Premier Kathy Dunderdale is fortunate she is paid a six-figure salary, because if she had to get by on five-figure earnings — a paltry $99,000, say — she would likely encounter personal financial difficulty.
Her spending habits as premier would be disastrous if applied to personal finances. But I could be wrong. Perhaps the premier has, in fact, walked into a bank and asked for a 40-year mortgage on a house.
Most people who don’t sit in the provincial cabinet, however, see the many advantages of paying off a mortgage sooner rather than later.
One benefit is that you could leave something for your children, rather than ask them to help you finish paying for it.
Which brings us, naturally, to the premier’s ridiculously pompous extravaganza this week announcing that the province has secured a
$5-billion loan — with repayment instalments spanning 40 years — to build the Muskrat Falls hydroelectric project.
The federal government’s loan guarantee gives the province a lower interest rate, saving $1 billion in payments. Dunderdale grandiosely described the guarantee, loan and project as “historic.”
Well, yes and no. It will indeed be “historic,” but not in the way Dunderdale meant.
Discussion about the Upper Churchill contract always involves a mixture of amazement and disgust that the province’s leaders at the time could have been so hapless. It seems incomprehensible that they agreed to a contract that is so irrational and one-sided.
The flaw in the Upper Churchill project can be narrowed down to one word: inflation.
We can only wonder whether, during contract negotiations, a minor minion or aide piped up and asked, “But what about inflation?”
If so, he or she was ignored, to the multi-decade, multibillion-
dollar detriment of Newfoundland (and Labrador).
Similarly, the essential flaw in the Muskrat Falls project can be found in a single word: investors.
To be more precise, the flaw is in a phrase: lack of investors.
When the province’s emissaries went to Toronto or New York looking for funding for Muskrat Falls, they must have looked for investors as well as lenders.
Surely they had meetings high above Bay Street or Wall Street and made their pitch: we have a project in the works, and there are profits to be made for investors.
Except that … there aren’t. There are no investors. There are no profits, nor will there be. If Muskrat Falls were a project that could turn a profit, investors would have put their money in. That’s how free enterprise works.
The supposedly open and accountable Dunderdale administration hasn’t explained why investors weren’t willing to put money into the Muskrat Falls project.
The government is, understandably, unforthcoming on this question. The answer would not reflect well on its “historic” project.
An alternative might be to ask Nalcor Energy — the Crown corporation in charge of the project — about its search for investors, and why none could be found. Oh, wait. Bill 29 legislates that Nalcor doesn’t have to tell the public anything about its internal workings.
The folks at Fortis Inc. could probably provide some valuable information. But Fortis is a private company beholden only to its shareholders, and has no obligation to Newfoundland (and Labrador) taxpayers.
But we can learn something from its actions. Fortis is headquartered in St. John’s. Among other things, it is in the business of producing and selling electricity. This week, Fortis bought a utility company in Arizona for $4.3 billion. Presumably, Fortis made this purchase because it expects UNS Energy Corp. of Tucson to turn a profit.
Fortis did not opt to invest in Muskrat Falls, in its proverbial backyard. That fact tells us more than Dunderdale ever has.
Brian Jones is a desk editor at The Telegram. He can be reached at email@example.com.