As for major resource development - I call on Gerry Reid - Lorraine Michael - and Danny Williams - to introduce legislation that would require such MOU's to be released and debated in the House of Assembly. Otherwise you are all hypocrites.
Now that Danny won't release the MOU and Gerry has gotten into a list of questions - which I say the Premier will have a list of answers to during a televised election debate (won't be pretty) - I have some questions and answers of my own.
Why in the face of obvious public support for equity ownership (risks-benefits) accepted - do Gerry Reid and the Liberal Party continue to question the policy choice?
Here's one of Gerry's questions:
How long will it take for government to recover its up-front investment?
An estimated $600 million is a lot of money to put forward in up-front costs without any immediate return on investment. How long will it take to recover this investment before any real money flows into the province's coffers?
My answer is - yes it is a significant investment - with significant reward potential - nothing is guaranteed. At a time when oil was below $20 a barrel the feds purchased a piece of the Hibernia action and it has paid off exponentially. Now when oil sits at almost 4 times that value - we are wondering why we should take a piece of the action. Well that thinking gets us right back into the Upper Churchill. If we had taken some of the financial risk of that investment as Quebec did - we might be sitting here now with a few hundred million a year to work with. Labrador could have a highway of gold.
What is more puzzling is that the NDP and the PC's are willing to invest in equity and the Liberals are waffling on the whole idea. Get your arse pants off the picket fence and make solid policy choices.
Yes there are risks with equity - but you still buy a home right? Anything might happen.
With the size of our stake and the associated costs - one might imagine the "risk" the companies must be taking with the other 95%. We all know the oil companies do one thing better than any other industry - make profit. They too would have to speculate what the market would deliver - and they expect to make money from the Hebron development. We will also.
Let's look at another of Reid's questions:
How much money has been left on the table by compromising on the royalty regime and allowing a one percent payment until payout?
If the generic royalty regime with an increasing royalty rate from 1% to 7.5% until payout is applied, similar to White Rose, hundreds of millions of extra dollars will flow into the province=s coffers in the early years of production. What impact will your compromise have on the amount of money that could have flowed into provincial coffers in the first ten years of production?
Well I will address this two ways. First if we take more royalties on the back end of the deal instead of in the first ten years - we have essentially accomplished our equalization objective. Harper did not remove non-renewable resource revenues from the formula - so why scoop them all up now - only to lose equalization payments? No let's be more clever - bide our time - maybe the formula will change to reflect that policy in years to come - but if we are in the country let's max equalization as is done in Quebec.
Secondly if the profits of the equity are funneled into the new Energy Corporation and invested in much needed social and economic programs - we hide them from the equalization formula - thereby increasing our take again of the resources in our waters.
The Liberals had this advice in the past and ignored it. Too bad - they could have used the boost in public popularity and increased our benefits. Notwithstanding all of this in order to be a Norsk Hydro or a Hydro-Quebec we have to be players - and under past Liberal policy we were not. I only wish the Premier had done the same with wind - because in that you find Danny's weakness - inconsistency. That should have been further obvious when he did not release the MOU.
Over the next few days I will respond to Gerry's questions - and give you my take. Meanwhile Danny release the MOU. I have my own theory on where the oil companies made the gains and it's not with Hebron.
9 comments:
but if we are in the country let's max equalization as is done in Quebec.
how much equalization would we get if we weren't in the country?
none - we get all the corporate taxes - you want to add that up?
All of the revenues Ottawa receives on oil and gas is taxation - that would be ours - no need for equalization then my friend.
That's why I said if we are in the country...
Sue,.............never mind that.How much does Ottawa take in just for allowing other countrys to use our air space.
I think that some here have said 1 Billion a year.I really think someone should look that figure up because my sources are saying something far differant ,and far larger.
Equalization is just another way for Ottawa to keep control of the Province.I would gladly say good-bye to Ottawa if Quebec wanted to leave confederation.Hands down.
none - we get all the corporate taxes - you want to add that up?
Already done, somewhere. Will dig through Ye Olde Files. Reader's Digest version: the federal government spends more in the province, by way of spending or transfers, than it collects from revenues, from all sources, in the province.
All of the revenues Ottawa receives on oil and gas is taxation - that would be ours
So, too, would be general federal program and capital expenditures, the salaries of 7500 federal employees in the province, EI, CPP, and other federal transfers to persons.
Why do you look only at one side of the equation?
- no need for equalization then my friend.
How do you know? Have you done the math, on both sides of the ledger?
How much does Ottawa take in just for allowing other countrys to use our air space.
About the same as it costs to run the traffic control; it's revenue-neutral.
Define "our air space".
Equalization is just another way for Ottawa to keep control of the Province.
How does equalization accomplish that?
What control does "Ottawa" gain over a province, any province, by giving it equalization payments?
[Secondly if the profits of the equity are funneled into the new Energy Corporation and invested in much needed social and economic programs - we hide them from the equalization formula - thereby increasing our take again of the resources in our waters. ]
Now, that's what I call smart thinking, especially in the light of the extent to which we are being been ripped off. However, it is quite a blow to our collective ego to be taking our cues from Quebec and thereby conceding that they are a lot smarter then we are.
Forty years ago the Quebecois where still being subjected to the humiliation of having to learn to speak a foreign language in order to be able to work in their own province. I know, I lived there and some of those who endured that indignity were my neighbours.
The secret of Quebec's success is the result of neither political astuteness nor superior intelligence but rather the result of an awakening of their national pride. They had reached the limit of where they were willing to treated as "white niggers" : servants in their own house, beggars at their own table.
"A river can't rise above it's source". The political leadership we have, or lack thereof, is exactly what we deserve. Politicians will strive to give us what we want; that's how they get elected, and right now those wants are perceived as being more to do with tending the house than with tending the home: hardly the spirit to move a nation to the attainment of its potential.
Sue ,I would just like to say that what I have read from Lloyd is well written. Lloyd ,you should put your feelings into writting more often.Some of us do not have the talent of writting in such a manner.
WJM said...
How much does Ottawa take in just for allowing other countrys to use our air space.
About the same as it costs to run the traffic control; it's revenue-neutral.
Define "our air space".
Propaganda police needed!!!
Propaganda police? Yes that's needed and if Newfoundland and Labrador had it - Canada would be exposed more than it already is.
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