other fees, provincial corporate and municipal taxes the project will pay out during its lifetime. That works out to 27 billion in direct net benefit to the province from Hebron alone.

Hebron MOU Becomes Political Football

On August 27 VOCM radio’s question of the day on their web site asked, “Do you think government (of Newfoundland and Labrador) should release all the information it has on the Hebron Deal”?

At last check the result showed:

NO – 62%
YES – 34%
Undecided – 4%

Very interesting numbers to say the least and they should prompt everyone in the province to stop and think for a minute.

Keep in mind that the poll is by no means a scientific one. People can lobby friends, family or even political party faithful to vote one way or the other and (though I won’t discuss how) there are ways to vote more than once if you have nothing better to do. Regardless, the poll results ought to raise a lot of questions and concerns among the population. If they don’t then God help us all.

From my own perspective, I’m at a loss to understand why so many people would not want to know the details of an agreement that will significantly impact them, for better or worse, for decades to come? When you consider that the people of Newfoundland and Labrador have witnessed some of the most idiotic contractual blunders in history, starting with the Terms of Union, the results are very disconcerting.

The people of Newfoundland and Labrador have lived for decades under a lopsided contract for Churchill Falls power. The province has seen the wasteful and shameful results of the Sprung greenhouse fiasco and as recently as a few years ago witnessed the Liberal government, under Roger Grimes, stopped in its tracks in an attempt to sign a less than stellar contract for the Lower Churchill.

Why, with those and other shameful examples of government idiocy permeating the collective psyche, would so many people be willing to put their faith and their future in the hands of any government, no matter how popular, with no concern over the details of the deal?

Don’t get me wrong. I’m not one of those self proclaimed “public relations” or “public policy” consultants who haunt the open line programs while waiting by the phone for the next interview request from the national media. You know the ones. Those poor folks who once held highly paid positions under former Liberal governments and now spend their days desperately scratching for any way to attack the governing PC party. Doing so, I can only suppose, in the hopes of one day finding their way back into a cushy job and the halls of power.

No, I don’t fall into that camp and I don’t play that game, not at all, in fact nobody is happier than me that a deal is finally in the works for the Hebron project, but I have to question whether or not secrecy is really in the best interests of the province.

I fully understand the government’s resistance to simply handing the MOU out to the public, or even bringing it to the House of Assembly a month or so before a provincial election, but the entire situation bothers me anyway.

There are arguments to be made both for the release of the document and against it. Perhaps the most compelling argument against releasing the details might be that it contains information that could impact the publicly traded companies involved.

When it comes to documents that affect share prices or competitive advantage, either adversely or otherwise, secrecy is not only understandable but necessary. The problem with the Hebron MOU is that I don’t know if this is the case and neither does anyone who hasn’t seen the paperwork. I’d suggest though that a determination of whether or not it does could be made if the agreement was provided to the proper regulatory agencies for review.

Assuming for just a minute that the companies involved would not affected by the release of the MOU, what about the upcoming election?

The fact that the Williams government pulled off such a coup immediately prior to the election must have hit the local Liberal and NDP parties like a runaway freight train. There is no doubt both opposition parties would love nothing more than to find a way to tear the agreement apart and through it, the Williams express, but what would that provide to the public other than a political spectacle?

Releasing the MOU this close to an election would provide little more than a political football with the Hebron partners caught in the middle while candidates scramble for political points. That situation wouldn’t do much to help the public understand the real question, whether or not the deal is a good one. Instead it would more likely cloud the issue and confuse voters.

Another option might be to wait until after the election to release the document and debate it in the House. The problem with this approach is that by all accounts premier Williams will have secured a second majority by that time, if not the total annihilation of his opposition, and with a majority in place the deal would likely proceed anyway, good or bad.

There are those (most of the 62%) who will, for whatever reason, stick to their guns that “Danny is the man” and we should all just leave him alone. Not me. I like the man. I fully understand, even support, many of the decisions he’s made since elected, but I don’t believe absolute power should be handed to anyone. Remember Joey Smallwood?

There are also those (the 34%) who believe this agreement should be brought out immediately. Some of them see the potential for political advantage (read Liberal) and others who believe that openness and transparency makes for a much more responsible government than secrecy does. I agree in principle with latter group but after looking at the issue from a number of angles I can honestly say, while I would personally love to see the Hebron MOU, I can understand the problems tabling it now might present.

There is no black and white to be found here, only shades of grey.

As for the 4% who were undecided in the poll, I usually look on undecided voters with little or no respect. The reason is simple. Usually their response is the result of a lack of concern over important issues or a lack of knowledge about them, both products of their own doing. I don’t feel that way about the respondents to this particular poll.

So where does this leave yours truly on the issue?

In my 40+ years on this earth I can’t recall ever slipping into the “undecided” camp on any poll and while this one has me stumped, baffled and befuddled, I refuse to go there now.

I’m almost convinced that the Williams government will win a large majority in October regardless of whether the MOU is released or not. With a majority government in place, even if the deal calls for the province to give the oil away and pay someone to take it, there’s not much anyone will be able to do about it.

The only thing releasing the MOU would do at this point is to give the Liberal party a fighting chance of winning a couple of close ridings. If their publicity machine is strong enough to make anything out of its content that is, something that’s by no means guaranteed.

The public already knows enough about the deal to understand that billions will come into the province and thousands of jobs will be created. Even if there are major problems with agreement I doubt the Liberal machine is functioning well enough to make much out of the details. They might pick up a seat or two but I seriously doubt they can do anything to change the overall outcome of the October election. At this point even if it were uncovered that Williams had sold his soul to the devil in exchange for eternal life and a crunchy bar he’d likely win.

So, should the MOU be tabled in the House at the first opportunity? Should the government keep it under wraps? Should it be brought to the House after the election for public debate?

I don’t know but all these questions are making my head hurt.

I also know that the MOU itself won't contain all the details of the final contract so while it may contain some insights for the public it won't answer all the questions. Even if the MOU never sees the light of day everyone in the province needs, and should demand, to be made fully aware of the details in the final contract when it's drawn up. They deserve to review every last comma before anyone lays a pen on it to sign us up. That at least will let the public know who they should congratulate or who they should hang from the flagpole on Confederation Hill.

Ship Comes in - Local Media Misses Boat

Update: At the time this story was published I was unaware that the Telegram's Rob Antle had alredy done a piece on the same topic. Never the less, the fact remains that two local media outlets neglected to bring the public the full picture. I'm glad however that one paper (run out of Quebec) did bring the facts out into the light of day.

My disdain of the mainstream media is something that’s grown on me over the past few years. The reason is simple. Most media outlets are lazy in their approach and for whatever reason they have an innate ability to continually bring the public slanted and incomplete stories.

While my disgust is usually focussed on national outlets like the Globe and Mail or National Post, our local media is not much better.

Recently a story ran in the Newfoundland and Labrador newspaper, The Independent. The same story was also covered by provincial radio station VOCM, which proudly bills itself as a winner of the Edward R. Morrow award for journalistic excellence. Both services highlighted a Florida based company, CALA Corp. and told us all about how CALA's future development plans might mean thousands of local jobs in the province.

According to both services the company is looking to contract a local shipyard for the construction of floating resorts and condominiums. CALA will finance the building of several mega ships by pre-selling residences then anchoring the newly minted vessels in resort areas around the world and in doing so provide ocean front living accommodations where very little ocean front property remains available.

Both the Independent and VOCM reported that the company had been in contact with the provincial government about its plans and was awaiting approval to move forward.

The Independent went so far as to quote a spokesperson with the company who said that in four years the operation could create as many as 25,000 local jobs.

When the story first came to my attention I immediately thought how great this would be for the local economy. My second thought was to wonder why neither The Independent or VOCM had questioned the veracity of CALA Corp’s claims or reported anything at all about the makeup of the company.

Instead of offering the public with hard facts these supposedly unbiased news stories presented only the information provided by a company spokesperson and in doing so left the distinct impression CALA might single handedly end the unemployment problems in our province for decades to come.

I don’t know if anyone ever told the our local reporters but there is an old saying, “if something sounds too good to be true it probably is.”

Since the mainstream media appeared uninterested in doing its job I figured I might as well see what CALA Corp was all about. Here’s what I found out.

According to their latest annual report, dated August 2, the company has suffered net losses of between $800 thousand and $900 thousand in each of the last two years. As of a few weeks ago the company’s liabilities exceeded its assets, meaning CALA Corp is essentially broke.

As reported, CALA is a company that plans to finance their multi-million dollar projects by pre-selling units, but who will the buyers be?

Ask yourself, "If I had hundreds of thousands or even millions of dollars to buy a luxury getaway would I be willing to hand that money over to a company on the edge of bankruptcy in the hope they can sell enough units to actually build it?"

CALA Corp is not a major corporate entity. In fact the board of directors of CALA Corp. consists of only three members, Joseph Cala, Ray Francis and Larry S. Pfautsch.

Joseph Cala, the company’s founder, is also its Chairman, Chief Executive Officer, President, Chief Financial Officer and Principal Accounting Officer.

While the company has been bleeding red ink, Mr. Cala pays himself a salary of $300K a year.

The one shining light is that Mr. Cala appears to be quite honest in his reporting on the company’s finances. He even noted in the company’s annual report that there are major concerns about CALA’s ability to continue as a viable entity.

In the report plans for an ocean based resort development, the need to find a shipyard, the company’s lack of experience and its dire financial position are highlighted.

I’m not saying CALA won’t find a way to succeed in their efforts. I wish them well in it, but I think it’s fair to say that after learning more about the company my estimation of the chances that 25,000 people will actually be working on CALA projects in the next few years is somewhat diminished. Something a fair and unbiased news report might have informed me of if a little time had been taken by those who covered the story.

I don’t want to put too much emphasis on this with my friends in the mainstream media, and I do consider many of them friends in that they’ve been very supportive of my efforts up to now (if not after this article) but maybe the next time you might want to consider doing more than reporting on what the people directly involved have to say.

By the way my research took about 5 minutes thanks to a fantastic new software program called Google. You should check it out sometime.

CALA Corp - Annual Report Excerpts:

Twelve-Month Plan of Operation.

...The Registrant plans to build the first UnderSea Resort & Casino, the first Undersea Residence, and the first Residence Fractional Ownership. The first development will be the residence and the fractional ownership, and the project will be financed from pre-selling individual units…

…During the twelve months forward the Registrant plans to complete the development phase of the Undersea Resort and finalize plans for securing the financing and construction of the resort. The Registrant will secure the yard to build the resort and contract for its construction.
Risk Factors Connected with Plan of Operation.

Limited Prior Operations, History of Operating Losses, and Accumulated Deficit May Affect Ability of Registrant to Survive.

The Registrant has had limited prior operations to date. Since the Registrant's principal activities recently have been limited to seeking new business ventures, it has no recent record of any revenue-producing operations. Consequently, there is only a limited operating history upon which to base an assumption that the Registrant will be able to achieve its business plans. In addition, the Registrant has only limited assets. As a result, there can be no assurance that the Registrant will generate significant revenues in the future; and there can be no assurance that the Registrant will operate at a profitable level. Accordingly, the Registrant's prospects must be considered in light of the risks, expenses and difficulties frequently encountered in connection with the establishment of a new business.

The Registrant has incurred net losses: $798,862 for the fiscal year ended December 31, 2005 and $904,233 for the fiscal year ended December 31, 2006 including discontinued operations loss of $11,516. The Registrant's current liabilities exceed its current assets by $62,221 as of December 31, 2005 and $114,027 as of December 31, 2006. At December 31, 2006, the Registrant had an accumulated deficit of $11,886,789. This raises substantial doubt about the Registrant's ability to continue as a going concern…

A complete copy of this report can be obtained by contacting higginsmyles@yahoo.ca or by searching Google for “CALA Corp Annual Report” (Sorry, I couldn’t resist)

Might as Well be Happy About Hebron Deal

The following is from today's Halifax Chronicle Herald. It doesn't contain anything new about the Hebron deal or the circumstances surrounding it but it does make an interesting read simply as a means to see how Nova Scotia papers are viewing the Hebron deal.

Enjoy.

Might as well be happy about N.L.’s Hebron deal
STEPHEN MAHER 6:53 AM

SO, IT LOOKS like Brian Peckford’s prediction is finally going to come true. The sun is about to shine on Newfoundland and Labrador, and have-not will be no more.

Premier Danny Williams announced Wednesday that the province has reached a tentative deal to develop the Hebron oilfield, which is estimated to contain 700 million barrels of oil, worth about US$50 billion at the current price of US$70 a barrel.

The deal looks sweet. For $110 million up front, the province will buy a 4.9 per cent equity stake in the project, and stands to take in as much as $16 billion over 25 years, thanks in part to a 6.5 per cent "super royalty" on top of other royalties, as long as oil remains above US$50 a barrel.

The province had to give up some of its demands to make the deal with a consortium led by Chevron and ExxonMobil. It had earlier asked for a bigger equity stake and a new refinery. It also gave up some royalty points in the project’s early days.

If it all works out as intended, Hebron will provide a healthy stream of cash from 2015 until 2040, which happens to be when Newfoundland’s terrible deal with Quebec finally ends and it starts to make money from Churchill Falls hydro.

In winning the deal, the man Newfoundlanders call Danny Millions acquired a new mainland nickname: Danny Chavez, after Venezuelan President Hugo Chavez.

In April, Mr. Williams’ tough negotiating style drove the oil companies away from the table, complaining that Newfoundland was unfairly insisting on an equity share in the project.
Mr. Williams responded with bombast, threatening to expropriate ExxonMobil’s share of the oilfield.

"I can tell ExxonMobil that I will be in this office when this project gets done," he said. "If that takes 10 terms, and the people of Newfoundland and Labrador want to re-elect us time and time again, we’ll stay here till this is done. They won’t wait us out."

Business journalists in Toronto and Calgary didn’t like this kind of talk, and, like singers in a chorus, they sang together, portraying Mr. Williams as a dangerous fool.

The Calgary Herald called him "a tinpot, banana republic demagogue."

Financial Post columnist Terence Corcoran called him Hugo Williams, and said he was joining "Russia and Venezuela at the forefront of grandstanding potentates facing off against the global oil industry."

The federal Tories — keen to find a way to counterattack Mr. Williams while he was savaging them over the Atlantic accords — joined in.

In June, federal Natural Resources Minister Gary Lunn released an ominous speech.
"We have to remember that decisions, no matter how popular or appealing, have consequences," he warned.

As it turns out, the consequences of Mr. Williams’ decision to play tough with the oil companies seems to be a wonderful grand deal for Newfoundland.

Mr. Williams seems to have correctly judged that in an increasingly oil-thirsty world, ExxonMobil couldn’t afford to turn its back on 700 million barrels of oil. And however annoying Mr. Williams may be to the oil guys, he’s easier to deal with than the real Hugo Chavez, or the gangsters running Russia’s oil industry.

Of course, there is no way of knowing whether the oil companies would have been willing to sign a deal like this back in April if Mr. Williams had been ready. He does have an election coming on Oct. 9. The deal with the oil companies hasn’t been finalized, and the premier won’t release many details.

In opposition, Mr. Williams was apoplectic when the Liberal government of Roger Grimes wouldn’t release the details of the Voisey Bay deal, so his refusal to release this information looks hypocritical, and reinforces the impression that, like Joey Smallwood before him, he has dictatorial tendencies. (Consider, for instance, that Mr. Williams appointed a former president of the Newfoundland Progressive Conservatives as chief electoral officer.)

So it’s possible that Mr. Williams played chicken with the oil companies to look good to voters, delaying a project for no good purpose and then signed an enormous deal just before an election. The oil companies have no reason to care if Mr. Williams storms around on stage, ranting and roaring and waving his fists. They just want to get their manicured hands on the 700 million barrels of oil.

But Mr. Williams was already at 73 per cent in the polls, so he didn’t really need the help. And, whatever happened behind closed doors, he is seen to have faced down the oil companies and won.

In politics, perception is reality. That means that whatever the truth of the matter, Mr. Williams beat ExxonMobil and pulled Newfoundland one giant step closer to being a have province.
Newfoundlanders are a tough crowd from a tough place, and they love a fighter. Mr. Williams has now fought and bested Paul Martin, Stephen Harper and the biggest oil company in the world.

He could — and might — spend a big chunk of the oil money installing a rotating golden statue of himself atop the Battery, and Newfoundlanders still wouldn’t complain.

In Nova Scotia, we can only look on happily, with perhaps a little jealousy, and watch as the natural order of things is overturned, and Newfoundland becomes richer than our province in the years ahead.

Better our kids move to St. John’s than Fort McMurray, I suppose.

Workforce Concerns Hit Alberta Oil Patch

The following appeared in today's Edmonton Journal.

Interestingly it seems this week's Hebron announcement has begun to stir some level of concern out west.

Newfoundland fog rolls over oilsands

The Rock hopes Hebron oil brings its people home -- but Albertans say it's too soon to tell
Jamie Hall, The Edmonton JournalPublished: 2:20 am

EDMONTON - Newfoundland's natural resources minister says the billion-dollar Hebron offshore oil project will lure thousands of Newfoundlanders and Labradorians who now live and work in Alberta back home to the Rock.

"(They're) like homing pigeons," insisted Kathy Dunderdale in an interview Thursday. "They want to come home."

Newfoundland-Labrador Premier Danny Williams said this week's deal, to develop the $6-billion Hebron Ben Nevis heavy-oil project, means the province can finally take meaningful ownership of its resources and pave the way for the return of residents forced to leave to look for work.

But an Alberta economist says it's too soon to know what impact the deal will have on either province. "There may be effects (to Alberta's economy) in the long run," says Todd Hirsch, a senior economist with ATB Financial.

But Hebron won't start producing oil until after 2010, so the impact on Newfoundland will be medium- to long-term, he adds.

Also, when the jobs do arrive, they will be very different than those in Alberta's oilsands, where many Newfoundlanders currently work.

"Offshore drilling is a much different type of technology and infrastructure than the oilsands," Hirsch says. "(Many) of those skills might be transferable, but a lot of them aren't going to be."
"And," Hirsch adds, "the oilsands are far more labour intensive; that's why you need so many workers."

Oilsands giant Suncor, for instance, employs 6,000 people company-wide, 4,000 of them in Fort McMurray, and a "significant number" hail from Newfoundland, says spokesman Brad Bellows.
Like Hirsch, Bellows says it's too soon to know if the Hebron project will take a bite out of Suncor's workforce.

"There may be some movement," Bellows says. "We'll have to wait and see.

"There's always competition for jobs and there are always a lot of opportunities for skilled workers, and not just in the oilsands.

"But we feel we are the employer of choice for a lot of employees, and we plan to keep it that way."

Another major oilsands player, Syncrude, offers similar sentiments.

"Having a qualified and skilled workforce is key to maintaining solid operations at Fort McMurray," says spokeswoman Kara Flynn, "and we're committed to ensuring that we provide an attractive situation for employees and potential employees. We would do that regardless of what market conditions were."

If Dunderdale has her way, Albertans will soon be flocking to Newfoundland to take advantage of the prosperity resulting from Hebron and myriad other projects Premier Danny Williams' government has been developing in the past couple of years.

"Our challenge all along has been to try and organize these projects in a way that we will have long-term, sustainable employment," Dunderdale said, "and I think we've done that.

"Alberta has been so generous to the people of our province who have come there, and it's a wonderful time in our development where we can extend an invitation and provide opportunities for people in other provinces."

When Williams toured the oilsands in Fort McMurray earlier this year, he met with Newfoundlanders and talked at length about the eastern province's "changing economy" and the "opportunities that are on the horizon."

Hirsch says Alberta needs to create an environment for workers who will remain "attached," regardless of opportunities elsewhere, whether they're from Newfoundland or elsewhere in the country.

"For too long, Alberta has been looked at as the bank machine of the country because of its boom-and-bust cycle," Hirsch says. "People come in, they get their money and get out.
"We need to create a province that, even if things moderate, people won't pick up and leave at the first job offer from back home. We'd like to keep them."

The Newfoundland and Labrador Welfare State

During the past few days, ever since news of the Hebron oil agreement reached the media, Newfoundland and Labrador premier, Danny Williams, has made it a point to highlight the contribution his province makes to the Canadian economy. Hebron oil grabbing the headlines has provided him with an opportunity to impress on Canadians that the stereotype of Newfoundlanders as “sucking at the federal teat” is one that is so far off base as to be ludicrous.

Ever since Newfoundland and Labrador was dragged, kicking and screaming into Canada in 1949 many in the Country have held onto the false and backward belief that the province is nothing more than a drain on the nation and should be cut loose. What was it Globe columnist Margaret Wente called the place, “a vast and scenic ghetto”?

It seems that sort of narrow minded bigotry is displayed every time someone mentions battles over equalization, offshore revenues or anything else related to federal funding in the province. Many Canadians just shake their heads and comment that those “damn newfies are whining for more welfare again”.

The same people who are quick to make those sorts of statements are just as quick to accept it as natural when Ontario demands billions for the Auto industry or for mass transit. The thinking is that Ontarians put far more into the federation than they take out but those bloody Newfoundlanders just take and take and take and whine for more.

The utter stupidity of that attitude is a message the people of Newfoundland and Labrador have been trying to send for years. Unfortunately it usually falls on deaf ears and closed minds.

These days we find premier Williams using public interest in the Hebron development as an opportunity to try to change that attitude. I wish him all the luck in the world. He’ll need it.

What many Canadians never hear about, or refuse to see, is the contribution made by Newfoundland and Labrador each year in direct relation to what it receives.

Of course there are a lot of back and forth financial dealings between any province and the federal government, everything from health care dollars to environment funding and more. In that light Newfoundland and Labrador is no different than any other province (except it generally gets far less because of its small population).

That aside, the one financial figure most people use as a benchmark and the one that’s been in the news so much recently is equalization. That’s the one people most often use to paint Newfoundland and Labrador as a burden to Canada, so let’s take a look at it.

According to the government of Canada, Newfoundland and Labrador received $632 million dollars in equalization payments in 2006-07. That figure was about half of the value of the payout to NS, NB or Manitoba and only about 10% of the figure paid to Quebec.

Now that we have a clear cut figure to work with, $632 million, perhaps it would be enlightening to compare that number with just a few of the contributions the province made to Canada during the same period.

The complete list of Newfoundland and Labrador’s contributions to the rest of Canada, (just the financial ones alone that is) can never be covered in one article and likely never fully understood without an in depth study, however…

At a glance I can easily identify the $1 billion dollars Quebec Hydro makes each and every year from Churchill Falls power generated in Labrador, not to mention the industrial revenues available to them thanks to the availability of that power.

I can also see the approximately $2 billion each year Ottawa receives from offshore oil projects in the province (not counting the upcoming Hebron project that’s expected to generate even more).

Next to come to mind is the value of ore coming from the province and used to keep smelters operating in Ontario and Manitoba? That ore keeps hundreds, if not thousands, of direct workers on the job in those provinces and helps feed secondary spin off industries such as restaurants, bars, real estate sales, etc. and let’s not forget the taxes it generates. For the sake of argument let’s peg the value at an even 1 billion a year.

Speaking of taxes, what about the federal taxes paid directly by Newfoundlanders and Labradorians working at home and across Canada and let’s not forget those paid by local companies. I can’t even begin to guess at the value of that but I know this writer alone pays enough federal taxes to support another family so I’ll conservatively put the number at another $1 billion.

By the way, those taxes, mine and yours, are what Ottawa uses to pay out equalization to the provinces. Now that you know that, the next time someone in Alberta or Ontario complains about their province having to pay for equalization, tell them to bite you. No province pays a penny for equalization, the taxpayers do, including the ones in Atlantic Canada.

I haven’t even mentioned the value of Newfoundland and Labrador’s contribution to Canada’s GDP in other areas, its paper products and lumber, the value of its fisheries exports, etc. I don’t intend to go through an exhaustive list but I think I’ve made my point.

When you consider that just the few items I’ve mentioned clearly exceed $5 billion each year, and likely far, far more than that, it should be easy for any intelligent person to understand why Newfoundlanders and Labradorians suddenly get defensive when someone from “the mainland” seizes on the few hundred million dollars the province receives from equalization as an excuse to propagate the myth of an east coast welfare state.

I’m glad Danny Williams has taken the opportunity given him to clarify the province’s position on this ever present issue but as I said before, good luck to him. I, like many others, have tried for years to deliver the same message. It’s a thankless and often frustrating task.

Newfoundland & Labrador Sets Precedent with Hebron Offshore Deal

Yesterday reports surfaced that the government of Newfoundland and Labrador had reached an agreement with Chevron Canada and its partners over development of the lucrative Hebron oil project off its shores. Today Premier Danny Williams has confirmed the report and released further details during a press conference held on Confederation Hill in St. John’s.

Williams told reporters that in addition to the standard royalty agreement in place on previously negotiated offshore projects, such as Hibernia and White Rose, the Hebron deal will also include a new “super” royalty regime that will see royalties increase whenever oil prices exceed $50 per barrel, a common situation in today’s markets.

The agreement will also see Newfoundland and Labrador purchase a 4.9% equity position in the project at a cost of $110 million dollars (Can.) marking the first time the oil industry has agreed to an equity stake for any Canadian province on such a development. This has led some industry analysts to believe the precedent setting deal may alter the way other provinces manage their oil developments in the future.

With the Hebron project estimated to cost $6 billion to develop some expected the 4.9% stake would cost an estimated $300 million. The investment by Newfoundland and Labrador announced today was actually much lower at about a third of the price.

Over the 25 year production life of the project, based on oil price projections and the expected inflation rate, the project could be worth upwards of $16 billion to Newfoundland and Labrador. It is also expected to generate more than $7 billion for federal coffers. Clear proof, Williams said, that Newfoundlanders and Labradorians are indeed strong contributors to the Canadian Economy.

Taking advantage of the opportunity to send a message to Ottawa, Williams went on to say that the project would go a long way toward helping to make Newfoundlanders and Labradorians “Masters of our own house”, a statement clearly reminiscent of the early nationalist movement in Quebec.

According to Williams the memorandum of understanding also includes a local benefits agreement that will see construction of a gravity based structure take place in the province and a higher level of local employment than any previous project has fostered.

The Hebron oil field was discovered more than 2 decades ago however the companies involved showed no interest in developing it until the recent rise in oil prices and political instability in other locations worldwide made it look far more attractive to the partners.

The long wait to see development of the field, estimted to contain over 700 million barrels of oil, is something that has irked the people of the province who continue to suffer under high unemployment and a crushing provincial debt.

Two years ago many saw a light at the end of the tunnel but just 18 months ago negotiations broke off when the companies involved walked away from the table after Williams asked for an equity stake in the project and refused to grant hefty tax concessions to the developers.

At the time many national industry analysts and news commentators slammed the premier over his handling of the file, even comparing him as Venezuelan dictator, Hugo Chavez.

Prime Minister Stephen Harper also refused to back the Premier in his efforts to table “fallow field” legislation that would force oil companies sitting on major finds to develop them rather than warehousing them for decades.

Negotiations resumed early this summer after the premier publicly stated that he intended to introduce a new energy plan that would include an even tougher position on all new developments but with the caveat that any deals agreed upon prior to the release of that plan could still move forward without being subject the new regulations.

This move, in addition to the companies involved facing worsenting development conditions in places like Venezuela, where Hugo Chavez is demanding a controlling equity in all projects, has led the developers to rethink their original stand on the Hebron field and to consider a 4.9% stake much more reasonable than they originally did.

It seems that although some in the national media labelled Williams as another Hugo Chavez big oil does not.

There was no indication today on whether or not the companies involved were granted any tax breaks or other concessions as a part of the agreement. When talks broke down in 1996 the companies insisted on a $500 million dollar tax break before moving forward, a demand the Williams government refused to entertain at the time.

As with any memorandum of understanding, the Hebron agreement indicates that all parties are in agreement with the general terms for a binding contract, however the final details of the agreement still need to be ironed out and will likely take several months to finalize.

With today’s announcement Premier Williams is claiming a victory for the people of Newfoundland and Labrador however the official opposition leader, Gerry Reid, says he is waiting to see all the details before making up his mind on the deal.

Breaking News - Province Signs Deal on Hebron Oil Project

A press conference is tentatively set for tomorrow morning to officially announce a deal between Newfoundland and Labrador and the oil consortium involved in negotiations over development of the Hebron oil project.

At this point all the details are not known but both NTV and CBC are confirming that the deal includes a 4.9% equity position for Newfoundland and Labrador and a "super" royalty regime, something that has not been accomplished on any of the currently existing projects.

It is expected that the new royalty regime may mean between 8 and 10 billion dollars for the province in addition to the potential revenue to come from its equity stake.

As with any contract, the devil is in the details and over the next day or so, as more details are announced, the content of the contract will be discussed and analysed in further detail.

Latest Canadian Fatalities - Journalistic Integrity and Democracy

The mainstream media is nothing more than a lap dog to the political machine.

I wouldn’t wonder so many people now turn to alternative media and independent internet sites for their daily dose of political and other happenings. At least there you have some hope of knowing what you’re getting.

Most bloggers and internet writers, including yours truly, clearly present individual perspectives to their readers but at least most of us do it in an open and honest way. Our readers know we represent a point of view and in knowing this they are free to decide whether to read our words or move along. The supposedly “impartial” media on the other hand does exactly the same thing under the guise of honest and fair journalism, an honesty that exists in name only.

We all know what we are in for when we turn to the editorial page. Opinion. There’s nothing wrong with that, but when supposedly factual news stories are peppered with words intended to subtly convey a targeted message it’s a different ball game all together.

The days of hard boiled political journalism are dead and gone. Today we get little more than a concoction of spoon fed pablum designed to placate the masses and spin a government message to best effect.

It’s sickening, disgusting and dangerous.

How many times can you read a news story about Canada’s “New Government” without wondering when they’ll finally be considered Canada’s “Old Government” or how about just “the government”?

I bought a fridge about a year ago and the warranty has already expired. My fridge is not “New” any longer and neither is Canada’s government, yet we are told it is in papers from “coast to coast to coast”, another example of government spin that’s suddenly all the rage in these days of arctic supremacy.

Why do we never hear, "from coast to coast to coast to border"? Could it be because our border with the U.S. is not being contested? We all use the 3 coast term these days but did we always or has it suddenly grown in popularity with international interest in a melting artic ice cap?

This sort of blind adherence to pre-written “spin” in papers like the Globe and Mail, National Post and others serves no purpose beyond helping to prop up a floundering system of government, ensuring that the masses are onside with whatever the agenda of the day happens to be and shifting our attention away from some voter affecting issue toward a more government friendly one.

Let's be honest, have you always been as concerned about global warming and the environment as you are today? Sure you shut off the lights when you left a room or cut the thermostat a little to save a few bucks, but did the issue actually top your list of priorities before the mainstream media told you that most Canadians considered it their number one issue?

It’s not that there’s anything wrong with protecting our environment but if you stop to think about when it became so important in your life you may discover something about yourself and your susceptibility to media manipulation that you were unaware of before.

Ask yourself, how often do we see news stories that completely contradict the official government line and prove they are lying or misleading the public on an issue? Ask yourself as well, is the near absence of that sort of story a sign that the government is forthright and honest in everything it does or is it because nobody is digging below the surface to find out what’s really happening?

There are those, often in mainstream media itself, who will occasionally go on the attack when someone says the discovered this or that on a blog or other alternative news site.

“You can’t trust that”, they shout, “Look at the source”.

Perhaps that’s true but at least most bloggers, at least those who do what they do without the hope of compensation, don’t hide behind the facade of a legitimate news service while hungrily hanging on every syllable dripping from the lips of Canada’s political elite. All the while hoping against hope they’ll get invited to the next cocktail party on the Hill.

The saddest thing of all is that most people go about their daily business oblivious to the kind of manipulative propaganda they are fed everyday on the six o’clock news or in their morning paper.

The mainstream media is lazy.

News editors and managers are more interested in being first with a story than being accurate and in depth with their reporting.

Corporations, by spending or withholding advertising dollars, often influence news content though not intentionally in most cases.

Politicians manipulate reporters by granting or denying access based on whether the reporter is considered “friendly” or “unfriendly” to their policies.

The entire process is tainted yet the public continues to gobble it up and believe it without question.

If you read a paper in Ontario you’ll be convinced Newfoundland and Labrador is trying to rob taxpayers blind over equalization. Read a paper in Newfoundland and Labrador and you’ll be convinced the province deserves every penny.

The Quebec media will report on the injustices done to the Quebecois people in Canada while across the Country in BC or Alberta they’ll bemoan the “sweet deals” handed out to Quebec again this week.

The end result is that the people of Canada are continually at each other’s throats and unable to find any common ground on which to move forward. It’s a great situation for federal politicians because no matter what one province wants there are always at least 5 or 6 others against it and as a result the fed can slip off the hook whenever they want without ever doing anything to resolve the situation.

Does anyone remember Stephen Harper saying he asked the provinces to decide how they wanted equalization handled and becuase they couldn't agree he had to "make the tough decision"? Does anyone honestly believe he really expected 10 diverse provinces to agree on such a contentious issue and in reality, how hard was it for him to decide in favor of the most vote rich provinces?

There’s a reason the old sayings, “Divide and conquer” and “United we stand, divided we fall”, have survived as a part of the vernacular for so long. Government spin doctors have become experts at the game of public manipulation and the mainstream media has blindly followed along for years.

News services have reached a point where they no longer report the news but simply recount the lies and “spin” our government hands them each day.

It’s a dangerous situation that can lead to electing an unfit leader simply because he has deep enough pockets to hire the best press “handlers”. It can lead to our nation participating in wars without a valid reason and, perhaps most importantly, it can and HAS led to the erosion of democracy Canada.

One of the basic cornerstones of any democracy is the absolute right of an informed electorate to determine their own future. By impeding the public’s ability to become truly informed the mainstream media has not only ensured the death of honest journalism but they have ensured the destruction of democracy itself.

Water, Water Everywhere - But for How Long?

Today we once again find Loyola Hearn travelling around the province with cash in hand, hoping to buy back voters with money taken out of their pockets in the most recent federal budget.

Hearn’s approach to pork barrel politics is nothing new under the sun but today’s announcement is one that’s interesting for its timing if nothing else.

Steve Harper, George Bush and Mexican president Calderon are meeting on Quebec this week to secretly discuss ways of intertwining the three nations as never before. Knowing this, Hearn’s latest attempt at politicking might be considered as more than the usual run of the mill vote buying scheme we’ve all become accustomed to.

This week’s government payoff consists of $516 thousand dollars in funding supposedly to help the agriculture industry in the province. The funding is being offered as a way to help the industry determine exactly how much available water there is in the province. As one report noted, “In many areas of the province, the size of water areas is unknown”.

On the surface this might seem quite benign but when you consider that Newfoundland and Labrador is often used as a “laboratory” for hair brained schemes before they are tried on people across Canada and that the three amigos are believed to be discussing the trading away of Canada’s valuable fresh water resources to a parched U.S. and Mexico, it isn’t difficult to imagine a sinister side to Hearn’s agenda (even it he isn’t personally aware of it).

In his public address Hearn said this new funding would “help ensure the long term use of these resources”. He didn’t say by whom.

Newfoundland and Labrador's Future Past

Has anyone ever heard of Frankie, Bri, Tommy, Clydie, Bri (number 2), Bea or Rodge? Likely you haven’t. Maybe you know them better as Newfoundland and Labrador premiers: Moores, Peckford, Rideout, Wells, Tobin, Tulk and Grimes.

Generally speaking the people of this province, or anywhere else for that matter, don’t get all that buddy, buddy with the political leaders. Not enough to call them by their first names anyway and certainly not some overly friendly version of it with a cute little “y” tacked onto the end.

There have been two notable exceptions to this in the cases of, “Joey” and “Danny”.

Now don’t get me wrong. I’m not saying either man has all that much in common. Heaven’s no. I cherish my hide far too much to go down that road. Both have at least one similarity that’s hard to deny. Their popularity in the province, during their hay day, was/is phenomenal. Joey in a post confederation Newfoundland and Danny in today’s Newfoundland & Labrador were and are as popular as a big plate of salt cod at a Good Friday dinner.

The personal popularity of Danny Williams is unequaled. Even his arch enemy Steven Harper recognizes it. It’s a reality that must make for some sleepless nights in Ottawa and more importantly inside the homes of devout Liberals across the province.

Just like Liberal Joey before him, PC Danny is unstoppable and will likely remain that way for at least two more elections (should he decide to stick around that long). After that it’s anyone’s guess. Remember what happened to the Father of Confederation when he stuck around too long and the great unwashed masses tired of his chicanery and grand standing? I still get chills thinking about it.

The big question is, is this kind of semi-rock star popularity a good thing for the province? The jury is still out on that one. Likely the history books will decide the truth of the matter for Danny just as they did for Joey before him. Let’s hope they have reason to be far kinder to our current premier than they were to the former. It only takes a few shifting sands to turn a would be Moses into a David Koresh.

In his day Joey was believed by many voters to be God’s gift to the province but in the end he was seen for exactly what he was, a scared and pathetic individual with no head for business and an ego bigger than the land he led into the clutches of the Canadian wolf.

Will Danny suffer the same historical thrashing or will he retire at the top of his game with oil revenues flowing faster than power down the lower Churchill, under the straits and into New Brunswick? Will the day come when Danny also falls from favor and is seen as a curse rather than a blessing, or will he simply ride off into the sunset with his adoring fans cheering him on?

One thing is certain. Danny’s popularity with the electorate today is unmatched by anyone in the political arena across the Country or perhaps around the world. Like Joey before him Danny has no opposition to stand in his way. He is free to do as he pleases with our province and our future and for better or worse he is doing just that.

There are those who look back on Joey’s time in office and cringe at some of the things he did. They blame him for everything from winter snows to global warming. I don’t see it that way. I also don’t blame Danny for any mistakes me may have made to this point in his political career.

I doubt anyone will accuse either man of willfully trying to undermine the province and hurt the people. On the contrary I believe both had / have the best of intentions. If mistakes are made, as they were with Joey, the blame doesn’t rest with one person but the thousands of voters who put them in a position of unbridled and unfettered power to begin with.

As voters we make our choices and in the end we’re the ones who will either celebrate the victories or bemoan the defeats. We each put our collective future into the hands of politicians every time we go into a polling booth. All anyone can do once an election is over is to hang on tight and hope we made the right choice.

Most believe a governing party needs a strong opposition to hold it to account, others believe that every once in a while a strong opposition just gets in the way of a great leader and his ability to “make it happen”.

No matter the outcome of the next election one thing we all need to do in this province is pray that whoever we elect, or coronate, on October 9th puts his personal ambitions aside for the good of the province and makes far better decisions than the “pig farmer from Gambo” did.

Harper, Bush and Calderon Secretly Plot Future of North America

In a strongly worded warning to all Canadians, (after Stephen Harper reneged on his promises over resource revenues and circumvented the intent of the Atlantic Accord contract), Newfoundland and Labrador Premier Danny Williams said, “Be careful, if he can do it to us he can do it to you”.

There may never have been a more prophetic statement made by a Canadian politician.

Bend over and grit your teeth Canada because you’re about to “have it done to you” in a big way.

Williams’ words might just prove far more accurate than anyone thought at the time.

Next week, on August 20 and 21, Stephen Harper, George Bush and Mexican President Felipe Calderon will spend a couple of days quietly sequestered at a hotel in Montebello, Quebec, a location that will not be open to the public or the press. No cameras will be permitted inside and public discussion of what takes place in those meetings will be tightly controlled and managed by the three leaders.

While camped out at the Chateau Montebello, a luxury hotel in Quebec, the three will discuss what is being called the “Security and Prosperity Partnership” or SPP. While SPP is officially being spun as little more than an opportunity for the three amigos to discuss security and prosperity many critics are calling the SPP a case of NAFTA (The North American Free Trade Agreement) on steroids. SPP was initiated in March 2005 at a summit of the Canadian, US, and Mexican leaders.

The SPP exists only as a verbal entity and is not found in any official treaty or identified in any government legislation. Instead SPP is based on private discussions between the leaders themselves and closed door meetings with big business, lobbyists and political insiders.

From the Canadian perspective, the SPP is a means of completely overhauling Canadian business, military and social programs without having to adhere to normal democratic processes or contend with unwanted public scrutiny.

Since none of what is discussed or agreed upon during SPP meetings is ever reflected in official documents the public has no idea what is being done behind the scenes and no opportunity to have a say in the nation’s future. A future which, if SPP proponents like Stephen Harper have their way, will see Canada suffer massive job losses and lead to the destruction of the of social programs and benefits we all depend on.

One of these secret meetings took place in Sept 2006 in Banff Springs, Alberta. When asked by the media if he was in attendance Public Safety Minister, Stockwell Day refused to confirm or deny his attendance. He instead said that “if he was there” it was a "private" meeting that he would not comment on.

"No item - not Canadian water, Mexican oil, or American anti-dumping laws - "is off the table"; rather, contentious or intractable issues will simply require more time to ripen politically."
- Leaked Minutes of a 2004 meeting of the Task Force on the Future of North America

The North American Competitiveness Council, (NACC) was launched as part of the SPP program in June 2006. It is the only known advisory group to the SPP and the only “tangible” component of the SPP itself.

The NACC is made up of 30 powerful, hand picked and influential corporate leaders from the three nations along with a few “special” advisors. According to recent reports the minutes of a January 10, 2006 “Dialogue on the Security and Prosperity Partnership” meeting reveal that the NACC was created to "engage substantively and pragmatically on trade and security issues without undue deference to political sensitivities."

In other words, the intention of the NACC is to move the SPP agenda forward without public knowledge, involvement or intervention. They are tasked with, “making it happen” by circumventing legislative requirements and the democratic processes itself.

In 2006 Maclean's magazine reported that the NACC is a "cherry picked group of executives who were whisked to Cancun [Mexico] in March by the leaders of Canada, the U.S. and Mexico, and asked to come up with a plan for taking North American integration beyond NAFTA."

The public is largely unaware what this organization is up to or even of its existence, let alone that Stephen Harper is actively working toward tighter security, military, financial and corporate integration with the U.S. and Mexico than ever before.

The dream of the SPP is a North American integration that far exceeds current trade agreements and will lead to the erosion of trade unions, lower wages and limited control over resources such as petroleum, water, minerals, forest resources, etc and the like. It will also lead to an intertwining of Canada’s military with that of the U.S, widespread job losses and the erosion of federal programs such as universal healthcare in an attempt to more closely align with U.S. policies and programs.

Currently Stephen Harper and his cronies are playing their cards very close to their chests. With a minority government it’s his only option. Many observers believe that should the Prime Minister win a majority in the next election the SPP will move toward full implementation of its agenda at a much faster pace.

The whole situation makes me wonder if Harper’s refusal to let the Atlantic Provinces retain the benefit of their natural resources might actually have been decided at one of these secret SPP meetings. I guess we’ll never know, nor will know when or where the next shoe might fall.

Like Newfoundland and Labrador Premier Danny Williams said, “Be careful, if he can do it to us he can do it to you”.

Web Talk Site Update

Effective immediately Web Talk-Newfoundland and Labrador will no longer allow the posting of comments by anonymous contributors.

Comments will now requires a blogger username and password.

Registering is easy and only takes a few minutes. While access to view articles will remain open to the general public, anyone wishing to make a comment will first need to register with blogspot. You can do this by visiting http://www.blogspot.com/

Web Talk has been online for more than 2 years and in that time has provided full and open access to anyone wishing to have their say. Freedom of speech is what Web Talk is all about and that will not change.

Unfortunately over the past few months several individuals have decided to use the comments section as a place to post personal attacks, abusive language and off topic statements that contribute nothing of value.

As a result the decision has been made to allow only registered bloggers to post comments.

This step will likely result in a decrease in the overall volume of comments however it is believed that the calibre of those comments will improve.

All comments, at least during the first days of this new implementation, will be monitered and moderated prior to publication. This will help ensure that even registered users do not abuse the opportunity provided to them.

Pre-screening of comments may cause some delay in publicaton however it is hoped this will be a temporary measure. It is hoped that the moderation and reveiw process can can be dipensed with over time as the content of the comments becomes more acceptable to everyone.

These steps were not taken lightly and were implemented in the best interests of the site, the readers and those who wish to provide legitimate commentary on the issues. It is hoped that it will result in a more focused debate and far less of the kind of abusive posting we've seen recently.

This is by no means an attempt by anyone to limit or censor legitimate debate, in fact the opposite is true. Posts containing information or comment contrary to the political or social beliefs of the editor will continue to be published as long as they contain valid points directly related to the issue being discussed and are not abusive or profane in nature. Rather than an act of censorship, these steps are being taken to help ensure that the views of readers are presented and discussed openly rather than stifled or undermined by personal attacks.

The Hebron Solution

Last week premier Danny Williams, left the premier’s conference in New Brunswick citing a fresh round of negotiations over the Hebron oil project as the reason. This was good news for the province, not to mention a golden opportunity for Williams to break away from the infighting and wheel spinning taking place in New Brunswick at the time.

The restarting of official negotiations for the Hebron project has come after many months of silence on both sides. Talks broke down because the oil companies expected tax concessions and showed no interest in allowing the province to hold a 4.9% equity stake in the project.

Several months ago premier Williams helped get negotiations back on track with his public statement that the province’s new energy plan would be released sometime prior to the October 9 provincial election. He also said that after its release the “ask” by the province for all projects would exceed the 4.9% expected from the Hebron partners but noted that if a deal was made prior to that time the province would still be willing to settle for the previously quoted amount.

Another factor that may be at play here, but one that the people of Newfoundland and Labrador will never know for sure about, is the potential for backroom federal intervention. It’s possible someone on the national scene interceded on the issue and spoke with “friends” inside the oil industry, perhaps someone who hails from the oil rich west.

If this was the case it surely wasn’t done for the good of the province. More likely it would have been done to improve federal revenues.

It’s only speculation of course, but some people are finding it more than a little curious that when Newfoundland and Labrador was fighting to retain 100% of offshore revenues, as promised by Stephen Harper during the last election, talks fell apart and Ottawa refused to support the province.

Hey, Harper is from out West isn’t he? Hmmmmmm.

Sorry, where was I? Oh yeah, now that Ottawa believes it has assured itself of gaining revenues every time a project moves forward in Newfoundland and Labrador, or more accurately they’ll end up paying far less to the province in equalization, suddenly the talks are back on again. Just a coincidence I’m sure but you know how conspiracy theories get started.

Regardless of the reasoning behind the latest round of negotiations I believe the province has a golden opportunity to show Ottawa that two can play the game when it comes to financial slight of hand.

Perhaps Newfoundland and Labrador should setup a royalty and offshore revenue distribution system that shuts Ottawa out of the picture completely and denies them their pound of flesh.

It’s not really that difficult. In fact it could be accomplished with a payment system that allows a portion of royalties and revenues from the Hebron project, or any other, to be paid directly to the province’s creditors rather than the province itself. The Hebron partners could also direct a portion of the provincial share directly into funding programs such as schools, roads, hospitals or anything else the province decides.

Such an approach would see the provincial debt paid down in record time, freeing up even more money that would otherwise go to servicing the interest, and it would allow expensive provincial programs to be maintained or even enhanced without the provincial treasury ever actually laying its hands on a single penny from offshore.

It’s something that should be considered very seriously.

When it comes to equalization, Ottawa can’t claw back something the province never had.

Canada: The Failed Experiment

At the premier’s conference in New Brunswick this week we were once again given a glimpse into the disjointed and fractured makeup of the Canadian federation. The disparities, differences and dysfunction that Canada embodies speaks volumes about the desperate need to overhaul the entire federal system or perhaps even dissolve it.

Two of the key planks in the federal government’s agenda have been the development a solid approach to environmental issues and the creation of an east / west power grid. Both concepts are lofty goals for a federation that includes thousands of miles of terrain, widely varied economies, differing cultures and diverse needs.

The reality is that Canada, as a nation is a failure. Its shear size does not allow a one size fits all formula and it never will. Regional or provincial issues and priorities rarely if ever align and the premier’s meeting this week proves the point.

The Environment:

While some provinces, especially Ontario, would like to see a hard cap on carbon emissions, resource dependent provinces like Alberta are dead set against the idea, preferring instead to see limits tied directly to production. In a nutshell one would wants a set limit on emissions while the other wants a formula based on output.

The problem with not instituting a hard cap is that it doesn’t do much for the environment. As production levels increase so do the level of pollutants and with Alberta planning to increase tar sands production by anywhere from 200% to 500% over the next few years, in an effort to meet U.S. demands, a per ton formula would simply see emissions rise dramatically with the increased output.

On the flip side of the equation, capping total emissions might improve the environment but would kill development and economic growth in the Alberta and essentially hamstring the oil industry. Simply put, if a company can only produce X emissions, when they reach that magic number they are at a stand still and can’t grow or expand.

Enter the much talked about concept of an emissions trading market, an idea some provinces support and others don’t (no surprise there). Ths market would allow companies or provinces who are below emission standards to sell some of their excess credits to higher emission producers for a profit and in doing so give those companies that have maxed out the opportunity to expand and produce more product and more pollutants, at a price.

While Ontario is in favor of the approach, since it would likely be a profitable situation allowing them to sell credits, the problem is that it will cost provinces that are dependent on resource production such as Oil.

Not every province can have depend on a manufacturing economy like the one in Ontario. Someone has to supply the raw materials such as oil and minerals the manufacturers there need and those "supplier" provinces don’t want to be penalized by having to pay extra to the very province's they are supplying.

The East / West Power Grid:

For the past few years the idea of a nation wide power grid has been talked to death but no progress has been made. Such a grid would help ensure the security and free flow of power across Canada and has been touted as the direction of the future. While places like Newfoundland and Labrador have abundant power supplies others, like Ontario, have a huge hunger for that power.

As things now stand most of the transmission lines in Canada run from North to South or from Canada to the U.S. In order for Canada to ensure its energy security and independence the federation needs to develop a link across the entire Country. The roadblock in this case is Quebec.

With Quebec already having made Billions of dollars from power produced in Labrador and with billions more continuing to roll in, the idea of a nation wide power grid is a frightening prospect.

Quebec premier Jean Charest said at a press conference this week, "There will be no talk of a federal line".

As things exist today Quebec has the potential to increase its revenues dramatically by holding the latest Newfoundland and Labrador power project, the Lower Churchill, for ransom in the same way it did the Upper Churchill.

It will do this by forcing Newfoundland and Labrador to pay for improvements to Quebec's transmission capacity and also charging a rental fee for using those lines. The other scenario for Quebec would see the province simply buy the power at a cut rate as the only available purchaser and then resell it into the market for an obscene profit. The latter approach being the technique already used today to rob Newfoundland and Labrador of its resource revenues from the Upper Churchill under a contract that will remain in effect for at least another 34 years.

The government of Quebec sees a federally controlled national grid as a threat to its ability to rape, rob and plunder the people of Newfoundland and Labrador well into the future and wants no part of such a plan.

The province of Newfoundland and Labrador is geographically cut off from the rest of Canada by Quebec and has been forced to virtually give away its power resources in the past in order to get them to an outside market. Quebec wants that reality to continue and is willing to kill the idea of a national power grid in order to make sure it does.

Newfoundland and Labrador is left to decide if it will once again give away one of its most precious resources, fund an extremely expensive sub-sea transmission line, give up on the project all together or try to find a way to attract local industry that can use the power domestically. The latter is clearly the preferred option of the general public but one the provincial government doesn’t seem enthusiastic about for some mysterious reason, but that's another topic.

In a few weeks the government of Newfoundland and Labrador is set to release it’s energy plan for the next few decades. It’s expected some insight into their plans for the Lower Churchill may be gleaned from that document but whatever happens its clear that consideration must be given to the Quebec factor.

A Failed Experiment:

Canada as a nation is a failure. You cannot manage such a diverse area by defining regulations, standards, wealth distribution, environmental policy or much of anything else from an ivory tower in Ottawa.

The best option for everyone is not for Quebec alone to separate, as they've been threatening to do for years, but for the various provinces and regions to form separate and fully autonomous states. States that can then work together, under some sort of EU like union, on mutually beneficial issues while going their own way on others.

In this way the separate states will at least be able to deal with each other as equals rather than as powerful provinces pitted against weaker ones. A situation that exists today.

With political decisions made in Ottawa and political clout centered in just a few provinces the rest of Canada is left at the mercy of the majority. Federal politicians, who live and die by the polls, will always side with the larger porivinces, Ontario, Quebec and to an increasing degree Alberta.

It’s becoming increasingly clear to Canadians from coast to coast to coast that the federation is little more than a bad marriage between incompatible partners. Staying together while sniping at each other and arguing over every little issue isn’t going to make things any better. The sooner the marriage is formally ended the better off everyone will be.

Perhaps the new Canadian buzz word shouldn't be "Soveriegnty", "Separation" or "Autonomy". Perhaps a "Divorce" might be more in order. We can always cite "irreconcilable differences" as a valid reason.

McGuinty: Do as I Say, Not as I Do

This week Ontario Premier Dalton McGuinty is once again hitting up the federal government for increased funding in his province.

A few months ago McGuinty made no bones about his feelings when it came to resource dependent provinces like Newfoundland and Labrador retaining 100% of non-renewable resource revenues. A plan that would have seen the cash strapped and debt ridden province take in about $1 billion over the next decade and drastically improved its financial position.

According to McGuinty the concept was nothing more than another taxpayer funded handout and he wouldn’t stand for it.

Today, in a clear case of “do as I say and not as I do”, Dalton McGuinty is telling the federal government his province wants $2.85-billion in funding NOW to help the struggling manufacturing sector (with over $650 million to go directly into the auto industry) and improve Ontario’s unemployment rate, a rate that must be terrifying to the premier as it hovers at about half that of Newfoundland and Labrador.

He also would like Ottawa to lower the number of insurable weeks necessary to collect EI in Ontario.

Mr. McGuinty’s only explanation for this latest round of begging is to say, “It worked in the past”.

During Paul Martin’s reign McGuinty convinced Ottawa to increase funding for immigrants in Ontario from $819 per person to just over $3,800 and in the last budget he convinced Stephen Harper to provide additional funding for everything from health care to post secondary education. Now he wants billions more in funding.

The sad thing is that he’ll probably succeed, even after destroying the economic ambitions of Atlantic Canada. With a federal election coming sometime in the next 2 years, and Harper dead in the polls, there’s little doubt the PM will pander to vote rich Ontario as a matter of course.

It’s not that there’s anything inherently wrong with helping to curb unemployment in Ontario or anywhere else but for the Ontario premier to demand billions of dollars while other provinces are far worse off and after ensuring that those provinces would lose out on their resource revenues is almost as low as any man can sink. I say “almost” because I’m convinced we’ll see McGuinty’s level far exceeded by the generosity Stephen Harper will soon display to him.

It begs the question: If allowing poorer provinces with truly high unemployment to use their own resource revenues is a hand out, what is it when a rich province with lower unemployment expects the Canadian taxpayers to cut them a cheque every time they turn around?

Since hearing about McGuinty’s latest round of begging I’ve been trying to come up with a solution to Ontario’s problem that will save taxpayer’s like myself a ton of money. I think I found it.

With all due respect to the people of Ontario, when Newfoundlanders and Labradorians dare to speak about high unemployment the average Ontarian responds by brushing it off as “East Coast Whining.” Their typical response is to say, “Hey, if you really want a job why don’t you move to Alberta, there’s plenty of work there.”

Maybe that’s the solution is for Ontario as well. Perhaps McGuinty should give up his attitude of, “Do as I say and not as I do” and listen to Newfoundlanders like myself who are saying, “do as I say and as I do.”

Fort Mac can use a large influx of Ontario Labour just as well as workers from Atlantic Canada.

Alberta will provide an opportunity to put those unemployed Ontarians back to work without costing taxpayer’s a dime.

It’s a sound solution, and besides, I’d hate to see the people of Ontario cause a drain on the system by becoming too dependent on welfare and EI.