When the rock gets rich

Newfoundland will be a ‘have’ province soon. Poor Ontario.
John Fraser

The timing is a bit arbitrary, but at some point in the next year and a half, the province of Newfoundland and Labrador will slip over from being a “have-not” province to a “have.”

Just like that.

What a sea change this will represent. The lowest man on the totem pole shooting up past its Atlantic province siblings, past the historic rival (Quebec), past Manitoba to survey the sunny economic uplands of Canada, there to sniff the purer, rarefied air that has been so unquestionably the right for so long of Ontario and the affluent western provinces.

The prospect of “haveness” has been around for a few years. Just last February, for example, the annual satirical Leacock Debate held each year in Toronto featured the proposition, “Newfoundland will stick with Canada even if Ontario sinks.” The motion was humorously attacked by the outgoing lieutenant governor of Newfoundland, Edward Roberts, and the former Liberal premier, Brian Tobin. The unlikely defence was mounted by professor Shane O’Dea of Memorial University, something of a Newfoundland nationalist, and the new lieutenant governor, the redoubtable John Crosbie.

“You poor buggers,” said Crosbie to the blue-chip audience of lawyers, business folk and academics who had gathered at the University of Toronto. “You’ve got potholes in your streets and leaks in your bank buildings,” he said, laying it on with a trowel. “It’s pathetic when you see the reality: beggars on Bloor Street, company chairmen having to drive themselves to work. But here’s good news. Newfoundland is going to stick with you, come hell or high water. Even if you all end up on the welfare rolls, we’ll tide you over. We’ll help you to keep your noses above the waterline.”

The laughter was loud, but there was just a slight edge of uneasiness. That a prominent Newfoundlander could mock Ontarians in their own capital was profoundly funny, and also something few there that evening could have ever imagined just a decade or so ago. That’s because for generations, Newfoundlanders have been the poorest of the poor, the Haitians of North America, the dumb fishermen and brutal swoilers (seal hunters) of old, the butt of national jokes no one outside of Canada ever understood.

That contempt was noticed on the Rock. Surveying a national penchant for laughing at “Newfies,” the brilliant and caustic St. John’s Evening Telegram columnist Ray Guy wrote in 1968: “Newfoundlanders, what are we? We’re slobbering idiots, slack-jawed simpletons, rustic fish billies living in Dogpatch-on-the-rocks, lower than lower Slobovians, the laughing stock and ‘white trash’ of Canada. Why one province of Canada should have become the object of scorn and derision of the other nine is a mystery to us. Do we deserve it? If we do, we’d like our fellow Canadians to tell us why. If the fad for ridiculing all things Newfoundland continues, it could leave a scar that will take a long time to heal.”

Now all that’s changing faster than any scab can be peeled off the skin, just as fast as the ever-rising price of oil beneath the Grand Banks can be brought to market. And it is the oil that’s primarily done it, of course. The offshore Hibernia field has been nudging Newfoundland for some years to look beyond its colossal net debt (at $11.6 billion, the highest per capita debt in the country) to the brightest future in its long history.

And then recently, Premier Danny Williams—in some Newfoundland eyes the greatest leader in the Western world since Charlemagne—signed a multi-year agreement with four oil companies (Chevron, ExxonMobil, Petro-Canada and StatoilHydro) to develop the new Hebron offshore site, south of the already lucrative Hibernia fields, which will pump billions more into the Newfoundland economy in a few years.

All across the country, and especially in Alberta, where young Newfoundlanders have often reluctantly migrated to better their lot in life, there is a rising sense of possibilities. Colin Whiffen is typical. A 21-year-old scaffolding worker who has found great-paying work on the oil sands project at Fort McMurray, Whiffen still comes home to Placentia for 10 days a month to live the life he loves with the most warm-hearted, culturally confident people in English Canada. He’s hoping for full-time work in Newfoundland before he turns 30 and now there’s a pretty good chance he might make it by 25.

A prosperous, spiritually buoyant Newfoundland is set to become one of the great wonders of 21st-century Canada, wiping out forever all the vicissitudes of the first half of the 20th, if not the preceding centuries. Canada being a country that tends to jettison its history—especially when it is inconvenient—has largely forgotten that Newfoundland has already experienced the Canadian nightmare: loss of nationhood and absorption by its big, wealthy and often arrogant neighbour. Up until 1933, Newfoundland, a self-governing dominion within the British Empire, had the same status as Canada and Australia till economic privation and bankruptcy forced it into a sub-colonial dependency on the British government during the Depression.

Of course, Confederation in 1949 with Canada has been good for Newfoundland, and there are very few today who would deny that. But Newfoundlanders also know that all the economic benefits of being part of the larger whole have come with a price tag, ignorant condescension being the least of it really, along with an often crippling dependency on handouts that demeaned the spirits even as it held out a lifeline.

There’s also all the decades-old rancour over the Churchill Falls power deal that has seen huge sums go to Quebec, for merely being the middleman between Newfoundland’s natural resources and the power hungry markets of the rest of North America. The rancour continues and is fuelled by what all Newfoundlanders consider the rotten deal the Smallwood administration felt itself forced to sign with Hydro-Québec in 1969.

There’s more inconvenient history here. When Newfoundland joined Canada, it was on the broad understanding that no province could impede the trade of others provinces. That’s part of the British North America Act, still the cornerstone of Canadian constitutionalism. Unless, of course, it is Newfoundland trying to sell electricity to New York state or English Canada via power lines that have to be built on Quebec soil. Ask anyone in Newfoundland and they will tell you Quebec has always had a “notwithstanding” clause in Confederation.

The four-decades deal with Hydro-Québec for a laughably low price was bad enough. But worse is in store. Only lately has it been rediscovered that Quebec has the right to a 25-year extension at even a cheaper rate. Here’s how a recent article in the Dalhousie Law Journal described a situation guaranteed to rile any self-respecting Newfoundlander: “The 44-year term of the contract (signed in 1969) runs from 1972 to 2016,” observed James Feehan and Melvin Baker of Memorial University. “However, the contract provides for renewal at the expiry date for a further 25-year period with the terms predetermined. As such it amounts to a contract ‘piggy-backed’ onto a contract. During the renewal period the price is pre-set at two mills per kilowatt hour. A mill is one-tenth of a cent, so two mills is 0.2 cents.

“Even in the late 1960s, a price of two mills was extraordinarily low and not achievable from any new energy source available to Hydro-Québec. To put this price in perspective, in 2004 the average wholesale price of electricity in Ontario was 52.2 mills per kilowatt hour and in 2003 Hydro-Québec received an average of approximately 84.9 mills for its electricity exports. A price of two mills in 2016 with that price fixed until 2041 is barely distinguishable from being free.”

Before Stephen Harper and Danny Williams, either in collusion or through individual desire, managed to shut the great gob of John Crosbie by appointing him the representative of the Queen to sit in occasionally magnificent frustration in Government House in St. John’s, he was very vocal on this issue. Five years ago when he was the chancellor of Memorial University, he let a blast go in the general direction of Ottawa when he addressed the Newfoundland and Labrador Construction Association in January 2003: “We cannot cease in our efforts to have the government of Canada participate meaningfully in such [new power] developments to atone for their permitting us to suffer the economic losses we have had to bear through its failure to develop a reasonable, sensible, courageous and equitable national energy policy that would permit and encourage the wheeling of power across provinces and the development of a true national grid for hydroelectric energy transmission in our country.”

The unfair hydro deal is the principal reason Premier Danny Williams has insisted the province have an equity stake in the new Hebron oil project—4.9 per cent in fact. It’s a gamble. The history of direct government involvement—and intervention—in energy projects like this is not a happy one, but the history here and the remembered grievances speak louder than fears over the heavy-handed potential of government.

“We’re now partners at the table,” said Williams after the signing, “and that’s a wonderful thing. We can be criticized because when we become partners, we take on risk, but we all know there’s no reward without risk. We are taking very modest risk compared to the reward here.”

All the hope and expectations of growing prosperity buzzing around the streets of old St. John’s is such a far cry from the traditional tale told on the Rock. In many Canadian eyes, as Ray Guy observed, and even in the view of some Newfoundlanders impatient for a better future, this island province was the end of the road on Misery Lane. Nothing epitomized this more than the catastrophic and tragic depletion of the cod fishery at the end of the 20th century, a resource that for centuries defined the Newfoundland economic system.

The overfishing by all countries brought about a moratorium still in place today, although there are hopeful signs that the cod stocks are in recovery. Go over for a fireside chat with His Honour the Governor (some still call the lieutenant governor by the historic title in place till 1949) and you will see the famous brow furrowed at this news. You can tell he wants to say something over-the-top. That’s how John Crosbie, and many Newfoundland politicians before him, manage to get heard. So actually watching Lieutenant Governor John Crosbie trying to choose his words carefully in order to stick within constitutionally accepted norms of the Queen’s non-partisan representative is a bit like watching a mongoose befriend a python. It doesn’t come naturally to the man, but he is trying: “It may sound strange coming from a former politician,” he said in Government House a few weeks ago, the day after Williams announced the Hebron oil deal, “but our hope in Newfoundland is that politics doesn’t screw up the fishery. I don’t mean any particular politics, I mean politics in general, at all levels. If the cod really is coming back, and acknowledged experts like George Rose at Memorial are pretty sure it is, then we are at the same sort of crucial juncture with the fishery as we are with our other God-given natural resources.

“Will we keep an eye to the long-term future or will we blow it with a big blast like a crazed lottery winner? There are some positive signs here that Newfoundland has learned from the errors of the past, which is good because you know this oil bonanza isn’t going to last forever—10 to 15 years if we are lucky. All Newfoundlanders need to work on a comprehensive vision. It’s not just up to the government of the day, although it has to take the lead. It’s great if the cod fishery really is coming back, but we also know very well how to kill it off, and if we start overfishing again, that’s what we’ll do, we’ll blow it.”

Crosbie feels Newfoundland is at much more than an “interesting juncture.” For the first time in its long and struggling history, this extraordinary place is about to deal with a wholly new situation as it becomes an economic leader in a nation it joined as a pauper.

“What’s new? We’ve been helping you lot out for a long time,” said the governor, with just a hint of a tight smile. “Who do you think has been keeping Quebec afloat all these years with that cheap electricity? We’d like to help Ontario too, I’m sure.”

The mischievous twinkle in his eye also comes with a deadly earnest concern that Newfoundland doesn’t screw up its good fortune. Stephen Harper and Danny Williams may think the Queen’s man is like a codfish caught in a net of constitutional strictures, but I don’t envy anyone who’s around the governor if he thinks they’re blowing it.