Your tax dollars at work

Russell
Russell Wangersky
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I first heard the argument decades ago, when I was a business reporter. I was asking why one of Newfoundland’s most successful businessmen, a guy who was able to finance almost any project he wanted with ease, had instead taken a whole bunch of federal money to build a building he was going to build anyway.

The businessman’s rationale?

“If the government gives you a cookie, you take it.”

You can understand why the government wanted to be involved: their “investment” would be pretty well protected, because it was infrastructure for a strong and existing business, and the government money would let them argue that they’d “created” jobs, when really, they were piggybacking on something that was happening anyway.

You could understand why the businessman wanted it: free money, with no strings attached other than the ones his business had already agreed to anyway.

Win-win — except for the taxpayers, who were going to wind up paying, when all they were really buying was business cred for the  government.

That’s the problem with deals between two already-interested parties — and that brings us to the Newfoundland government, currently trying to woo a business called Rentech to build a wood-pellet plant in Botwood.

Rentech is in the midst of converting two Ontario facilities — one at Wawa, the other at Atikokan — into wood pelletization plants, with support from the Ontario government. (No one seems to be saying what the support entails, other than rights to wood fibre in the area.)

But pellets are a bit of a change; Rentech was originally looking at a larger labour force, especially at Wawa, to convert wood fibre into biodegradable jet fuel. Now, the two plants are set to produce more than 490,000 tons of wood pellets, with a combined total of something like 65 employees.

And that’s not the only change. When Rentech went into the Ontario pellet business, it was a joint venture with Graanul Invest, one of the largest wood pellet producers in the world. The two have since gone their separate ways, following Graanul’s review of the project.

Here’s how it’s described in Rentech’s financial filings: “After the joint venture (JV) with Graanul Invest (Graanul) was formed in May of this year, Graanul reviewed the engineering and project plans. Rentech and Graanul then jointly decided that … the resources of the JV and Graanul would be focused on other projects under development. Since Graanul would not be providing (engineering, procurement and construction) services, the Wawa and Atikokan projects would not be financed and owned by the JV. Rentech will continue to own the projects outright and be responsible for construction.”

Now, Rentech’s coming here as well, looking for additional wood fibre and, according to the CBC, a fair amount of money to build yet another wood pellet plant.

In other words, a whole plate of cookies.

Problem is, just like the businessman I mentioned earlier, both Rentech and the provincial government want the project to go ahead — Rentech, because it is trying to corner a part of the industrial wood pellet market and, face it, Botwood is cheaper and closer to Rentech’s current customers in Britain. The provincial government?

Well, it wants to be seen as doing something in the depressed forestry industry in central Newfoundland — and it’s not spending its own money anyway.

That’s why the cookie business ends up being such a fiscal sham. The provincial government is not looking for an investment — their return is not fiscal, it’s political, and the money ends up being secondary.

Sometimes, it all works in spite of itself.

Other times, we do things like trade cookies for cucumbers. Or build buildings that would have been built anyway.

Russell Wangersky is The Telegram’s news editor. He can be reached by email at rwanger@thetelegram.com.

Organizations: Rentech, CBC

Geographic location: Ontario, Newfoundland, Botwood.Rentech Botwood Britain

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  • I'm delighted to see my fellow Newfoundlander and Labradorian taking a stand and speaking out!
    April 15, 2014 - 09:52

    @Fisher person I concur with you on this article. I am also delighted that my fellow Newfoundlanders and Labradorians, like you, are finally seeing through the opaqueness, intransparencies, smoke and mirrors that have always been thrown up when the politicians were cooking up a deal for themselves and their business acquaintances on our natural resources. After 65 years the electorate of Newfoundland and Labrador is starting to speak out about how they have been scammed and shafted by the very people they put their faith into electing. Shame on those who have taken advantage of such a trusting people and given away their coveted natural resources with the resulting loss of their human resource so that they, the politicians, could prosper while letting the rest of us, their employers, suffer greatly from the lack of everything that those enjoying the fruits of our raw natural and human resources are benefitting from.

  • Fisher person
    April 15, 2014 - 08:48

    I like this article. The government has done the same thing in the Coast of Bays region in respect to aquaculture. The government have invested many millions of the tax payer's money, the companies have not done their part to protect the caged fish and thousands have died. The government steps in and pays the company for their loss. Win win for the company, and the government gets a few points. Loose loose for the tax payers. The equipment for the industry was paid by tax payers, the company that cleans the nets are paid millions by the tax payers, win win for the companies involved, the government gets a few points and loose loose for the tax payers. But the government will argue about all the jobs it is creating, they won't admit and neither will the companies that there are fewer than half the jobs announced by the Minister of fisheries and aquaculture and the MHA Tracey Perry. Win win, well you get my point. Well here are the loosers of this scam that that Tracey Perry, the MHA for the area brags so much about. The wild stock of lobsters are now eating the droppings from the caged fish, they are eating the excess feed that is full of chemicals, so what we have is a natural chemical free fishery that is no more on the south coast. We used to have a cod fishery that was also chemical free, organic is what we call it, now every cod is full of medicated feed and the fish actually smells so bad that a person can hardly stand the smell of its gut. So the people loose because we not have to eat contaminated fish. The same tax payers who are actually paying to feed themselves the contaminated feed. Now people have asked the Newfoundland Aquaculture Association to get a system in place so that the lobster and cod fisher people can have the seasons changed so that the lobsters and cod will be caught at a time when the chemicals are not administered to the feed lots where the salmon are kept. So again the tax payers loose because the aquaculture industry has more power than the government, the government has so much money invested they cannot do this season rotation to save the lives of the people (the same tax payers) and it would not help the government to win votes. While all this goes on, the roads in the area are in such a state that the area should be considered for a state of emergency, the forestry industry is near wiped out in the area and the government is responsible for these flops all paid by the tax payers. So the solution the government says is to double the aquaculture and create jobs, a win win for Tracey Perry and her family but a terrible loss for the tax payers. Now we will have double the amount of medicated salmon, double the amount of medicated wild lobsters, cod and all other species and it will wipe out the wild salmon stocks at the same time. The tax payers will have to pay for twice the amount of dead fish as this will happen in a short time as we will have millions more infected fish. But it is a win win for the government. As long as this scam can get Tracey Perry elected to get the full benefits of her pension (paid for by the tax payers), but the same people that have no roads to drive on, the same tax payers who pay to feed themselves contaminated fish, and have to spend their free time to go collect all the garbage from around the shoreline created by the aquaculture industry, that was put there by the tax payers money, but it's ok asTracey Perry can get a few more votes so she wins and everyone else loose. So really there is no problem as Perry is the only one that matters, right. The people are finally getting fed up with this scam that has been put in place to make a few rich and to help give Tracey Perry a job and a pension. Nothing else has been accomplished by these government actions.

  • Why not use the trees to produce the proudct that gives our province the best Economy?
    April 15, 2014 - 08:04

    What a waste of our precious wood! As one person said a few years back, I believe it was one of our present Senators, our trees grow at a more slower rate than wood elsewhere in North America, and they produce some of the best lumber because they are made up of a more compacted fiber because of the slow growth. So why then are we not talking about utilizing our wood resource for the purpose that gives us the best Economy? If his argument is right, are we stupid to utilize the wood for pellets and besides give it to an outside entity to reap the rewards? Was not the give-away of all of our coveted natural resources for others to grow economies the very the template that has gotten us in great economic trouble over the past 65 years?