Thursday, June 10, 2010

Danny Williams Bashes Quebec at the Canadian Club

This morning I saw Danny Williams, at the Canada Club in Ottawa, speaking out against Quebec's arrogance on CPAC television. Although I am aware that Newfoundland has been attacking Quebec for many years, this was the first time I think I have heard one of these attacks on television, although it was only CPAC, which I assume almost no one watches.

The current issue is about transmitting power from a new proposed hydro project in Labrador through the existing transmission lines in Quebec. According to Quebec's regulatory commission, the existing power lines do not have the capacity to transmit this much extra electricity (1.5 million homes) without an upgrade. Newfoundland does not mind paying for a modest amount of upgrade, but balks at the cost. So now Danny is going on the offensive, and I mean very offensive.

A brief recap of the history of this bitterness, which is really all about Labrador. Labrador is a large area from mainland Canada, that was in dispute between Quebec and Newfoundland. As part of the deal for Newfoundland joining Canada in 1949, the Canadian Government signed a deal that Labrador, and a large area of the mainland, claimed at the time by the province of Quebec, should be ceded forever to Newfoundland. So Newfoundland got a huge territory in mainland Canada, at Quebec's expense, which is larger than the island of Newfoundland itself. Quebec was opposed to this deal and remains annoyed by it it, although by now the deal is pretty much closed. In fact, Newfoundland has recently renamed itself "Newfoundland and Labrador" in order to show how Labrador will always be joined to Newfoundland.

The geographical location of Labrador is such that it cannot get electricity or roads in or out without going through Quebec. And not just a little bit of Quebec, but nearly a thousand kilometers. Newfoundlanders cannot even build power lines from Labrador directly to Newfoundland. (or let's just say it has not been done yet, I suppose with enough money it could be done going under the sea).

Danny Williams was not complaining about the decision to give this large territory to Newfoundland, of course. Although he did very briefly mention it in his speech, giving the impression he thought this particular part of the deal would not need to be disputed.

There is another deal that he complained about, which is a 65 year contract Newfoundland signed to sell electricity from Labrador to Quebec at a fixed price. The deal was signed about 1976, and today the price is well below market price for electricity. Danny Williams wants this deal, which he says is unfair, to be cancelled and replaced with a deal which gives Newfoundland a fair, current market price for the electricity.

This dispute has gone on for at least twenty years, but Danny Williams delivered this speech yesterday (June 9, 2010) in Ontario. As far as I could tell, it was a one man show, there was no representative from Quebec to give the other side of the coin. And Danny's attack was far ranging, and possibly more damaging than any previous verbal attacks have been. In it I heard these points (I didn't hear the whole speech).

  1. - That Quebec has an arrogance , sense of entitlement and greed. And it is the "Tail wagging the dog" (reference to Canada being the dog and Quebec being its tail)"
  2. - That the contract locking in rates for 65 years was unfair to Newfoundland.
  3. - That Hydro Quebec takes power at night from Ontario (which is cheap) and selling it back the next day during peak hours at 4x the price of what they paid for it.
  4. - That Quebec is cheating on its equalization payments. (Equalization payments are the equivalent of welfare for provinces). Quebec cheats by reducing the electrical costs to Quebecer consumers, and also reducing university tuition (for Quebec residents only), to make it look like the provincial government has less income, which is to boost equalization payments from Ottawa.
  5. - Quebec is blocking a national electrical grid, which could bring power from Nunavut, and northern Manitoba, and other remote places (such as Labrador, I guess, but was not mentioned)
  6. - Quebec is blocking the Lower Churchill Falls project, another proposed hydroelectric project in Labrador.
As usual, you do not hear the Quebec side of the story. In fact it's probably better for Quebec to not get involved in the mud-slinging from Danny Williams, who as he says, likes nothing better than a good scrap. The hydro electric deal has been to court several times, and every time it has held up against all legal challenges. After arguments from both sides are made, the essential point always seems to be that according to our legal system, and in our system of commercial contracts, it is valid and enforceable to sign a 65 year contract at a fixed price, regardless of the fact that one party may change their minds at a later date and want out of the contract. Historically, contracts have even been signed for more than 65 years.

From the one course of commercial law that I took many years ago, I believe that there are several ways to get out of a contract. Both parties can agree to terminate it, which means of course that Newfoundland would need to cut some kind of side deal with Quebec, which they have never done. Or it could be proven that one party has not held up their part of the bargain in some way, for example if Quebec had neglected to repair the hundreds of miles of downed transmission lines during the famous ice storm that destroyed large portions of Quebec Hydro's grid. But no court of law has ever ended this Quebec/Newfoundland contract in spite of all the challenges. In fact, with this latest challenge, it's starting to look to me more like legal harassment than a true legal case.

Newfoundland is not even losing money on the contract, they are making about 63 million a year. Considering the fact that Labrador has about 25,000 residents, that works out to about $2400 per person per year. And the contract only has thirty years to go now, before they can charge Quebec whatever they like for the electricity. So it's not exactly "milking Newfoundland dry"

The Province
The Montreal Gazette (English Language Paper)

On the CTV website:

"Newfoundland premiers have long complained that a mid-1960s financing agreement that made development of the Upper Churchill hydroelectric project possible is now transferring billions of dollars of wealth from what once was one of Canada's poorest provinces to Quebec."

Well, another way to frame that statement is "transferring billions of dollars from what was once Quebec, to what is left of Quebec."

And by the way, with offshore oil discoveries, Newfoundland is no longer Canada's poorest province.

Not that I am trying to split hairs, but all through the speech, Danny kept mentioning that this was a "Green Energy" project, but I believe that the USA has not decided that hydroelectric projects such as this, and the similar ones in Quebec are "Green Energy". I don't agree myself, but the greenness is obviously in dispute. Especially when Danny says this is the greatest green energy project on the continent

Picture: taken by me on our 2007 road trip, Driving through Quebec on the way to Labrador. This is pretty typical of our whole day driving. Just to illustrate Labrador is a remote place.


  1. Good for you Danny, Quebec has been milking Canada dry for decades.The entire system is a disaster from the top down and the bottom up. Nothing will be fixed or corrected. We will get a lot of spin from politicians and the media, a lot of foaming at the mouth, blah, blah, blah, and things will remain the same as they usually do. What a joke this country has become. We now have over 3.5 million people working for government across the country. Just sickening! Average salary in government is about 70 thousand yearly and rising. Average salary in the private sector is around 45 thousand yearly and dropping. Over 10% of government employees now make over 100 thousand yearly. In the private sector the number is under 2%. Nice eh? Look to Greece and Quebec, this is where Canada is headed if we don’t stop equalization and get spending and government growth under control. This tax and spend, union, socialist, big government, social engineering that has been destroying this country has got to stop. Yes, it has left Quebec and has been spreading throughout the rest of the country since the 1970”s. Thanks Trudeau.

    The Liberals and Conservatives have spent the last few decades destroying Ontario and Canada’s economy, its English speaking history and culture, not to mention the racism, bigotry, ethnic language cleansing and human rights violations going on in Quebec, bills 22, 178, 101…What are they really up to? “First Quebec, then we take over the rest of the country, one step at a time…through bilingualism…” PT, “How to take over a country through bilingualism…” SD. That’s what’s really going on. Wake up, people! High taxes, high salaries, big government, social engineering - expensive forced bilingual and multicultural policies (only outside Quebec of course), unions controlling just about everything, new programs and new departments yearly, the size and growth of government and salaries have been out of control for decades with no end in sight. Lie after lie, spin, propaganda from politicians and all government officials on a daily basis, scandals, corruption, billions of dollars being wasted on all sorts of socialist nonsense, again with no end in sight.

    Both parties have created the mess this country has become and they do not have the ability to fix, or correct anything. They just create more problems. We need a new party and a new system now or else things will only get worse.

  2. What do you mean when you say "Newfoundland is not even losing money on the contract..."?

    When Quebec reaps $1.7 billion per year, while Newfoundland gets $63 million, I think it is obvious that Newfoundland is losing money.

  3. Newfoundland is not losing money if they are getting 63 million a year, I think it's pretty clear what I meant. If you believe that Quebec's money really should belong to Newfoundland, then you might think Newfoundland is losing money. But that opinion is clearly wrong. The case has been before the courts, and Quebec's share legally belongs to Quebec.

    If you do not wish to accept the legal ruling, but only go by what is morally right, then by any moral standard, the interior of Labrador should belong to Quebec. So how about we all just live by what the law says instead of calling it unfair.

    By law, Labrador belongs to Newfoundland, and the money belongs to Quebec. So why not take the 63 million a year that legally is yours, and is real money, and invest it in something worth while instead of trying to convince yourself that you are losing money?

  4. Lost Motorcyclist You need a basic history lesson. Canada did not "Give" Labrador to Nfld. Nfld was awarded it in the 20's by a judicial privy council decision and brought Labrador into Canada when it joined as a province in 1949.

  5. Jim, thanks for your comment. I probably do need a basic history lesson, but not as much as you might think. I did not actually say that "Canada gave Labrador to Newfoundland", but I did write these words "the decision to give this large territory to Newfoundland." I was actually partly referring to the Privy council decision to give Labrador to Newfoundland, and partly, Canada's decision to cede that territory forever to Newfoundland in 1949. Although I did not mention the privy council decision in this blog entry, I do know about it, and I wrote about it before, and there is a link in this blog (right after the third paragraph, called the "Quebec and Labrador dispute")

    Anyhow sorry for splitting hairs on this one, but the main point I was actually trying to make is that Quebec did not agree to this, it was imposed on them either by Britain or by the English part of Canada, and to the people of Quebec it does not really matter which, as they are both seen to be the same original source.

    So actually I guess each side got forced into a bargain they did not much care for, not just Newfoundland. It's time for both sides to move on.

  6. Lost Motorcyclist:

    Thanks for your level headed approach to this issue. The Labrador boundary issue is a mute point in the current squabble between NL and Quebec.

    I would like you to read the following investigation by Professor Jim Feehan of Memorial University regarding the upper Churchill issue.

    It clarify s many of the unknowns about the contract between CFLco and HQ. The unethical preditory practices by HQ at the time would today be considered criminal.


  7. I read with interest the file you indicated, although I have to admit that some of the intricate details had me occasionally skimming paragraphs. This paper is obviously well researched and scholarly, but I do not think it is even handed in dealing with the problem. It leans heavily in Newfoundland's side of the case. Which I guess is normal considering the University it comes from.

    Talking about Hydro Quebec's "criminal" behaviour might be a bit of an exaggeration on your part. Maybe you were referring to the conflict of interest, as Feehan pointed out. Hydro Quebec was part owner of the Churchill Falls Power Co. But wasn't the the issue of conflict of interest well known even back in the sixties? And has it not been brought up in subsequent court challenges? Those are some questions I might have, but I am not really a legal expert in this matter to go into the technicalities.

    One issue I am very aware of is the remoteness of the area. And in this paper I thought I detected an effort to downplay the problem of distance from the population centres. Most Canadians stick to populated areas, and are not really aware of the enormous distances and lack of facilities in vast areas of our country. How many Canadians have been to Churchill Falls, for example? I have not. I once drove to Labrador City in February, I only needed to go another 270 km and I could have been in Churchill Falls, but I turned back.

    Feehan does not ignore the issue of remoteness, but he does not explain it well either. Let me quote: "Developing the Hamilton Falls would involve considerable challenges. Its magnitude and its distance from major markets—approximately 180 kilometres due east from the Quebec border and several hundred kilometres further from there to large population centres—presented substantial engineering and financial complexities."

    Does this statement give you the feeling that somehow it was not so remote? Actually, Quebec City would be the nearest place to go. Both Chicoutimi and Baie Comeau were closer, but these smallish population centres already had their own self-contained electrical power.

    The road from Quebec City to Churchill Falls did not exist then. You can drive it today, and the distance is 1267 km. By plane it is 908. You cannot downplay the remoteness of this area and still fully understand the economic factors in the electrical agreement.

    And there many emotional and political factors going all the way back to the Battle of the Plains of Abraham. Many people, including me, would rather try to balance it out instead of exploiting any lingering bad feelings.