Newfoundland Vote

[jazz]

Now we know why they voted for the liberals; From the G&M. Insolvency on its way.
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Newfoundland and Labrador needs Ottawa’s help, and very soon, or it will be subjected to insolvency when the level of its fiscal problems becomes known – and that day is getting closer.

Today, the net direct debt carried by Newfoundland is close to $18-billion. Newfoundland’s entire gross domestic product (GDP) is only $34-billion. This means the province’s debt is a staggering 53 per cent of total GDP, which compares to the mid-30-per-cent level for a typical province.

Newfoundland’s long-term prospects are much less favourable than any other province. Its economy is not strong enough to support this level of debt, and it is already borrowing a billion dollars a year just to pay the interest. Newfoundland is borrowing money to pay the interest on existing loans, which is the financial equivalent of taking out new credit cards to cover the interest on the old ones.

Even without the coming write-down of the Muskrat Falls investment, Newfoundland’s debt load is formidable. Unfortunately, Muskrat Falls puts Newfoundland over the top, adding $9.4-billion to its debt.

The province has discussed various plans to contain electricity rates, but they all depend on government revenue that does not exist. Right now, the only option being seriously considered is for the province to raise taxes. As far as the financial analysts are concerned, the Muskrat Falls debts will become dependent on tax revenue, and would raise the province’s total debt to $27.4-billion, or a terrifying 83 per cent of GDP.

That is two-to-three times the debt load of a typical Canadian province. Plus, a tax hike of this magnitude would be almost impossible to justify politically.

The second alternative for Newfoundland is to just raise electricity rates to a point where it can cover the costs of Muskrat Falls. To do this would require electricity rates to double to 24 cents a kilowatt-hour (kWh) versus a current 12 cents per kWh. This would be devastating to the Newfoundland economy.

Currently, 50 per cent of electricity in the province is used for heating, and most people cannot afford to pay twice as much for this essential service. Their alternative is to reduce heat, something almost impossible with the province’s extreme weather conditions. Additionally, about 35 per cent of electricity is currently used by industrial users – forcing them to raise prices, causing further strain on the province’s economy.

Newfoundland cannot solve this problem by itself. The solution to this is immediate action by Ottawa to help Newfoundland by using the “dignified” alternative. This involves giving Newfoundland $1.4-billion annually until the year 2041, when the Churchill Falls deal expires. After, the province can take over and repay the principal and interest on all its outstanding debt from Churchill Falls profits.

Alternatively, there is the “nuclear” option: Newfoundland voluntarily defaults on all interest owing on the $8-billion in debt issued through the Muskrat Falls/Labrador Transmission Assets Funding Trust and Labrador-Island Link Funding Trust. The principal and interest on this are unconditionally guaranteed by the federal government, who will have five days (by covenants in the trust) to make good on the interest.

It is true that Newfoundland is obligated to repay Ottawa, but it is clear that it does not have the capacity to do so. The federal government cannot take administrative control over the province, and the consequences would be minimal.

Regardless, crunch time is coming for Newfoundland, with an ongoing structural deficit of $1-billion to fund, $500-million in capital expenditure to finance, and a record $930-million in provincial direct debt maturing.

There is no way Newfoundland will be able to finance this, and the world’s bankers will not allow the province to maintain this fiscal fantasy. This has happened before – in 1993, Saskatchewan came to the very edge of insolvency. If the Conservative government of Brian Mulroney that year was able to give Saskatchewan $1-billion to avert insolvency, why can’t a Liberal government in Ottawa give $1.4-billion annually to a provincial Liberal government in Newfoundland, a province that consistently votes Liberal?

The day of reckoning is close at hand.

[AlbertaFarmer5]

And guess who was involved in Muskrat falls, and ended up with a scandal? SNC Lavalin of course.

[seldomseen]

The Federal Government has no money so it goes out and borrows to try to keep it all afloat!

More provinces might be on the verge of the same fate.

[furrowtickler]

And Quebec will continue to suck up the vast majority of the transfer payments in canada like a Hoover vacuum ...... other provinces will fall .

[jazz]

Looks like they will be needing some propane too. Guess the west will bail the whole bloody area out.

Now we see the real deal with hydro. Its a mess, overspent, subsidized, govt involvement, shady deals between provinces. Not so clean after all.

[furrowtickler]

So all this burning of propane to heat homes but they are allowed to sell carbon credits to California?? Hmmmmm

[Oliver88]

So all this burning of propane to heat homes but they are slowed to sell carbon credits to California?? Hmmmmm

And of course debt ridden California actually has borrowed money to purchase the carbon credits from Crybec.....what a disaster.

Maybe Quebec needs another referendum?

[ajl]

Now we only have the Muskrat dam bankrupting Newfoundland, the Keeyask dam bankrupting Manitoba, and the Site C dam bankrupting BC. At least Alberta oil companies only bankrupt their shareholders and suppliers.

[chuckChuck]

I guess you cant blame the lack of pipelines and access to markets for Newfoundlands oil downturn!

"This has happened before – in 1993, Saskatchewan came to the very edge of insolvency. If the Conservative government of Brian Mulroney that year was able to give Saskatchewan $1-billion to avert insolvency,"

Grant Devine's Conservative governments left a mess of debt and deficits for Romanow when he took office late in 1991.

"It was a crisis for us in 1993," said Mr. Romanow, who discovered when he took office late in 1991 that his government had inherited a financial strait jacket after a decade of deficit spending by the previous Tory government of Grant Devine.

"Statistically, I think it was a race between Newfoundland and ourselves as to which of the provincial governments had a more critical fiscal picture on their hands," Mr. Romanow said. "I really think it was Saskatchewan. Our per-capita deficit was the highest of any province, as was our per-capita debt. And our lending sources had shrunk from over 100 to about 20 or 22, based on a series of bond-rating downgrades."

https://cs.uwaterloo.ca/~alopez-o/politics/GandMarticle.html

One of the forgotten legacies of Grant Devine.

[chuckChuck]

Another Devine legacy:

https://www.thecanadianencyclopedia.ca/en/article/saskatchewan-tories-in-fraud-scandal

Saskatchewan Tories in Fraud Scandal
"In what is easily the biggest political scandal in Saskatchewan's history, no fewer than 12 members of Devine's government - which was swept out of office in 1991 after nine years in power - have been charged in relation to a scheme that defrauded taxpayers of more than $837,000. So far, six of those charged have been convicted and three others acquitted in an unfolding saga that is tarnishing not only personal reputations, but the political profession as a whole. The TORY scandal, says University of Regina political scientist Howard Leeson, is feeding into "the tremendous cynicism towards politics that we see today."

The seeds of the current controversy were planted in 1987, when Devine's caucus agreed to pool 25 per cent of the communications allowances that MLAs are entitled to receive from the legislature into a central account. The CROWN has alleged that some members of the Devine government signed expense allowance claims that were submitted to the legislature along with invoices from four shell companies set up by John Scraba, then the caucus communications director. Many of the invoices were for services never rendered, or for expenses that were illegitimate. After the invoices were approved by the legislature's finance offices, cheques were issued to the phoney companies. That money was then funnelled back to several caucus members and Scraba in the form of cash and merchandise.

[chuckChuck]

Newfoundland had Conservative premiers from 2003 to 2015. Muskrat falls was a Conservative government project. Muskrat Fall is another example of Conservative mismanagement.

Muskrat Falls: A story of unchecked oilmen and their boondoggle hydro project
https://www.cbc.ca/news/canada/newfoundland-labrador/muskrat-boondoggle-reasons-1.5088786 https://www.cbc.ca/news/canada/newfoundland-labrador/muskrat-boondoggle-reasons-1.5088786[/B]

"Nalcor was created to lead the effort, and former CEO Ed Martin assembled a team of men with pedigrees primarily in the oil and gas sector, leading to a culture clash with the hydro experts at Newfoundland and Labrador Hydro, a Nalcor subsidiary."

"It's now clear Nalcor's team was given an unrestricted leash by its political masters, including what amounts to a blank cheque from the public treasury, to build the generating station at Muskrat and the transmission lines to Churchill Falls and Newfoundland's Avalon Peninsula.

A parade of government witnesses have testified that they trusted the experts at Nalcor, prompting inquiry co-counsel Barry Learmonth to say government leaders were naive and blindly accepting of everything put before them.

We've heard evidence of reports being sanitized to downplay the risks of the project, of risk assessments being removed from the scope of work of at least one reviewer, and of growing frustration among bureaucrats, with one government lawyer describing Nalcor as a fiefdom and the project as a runaway train."

[jazz]

Use your eyes and read and your mind and think. Sask got a one time bailout after a nasty recession. NB will need a billion every year from the feds. BC hydro was just bailed out. US only wants to pay half price for this electricity, no different than heavy crude discounts.

Doesnt matter which govt was involved, point is hydro is now a boondoggle. Those 3 new dams will never make money and will never get paid back without a govt bailout.

US shale has sent natural gas to generational lows. It is the superior heating and power generation source now. That is why Saskpower is going this direction instead of throwing up some more turbines on the Gardiner.

Green energy is dead.

Quebec and BC are in a very weak position. They better wake up. If they had to used hydro to supplement lack of FF, it would break them.

[chuckChuck]

Green energy is dead! LMAO. Green energy is more than expensive hydro options.

Saskatchewan is planning on more natural gas, lots of wind, some solar, and hydro imports from Manitoba. If anything is dead its going to be coal in Saskatchewan!

No comments on how Conservative governments mismanaged Saskatchewan and Newfoundland finances?
It doesn't matter what government is in involved? LOL Then why spend so much time bashing the Liberal record and ignoring the Conservatives mismanagement? LOL

[jazz]

Green energy is dead! LMAO. Green energy is more than expensive hydro options.

Saskatchewan is planning on more natural gas, lots of wind, some solar, and hydro imports from Manitoba. If anything is dead its going to be coal in Saskatchewan!

No comments on how Conservative governments mismanaged Saskatchewan and Newfoundland finances?
It doesn't matter what government is in involved? LOL Then why spend so much time bashing the Liberal record and ignoring the Conservatives mismanagement? LOL

It is dead. There will never be another hydro dam built in this country and the electricity supplied is subsidized by the govt, same as it is for solar and wind. No private company would ever be involved in these boondoggles, its always the govt.

The only technologies that would be relevant are the ones not being pursued. Nuclear or hydrogen. Only place where solar and wind work is a narrow strip in southern Sk and AB and no way to get that to Toronto or Vancouver. Greenies will block any transmission lines.

There is nothing else. So that means its oil and natural gas. Good thing we have them. I thought hydro was a possibility, its not.

So much for increasing Canadas population too if you cant get services to them.

DEAD

[chuckChuck]

Renewables 2019 - International Energy Agency

https://www.iea.org/renewables2019/ https://www.iea.org/renewables2019/

"Renewables are already the world's second largest source of electricity, but their deployment still needs to accelerate if we are to achieve long-term climate, air quality and energy access goals"
Dr Fatih Birol, Executive Director, IEA

"Solar PV drives strong rebound in renewable capacity additions

Renewable power capacity is set to expand by 50% between 2019 and 2024, led by solar PV. This increase of 1 200 GW is equivalent to the total installed power capacity of the United States today. Solar PV alone accounts for almost 60% of the expected growth, with onshore wind representing one-quarter.

Offshore wind contributes 4% of the increase, with its capacity forecast to triple by 2024, stimulated by competitive auctions in the European Union and expanding markets in China and the United States. Bioenergy capacity grows as much as offshore wind, with the greatest expansions in China, India and the European Union. Hydropower growth slows, although it still accounts for one-tenth of the total increase in renewable capacity.

In Renewables 2019's accelerated case, renewable capacity growth could be 26% (1 500 GW) higher than in the report's main forecast. The accelerated case requires that governments address three main challenges: 1) policy and regulatory uncertainty; 2) high investment risks in developing countries; and 3) system integration of wind and solar in some countries. Solar PV is the single largest source of additional expansion potential, followed by onshore wind and hydropower."