Monday, March 7, 2016

Captain Newfoundland's challenge

Geoff Stirling implored NLers not to give up 

on efforts to overturn infamous Upper Churchill contract 

The following article was published in the March 3d edition of The Newfoundland Herald. 

By Ryan Cleary

The late Geoff Stirling has been described as the “true Captain Newfoundland,” and he was. He may not have worn a cape, but the blood that ran through his veins had shades of pink, white and green. 

His exploits were as endless as his curiosity (Stonehenge, the pyramids); his patriotism (pre ’49 anti-Confederate) fierce. Stirling always stood on guard, with mystical flare. 

I cannot think of the seal hunt without imagining sealers on the icy Front dodging Newfoundland Heralds falling from the sky, or batting them away with their gaffs.

That particular story, a Geoff Stirling exclusive, began soon after the birth of the publication you’re reading. 

To draw attention to The St. John’s Sunday Herald (as The Newfoundland Herald was first known), Stirling had copies air-dropped onto the ice flows. No matter that the sealers likely weren’t prolific readers, the stunt was the mother of all Newfoundland publicity stunts, and told by Geoff in a 2004 interview with Report on Business magazine (Smallwood, Lennon, the gods and me, by Susan Bourette).

Here’s where the story achieves legend status. 

Stirling got the idea for the Herald in 1946 when stacks of tightly bound newspapers reportedly fell from the sky one day while he was hunting alligators in the Honduran jungle. “Stirling wondered: ‘If The Miami Herald can get all the way to readers in the Central American jungle, why can’t I get a newspaper to the outports of Newfoundland?”

As a legend-fuelling aside, the Herald was initially printed on 60 tons of newsprint that Stirling purchased from none other than Joey Smallwood himself, the last Father of Confederation, who had tried his hand at a newspaper, and failed. 

Stirling went on to become a media mogul, an independent broadcaster who pioneered privately owned television in Canada. He was a maverick by nature, and Newfoundlander to the core. 

I was hired as a senior writer with The Newfoundland Herald in 2003, and in the one year that I worked at the Herald I had many conversations with Geoff, in person and over the telephone from his second home in Arizona. 

But I had only one official interview, in April 2004 after I had left his magazine to become managing editor of The Independent newspaper

The central topic of the interview was the automatic renewal of the infamous Upper Churchill contract, which sees Quebec makes untold billions more than us. 

While the Upper Churchill contract (1972-2016) is set to expire on Aug. 31st of this year, at that point an automatic 25-year renewal clause will kick in. 

Worse, over the next 25 years 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. 

The Upper Churchill contract — seen by many as the biggest giveaway in our history — did not include an escalator clause to take into account the rising price of electricity. The 2003 Royal Commission that explored this province’s place in Canada predicted that the contract will result in “tens of billions of dollars in cumulative benefits to others in Canada.”

In my 2004 interview with Stirling, he called for a U.S. investigation of the Upper Churchill contract, which he described as “economic terrorism.”
“There’s nothing intellectually honest about this deal on the Upper Churchill,” Stirling said at the time. “If you’re living in a Confederation that says ‘No, we will not renegotiate anything. It’s frozen, it’s frozen, we have no sympathy … if you’re thinking that is the kind of country we want to be part of you’re thinking wrong.”

The province made repeated attempts to reopen the contract, but with no luck. Profits from the project would go a long ways towards pulling the provincial government out of its dire financial straits — facing a deficit this year alone of almost $2 billion as the result of a free-fall in the price of oil. Some economists have even said the province could face bankruptcy. 

“To give up on the Upper Churchill is absolute nonsense. I don’t care if there are 10 Supreme Courts. This is a question of intellectual honesty,” Stirling said. 

“It 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 1999 book published by Stirling Communications — Fifty Golden Years: The illustrated story of Newfoundland and Labrador's Union with Canada — included an extensive article by Vic Young, former chair and CEO of Newfoundland Hydro and Churchill Falls Labrador Corporation (1978-84). 

Young — who also led the 2003 Royal Commission into the province’s place in Canada— corresponded with then-Liberal Prime Minister Jean Chretien in 1996-97, calling for a tripartite resolution to the Churchill Falls situation involving Quebec, NL and Ottawa. 

Wrote Young: “How can a collective vision for Canada exist when one of our nation’s richest hydro resources produces huge returns for Quebec, while Newfoundland, as the owner of that resource, receives virtually no benefit?

“Who could imagine a situation where Alberta was forced to sell its oil to British Columbia, which in turn gained hundreds of millions of dollars in annual benefits from the subsequent resale of Alberta’s oil to the United States?”

Chretien ultimately turned thumbs down on Young’s request. 

Some critics argue it’s time get on with the future and not dwell on the Upper Churchill past, but Young wrote that the contract is very much our future considering the “unconscionable inequities of the contract will continue to unfold until the year 2041, unless a resolution is reached.”

The validity of the automatic Upper Churchill renewal clause has also been questioned. 

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.”
But that’s not the case. 

Newfoundland and Labrador has yet to launch a direct challenge of the Upper Churchill renewal clause, and political leaders have yet to explain why. 

Geoff Stirling may have been the original Captain Newfoundland, but it’s time more NLers step forward and be counted. 

God guards those who guard themselves.

Ryan Cleary is a long-time journalist and former Member of Parliament. 

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