Nfld. & Labrador·Weekend Briefing

An alley full of dumpster fires: Which crisis would you like to deal with first?

Stocks collapsed the day before the damning Muskrat Falls report was released; the next day, COVID-19 was declared a pandemic. John Gushue looks at a sequence of steep challenges for the provincial government.

If the Muskrat Falls report weren't enough, a stock market collapse and a pandemic came upon us

Premier Dwight Ball and Natural Resources Minister Siobhan Coady released the Muskrat Falls inquiry report Tuesday afternoon in St. John's. (Terry Roberts/CBC)

One of the themes that emerged during the Muskrat Falls inquiry was that critical information was prepared for politicians and other top officials, and yet that information went unread at vitally important points of the decision-making process. Instead, verbal briefings were the standard. (With the notable exception of Jerome Kennedy, personal note-taking was also not common.) 

These were people who were charged with making decisions — critical decisions, with billions of dollars at stake — and yet some were not as prepared as one might assume, or expect.

We don't know what lessons are being learned at Confederation Building, but it did seem striking, then, that Premier Dwight Ball and Natural Resources Minister Siobhan Coady assembled the media Tuesday to release the Muskrat Falls commission's final report, without giving journalists so much as a few minutes to read it first. 

This may not strike many readers as particularly unusual, but it is. On budget day, for instance, reporters have several hours to sift through a collection of documents to makes sense of it, while also being able to ask technical questions of experts. (More and more, however, journalists covering the budget are doing this while a cascade of politicians come before them to spin what they want the coverage to be about.)

Technical briefings are also common when, say, a new government policy is unveiled, or something like a new report on crab stocks. DFO did one of those just last week.

With the damning Muskrat Falls report, though, that kind of prepared rollout of information did not happen. Instead, journalists were given a report that is highly complex, and which takes time to digest, while two politicians made verbal comments ahead of their reading. Right away, Ball and Coady set the narrative — noting, in particular, that the matter was being referred to the police.

No surprise, then, that this comment was a highlight of media coverage on announcement day. It's a classic bit of political framing.

A worker from a Servpro disaster recovery team wearing a protective suit and respirator adjusts his mask before entering the Life Care Center in Kirkland, Wash., to begin cleaning and disinfecting the facility Wednesday. (Ted Warren/AP Photo)

The report itself (you can read all six volumes here) is captivating, sobering reading (as of this writing, I'm still reading it), and not at all likely to soothe the nerves of anyone nervous about Newfoundland and Labrador's economic future.

Highest per capita debt in history 

Muskrat Falls is entwined with a dismal and worsening fiscal picture for the provincial treasury.

The latest report from the auditor general's office, in December, put the government's net debt at $15.4 billion. Julia Mullaley, who just this week moved from the auditor general's office to run Newfoundland and Labrador Housing Corp., noted that works out to $29,250 per person, a new record high.

It's not just Muskrat Falls that has been racking up the debt. For every single year for the last seven years, we've been putting more debt on the proverbial provincial credit card. Those consecutive deficits add up to $6.4 billion of extra debt.

Mullaley's last report came out just a week after a delayed provincial fiscal update that revealed government revenues had fallen sharply, to the tune of an extra $392 million.

Dumpster fires aplenty

"Dumpster fire" is a metaphor that's being used frequently to describe the state of things with the government's finances.

What's concerning is that latest news about the current shortfall and the cumulative debt were both revealed before two crises that emerged in the new year: a collapse in oil prices and COVID-19.

They're not unrelated, although the cliff-like drop in oil prices involves OPEC and a price war between Saudi Arabia and Russia. (If you ever want to get a sense of how comparatively insignificant N.L.'s production is, reading about games that oil giants play will do the trick.)

The day before the Muskrat Falls commission report was released, oil prices took their single biggest jump since the Gulf War.

The day after the report was released, the World Health Organization officially declared COVID-19 a pandemic. There were signposts of the impact of the novel coronavirus everywhere: all of Italy basically shuts down, Dublin cancels its St. Patrick's celebration, the NBA suspends its season, Tom Hanks and his wife Rita Wilson are diagnosed … the list goes on.

As for oil prices … well, now. The downward pressure on oil is inextricably linked to the roaring bear that has dominated the stock market for the last three weeks, culminating in what's already been tagged as "Black Monday" earlier this week: the biggest single-day drop since the 2008 banking crisis.

Brent crude, the type of oil that Newfoundland and Labrador uses for budgeting purposes, dropped like a rock going over a cliff. In last April's budget, the government picked $65 as the average price per barrel of Brent crude. (The December update knocked that down to $63.20.)

What will this year's budget put oil at?

Well … we're not going to know for a while. The governing Liberals are focused now on electing a new leader, and we won't know whether it will be Andrew Furey or John Abbott until May 9. The budget was pushed back until a new leader, premier and possibly cabinet are in place.

Given how many things are being cancelled this week, maybe that's not entirely a bad thing.

But in an alley full of dumpster fires, it feels odd that we don't have a plan, at least for now, on how to handle a cluster of crises.

Read more from CBC Newfoundland and Labrador


John Gushue

CBC News

John Gushue is the digital senior producer with CBC News in St. John's.


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