Danny Williams told the people of Newfoundland and Labrador what he was doing with the energy corporation he created, which like now is legally NALCOR but doing business under another name, Newfoundland and Labrador Hydro.
“This particular government wants to strengthen Hydro, wants to make it a very valuable corporation: a corporation that will ultimately pay significant dividends back to the people of this Province; a corporation that perhaps some day may have enough value in its assets overall as a result of the Hebron deal and the White Rose deal, possible Hibernia deal, possible deals on gas, possible deals on oil refineries and other exploration projects, where hopefully we might be able to sell it some day and pay off all the debt of this Province, and that would be a good thing.”
The oil equity stakes Williams fought for would help make Hydro so successful that someday, the provincial government could sell it off “and pay off all the debt of this province.”
Danny Williams said that “would be a good thing.”
You may not know about that largely because no sooner had Danny said the words than he rushed into a scrum to claim he was only talking about the oil and gas stuff, not the precious, mythical NL Hydro. Precious anyway to the nationalist fairy tale world that grew after 1975 in Newfoundland and Labrador.
Local reporters never said anything about the episode until it turned up at a Telegram blog by Geoff Meeker, long since disappeared in the various mergers of the now defunct local newspaper. These days it staggers on as a front for a Nova Scotia content producer. CBC’s David Cochrane dutifully recited the Williams line at the time - sell individual assets but not NALCOR error Hydro - but unfortunately for both Williams and his mouthpiece, their line didn’t line up with the facts. There’s a 2009 column at the old Bond Papers blog that sets the record straight.
The facts are that Williams said different things different times about NALCOR and about the oil stakes. They were about gaining greater control of our resources, even though we had and still have 100% control of all of them without NALCOR. They were about getting richer, even though most money came royalty regimes and his Muskrat Falls project doubled the public debt *and* domestic electricity prices to give all the benefits of the project to others for free.
Williams was nothing if not consistently inconsistent. Not long after Williams talked about selling off NALCOR in bits and pieces, he criticized the crowd in New Brunswick for a plan to sell off that province’s energy corporation to Hydro-Quebec. “It’s giving away their future,” Williams said. Williams said lots of things, of course, the most important of which to understand him was that in his world all principle converts to cash.
And in the way Williams talked about NALCOR there was always an unsustainable contradiction in what he said at different times. The oil stakes were no different. They were the key to the future that we could sell to someone else for a quick buck, which is what the crowd currently running the place are doing. The story dropped last week that the government is moving ahead with what it calls Phase III of the “review” of offshore assets. Except that this isn’t the review stage. This is the sell ‘em off stage because we stopped reviewing and did some deciding.
“Rothschild & Co. will present the province’s portfolio of oil and gas assets to potential buyers,” last week’s new release says at the start of the *second* paragraph. Not quite burying the lede but holding a pillow over its mouth to muffle the words for sure.
Odds are high there’s already a buyer lined up and has been since Rothschilds started this business in 2022. This is now the pro forma. Going through the motions of a made-up process that has been 100% secret except for the announcements every now and then that they’ve moved to another phase.
The people of Newfoundland and Labrador have no idea what’s really going on, which is no surprise since for the past 20 years one government after another in this province have followed Williams’ approach of saying very little meaningful about anything until its all over. And along the way, there can be contradictions mostly because the people doing the deciding don’t have a clear idea of why they are doing stuff.
A good example is baked right into Danny Williams Blue Book, as SRBP explained in 2006ish, about the creation of NALCOR itself and the reasons behind it:
The fundamental contradiction between these two approaches is that while the [Strategic Economic Plan from the 1990s] is based on private sector entrepreneurship and increasing international trade for local products, the [Brian] Peckford and now Williams approach is focused on state ownership of industry and on local markets.
A genuine contradiction would exist if the Blue Book embraced the philosophies underpinning the [Clyde] Wells and Peckford approaches. It does not. Rather, Williams appears to be focused on control as an end in and of itself. For example, take this phrase dealing with prospective hydro development: "I'’d like to see us own the lion'’s share of the Lower Churchill...". The provincial government already owns the "lion's share" and can claim rents from electricity as a matter of owning it.
What Williams is talking about here is owning and controlling the company which generates the electricity.
Now go back to the start of this made-up series of steps from the Liberals. GNL hired Rothschild to “assess how to best maximize [the] potential” of the government’s “asset portfolio.” There’s never been a definition of what any of that means, including what’s actually in the asset portfolio. It could be a very big bag of stuff or it could just be the four items listed in that original statement:
the oil and gas holdings,
the Newfoundland and Labrador Liquor Corporation,
provincial registries, and
Marble Mountain.
To go with the confusion, you can get the contradictions in what government is doing. The latest statement says this is only about the oil equity stakes… but it tosses in the second oil and gas corporation the Liberals created a couple of years ago when NALCOR was under intense attack about Muskrat Falls. Turns out it has “assets” as well, in the form of information about prospects for more exploration. No mention of how it is the way government promotes offshore exploration. So we'll that off and you'd have to forget exploration or reinvent the whole thing at higher cost.
Of course, no one ever explained why breaking out a second company was necessary in the first place. In fact, at the time, the guv’mint crowd didn’t talk about a *second* company. They assumed they could take the equity stakes out of NALCOR. Then they discovered the stakes were tied to NALCOR financing for Muskrat Falls so they had to stay with NALCOR but - with Muskrat Falls still unfinished and still a huge liability - they apparently aren’t needed by NALCOR any more. No one has explained how all these contradictions work.
After all, that second company needed to make the province the preferred choice for offshore exploration is now just something to sweeten the pot to a buyer not even five years after it was the next best thing to perfection for securing our collective future.
“We see it as increased focus on developing the oil and gas industry in the province,” then energy minister Siobhan Coady said at the time. Now, finance minister Siobhan Coady says it’s about selling everything: “The province’s oil and gas assets continue to have market value globally. During this phase of the review, we will be presenting our portfolio to a broad range of potential buyers and then deciding on next steps which may include negotiating with the most credible groups.”
Flip?
Meet flop.
Potaytoe.
Potahtoe.
Let's call the whole thing off.
Or not.
But even there in the new release, the quote someone made up for Coady isn’t clear: The stuff is worth cash. We have this stuff to sell. We will see if anyone wants to buy. And we might talk about selling or we might not. After we flash the goods, to paraphrase Coady, then we will decide “on next steps, which may include” talking with someone about selling. May.
You get the idea: selling but not selling.
Confusion.
Contradiction.
Commonplace.
There’s also no common link among the “assets” in that earlier release. There’s a liquor manufacturing, retailing, and warehousing operation that is also the provincial liquor regulator. There’s a ski hill. There are provincial registries of everything from companies to cars to land. There’s the oil and gas equity stakes.
There are excellent reasons for government to operate an oil and gas company and be much more involved in oil and gas than it has been even under Danny Williams’ muddled vision. Take Norway as a model. we just never did for reasons no one can explain.
The registries are important parts of government’s core job of regulating certain activities. But the management of the registries could be done in the private sector, create jobs, stimulate the economy, and make money for government in the process. But that part of the Rothschild hobble is stalled. Or disappeared in the Argentine way.
But a ski hill? Sell the thing. There is *no* reason for government to be in the ski hill business so just get rid of it, which the government tried to do, sort of, but ran into a basic problem with all the people including the odd cabinet minister who don’t want to.
Liquor corporation could be turned over to the private sector, where it could be a big boost to the economy along with policies that promote interprovincial trade and better support local brewing and distilling. But there’s too much political opposition from within the parties themselves and the province’s public sector union that sees selling booze as a sacred birthright to be protected. The politicians rationalize it as revenue, even though there’d be *more* revenue from a private liquor corporation, which has been more often than not in its history the root of considerable bouts of graft, crime, and corruption of different sorts.
Then there’s the stuff that’s not on the list. If government looked at its whole asset portfolio, they’d hit the hydro stuff, including Churchill Falls, which is valued conservatively at 20-odd billions. Hospitals are assets and there is a case for running health care differently and potentially more efficiently and delivering better care if it wasn’t managed by a soul-sucking bureaucracy that grows ever bigger and delivers less care at higher and higher cost in both cash and suffering. But no one wants to talk about that.
What’s really not on the list is actually the process. The political process. There is no political process. That’s the real problem.
The “assets” on the list and what to do with them, why we have them, and all those other reasons or questions or details that go with them, they are all choices. They show what we value as a society. What we collectively agree on.
Making choices is what politics is all about. How we make choices matter. It defines us as authoritarian or democratic. What’s happened over the past 20 years is that we don’t do politics any more. We don’t have the conversations, debates, discussions, or bare-knuckle fights over anything. If it happens at all, discussion happens in secret even when secrecy isn’t needed or when it is even harmful. But when stuff like this latest release slips out or when Francois Legault tells Newfoundlanders and Labradorians about Churchill Falls talks, you get the sense that even in those secret talks there isn’t much real discussion that settles anything. Hence the muddy words about what is happening whether in that news release from Coady or the Premier’s year-end stare-without-blinking sessions of platitudes and rehearsed, scripted lines.
The people in those conversations don’t seem to know what is going on. They cannot state clearly what’s up not because they are incapable of figuring it out - they are smart people - but because they are simply not having the discussions, debates, and bare-knuckle fights among themselves they need to have to make a decision. To make a clear choice that you can then explain to the rest of us in a handful of simple, plain English statements.
To do that, you have to figure out what’s involved.
We don’t do that any more.
Which is why we are giving away our future.
Or not.
Good timing Ed, raising important considerations on Asset management, applied to Natural Resources. Of course Government must lead in determining the future best use for all its Resources. The Grande Riviere region, (Churchill) needs to be taken as just such an opportunity. Over 74 years of Canada/NL administration, and no detailed analysis of "best use". Let's start there.
Great Article by Ed!
As a general rule of thumb, we should consider the government "owning" assets as the last solution, only when all other options have failed.
We need to ask ourselves this question:
"When has government ever ran anything efficiently?"
"Is a service provided by a monopoly (in this case, govt) ever in the users (citizens) interest?"
"Do we really need to buy our lotto tickets, ski passes and liquor from the government???"
I'm not arguing that government has no role. I'm arguing about the extent. If we are to survive the longer term, we need to ask ourselves "To what extent is government serving us, and when do they cross the line and start being counterproductive for the citizen?"