Whispers From Babylon

A long time ago in a land far away,  six seven years olds put on Cub Scout attire and headed for the Indian Meal Line and Trails End for their first-ever camp with the First St.John’s Boy Scout Troup.  One Deñnis Meaney was the Cub Scout Master, John Doyle, the Pontifex Maximus, and it was not long before many of the little boys were crying, this being their first time away from their parents and home, even though both were but twenty minutes drive away.  Bill Collins, Gerry Angel,  Greg O’Keefe, Terry Stack, Ed Thorburn, and  Gary Mooney are names I remember, though there may have been some  I forget.  Sixty-five years clouds such memories.  Now there are only three remaining,  Thorburn, Stack and me, the others having transitioned, most recently William August Collins, QC, and it is him I choose to honour today.  I have lived for fifty-eight years in the Newfoundland diaspora, but these knights-errant of my childhood and youth forever shine brightly.

Bill is now being deservedly honoured by his Brother and Sister Barristers of the Newfoundland Bar. Some hail him as the best Criminal Litigator of his generation and speak with admiration of his unique skills when addressing a Jury.  He was all of that and more, and he deserved Silk.  However, I choose to recall an old and dear friend, whom I kept in sporadic contact all through those sixty-five intervening years.    Wise, humble, gentle and kind was he, and I will always remember him

I am blessed to have been adopted by a large family of ‘gentlefolk’, six sisters and one brother.  They view fashion as art, and consequently, I have to sit quietly and endure the ‘great void’ that is the Academy Awards.  I find the whole thing mind-numbing, but I have learned to be as polite as my wife and her sisters are to me, so I sit in silence.   My mind wanders off to Toad of Toad Hall, to Badger, Ratty and Mole and the others. Each of them is accepted as they are, and are not pushed to be anything else.  Belonging does not demand conformity. The people I value do not write me out of their books of life because we disagree.  What links us is not that we are like-minded but rather that we are like-hearted.

It is a challenge to find people who think. Search in vain for the few in most of the academic world, the political world, the professional world, the corporate world, the religious world, and even in the artistic world.  To win admission to the Academy requires good marks, and to obtain good marks involves catering to the biases of the anointed, and then living out the compromises of institutional life, not all that different from the much reviled Church.  To say as much out loud invites excommunication as a “repugnant cultural other” The same holds true for every form of human endeavour save for the journey of a hermit.   Sapere Aude!

Are those who dare to think condemned to solitude?   Cogito ergo sum.

Saturday, 24 February 2018

Three score and ten plus almost two, and no matter how erratic ‘the beat still goes on’. From my very earliest days, I never wanted the people I loved to leave, the experiences I relished to end, or the challenges that gave me a reason to live, to wind down.  I am also  very easily bored and all too often intolerant.  While I transitioned regularly through many countries and multiple roles and careers, I often did so at a significant cost. Now  I must prepare for a unique transition. I will despise myself if I hang around for too long. I don’t want my colleagues to say, “there’s that old fart Mooney, he is well past it, why doesn’t he just move on.”  But I persist!

Well, I have begun to think about thinking about it

I received ver the following Notice today and I share my sorrow.

“It is with deepest regrets that we announce the passing of Greg O’Keefe, founder of O’Keefe Agencies Ltd. As many of you know, in the past few years Greg has been battling cancer and despite his best efforts to combat this terrible disease he passed peacefully away on Friday, June 9. Greg was a very private man and there will be no funeral or wake.

Greg was a man full of passion and humor. His hard work and determination allowed him, along with his wife Regina, to build O’Keefe Agencies Ltd. out of his mother’s basement in 1968 to where it is today. Greg was a salesman for many years and travelled to hundreds of customers all over the island. The business grew and it continues to be 100% Newfoundland and Labrador family owned and operated .

Greg was most known by customers for his friendly and reliable customer service, a trait he believed was the foundation of the business. This strong family tradition continues with both his sons, Charles and Andrew and their wives Joanne and Pamela. O’Keefe Agencies ltd. continues to grow and expand and will celebrate 50 years in business next year.

Greg’s legacy will be honored by his family and we would like to assure our customers we will continue to provide the outstanding customer service we are known for.

If anyone wishes to honor Greg’s memory the family requests that a donation may be made to the Autism Society or Rainbow Riders.”

I thought you would want to read Annals of Culture: The Invention of Sex, by Stephen Greenblatt. St. Augustine’s carnal knowledge. http://nyer.cm/zGYK4De Download The New Yorker Today app: http://nyer.cm/ba5wYPW

Part Three – Modernizing the Federation – March 3, 2017

Equalization and Other Fiscal Transfers

As both a beneficiary of, and in recent years a contributor to, the equalization program, Newfoundland and Labrador has an interest in ensuring more coherence, transparency, accountability and equity in the system of federal-provincial fiscal transfers in Canada.
First, some background: Every year, Ottawa channels billions of dollars to the provinces and territories to reduce inequities among Canadians. This goal is so fundamental to our way of life that it is entrenched in the Constitution. Section 36(1) of the Constitution commits our governments to: “(a) promoting equal opportunities for the well-being of Canadians, (b) furthering economic development to reduce disparity in opportunity, and (c) providing essential levels of public services of reasonable quality to all Canadians.” Federal contributions to provinces primarily take the form of transfer payments specifically designated for health care, post-secondary education, social assistance, and social services. Together these arrangements are called “fiscal federalism.” One specific form of financial redistribution of the nation’s wealth, called equalization, is specifically mentioned in Section 36(2), committing our governments to provide “reasonably comparable levels of public services at reasonably comparable levels of taxation.”

It is important to note that transfers from the federal to the provincial and territorial governments are an integral component of a well-functioning modern federation. In a federation such as ours, the so-called vertical balance between federal and provincial levels is just as important as the horizontal balance that focuses on correcting disparities across provinces. In fact, too much provincial self-sufficiency can lead to greater horizontal imbalances and interprovincial disparities; this then puts pressure on equalization. Indeed, we should be concerned that Canada is now the most decentralized federation in the developed world as measured by federal transfers as a percentage of provincial revenues. Many economists argue that the level of federal transfers is so low that this will seriously impede our ability to pursue national equity and efficiency on behalf of all Canadians. For example, from 1945 to 2006, federal government revenues only twice dropped below 15% of GDP – in 1958/59 and 1963/64. Yet revenues have now dropped below 15% of GDP every year since 2008/9.

It has become increasingly difficult to measure whether the current structure of fiscal federalism allows us to share the financial burden fairly and ensure federal transfers do what they are meant to do to promote national objectives. Governments engage in ad hoc deals that make calculating the real impacts of transfer payments next to impossible. Recent developments on the health care front with bilateral federal-provincial funding deals are just the latest illustration of this. The federal government once again has failed to negotiate a multilateral agreement with all provinces and territories, and establish a specified set of national standards in health care, together with clear indicators and measurements against targets. Without such long-term clarity and transparency, the record shows that the federal government cannot be relied on to guarantee adequate funding to maintain those standards, and too often arbitrarily reduces transfers to provinces in future years, with serious consequences. To ensure greater accountability and more openness and transparency surrounding the purpose and adequacy of federal fiscal transfers, there must be crucial changes to how Parliament handles them, and much more meaningful scrutiny at the very least by the House of Commons.

In 2015-16, the Canada Health Transfer distributed almost $34 billion and the Canada Social Transfer (covering such areas as post-secondary education and childcare) another $13 billion. Both these transfers are now paid on an equal per-capita basis. Equalization payments (which are made only to provinces with comparatively weak fiscal capacity) totaled approximately $17.3 billion, with about half of this amount going to Quebec and the rest distributed across Ontario, Manitoba, Nova Scotia, New Brunswick, and Prince Edward Island. Presumably Newfoundland and Labrador will once again qualify for equalization this fiscal year. There are many other federal programs and initiatives that incorporate equalizing elements, such as Employment Insurance, which is currently structured to benefit the unemployed who live in areas of the country with fewer job opportunities.

Undoubtedly, equalization is a valuable program that some observers argue may help Canada to quell incipient voter revolts in particularly hard-hit geographic areas (as happened in the US Rust Belt states that tipped the vote to Trump). But our equalization program has long been in need of serious reform, both substantive and procedural. The formula is so complex that few experts can even describe it in understandable terms – adding up different tax bases while excluding others to somehow measure comparable fiscal capacity across provinces.

Too often equalization has become a political football: at one point under the Harper administration, we ended up with several different versions in play when Danny Williams here in Newfoundland protested successfully regarding the impact of a change on our province. Alberta, because of its natural resource wealth, used to be the biggest contributor to equalization, and even though this has changed, Alberta politicians still question why enormous sums are being sent to Quebec to allow that province to pay for services that others cannot afford, such as subsidized electricity, $7.55-a-day child care (now for incomes up to $50,545.00, and rising on a sliding scale to $20.70 for higher incomes), and the lowest post-secondary tuition fees in the country.

We urgently need to bring coherence, consistency, and accountability to the perverse jumble of federal contributions to provinces so that it does not divide governments and erode Canadians’ ties to one another.

A permanent non-partisan independent advisory commission, similar to Australia’s Commonwealth Grants Commission, could scrutinize and manage fiscal federalism. This Commission on Fiscal Transfers would examine how every province is doing based on a giant balance sheet of GDP in each jurisdiction, taking into account all revenue sources, measuring the effectiveness of programs, and charting improvements in equity. It would examine such difficult issues as whether and which transfers should be made on a per capita basis or according to “fiscal need”, given the disparities among provinces. The current equalization formula, among other things, would be replaced.

The Commission’s reports to Parliament and recommendations to the minister of finance would make the system of federal contributions to other levels of government more transparent and much less political. Its findings would inform intelligent debate on longer-term national standards and objectives, thereby building stronger ties among Canadians and greater confidence in the fairness of the system.

Council of Canadian Governments

When Newfoundland and Labrador seeks support from the federal government on a bilateral basis, inevitably and predictably the cries go up from other provinces that if Newfoundland is getting ABC for Muskrat Falls then, for example, Quebec is entitled to XYZ for its hydro projects on the St. Lawrence river. In the ensuing bidding war, the federal support that ultimately materializes too often reflects more transitory political priorities rather than important long-term economic and financial realities.

The traditional approach of relying only on ad hoc first ministers’ meetings to achieve an intergovernmental consensus no longer works for the long-term action that is urgently needed. Too often, on any given issue from health care to energy, we end up with either the lowest common denominator of agreement, or no multilateral agreement at all with a potentially inequitable patchwork of standards and quality of services across the country.

We know all too well that many critical challenges we face today – from infrastructure to energy, education/training and health care to climate change – involve every level of government. We cannot neatly allocate this or that responsibility to this or that jurisdiction. We need coordinated governance to ensure that all levels of government work together collectively to help Canadians meet the real challenges we all face on a daily basis.

The time is overdue to bring about structural changes to modernize our federal system and to facilitate all levels of government working together towards common goals for all Canadians. It is also time to make structural changes to assure maximum accountability and maximum efficiency from our collective public expenditures across multiple levels of government.

Australia has a model that Canada could follow to create a more collegial and collaborative federalism without the need for constitutional change. The ten-member Council of Australian Governments consists of the prime minister, the state and territorial leaders, and the head of the Australian Local Government Association. Established in 1992, the Council fosters co-operation on policies and issues of national importance. It is generally well accepted and has enabled Australia to eliminate much of the inter-jurisdictional wrangling with which Canadians are so familiar while successfully establishing more coherent and harmonized policies across the country in areas such as a national disability insurance plan, skills training, business regulations, transport, infrastructure, and health care.

A Council of Canadian Governments, chaired by the prime minister, would include provincial premiers, territorial leaders, representatives of the municipal order of government, and representatives of Indigenous people. It would not be a formal part of the legislative process, nor would it have any governmental powers or constitutional status; instead, it would supplement first ministers’ conferences. The Council’s role would be to initiate, develop, and monitor the implementation of policy reforms that are of national significance and require action by all Canadian governments.

The focus on collaboration would bring more direction and coherence to national governance. The Council would be transparent. Full information about its meetings, agendas, proposed initiatives, agreements, and so forth would be made public. Council meetings could be open to the public, giving them access to experts invited to participate. This high degree of transparency would facilitate constructive citizen mobilization and permit Canadians to demand much greater accountability from our leaders collectively for progress on matters requiring national attention and co-ordinated government action at different levels. (The provincial and federal legislatures would be accountable for any laws or regulations they made that followed up on the Council’s work.)

So much of the public action required to strengthen our social safety net and our economic fundamentals requires all levels of government to collaborate constructively. From the citizen’s perspective, it is frustrating to be met with one level of government ducking from taking action by blaming another level. It is frustrating to find federal action uncoordinated with a related provincial program so that individuals fall through the gap and find certain benefits arbitrarily canceled. It is frustrating to find that your business has to comply with different requirements when you operate across more than one province, and that your employees’ training certificates are not recognized across Canada.

The Council’s purpose would be to strengthen our social safety net and prevent Canadians from falling between the cracks when dealing with complex and uncoordinated federal-provincial-municipal initiatives. The aim would also be to strengthen our internal Canadian economy and eliminate the regulatory labyrinth across Canadian jurisdictions that absurdly makes it easier to conduct business outside our borders. Greater national coherence will provide Canadians with greater economic and social security and increase investment and jobs across the country.

Finally, the Council of Canadian Governments would permit much-needed accountability for the massive federal-provincial fiscal transfers that totalled $68 billion in 2015-16, or 25.8% of all federal program spending. It would be invaluable to have a forum where issues such as the much-misunderstood topic of federal-provincial “fiscal balance” can be examined, and ensure a coherent, collective focus on the sustainability of the federation’s finances.

I thought I had  read the entire Trollope corpus, but I keep discovering  more. I just finished `He Knew He Was Right` .   I recommend the marvelous worlds of Trollope to anyone who loves character and language.

Massey College in the University of Toronto in an extraordinary collegial community. Modelled on All Souls Oxford, it elects Senior Fellows from across the Academy and also from the broader Community.   My friend Ken and I were elected to the Fellowship on the same day a few years back, the two of us lawyers among other things, and both us with  deeply felt connections to Oxbridge.   Ken embraced Massey with a commitment that marked most everything he touched, and he did all of us proud.

I learned this week that Ken has entered the final stage of his life’s journey. I had known he was ill, so I was not shocked, but then one is always shocked.  Ken is one of  the most measured and even tempered men I have ever known.  He has always been a good physical shape and he worked out regularly. He is one of the few people I know who really embraced a balanced life style, and at times I envied him that balance. His love of his family was forever  apparent, and it was only a year ago that I sat with him at the annual Oxford Cambridge Gala and met his daughters.

There was little obvious disorder and no emotional explosiveness in Ken. Unlike me,he had a monastic calmness and peace about him that one could never miss.  It made you feel good to be in his presence.  He is almost decade younger than me, and yes, I wonder about the justice of it all.   Then again I accept the mystery that is life and death, and feel humbled by all of it.  Today I am both sad and grateful to have walked briefly alongside a truly good man nearing the end of his pilgrimage.

Part Two – Muskrat Falls

Let me turn now to something of particular importance to Newfoundland and Labrador’s economic future.  For better or for worse, Muskrat Falls is a mega-project involving both great financial cost but also great potential gain. If we make the decision to go forward with it, how do we make a go of it?

Muskrat has not been without controversy, notably the substantial cost overruns – the costs of the project have risen from $7.4 billion in 2012 to $11.4 billion in 2016 – and there is still work to be done to meet the concerns of affected Indigenous communities. But the opportunity to put behind us the painful years of ceding control over our hydro resources to the province of Quebec, and to start using our hydro-electricity productively and efficiently to expand our provincial economy and local jobs, is invaluable. So, how do we move forward in a financially sustainable way?

For example, is the latest increase in the loan guarantee from the federal government sufficient to cover the cost overruns to support the scheduled completion by the end of 2017?  Muskrat Falls is, after all, a project of national significance from both the energy and environmental perspectives, and merits substantial federal support. Muskrat is not a narrowly Newfoundland and Labrador project; it is bold idea with broad national impact, and one meriting regional and national engagement and support.

It is arguably far better to join with our provincial Atlantic counterparts and make a strong case to the federal government for the necessary ongoing financial guarantees or assistance than to start skirmishes with Nova Scotia with dubious arguments that NS is getting something for nothing.  Perhaps I am misinformed, but it is my understanding that Nova Scotia negotiated and paid for 20% of the overall capital costs by fully funding the construction of the Maritime Link between Newfoundland and Nova Scotia.

In seeking new markets for our power, would it not be more useful, for example, to collaborate with both Nova Scotia and New Brunswick, and go to Ottawa together.   We could secure federal government support for upgrading of the sub-sea link between Nova Scotia and New Brunswick that could expand the market for NL hydroelectricity exports from Muskrat Falls, including electricity from our large-scale wind projects, to both other provinces and the eastern U.S.? Is this not something for which the business community should lobby aggressively?

The project can  produce about three times the power  used by our province to be transmitted across two new transmission lines – one to Nova Scotia and one to Newfoundland.  Yet the power plant still has no export contracts for the surplus power, especially to the United States market. Newfoundland and Labrador is still unable to transmit electricity by the most direct route from Muskrat Falls to markets in New England because Quebec is demanding too steep a price for crossing its territory. Quebec favours its own hydro projects competing with Newfoundland for the same American markets (La Romaine and expansion of James Bay capacity) and has already delayed Newfoundland’s application to use Quebec transmission lines to export to the U.S. for several years.

Newfoundland and Labrador would clearly benefit from developing transmission routes that bypass Quebec, through New Brunswick. New Brunswick should be open to this collaboration. In this connection, we must remember the reasons why New Brunswick residents fiercely opposed the proposed $3.6 billion Hydro-Québec takeover of New Brunswick Power in 2010.  There can be no doubt that New Brunswick faced, and still faces, a serious energy security crisis, and that obtaining cheaper hydro-electricity from Quebec made some sense.  But by strengthening Hydro-Québec’s monopoly on transmission access to the U.S., the Quebec-NB hydro deal (together with expected parallel hydro deals with Nova Scotia and Prince Edward Island) would have cemented Quebec’s control of Eastern Canada’s power grid, something that New Brunswickers could not support.  The New Brunswick opposition was fortunate from the perspective of Newfoundland and Labrador because the takeover would have increased Hydro-Québec’s ability to extract a greater share of Newfoundland’s profit from Churchill Falls.

Moreover throughout the debate, the federal government remained typically  mute on the sidelines, hesitant to challenge Quebec, as it has done consistently since Pearson and Trudeau in the 1960s. Yet the bilateral Quebec-New Brunswick deal clearly engaged the Canadian national interest in promoting inter-provincial equity in the transmission of electricity across Canada and to the U.S., and guaranteeing all Canadians equitable access to long-term supplies of clean energy.  When New Brunswick finally rejected the deal with Hydro-Quebec, the federal government simply resumed muddling along incoherently, making one-off deals with provinces — a loan guarantee for the Lower Churchill development here, a contribution to the Old Harry oil and gas development in the St. Lawrence there.

In looking to the future, it is clear that Canada needs an integrated national electricity market and, at the very least, an Atlantic Canada grid.  Newfoundland and Labrador should support this initiative. The status quo in the coordination of grids across provincial and international boundaries is particularly absurd and even embarrassing. The federal government needs to step up to the plate and do something about Canada’s hopelessly inefficient and highly politicized electricity business, and fragmented market, that wastes billions of dollars every year, not to mention produces millions of tonnes of avoidable greenhouse gas emissions.

The federal government also should resume oversight of the electrical trade across the Canada-U.S. border.  It is absurd that when Newfoundland is eventually in a position to transmit electricity to the U.S., whether via New Brunswick or Quebec, the terms of transmission will be set not by Canadians authorities, but by the American Federal Energy Regulatory Commission (FERC) that requires owners of power lines (whether Quebec or New Brunswick) to give equal access to competing power suppliers.  Indeed, the federal government has been missing in action for a long time, backing off from energy management so thoroughly after abandoning the deeply unpopular National Energy Program of 1980, that it abdicated even its constitutionally-sound cross-boundary regulatory responsibility.

Focusing on Muskrat Falls and the economic potential of our hydro-electricity is as an example of where we can take action at home in Newfoundland and Labrador, while at the same time as reaching out and collaborating with like-minded Canadians through both our common federal government and provincial governments. Part Three addresses the crucial discussion of how to modernize certain federal structures and operations to better serve both the national interest and all Canadians, including Newfoundlanders and Labradoreans.