The Province needs a “Mini-Budget”.  The Government should commit to dismantling
Nalcor, too.

Presently, the House of
Assembly is engaged in a ridiculous debate over minimal savings on downsizing
the Legislature. The Government has created a diversion; large, financially
worthy decisions are delayed. It should to be talking about public policy
issues and measures that will seriously downsize government expenditures; it
dwells on an amount equal to a rounding error in the context of the size of the
deficit, especially next year’s.

A crisis looms; the important issues can’t make it to the top of the public agenda.

don’t get that the role of government, in a democratic, free enterprise economy, can and should be limited. Its chief role includes programs and
services. Governments should be preoccupied with figuring out how they can be delivered cheaper and better. They should be concerned about laws and regulations for the well-being of society.  They should be worried about sound management
practices, good governance and about providing for the future. 

has shown that, while these are roles in which bureaucrats are suited, they are not good at running businesses.

The “international experts” at Nalcor have been permitted to
use the public purse as a roulette table; to place a large bet on the public treasury; doing, at Muskrat Falls, what one local icon of industry said “he wouldn’t touch with a
barge pole”.

Muskrat enlarges the fear the well being of thousands of people will be affected if the current financial crises is poorly handled.

Government should be working on an interim budget, right now. It should bring in a “Mini Budget”;
one that provides for immediate action, including specific cuts to expenditures. The imprecise declaration it made, late last year, about freezing “discretionary expenditures” won’t suffice. Firm decisions, now, might lessen the pain of delayed
decisions; any deferral will surely shock the economy and make matters worse. 

government has stated it wants to delay the Spring budget, too, and wait until the
federal government has brought down its budget, now delayed until April. That is a mistake; decision time is here. A new statement on the deteriorating condition of revenues is also required.

prices have fallen further since the Finance Minister released the “Budget
Update” on December 16th, when the forecast deficit was estimated at $916 million. The deficit likely exceeds a $1 billion, now.  In addition, the fall in oil impacted
only the latter six months of the current fiscal year.  The new Spring budget will be based upon a
full fiscal year at the lower oil price.

$30 million for each dollar oil has dropped, the 2015-16 budget is short $1.65
billion. That figure does not include loss of mineral royalties, the prices of
other commodities having moved in oil’s southerly direction.  

too, that the budget deficit this year would have been $538 million even if the
forecast $105 price for oil, for the full year, had been on target. Then, there
is the annual inflation rate including public sector wage increases, already
contracted.  All of those issues add to
oil’s shortfall which place the government’s problem well in excess of $2
billion next year.

The need for a mini-Budget is obvious.
Lower oil prices and out-of-control public spending have compounded the problem of cost overruns and other issues at Muskrat Falls. 

that the oil bubble has burst, confirming Williams’ energy warehouse idea was based upon a political architecture of inflated egos and false expectations, we have to kill the policy and, where we can, its
offspring. Nalcor must be stopped from making new commitments. It must be dismantled; carefully but unmistakably. 

process will be neither easy, or fast, nor cheap.  Martin has already made references to “sunk
cost”. Now, the government should make immediate decisions to ensure we
experience as little further capital destruction. 

Falls is a black hole that will compete with hospitals and schools.
We may not be able to stop it now; I don’t know. I do know, given the severity
of our Budget crises, a Crown Corporation which has advanced that project
through a sanction process history will judge as reckless, must be permanently stopped from compounding the harm it has has already conjured.

course, the alternative is the government will
continue to evade responsibility and not make any important decisions at all.  

dismantling of Nalcor will require public discussion.  Monday’s Post will attempt to first give the issue
some further context; a second Post will offer more specific proposals.

own views are welcomed, as always.
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.


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.


This is the most important set of negotiations we have engaged in since the Atlantic Accord and Hibernia. Despite being a small jurisdiction we proved to be smart and nimble enough to negotiate good deals on both. They have stood the test of time and have resulted in billions of dollars in royalties and created an industry which represents over a quarter of our economy. Will we prove to be smart and nimble enough to do the same with the Upper Churchill?