In the days following the collapse of the Hebron talks, the Newfoundland Ocean Industries Association (NOIA) issued a news release, expressing concern about the situation and urging both parties to resume negotiations. Rather than address the points raised by NOIA, Premier Danny Williams ridiculed the association, saying they were here to "annoy ya". Many business leaders were shocked by this behaviour. Yet none spoke out. If you noticed this disconnect, then you aren't alone. On February 21, David Cochrane, Provincial Affairs Reporter for CBC Here & Now, delivered a controversial and hard-hitting speech to the St. John's Board of Trade, in which he demonstrated that, when politics and business collide, business loses. Following is the text of David’s speech...
By David Cochrane
"I’ve been covering politics and provincial affairs in this province full-time since the Fall of 1998. In that eight years, I’ve seen the worlds of business and politics collide many times. In almost every case, politics won.
I have covered stories about resource-based industries involving four different premiers, and intersecting with some of the biggest companies in the province. In almost every case, the government used the power of the legislature to change the rules under which business is conducted to determine a favourable political outcome.
The political climate in Newfoundland and Labrador is having a profound and negative impact on public debate. And the time is ripe for change.
Please note that I am not passing judgement on any of the actions I am about to describe. I’m merely pointing them out and outlining what I think were the consequences.
In almost every case, these actions had tremendous public support. But popular decisions are not always good decisions. And when everybody is nodding their heads in agreement, I think it is the journalist’s role to shout ‘Bullshit!’ from the back of the room.
In 1998, former Premier Brian Tobin was in the middle of highly charged negotiations with Inco over the development of Voisey’s Bay. The central issue was whether Inco should build a nickel smelter in the province. Inco had spent $4 billion to acquire Voisey’s Bay and was proceeding under existing development rules to start mining nickel. On November 17th of that year, Tobin and mines and energy minister Chuck Furey outlined a series of amendments to the Mineral Act. The key element was section 31.1 which gave the cabinet the right to order a mining company to complete primary processing in the province. These changes would be broadly applied. But the clear target was Inco.
The changes were retroactive so that existing discoveries such as Voisey’s Bay were included. And it could not be appealed. Tobin said this was to ensure that companies such as Inco couldn’t use “back door methods” such as the courts to get around that requirement.
This decision had tremendous public and political support. But it was a political decision to change the rules of the game after a company and its shareholders had invested billions of dollars to acquire the rights to a nickel deposit. Investors were not happy. Negotiations reached an impasse. And there was no deal on Voisey’s Bay until Tobin left and Roger Grimes became premier.
It was under Grimes that I covered the second major collision between business and politics. And it’s a dispute that continues today.
In the summer of 2001 Fishery Products International announced its intention to buy Clearwater Fine Foods of Nova Scotia. Shortly afterwards, FPI announced plans to cut jobs at its fish plants in Harbour Breton and the Burin Peninsula.
FPI is a publicly traded, private company. But it was created in the mid-1980s though a piece of legislation called the FPI Act. The Act included restrictions on share ownership and the sale of assets designed to stop the break-up of the company. But it was privatization legislation and not intended to give the government any direct control over the day-to-day operation of the company. However, starting under Grimes that legislation has been amended three times. In almost every case, it was in reaction to the company’s decision to cut jobs or reduce operations.
Most recently it was amended to attach operational and capital spending requirements to the company’s plans to create an Income trust and again to change the structure of the Board of Directors.
But the most controversial changes came under Grimes. Grimes put a halt to the Clearwater takeover bid and delayed the looming job cuts at the south coast plants until last year when the plant closed. He threatened to amend the FPI Act to give government an operational veto over FPI, a privately owned, publicly traded company. He toyed with the idea of legislating the government a seat on the Board of Directors.
Those options never happened. But the government struck an all-party committee that recommended a series of changes to the FPI Act. The most significant was the inclusion of a clause stating that the company and its shareholders could not sue the government, even if government’s actions financially damaged the company and caused its share price to plummet.
FPI may be the most unpopular company in the province. Its management and directors are cast as the current villains of the fishery. Each time the FPI Act was amended it enjoyed enormous public and political support. But each time the FPI Act was amended the industry and the financial sector recoiled. Fish companies complain that it has become increasingly difficult to get financing from Canadian banks. More and more of them are turning to Icelandic banks for loans. Bankers tell fish companies that the political climate in this province gives them cause for concern.
This was underscored in March of last year when the fisheries union held a rally outside FPI headquarters to protest job cuts at fish plants on the south coast. At that rally Tom Rideout, a lawyer, former premier and currently the deputy premier and attorney general of the province, climbed onto the back of a pickup truck, while wearing a fish union toque and accused FPI of breaking provincial law.
FPI has since been charged with illegally exporting fish. But at that time there was no completed investigation or public evidence of any wrongdoing. There was only a crowd of angry fishery workers. And the deputy premier in a toque. I’m not a lawyer, but I know of no jurisdiction in the world where trial by toque is the foundation of their justice system.
The most recent collision of politics and business is the failed Hebron negotiations (I exclude Hibernia South from this discussion because that one’s not over). Last year Premier Danny Williams and the Hebron partners reached an impasse. Williams wanted more then the oil companies were prepared to give.
There is a generic royalty regime on the books here. But that became a starting point for negotiations rather than the terms of a contract. Given ExxonMobil’s disciplined commitment to its business model and Williams’ negotiating style, I’m not sure if these talks will restart soon or if a deal is reachable. What I do know is that despite the stakes, the public debate around this impasse has ranged from “way to go Danny” to “lets go Danny.”
This has been the case in all of the examples I’ve outlined. Politically motivated changes to the Mining Act and the FPI Act had mass appeal, but made many people in the business community nervous or even angry.
But they stayed silent.
One of my frustrations as a journalist is that the business community in this province is soft. They are afraid to challenge the government or criticize it in any meaningful way. We see this now with Williams, a man elected to be the business premier; but a man who is making many in the business community nervous.
We saw it with Tobin, a premier who had arguably the worst fiscal record this province has ever seen. Tobin’s so-called balanced budgets were a house of cards; a shell game of one-time money used to mask enormous structural deficits. The business community knew this, but said very little. And instead of writing letters to the editor, they wrote cheques; donating thousands of dollars to the political parties they spent their time muttering about under their breaths.
When the world of politics and business collide, only half the story gets told because only half of the collision is talking. Business leaders shy away form comment if it even smells of conflict with the government. They react as if the first person to speak out would be like the first person to wander off alone in a horror film… never to be seen again.
Now this isn’t to suggest that business people don’t talk about politics or criticize their government. They just don’t do it in public
I have had hundreds of conversations with business people, many of them imploring me to do stories about the many, many problems they have when it comes to doing business in Newfoundland and Labrador. I agree to do a story if they will go on the record. But they won’t. This reluctance to speak is as understandable as it its regrettable.
There exists in Newfoundland and Labrador a phenomenon I like to call “Patriotic Correctness.” Like political correctness, it makes certain words or expressions unacceptable.
But most significantly, it has fostered an environment where informed dissent is seen as nothing short of treason. Where the simple questioning or criticism of the government or the premier is viewed as an unpatriotic assault upon the very fabric of Newfoundland and Labrador.
Patriotic correctness manifests itself in times of conflict. Usually it pits the premier and the government against an outside force such as the federal government, a nickel company, Big Oil, or a fish company that happens to be run by a Nova Scotian. It creates an incredibly lop-sided public debate, one where all good Newfoundlanders and Labradorians must rally to the side of the government.
What matters most is a public display of loyalty; of being on side with the stated goal of getting the best deal, best return and most benefits for the province.
What matters least is a public debate about the merits of this stance. Or whether these goals are even reasonable or achievable. Or whether the government is acting in a way that is fair to all parties.
We saw this with Voisey’s Bay. We saw this with Hebron. We are seeing it to this day with FPI.
The first collision of business and politics I witnessed was the Voisey’s Bay negotiation. When I came on the scene, Tobin had won a second mandate after calling a snap-election just 30 months into his first term, supposedly to send a strong message to Inco and give him a “strong mandate” to negotiate the best deal possible on Voisey’s Bay. After all, “Not one ounce, not one spoonful of ore” would leave the province without a nickel smelter being built in Argentia.
The people ate it up. Tobin got an overwhelming mandate. Voters accepted the rhetorical fiction that a snap election was really about getting a mandate to negotiate with Inco. Or if they didn’t buy it, they ignored it, and embraced the blind hope that Brian Tobin – a Newfoundlander – might one day be prime minister. So he had to be supported at all costs.
Again, it was the rush to be “on side.” To embrace the populist myth that Our Leader needed Our Support to take on Them.
I was working for CBC for less than a year at that time and was new to the political beat. But I came to the conclusion very soon after the 1999 election that Tobin’s “not one spoonful” stance was an excuse for inaction. That his stance was so entrenched, the political stakes so high, that he could not possibly get a deal that would satisfy the public’s expectations. Expectations he created. Good politics got in the way of good economics and it became obvious that Tobin would never sign a deal with Inco. When I started to challenge Tobin on this I felt the sting of Patriotic Correctness.
I was new to the press gallery. And suddenly the halls of the legislature were buzzing with talk that I just didn’t understand Newfoundland and Labrador. After all, I was a mainlander. Liberal MHAs openly questioned how someone from up-a-long could understand this province’s long history of disappointment and bad deals.
Now, having been born at the Grace, raised in Mount Pearl and educated at MUN, nobody was more surprised by this than me. But it shows the way dissent – even in the form of legitimate questions – led to an attack on my very character.
For the record, Brian Tobin quit as premier just 20 months into his mandate to negotiate, he never did sign a deal with Inco, he moved to the mainland… and I’m still here.
This attempt to marginalize critics still happens today. When a particular political issue is causing the government grief, it dispatches hit squads to the open-line. Armed with talking points, they seek to hijack the debate. And if someone questions the government on an issue such as Hebron or FPI, the Us versus Them argument is re-opened.
A recent example of this came in the four byelections that we just had. Four MHAs resigned for very different reasons. But the Premier sought to make local elections about something bigger than what they were. These races were cast as a referendum on Danny Williams’ negotiating stance on Hebron and with the Prime Minister on Equalization. Williams said: “It's very, very important that the people I'm into battles with - for want of a better term - understand that I have the clear support of the people of this province."
Never mind what issues mattered to the district. Never mind what you think of the people on the ballot. This was about supporting the premier. This was about Us versus Them.
A vote against the Conservatives in these byelections would mean you didn’t support a better deal on oil. It would mean you didn’t support a better deal on equalization. A vote for a Liberal or a New Democrat would be a vote against a better deal for Newfoundland and Labrador.
I’m not saying people should vote against the government. I’m not suggesting they should vote for one party over another. But people should be free to make up their mind and vote in an election without having their patriotism questioned, before they step into the voting booth. Just as they should be free to question this government – and any other government – without having their love of place put to some sort of test.
Patriotism isn’t the only weapon in this strategy. There are also numbers. In the current government there is a group of backbenchers and new cabinet ministers who like to justify every action by quoting poll numbers. When I say something on the panel or do a story that questions government’s action, the next day at the House of Assembly, I am bombarded with the math of public opinion.
“You may not like it Cochrane,” they shout. “But 75 per cent of the province does.”
But as I said earlier, popular decisions are not always good decisions. Just as popular government are not always good governments. After all, Brian Tobin had poll numbers that rivalled Danny Williams’. Did that make Tobin a great premier?
The MHAs don’t like it when I remind them of that. They like it even less when I remind them that Time Magazine named Adolph Hitler its man of the year about eight months before he invaded Poland.
Good polling numbers are nice. But they are not a vaccine against dissent and criticism.
By all accounts this government has done a very good job of managing its finances. Soaring deficits have been replaced by surpluses. And the new Atlantic Accord is the arguably the most positive development this province has seen since the Hibernia project went ahead. But that doesn’t mean there aren’t problems, or that people shouldn’t be allowed to talk about them.
That includes the people in the business community. Because while Newfoundland and Labrador might have solved its fiscal problem, it may well be on the verge of an economic problem. After close to a decade of leading the country in economic growth, some banks now project that Newfoundland and Labrador will be last in the country in 2008.
One estimate says GDP growth will drop to 1.7 per cent next year. The reason is the lack of any new projects. Projects like Hebron. For the first time since Hibernia, there is no ‘next’ project.
This has done more than just cripple GDP growth. It has single-handedly changed the real estate market in St. John’s, instantly transforming a sellers’ market into a buyers’ market.
It has led to increased anxiety in the local offshore industry and made Oil and Gas Week more of an irony than a celebration.
Now, on the surface, the employment picture looks far brighter. The government issued a news release this month boasting that the Market Participation and Employment Levels for January are at a historic high. But what’s missing from that news release tells a more important story. The Employment numbers for Newfoundland and Labrador include the hundreds if not thousands of people who fly to Alberta to work but leave their family behind. Their job is in Alberta, but their residence is in Newfoundland and Labrador. Because of the way Statistics Canada crunches the numbers, this boosts the employment rate and the participation rate of this province. So while more people from here are working, it doesn’t mean they are working here.
While the economy enters uncertain times, the population continues to decline. Since June of 2003, Newfoundland and Labrador has suffered a net loss of 10,105 people. That’s the population of Gander gone in three years. Of that group, 5,248 were between the ages of 20 and 24.
Instead of slowing down, the pace of the outmigration has increased each year of this government’s first term. There are still many proud young Newfoundlanders and Labradorians. They just happen to live in Calgary or Fort MacMurray.
These are enormous challenges that will be difficult to solve. But how can you have a larger public debate about the big problems, when it’s tough to openly discuss the small ones?
The sad reality is that for my entire adult life the intellectual leadership of this province has been confined to the legislature and the open line. I believe this has to change. The broader elements of our society need to participate in the larger discussion on how the government conducts itself and how it manages the economy.
People need to be free to question, challenge and criticize their government without fear of reprisal or of facing a public challenge to their patriotism.
Now I have to be careful about what I say here, because I don’t want to get sued. However, because of the recent spending scandal in the House of Assembly, I think I can safely say that politicians have – at least temporarily – lost their place on the moral high ground. And they’ve lost it as a result of their own actions.
This has all happened in an election year. This election will be about cleaning up government. But it should also be about the larger problems I outlined earlier.
The state of the economy. Outmigration. And unemployment.
That means there has to be a debate, one that should include the business community. But I’m not convinced that it will. My past experience leads me to believe that most business leaders will shun the spotlight of public discourse in this election and avoid the potential wrath of politicians.
Instead they will cut the cheques that are the oxygen of any political campaign and watch – as always – from the sidelines.
Yes, politicians can make your life difficult. Sometimes there is risk in speaking out. But what if they called an election and nobody donated any money? Each year everyone in this room is asked to donate to the various political parties. You are an IV bag filled with cash for them. They couldn’t survive without it. That annual donation is your ante to the big table; your licence to speak freely and openly about the government and the direction of the province.
It is a luxury that – quite frankly – the middle-class does not enjoy and cannot afford.
This dynamic presents an opportunity to break the pattern of patriotic correctness… something that needs to be done.
A society cannot progress unless it does so on the strength of its ideas. And good ideas require the courage and the intellectual leadership that isn’t always found in the legislature or from the caller on line 3.
Public debate cannot be ceded to the mob. Because when it is, the mob almost always chooses to free Barabbas and send the good man to the cross."