The Furey Administration’s
decision to cut $20 million from funding for offshore seismic surveying, a
program ostensibly intended to enhance bidding for explorations rights in the
offshore oil sector, is the right one. Unfortunately, the decision is a pause
rather than a cancellation.

The distinction is self-evident,
but at issue is that the Government of Newfoundland and Labrador really hasn’t
spent five minutes on the broader public policy questions of how best to pare
the expenses of the Government in pursuit of the balanced budget objective described
in the PERT Report.

Cancellation, rather than pause,
should have been an easy decision in this case, because more objective industry
players, which do not include either OILco or NOIA, will remind that majors and supermajors – Suncor, Equinor, ExxonMobil, Chevron and others – are cash rich again, and more than capable of performing their own seismic programs. Global oil prices are replenishing their coffers, enabling them to pay down debt, buy back shares, and in some cases, double the dividends to their shareholders.

This issue should be viewed in
conjunction with Government’s recent referral to the banking firm of Rothschild
of an unconfirmed number of assets for valuation. Together, the decisions confirm
that provincial public policy remains a haphazard, ill-defined, even kneejerk process.

Some would argue that the
Government deserves some slack in its approach, that they have good intentions
but lack the skills to prepare or misunderstand the benefits of a more transparent
path of public policy execution.  If
Furey was using his truncated approach to deal with the fiscal crisis, that
would be another reason to reserve judgment on his Administration’s intentions.
But anyone who saw CBC reporter Peter Cowan’s interview with the Premier, “Here
and Now” 7 January 2022, would have heard the Premier say that he has always
said that “it is going to take five to ten years to get out of the position we
are in.” If that is the case, he has concluded that he is dealing with an
unacceptable trend, not a fiscal crisis. That is inconsistent not just with the
spending practices of the last decade, but with the reasons he employed Moya
Greene and established PERT.

Nevertheless, if his thesis is
the correct one — the urgency for swift action no longer a factor — this only
bolsters the rationale for why the public should now be witness to a
government-wide policy and program review.

In other words, the public should
now be witnessing not the employment of an appraiser, but the analysis of a
Government that has thought through the public policy implications of program
changes and asset divestitures.

That is not the same as saying that
some of the potential asset sales aren’t prudent or that the Government should
not seek advice on how to proceed. Rather, the public interest dictates that
they have a right to understand any fallout from those decisions, positive and
negative, most especially if large asset sales — like Bay d’Espoir or the Upper
Churchill — are being contemplated. That is the basis of transparent democratic

Any smaller asset sales, such as
those mentioned in the Finance Minister’s release (namely the liquor corporation,
registries, and the Marble Mountain ski resort), require a similar focus for
very good reasons — before they reach some valuation consultancy.

If the Premier and his Ministers
believe that there are no implications worth communicating, I suggest that they
are in the wrong business.

Consider: Are there any implications
for western Newfoundland’s tourism economy if Marble Mountain is transferred to
private hands? Is Government prepared to sell the asset to the highest bidder
notwithstanding the winner’s financial capacity to absorb possibly large and
long-term losses? Can the tourism sector afford Marble’s closure if that is a
consequence of the divestiture?

Are there no public policy
implications for the sale of registries either? No issues of privacy? No
considerations of oversight?

How about the public policy
issues related to the sale of the Liquor Corporation?

What is the future of the Corporation’s
dispensation and management of liquor licences and the shape of continued tax
revenues? Is Government giving up only the retail platform while maintaining
the wholesale and warehousing components? What of the manufacturing/bottling
side of the operation and the jobs that go with it? Will an entity strictly
engaged in retailing be permitted to close any tangly bits on which they lack
expertise? If the whole enchilada is privatized, what is the relationship of a
private operator and the Agency stores located in rural NL?

All those questions contain a
public policy component, and they affect not only the terms of any sale but the
valuation of the asset on offer, especially if Government chooses to retain
certain parts of them or attempts to hold particular elements of control. None
are particularly insurmountable in a public interest context. However, each
question contains implications which the public has a right to know now, not
after the assets are sold.

Rothschild should not be making
any of those decisions; that is the role of Government. That is why the
referral to Rothschild is premature.

What of the returns from those
asset sales, the small ones like the Liquor Corporation, or larger ones, like
our hydro assets? Will they be used to draw down the huge public debt? Or will
Government continue to spend $2–3 billion annually in excess of revenue, making
the process a charade that will render the province worse off in the future?   

The Premier claims that the
deficit has been reduced to $596 million. The figure is, at best, fanciful. His
Finance Minister has never explained why the last Budget indicated a “cash” deficit of $1.66 billion which was twice the amount
Government reports on an “accrual” basis!
 Neither this, nor the lower deficit figure claimed by the Premier,
reflect borrowing for the Capital (infrastructure) Account, the near-term
impact of huge spending on Public-Private Partnerships (P3s) or the shortfall
in revenue necessary to sustain Muskrat Falls financing and operating costs,
even after Federal “rate mitigation” assistance is accounted for.

As you can see, it is tough to
cut the Government slack when it continues to misrepresent the province’s true
fiscal position. And chooses a boorish approach to public policy.

An informed public makes better
choices, even if the result is push-back and protest.

A Government that misleads will
not be capable of controlling or curing their whiplash when, inevitably,
reality’s outcome starts to bite.

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.