Last week
the Minister of Finance confirmed what everyone knew: lower oil prices are a
wrecking ball for the 2014-15 provincial budget. While no one forecast $60
Brent crude, equally we should not be surprised. Events such as this have long
been a feature of resource based economies.

When we say commodity demand and prices are ‘cyclical’ that doesn’t mean they go up and
then go up further.  Prices fall, too,
often hard and precipitously. Anyone who has invested in the stock market has
felt the euphoria of conquest. But nothing always stays the same. When the
market turns, the whiplash of price swings guarantees that those having danced
with, and perhaps married risk, get stung. The markets do not discriminate
between the well-intentioned, the prudent and the foolish.   

The word
“prudent” made its way into the Finance Minister’s budget update. Said Ross
Wiseman, “In the shorter term…we have to be prudent and adjust our oil price
forecast for the remainder of this fiscal year.” The word has no meaning for
this Minister; short or long term.

This is a government that has spent
the cupboard bare for several years and ran budget deficits consecutively for
three of them, knowing the risks of such irresponsible behaviour.  Expenses, according to the Auditor General,
have grown by $2.9 billion or 58% since 2005; the figure has risen. A forecast deficit of $537.9 million, in 2014-15, is now
estimated at a whopping $916.1 million. 

Per capita expenses are
45% higher than the average of all other provinces. By March 31, 2016 public debt will exceed $10
billion not counting the additional $3.3 billion equity in excess of the $5
billion financing for Muskrat Falls or the amounts required for cost-overruns.  Where do you think that money is coming from?

There is also the
117% increase in unfunded pension liability since 2007-08, and the 282%
increase in employee future benefits expense which occurred from 2008-2014;
exhibiting a fundamental loss of management control by senior public servants
and the politicians.
Where is
the prudence of which the Finance Minister speaks?

Then there
are the advisors, the boosters and the plain self-interested.

Dr. Wade Locke
told the CBC recently it is “important government doesn’t overreact” to the
Budget debacle.   He assures us “it won’t
get much worse” and that “we’re pretty close to the bottom…now…”  

Locke can
call a ‘bottom’ to the markets.  Why is
he unable to call a ‘top’? 

He seems
one who has tired of the discipline of economic analysis, having stepped into
the business of politics and prophecy, where the fees are far more generous. He
is content to run interference for the government with the lazy scribes and the
That is the
rub. The CBC knows Dr. Locke has been a long-time paid consultant to government
and to Nalcor.  Reporters choose, anyway,
to seek out his views ostensibly because he is attached to Memorial University
and the claim to professionalism and independence his position affords.  Yet, he is as tied to the Finance Ministry
and Nalcor as anyone in the government’s PR machine.

Then there
is the St. John’s Board of Trade’s Sharon Horan. “We have been vocal about the
need for government to spend less…” She even has the audacity to opine “…what
is astonishing to me, when groups…talk about the need to curtail spending, is
how polarized people are in their views.”  Ms. Horan, and her Board, have been “boosters” for
this government and every bit as ardent as Wade Locke. They whisper “tut, tut”
over deficit financing while the Board brooks no dissent (just ask David Vardy) within earshot of its members; it warns against tax
increases for business, but it is content to flag-wave for Nalcor as it becomes a multi-billion
dollar state-owned enterprise (SOE); one overseen by inexperienced bureaucrats.

The NL
Employers’ Council suffers a similar problem of cognitive dissonance (holding two opposing views at the same time). While, to its credit it
has been slightly more forceful than the Board of Trade, it
speaks less with a desire for sensible public policy than as a self-interested advocate
for lower taxes and as a foil to labour. I
t, too, is content to be demure as the province readies itself for more self-inflicted dependency and refuses to rebuke those whose SOE ambitions threaten to injure the Province on a long-term basis.

likes to see itself as having an ideology fundamentally different than that of unions. What nonsense! Business and unionism in NL is all
about dividing the spoils. The unions now want government to spend its way out of
overspending. They will hear nothing of repairs to the deficit or sensible
cutbacks to a bloated public service.
Gibberish is their recipe for protecting workers’ fundamental interests, long-term. (Lana Payne is not the only culprit in this arena; Mary Shortall’s comments on the December 20th “On-Point” proves she is in lock-step with her ‘sister’)

Business organizations,
on the other hand, comprise a membership that ostensibly subscribes to
capitalism, to competitive markets, and who feign opposition to over-bearing
government. Capital risk, associated with state-owned enterprises, ought to be understood
by them.

Yet, in the
face of one of the most unnecessary, risk-laden acts of inspired political
aggrandizement ever, the business-types can’t compose themselves; such is the
allure, not of the assurance, but the mere prospect of a few scraps from
Nalcor’s table. 

With few exceptions, the
common sense that guided their businesses through some very tough years has dissipated
in a frenzy of instant gratification.  They
watch, speechlessly, as South Korea builds the entire “top-sides” for the Hebron
project and as Husky delays the GBS for West White Rose. No one thought to delay Muskrat at the beginning , even if Danny dumbly insisted his legacy must manifest; nor did they attempt to stage the “boom”, making it last, in case the work might be needed here. There is
only the ‘now’. Our business types don’t even present as good Calvinists; they have only an ascription to greed. Ours is a Province of the ‘compradore’, of intermediaries, and of manufacturers’
agents, elbowing each other at the trough.   

and unions are joined. They offer
no leadership. They have no ideology, except “short-termism” and “self-service”.

“Be the
Boom” ran the cheerleading exhortation of the St. John’s Board of Trade just twelve month ago. Now, the chant contains the echo of baloney in recoil.  

 “I believe in Newfoundland and Labrador” is
the other exhortation that attempts to raise puffery to the level of serious commerce. The refrain ought
to invoke an inspired attachment to culture and to basic values. Instead, it is
an advertisement for ass-kissing conformity.

There is
much uncertainty ahead; much of it due to an unwillingness to employ our collective
common sense or condemn poor governance, regardless of the cost. As a society
we have to do better. We have serious problems to fix.

We have
listened to the government, its ‘advisors’, ‘boosters’ and ‘shills’. Fortunately,
we can turn them off, and we should.

Right now
is a time for family and friends.

I wish you
all the best of the Season.

Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.


If a Big Mac costs McDonalds $10 to produce and it is sold for $1.50, McDonalds will go out of business. They would not declare a profit!


Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.


  1. Des, I applaud your straight talk. No one else comes close to expressing what so many must feel. I just returned from a 45 minute walk. My pulse was at 114, unusually high compared to 80 for this activity. But while walking, me `blood was boilin`, feeling outraged at the Liberty Report update, and what it means.
    Here we promote our province as a energy warehouse. Last year we went through rotating outages and plenty of hardship. Now even with the new gas turbine, we are told we can expect a continuation of supply shortages and risk of more rotating outages until Muskrat Falls comes on, which is likely to be delayed past 2018. And Liberty has yet to report on the reliability of MF power itself, and then there is the issue of reliability of importing emergency power from Nova Scotia when MF goes down. There is no assurance we will get any emergency power from Nova Scotia, not even unreliable power.
    Indeed , we seem to be looking at a permanent situation of high risk of shortages requiring rotating outages. Liberty previously said rotating outages are seldom used in North America, but is common in third world countries.
    How quick we have gone from a have province to third world type.
    Liberty says our power companies should be transparent with stakeholders, including the results of the benefits of customer energy conservation efforts during emergency conditions, and that a flyer was in the December mail to all customers. This flyers says if we all followed the recommendations outlined, we could reduce the peak demand by 20 percent.
    With peak demand at about 1700 Megawatts, 20 percent suggests a 340 Megawatt reduction. With 250,000 residential customers this translated to 1360 watts reduction per household. With about 6500 watts of average demand for each house, 1360 watts reduction seems about right. But where is the transparency to show how effective the conservation was, how much did the efforts and hardship actually reduce the peak demand.
    There is no transparency there.
    But one can find and calculate it.
    Here are the numbers: average household demand was reduced 32 watt! No mistake. 32 lousy watts per house. 8 megawatts for the whole island. A miserable failure. True, Liberty in its April report said every megawatt of demand reduction counts. And as the misquito said when he spit into the ocean,`every drop counts`. But lets face it, Instead of turning down heat, not using appliances, and turning of all unnecessary lights, we could have stayed warm and got the same reduction by just turning off 32 watts of CFC bulbs!
    Something wrong here.
    There is no transparency why this failed miserably.Of course they know, and hoped no one would do the calculation. It will make them look pretty bad.
    Personally, I think Ed Martin needs a good kick in the balls over this. And then get fired.
    32 watts per household!…..see why my pulse shot up!.
    And then, after the walk, I realized I have not yet read Uncle Gnarley. Within 15 minutes you settled my pulse down to 84, and should drop to 65 soon. It is just settles the blood, I guess, to see you keep up the good work. Straight talk, which so few speak. I want to see Ed Martin being asked by Debbie Cooper, Patty Daley and others in the media to explain this 32 watts reduction. Of the 20 percent reduction possible, 2 percent achieved.
    And little of this is customer fault, as one might think, and Ed Martin likely to suggest.