$90-M question answered

James
James McLeod
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Details won’t be released until terms of deal are done

Corner Brook Pulp and Paper will get at least part, if not all, of the $90-million mystery fund allocated in the March 2013 provincial budget.
— Western Star file photo

The details are scanty, confusing and secret so far, but the provincial government said Wednesday it will give Corner Brook Pulp and Paper a loan of $90 million — probably.

In the House of Assembly, Natural Resources Minister Tom Marshall revealed the worst-kept secret in Confederation Building: a $90-million mystery fund in the provincial budget is set aside for some sort of financial aid to the Corner Brook paper mill.

“I am pleased to stand and inform this honourable House that the provincial government plans to assist Corner Brook Pulp and Paper Ltd. with a $90-million loan,” Marshall said.

But only an hour or so later, Premier Kathy Dunderdale told reporters it’s possible not all of the money will go to the Corner Brook mill, and until it’s all finalized, she won’t tell anybody what the terms of the financial agreement are.

“Near enough, $90 million is going. The details, you’re going to have to wait to get,” Dunderdale said to journalists outside the House. “If Corner Brook Pulp and Paper is successful in its negotiations with its unions, there’s going to be an arrangement between the government and Corner Brook Pulp and Paper that’s going to see the bulk of this money go to Corner Brook Pulp and Paper under a number of terms.”

Since the provincial budget was released March 26, opposition parties have been hammering the government for details on the $90-million line item in the budget.

 

Until today, it was widely believed the money was earmarked for the struggling Corner Brook mill, but Dunderdale and her ministers would only say they couldn’t give details because financially sensitive negotiations were ongoing.

Then, in a testy back-and-forth exchange with NDP Leader Lorraine Michael in Estimates Committee in the House of Assembly Wednesday morning, Kennedy said that even by asking questions about the money, Michael is threatening the future of the Corner Brook mill.

“These questions that you’re asking certainly put into jeopardy everything that’s going on,” Kenn­edy said.

Estimates Committee is an annual process where opposition politicians get to question government ministers and their top bureaucrats about the budget allocations. It tends to be a less politically charged environment than other House of Assembly proceedings, and ministers are frequently more forthcoming and unscripted than at other times.

At first, when Michael asked about the money, Kennedy only assured her that it was needed for “ongoing discussions” and he said it’s not for Nalcor.

Kennedy said the money is essentially sitting there on the books, in case an agreement is reached, so the government can quickly spend the money if need be.

“We have to have money in terms of negotiations ongoing,” he said. “The money is there to allow for an expeditious resolution if an agreement is reached.”

At first, Kennedy wouldn’t reveal what the money was earmarked for; instead, he cryptically said, “I think everyone in the room had an idea of what this is about.”

When Michael asked him point-blank whether it was for Kruger Inc., which owns the Corner Brook mill, Kennedy confirmed it was.

Dunderdale said the plan all along was to make an announcement Tuesday afternoon, and they knew the question would come up in the morning committee meeting, so she instructed Kennedy to reveal the money is for Corner Brook Pulp and Paper.

The government has said for months that if the mill owners can come up with a long-term sustainability plan with the unions that represent workers in the mill, there will be some sort of government assistance to make the mill more economically viable.

In principle, that’s something Liberal Leader Dwight Ball said he supports, although he added the caveat that he needs more information about the terms of the loan before he can endorse it.

Michael said she also needs more details.

West coast Liberal MP Gerry Byrne also weighed in on the situation. He said he has studied the mill’s economic position in detail and is convinced it’s a good use of taxpayers’ money, assuming the deal is structured well.

Byrne said the biggest need at the mill is upgrading the equipment and facilities. If the money is spent on capital upgrades, it can be one of the most cost-effective paper mills in North America, he said.

“This mill is in a winning position. It just needs that investment,” he said. “There’s no doubt about it. In my mind, this is a low-risk loan. You will not only see this money paid back, but you will see the mill operate for decades.”

 

jmcleod@thetelegram.com

Twitter: TelegramJames

 

Organizations: Corner Brook Pulp and Paper, Kennedy said.Estimates Committee, Kruger Inc.

Geographic location: Corner Brook, North America

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Recent comments

  • FINTIP
    April 18, 2013 - 14:47

    It's too early to pass judgement on government's plan to loan $90 million to Kruger for the Corner Brook mill. Whether it's a good deal or not depends on a great many questions - e.g. what are the terms of the loan, is there really an expectation that it will be repaid, and how will it be secured. More importantly, how much more competitive will the mill become. Is the expected efficiency cited by Dunderdale based solely on the expected reduction in wages being negotiated with the unions, or is the plant being re-tooled and upgraded to higher technical standards? Finally, will this be the last infusion of government money or is there more to come? By its own account, the $90 million will bring total provincial support for the mill to $140 million in recent years. That wouldn't be so bad if the money is repaid within a reasonable time frame. Otherwise it would amount to a subsidy between $400,000 to $500,000 per job for whatever period of time the jobs continue to exist. We will have to wait for these answers (if they are ever forthcoming) but in the meantime there is already one major cause for concern. Is this deal being done on its own merits or is it out of fear that a shut-down of the mill would seriously undermine this government's already shaky argument for moving ahead with Muskrat Falls? If the latter, then Kruger must be thinking it controls the toothpicks that are holding up the entire Muskrat house of cards.

  • Fred Penner
    April 18, 2013 - 14:24

    It is a loan people! It will preserve an industry in Corner Brook! What is the problem?

    • david
      April 18, 2013 - 14:48

      Turnip truck just dropped another one.

  • david
    April 18, 2013 - 12:32

    Throw these clowns out, and send fresh new clowns in. Folks, Newfoundland is what it is....and if after this long, and after an oil windfall that is the equivalent of winning a million lotteries, it's still as pathetically bad as this, I'm pretty sure it's safe to say it will never be any better. But if it makes you feel better, by all means vote up a real arse whooping....you really should get at least something for your money.

  • FINTIP
    April 18, 2013 - 10:52

    It's too early to pass judgement on government's plan to loan $90 million to Kruger for the Corner Brook mill. Whether it's a good deal or not depends on a great many questions - e.g. what are the terms of the loan, is there really an expectation that it will be repaid, and how will it be secured. More importantly, how much more competitive will the mill become. Is the expected efficiency cited by Dunderdale based solely on the expected reduction in wages being negotiated with the unions, or is the plant being re-tooled and upgraded to higher technical standards? Finally, will this be the last infusion of government money or is there more to come? By its own account, the $90 million will bring total provincial support for the mill to $140 million in recent years. That wouldn't be so bad if the money is repaid within a reasonable time frame. Otherwise it would amount to a subsidy between $400,000 to $500,000 per job for whatever period of time the jobs continue to exist. We will have to wait for these answers (if they are ever forthcoming) but in the meantime already there is one major cause for concern. Is this deal being done on its own merits or is it out of fear that a shut-down of the mill would seriously undermine this government's already shaky argument for moving ahead with Muskrat Falls? If the latter, then Kruger must be thinking it holds the toothpicks that holds up the entire Muskrat house of cards.

  • Christopher Chafe
    April 18, 2013 - 10:49

    Shaking my head with disgust. I don't have a problem with a provincial government investing monies into private industries, but cripes almighty they should invest it in industries that will be around for a couple of decades if not longer. This move along with the continuous waste of money given to Republic of Doyle is as far as I am concerned a major slap in the face for all the Newfoundlanders and Labradorians working on the Mainland due to the fact that they chose not to be a fisherperson, an oil and gas worker or a tourism worker. BTW just thought I would point out, that I could care less where in this province new industries started up, so please do not say I have the Townie VS Baymen Personality.

  • Darren
    April 18, 2013 - 10:15

    Unfortunately, we have no choice but to take, and put up with, all this abuse from OUR Government, even though we, the taxpayers, are their Employers; we pay their salaries. They will continue to do what they want, whenever they want, no matter how citizens of NL feel, with OUR money.

  • james browne
    April 18, 2013 - 09:43

    the government of this province is proof that education has nothing to do with brains and common sense . a little flattery or coercion by these corporate asses and suddenly we fork over millions. as much as i hate to say it newspaper is a thing of the past. get over it and take your chances with the world. I've never seen any good come out of deference and ass kissing on behalf of and as the politicians would like us believe for the good of the people.

  • Amber
    April 18, 2013 - 09:37

    sickening

  • clay
    April 18, 2013 - 09:24

    i think its a big mistake to give kruger any money. they been at that sinch 1985 the mill havent got half employes idont know where mr. marshel got 600 employes if they want to go so be it 'stephinville and grand falls surviled so will corner brook

  • Robere
    April 18, 2013 - 09:23

    DISGUSTING!!!! How many of the 1200 could still be working from $90M? People forced to leave the province for work... families torn apart... and this government has the nerve to fork over $90M for one last money grab by Kruger. Sink or Swim... not one more dollar!!!! Is there any way to get an election this fall?

  • Foghorn Leghorn
    April 18, 2013 - 09:13

    The one and only way that this money should be loaned to Kruger is if Deer Lake Power is put up as collateral against the loan. When Kruger defaults, we now own the power plant. We didn't even have to go through another messy expropriation to boot. Somehow I don't think Joe Kruger would be so excited about that idea.

  • Kyle
    April 18, 2013 - 08:14

    Maybe the governemnt owns KRUGER too just like NEWFOUNDLAND POWER !!!!!!!!!!!!!!!

  • Corporate Welfare
    April 18, 2013 - 08:14

    Another example of corporate welfare in a Tory riding. And, with Missed by Millions Minister Marshall doling out the cash, can we have a recount please? The corporate welfare cheque to Kruger could be closer to $500M; he's been off by over 300% before!

  • JODY
    April 18, 2013 - 08:09

    MORE MONEY TO BE FUNNEL OFF TO QUEBEC TO KEEP THAT MILL GOING.MEAN WHILE CUTS IN EVERY DEPARTMENT IN NL. THATS TAX PAYERS MONEY NOT FOR THE GOVERNMENT TO DO AS THEY WISH. SOMEONE IS FEATHERING THEIR OWN NEST , BECAUSE THEY KNOW THEY ARE NOT GOING TO BE RELECTED.. ITS A JOKE

  • Max
    April 18, 2013 - 08:05

    It seems the world over Newsprint Mills are in trouble, and the owners are trying to Tap into Goverment assistance to keep going. This money might be better spent in another way, why prob up a company ,that appears doomed to fail. If the goverbnent does deceid to prop up this company, they should ensure that the Tax payerVoter is well rewarded for the risk thry're taking, and that the money invested is not used to continue the existence of another competing Mill. The voters of this province are not venture capitalist with money to throw at risky ventures , if the compsny csn't be placed on solid footing fully finsnced by profits , the Govenment should pass on this risky venture.

  • holy smokes
    April 18, 2013 - 07:55

    “This mill is in a winning position.................Since Kruger bought this mill from Bowaters in the 80s it has been a dying project..It is in it's death throws..Tom Marshall above all people should know that...From about 2000 people employed there in the late 70s to about 350 now ...maybe a few more....IS NOT an industry worthy of a loan.....The mill employees already loaned them a substantial amount that was to be paid back ..they asked for an extension...and all hell broke loose..now they get 90 million bucks..and Marshall calls it a 'win win'....while there are public service lay offs and nearly every service and program cut to nothing....Total Bull chit!!

  • Calvin
    April 18, 2013 - 07:51

    Hahahaha, it is Newfoundlanders like you Barbara that make the rest of us look, at times, like a bunch of slack jawed yokels. Yes, how dare the government try and keep the mill open and save over 300 jobs for taxpaying Newfoundlanders!!! How dare they invest in the future of the one of the biggest industrial employers in the province!! This is an outrage!! They should just let the mill die, those Newfoundlanders don't need those jobs, they can just move away to Alberta for work!!! I wish sarcasm was more evident in text format, cause I feel like my point may be missed by the people I am trying to reach here. This is one of the few good moves Kathy and her crew have made recently, even the opposition acknowledges this. A financial investment that is guaranteed to provide a return.... WHAT WERE THEY THINKING!!!!

    • Willi Makit
      April 18, 2013 - 10:15

      Is that you Paul? The only thing keeping the mill open is taxpayer money. That's not an industry that's vital to our province, it's a make work project. It's not an investment if the expected rate of return is negative - it's a giveaway. If government want's to throw tax money at make work, there's lots of rock to be moved and fences to be painted. At least the money will stay in NL instead of bolstering the coffers of a private corporation.

  • Robb
    April 18, 2013 - 07:34

    Came on over to the trusty telegram to post.......can't post on vocm anymore as they will not put up anything that defends the govt. Again, the small minded liberals and ndp at vocm are controlling things....and then they come out crying that the govt is tweaking the poll....the only reason they get sooky is that they cannot control who votes on the question of the day, but they can certainly weed out the partisan comments to their own liking.....if someone at vocm said it was raining, I would have to look outside before I would believe them.....anyway, not sure about this 90 million....giving money to private companies has never really worked well for any govt, and then throw the unions in the mix.....but I would say there is probably no need for concern, as if it is up to the unions to "pitch in" and help the company survive, the company may as well close it up now...the greed of the unions makes them blind to reality, and is usually their undoing.

    • Ed. Anstey
      April 18, 2013 - 17:42

      robb you should be quiet and thought a fool.... you know the rest. 97% of union members in the mill gave up app. 30% of their income almost a year ago but the premier likes to keep that a secret. i still believe that mill has a future if kruger can put the money in the right places to make it a low cost producer. and put the right management in place.

  • Barbara Farrell
    April 18, 2013 - 07:01

    This is the last straw!!!When the Premier has cut so much & now turns around & gives $90 million to a private company,,, Good Bye Lady!!!!!

    • Kevin
      April 18, 2013 - 08:12

      Yeah, she has drawn a good many LAST STRAWS.............that moron. She probable doesnt even know how to add 1 + 1.................LOL. Now she goes out and just puts $90 in the hands of Kruger for NOTHING. In another years time they will be back looking for more.................whats that I hear? Oh, another plane full of Newfoundlanders and Labradorians leaving the province, SMART MOVE PEOPLE, to find GOOD PAYING JOBS, that will NEVER be found around here in this place. Remember the songs they sing at the hockey games.....NA NA NA NA, NA NA NA NA, HEY HEY HEY GOOD BYE..............THUNDERDALE BLUNDERDLE...........................THE WORST PREMIER IN OUR HISTORY BY FAR !!!!!!!! Once again government workers you get the big SLAP IN THE FACE !!!!

  • teamplayer
    April 18, 2013 - 06:49

    Wow, cutbacks and layoffs come down for healthcare and they pump another $90M into a mill and an industry thats been dying for 20yrs. If Kruger wants that mill to be viable maybe they should be on the hook for the money, not the tax payers of NL who will not see any benefit of keeping that mill running, outside of the few hundred jobs directly associated with it. Grab a life preserver folks, we're going down!!!