Why are we always giving stuff away? I mean, that’s what we’re doing, right? Giving it away?
Every few days, the clarion call goes out, in the words of our pride-restoring former premier: “No. More. Giveaways!”
But does it stop? Hardly. We may be proud, strong and determined, but we are clearly generous to a fault.
Liking that offshore oil, Exxon Mobil? Go ahead, help yourself. Take as much as you want. Just plug it up again before you leave.
Got a hankering for that nickel, Vale? Go for it. Cart that rock right on out of there. We’ve got no use for it.
And what do we get in return? Nothing.
Well, nothing, that is, except for taxes and royalties and super royalties and equity stakes, and more jobs than we have workers to fill.
Fact is, anyone who still rails about us giving stuff away needs to take a long, deep breath. When you give something away, you don’t usually get cash for it.
Last week, Premier Kathy Dunderdale and Natural Resources Minister Jerome Kennedy announced they had accepted a financial penalty of $150 million in lieu of Exxon constructing a third topsides module in this province. The Hebron project will still see the main gravity base structure and two other modules constructed here.
Dunderdale has been playing
the no-more-giveaways card for months, ever since the company announced it wanted to move the work elsewhere. Whether or not she knew or wanted to admit it, the contract was likely as good as gone right from the beginning.
Legitimate labour shortage
The 2008 Hebron deal stipulated that all three modules would be built in the province as long as there was sufficient labour to do so.
Needless to say, there isn’t.
Industry experts have been sounding the alarm for years, but little was done. The original Hebron deal saw a mere $1 million earmarked for training at MUN and the College of the North Atlantic. The Hebron benefits agreement calls for $120 million in research, development, education and training over the life of the project. But with the local labour pool drained, and a need for foreign workers that’s already evident in other areas, the third module was probably toast long ago.
The opposition parties foresaw this dilemma back in 2008. While they can certainly claim bragging rights now, any expression of shock or dismay at the current news rings a little hollow.
A decent payoff
And while some question whether $150 million is adequate compensation, it’s no less than the estimated value of the contract itself. It’s too early to calculate whether the economic value of projects the province plans with that money will make up for the lost work. Odds are there won’t be a significant difference.
This is not even the first time Exxon has agreed to make up for lost work. In 2010, the company announced a $20-million barge construction project to replace lost work from a decision to cancel pre-drilling operations at the Hebron site.
Temporary work booms do little for the long-term health of the local economy. Jobs may be top of mind when big projects come to town, but the real action comes from royalties and taxes. Long after the platforms are built, oil revenues continue to pour into provincial coffers.
Newfoundland has proven it has the workforce and infrastructure to accommodate offshore oil construction. The remaining work planned for Hebron — and the expected windfall — far exceeds that created by the Hibernia project.
Losing one module — with a cash consolation prize — is hardly a giveaway.
Peter Jackson is The Telegram’s commentary editor. He can be contacted at email@example.com.