N.L. a victim of 'economic terrorism'

The following letter to the editor is published in today's edition (Monday, Dec. 14th) of The Telegram.

As a Newfoundland and Labrador MP, it was a challenge to truly love Canada.

Oh, I always liked her enough, she’s a red-leafed beauty/hockey Goddess to look at, but dig deeper and there’s evidence of what the late Geoff Stirling once described as “economic terrorism.”

Our people have suffered greatly because of the monumentally lopsided Upper Churchill contract — Quebec makes billions more than us. And Ottawa has never been prepared to step in, to stage an intervention, which only adds to the pain. 

Most people aren’t aware, but the Upper Churchill contract expires next year (1972-2016). At that point, an automatic 25-year renewal clause will kick in. And, starting in 2016, Newfoundland and Labrador will make even less from the contract than it did in the first 44 years. 

According to a 2009 Nalcor report, the purchase price under the power contract is one-quarter of one cent per kilowatt hour and the automatic renewal clause fixes the purchase price at one-fifth of one cent until the contract expires. 

In 2014, it was estimated that Quebec had reaped more than $20 billion from the deal, compared to about $1 billion for Newfoundland and Labrador.

That disparity will only grow, which is not how provinces should treat each other; it’s not how the Canadian family should behave; it’s Canada’s dirty little secret — the “economic terrorism” inflicted on its youngest province. 

And local objections, all too often, are dismissed as the rants of bar-stool nationalists. There are those who say we should let the Upper Churchill go — a deal is a deal.

I say fair is fair, an injustice is an injustice, and the contract should be challenged at every opportunity. The Newfoundland and Labrador government, along with our federal MPs, should make the elimination of the renewal clause a top priority. Renegotiation of a fair Churchill contract would be a step towards correcting our dire economic course. 

“To give up on the Upper Churchill is absolute nonsense … this is a question of intellectual honesty,” Stirling said in an April 2004 interview. “… it (an investigation of the Upper Churchill contract) not only should happen, it must happen if there’s any honesty in Canada and nobody wants to be part of a country that has no honesty.”

A 2005 Memorial University paper — The Origins of a Coming Crisis: Renewal of the Churchill Falls Contract, by James Feehan and Melvin Baker — raised questions of business ethics and law, conflict of interest, and economic duress associated with the inking of the renewal clause. 

The paper concluded: “It is inconceivable that any party to a transaction would knowingly and willingly agree to sell its services some 50 to 75 years into the future at a price fixed below the current price, except if either forced to do so or offered commensurate benefits. In this case, the latter did not happen.”

The paper predicted that as 2016 approaches, the renewal clause is “certain to become a flash point.”

Only that’s apparently not the case.

Newfoundland and Labrador has yet to launch a direct challenge of the Upper Churchill renewal clause. That clause should be fought on every front, tooth and nail, until it’s renegotiated in the best interests of both provinces.

John Crosbie once said that the greatest failure of Confederation is the absence of a fair energy policy. The victim of that failure will continue to be Newfoundland and Labrador for as long as we accept it. 

Ryan Cleary,

St. John’s