On the Brink!

Smoky Lake Signal Article No. 246 (November 21, 2012)

Whispering in the Wind

The world is in a mess – politically, economically and financially – with a number of observers forecasting a major global recession. Some “conservative” politicians are recommending that more government money be thrown at a company, sector or situation hoping that the situation will become more competitive and more efficient. For some “neo-conservative” politicians, their conviction is straight forward: let the corporation handle everything and if left alone (without government interference) the corporation will solve most, if not all economic, social issues encountered. From my perspective, political leaders (as well as the electorate) are becoming more confused than ever, largely because the “conservative” and the “neo-conservative” approach has almost always proved ineffective. Politicians have got to wake up and smell the roses (or if you prefer, the weeds). Politicians have got to realize that they are not facing the world as it was just a few years ago; in today’s world they are dealing with a new reality, CORPORATE GLOBALIZATION and its dominance.

The United States

The United States is in deep financial trouble and if the financial meltdown is to be avoided President Obama will first have to get everybody on side so his first major task will be to defrost a polarized Congress. Mr. Obama has already made efforts to come to terms with the Republican leadership and it seems to be working. The US president also must keep in mind the growing $16 trillion debt and who it is owns the paper – at best he will only be able to nibble at the edges. Mr. Obama has another formidable challenge and that is getting the private sector on side if he is to re-build the nation, specifically those global corporations that have flocked to Asia to set up shop and are now sending products back into the US market. If that is Mr. Obama’s debt reduction and job creation strategy it means protectionism – so Canada and Europe beware.

Europe

The 27 nation European Union is the largest economic unit in the world (with an estimated gross national product of $17.5 trillion) – the European Union was set up about twenty years ago to compete in the new global economy. Within the European Union there is a 17 nation Euro zone group of nations and they are experiencing some serious financial issues with four member states (Greece, Spain, Portugal, and Italy) where the unemployment rate is 25 per cent in some regions and the youth unemployment rate is estimated at about 50 per cent. Culture has a lot to do with the financial and economic problems in the southern states causing tens of thousands of younger people going to the streets in protest. This week there has been some resolution to the financial issues in Greece but it is minor compared to the massive problems being faced by the European Union. In my view there is a real possibility of a major recession in Europe and that will cause a major re-alignment on how financing is conducted in the Euro zone. In my view it would have been better to cut Greece (and the other troubled states) from the Euro zone with some guarantees and support for the re-alignment.

Canada

While the United States and Europe are precariously close to recession, Canada is taking the high road, and paving a highway toward prosperity using the country’s natural resources as the prime building block. Prime Minister Harper is skipping around the world creating a lot of interest in what Canada has to offer but specific deals have yet to be signed. While Mr. Harper is to be congratulated on his trade and investment promotion efforts, there is always a price. I’ve already written on my concerns regarding the Canada – China foreign investment agreement signed recently which includes secret dispute resolution procedures and ignores the rights and privileges of the provinces As well, there are some concerns being expressed by the United States and Alberta governments regarding the pending NEXEN purchase by CNOOC (the Chinese government’s oil enterprise). That is why I suggested: Canada wants to trade with foreign countries and Canada welcomes foreign investment, but Canada itself will set its own commercial standards and Canada is not for sale and should never be subject to foreign intervention on its territory. A Foreign Affairs document, recently leaked to the CBC, reveals a major shift in Canada’s foreign affairs policy that to me is very, very disturbing: “To succeed we will need to pursue political relationships in tandem with economic interests even where political interests or values may not align.”

Smoky Lake Healthcare

Smoky Lake Signal Article No. 243 (October 31, 2012) Whispering in the Wind Sorting out confusing statements has always been an important part of any healthcare discussion. Recently in the Smoky Lake area there has been a lot of discussion and a lot of confusion regarding the region’s healthcare facilities and the changes expected to take place in the next year or two, particularly the changes expected for the “community care” facilities within the Town of Smoky Lake. Let me try and explain what seems to be unfolding but remember; the issues are complex, confusing but significant and the information scanty. So it’s going to take two or three “Whispering in the Wind” columns (over the next few months) to address all of what I want say, please let me know your views and hopefully I won’t add to the confusion.

Issue 1: Who Owns What? Who’s Responsible? 
When it comes to healthcare in the Smoky Lake area there is really only one authority in charge and that is the provincial government’s Alberta Health Services (AHS) and its regional administrative arm, the Aspen Regional Health Authority. AHS owns and maintains two facilities in the area; the George McDougall Healthcare Center (an integrated health center often referred to as the Smoky Lake Hospital) is the core healthcare facility in the region. AHS also owns and maintains a separate “continuing care” facility that is referred to as the Nursing Home. Things get a lot more complicated when you introduce the Smoky Lake Foundation for Senior Citizens. The Foundation is a local organization and it owns and maintains a number of health related facilities in the Smoky Lake region – specifically the Bar V Nook Manor in Smoky Lake, the Lodge in Vilna (both are identified as “continuing care” facilities). The Foundation also owns and maintains a number of other affordable housing units in Smoky Lake, Vilna and Waskatenau. It is important to note that both the AHS’s Nursing Home and the Foundation’s Bar V Nook facility are out-of-date and will likely be phased out within the next few years. Sounds a little complex; it is, so let me summarize: The Smoky Lake Foundation for Senior Citizens indicate that they are in the “housing” business and they only provide and maintain the facilities while Alberta Health Services staff the facilities and provide all the healthcare services. All in all I feel that ownership and responsibility is not a major issue at this time but it could blow up if administrative issues aren’t well coordinated with all the stakeholders involved. What is an issue is having ongoing, creative, effective dialogue with all the stakeholders involved in healthcare business and that means; not only Alberta Health Services and the Smoky Lake Foundation but it is vital to include all the medical professionals in the community and of course, the “customers” who are paying the bills.

 Issue 2: The Foundation’s Latest Initiative 
The Foundation recently received a $7.4 million grant from the provincial government to build a new 40 unit “continuing care” building next to the existing Bar V Nook facility in Smoky Lake. It is interesting to note that the $7.4 million came from a housing authority rather than a healthcare authority and yet specific healthcare conditions were placed on the grant, like 20 of the 40 accommodation units must be dedicated to dementia patients. Nevertheless, the cost for constructing the new 40 unit structure is estimated at about $10 million and that means that there is going to be a $3 million shortfall – something that will have to be dealt with in short order. Rick Cherniwchan, Chairman of the Foundation, is confident that the financing issues can be addressed without any tax increases. In my view the math doesn’t add up unless you double or triple the rental rates for the residents of the new facility. Another interesting twist in the Foundation’s plan is the specification that asks for utility capacity to be double what necessary for a 40 unit structure. From my perspective it means that the 40 unit building that is expected to be operational in the next year or two will end up being a 90 or 100 units within 5 years. On the positive side it means the “antiquated” Nursing Home facility (owned by AHS) and the “antiquated” Bar V Nook lodge will most likely be phased out and gone within 5 years – that’s the good news. When it comes down to the construction of the 100 unit “continuing care” facility the Foundation is probably looking at a total price tag of 25 or 30 million dollars and all the Foundation has in the bank is $7.4 million – and that is a pretty risky financial strategy unless there is a worthy Plan B.

Harper in a Box re: Foreign Investment

Smoky Lake Signal Article No. 242 (October 24, 2012) Whispering in the Wind On more than one occasion I have offered the view: Canada is NOT for sale! I have also indicated that the continuing turmoil in the Middle East has put Canada (and Alberta) on a pedestal with the clear suggestion that Canada is now a secure, stable, energy super power. It’s now up to Prime Minister Harper to guide Canada on that stage. Actually that is not the wish for a few nations, including some global corporations – their interest is to claim ownership of Canada’s energy resources rather than simply trading in energy products – these foreign interests have made their position clear; if Canada wants funding for the development of Alberta’s oil sands then these foreign interests want more control over how things are developed and a greater share of the benefits pie. Events are unfolding and I am beginning to think that Prime Minister Harper is sending out mixed, confusing messages to the international investment community, if not sending out contradictory messages. Mr. Harper has tried to control the damage that he and his government created – in the last couple of days Mr. Harper has said that he will shortly make clear the rules of foreign investment in Canada. Canada – China Investment Treaty Mr. Harper’s government has recently and quietly tabled an investment agreement in the House of Commons - the Canada-China Foreign Investment Promotion and Protection Agreement. In itself these types of agreements are no big deal – except in this case it is a big deal. Experts in the investment field have expressed some concerns regarding the government’s rather blaze approach to the implementation process and that the agreement is going through the House of Commons without any serious debate. The law firm McCarthy Tetrault has concluded that the investment agreement with China “is likely to become one of Canada’s most significant investor protection treaties.” Gus Van Harten a professor of international law at Osgoode Hall’s law school in Toronto opines on the arbitration process in the agreement: “This process can override any decision we [Canadian’s] take. It could be a decision of the Alberta legislature, or the Parliament of Canada or the Supreme Court of Canada.” Last week opposition Members of the House of Commons asked for public hearings on the investment agreement with China but their request was turned down by the conservative dominated trade committee. State Owned Enterprises Make a Play on Canada’s Resources In my view, the main issue facing Prime Minister Harper (and his wish for an effective foreign investment development strategy), is going to be how he and his government views and treats State Owned Enterprises. Simply put, State Owned Enterprises are extensions of foreign governments and therefore are the arms of a foreign government and their policies. That in itself adds many levels of complexity to the issue and will generate major problems regarding the monitoring, transparency and accountability of any foreign government’s operations in Canada. There are two examples before Canada’s investment review group and things are not going well for either example. Malaysia’s State Owned Enterprise, Petronas” put forward a $6 billion bid for Progress Energy Resources Corp., a LNG operation in northern British Columbia. Petronas’ bid has been rejected by Investment Canada and Petronas has 30 days to review its proposal and show that their bid is of “net benefit” to Canada. One of China’s State Owned Enterprises, CNOOC has put forward a $15 billion bid for the takeover of Nexen Inc., a diversified energy company with holdings in various parts of the world – including the politically sensitive areas in the Gulf of Mexico and the North Sea. In this case the Government of Canada has asked for another 30 days to review the CNOOC proposal.

The Nexen Deal?

Milton Friedman has been correctly identified as one of the 20th century’s most influential economists. He has been labeled a staunch advocate of the free enterprise system with little or no respect for regulation, and regulation of the world’s financial sector is a no, no. Particularly important, Mr. Friedman was a passionate believer in free trade and by extension, globalization. Mr. Friedman died in 2006 but his theories continue to reign within many of the world’s developed nation states and their political infrastructures – including the present day government of Canada. One only has to look at Prime Minister Harper’s recent libertarian efforts, including his strategy to seek “quick” free trade agreements with Europe and the People’s Republic of China, to see that Mr. Harper’s approach to economic policy management is consistent with Mr. Friedman’s libertarian theories. Nevertheless, Prime Minister Harper might be forced to take a much more practical, political approach when reviewing China National Offshore Oil Corporation’s bid to purchase Nexen Inc. The Nexen Inc. Deal? China’s CNOOC bid to purchase Nexen Inc. for $15.1 billion has become an important political issue in Canada, and suggests a major dilemma for Prime Minister Harper’s government – as it should be. For Nexen shareholders, the bid by CNOOC is supported – after all, the share price offered has been pegged with a 60 percent premium. Premier Redford conditionally supports the sale and recommends that Nexen’s board of directors and its senior management group be sustained with a 50 percent Canadian content level – sooner or later this 50 percent Canadian content condition will likely prove unworkable but for the present it’s not a bad political tactic and the recommendation does have some merit. For the Prime Minister, the issues are quite complex with no clear answers. Following are a few questions facing the Harper government: Should Alberta’s oil sands be considered a strategic resource and should oil sands development be viewed as a strategic undertaking where the national interest is more relevant than most normal commercial undertakings? Should foreign national governments be allowed to establish a “political” foothold within Canada and conduct their commercial activities using a different set of norms and standards? Is Investment Canada’s singular “net benefit” rule sufficient when dealing with foreign investment and negotiating further, future free trade agreements? And finally, when will it be a good time to discuss Premier Redford’s idea of developing, having and implementing a national energy strategy that operates in Canada’s best interest? In the meantime China has reacted to the proposed Nexen purchase and Canada’s apparent procrastination. China’s ambassador to Canada, Zhang Junsai made a few very telling comments a few weeks back which I think demonstrates bully tactics, if not outright threats and not very well camouflaged threats. Ambassador Junsai observed when talking about the Nexen deal: “Business is business….It should not be politicized….If we politicize all this, then we can’t do business.” As well Ambassador Junsai made a connection between the approval of the Nexen deal and the possibility of having a free trade agreement (something that is very dear to the political wishes of Prime Minister Harper). The ambassador observed: “It’s time to open up each others markets….It’s time to do the exploratory work on the possibility of a free trade agreement.” In my opinion Ambassador Junsai came on strong and his message was quite clear – Canada has to approve the Nexen deal or forget about any free trade talks. Even then Canada can forget about any useful free trade talks for at least ten years.

Justin, Where's the Beef?

Smoky Lake Signal Article No. 240 (October 10, 2012) Whispering in the Wind About 30 years ago Wendy’s, a major hamburger chain in the United States and Canada put out an award winning TV ad featuring Clara Peller and a couple of elderly friends poking and searching through a rather large hamburger bun; Clara cried out; “Where’s the Beef?” Hopefully some of you will remember the hilarious ad because I’m trying to connect Clara’s question to Justin Trudeau and his bid for recognition. “Where’s the Beef?” Last week, 40 year old Justin Trudeau kicked off his Liberal leadership bid in Montreal and then traveled the country to acknowledge his considerable “fan” support in Calgary, Richmond and Mississauga – and let’s not forget about his visit with one of his biggest fans, boyhood buddy Dominic LeBlanc at an often used cottage hangout near Dieppe, New Brunswick. I don’t think there is any doubt; Justin Trudeau has the celebrity status of a rock star and in the very short term that is exactly what the Liberal Party of Canada wants and needs if the party is to regain some serious attention by those at the centre of the country’s political spectrum. But very quickly, Mr. Trudeau will have to demonstrate his leadership skills if he is to lead the Liberal Party’s team (as weak as it currently is). Further, Mr. Trudeau will have to articulate and defend well thought out policy positions if he is to succeed in the longer term, particularly when the real political battles start opposite the prime minister and the leader of the opposition. In my view Mr. Trudeau stumbled at the starting gate of his leadership bid, but he should be able to recover knowing that a federal election battle is still a few years off, so the question becomes: when will he start showing leadership qualities that embrace the Liberal Party’s aims and objectives and when will he start to generate public confidence by demonstrating that he can lead and manage a political party, never mind a country if called upon – he has got to show that he is more than a pretty face with a large fan club? In the first week in his campaign to be a leader of his political party, he has admitted to be “impulsive.” He has admitted to saying things that maybe he shouldn’t have said. To him his impulsiveness is a reflection of his “authenticity,” a character trait that has gotten him into trouble in the past and he thinks will get him into trouble in the future – being impulsive is a refreshing trait for most of us but for a politician it is very dangerous territory. So the Trudeau drama continues to unfold and it is only week one of a long journey, so Justin Trudeau; “Where’s the beef?” Where’s the Water? In early July, 2012 I wrote a piece about the confusion and the lack of political transparency surrounding the water supply issue in the region and why water was not flowing through constructed pipelines into at least two communities in the Smoky Lake area. Two months earlier Councillor Hennig from Fort Saskatchewan (and a member of their local water commission) said: “Until we get sufficient grant funding to provide the Highway 28/63 water commission with the supply they need, we won’t sign any supply contract.” Mr. Hennig went on to say: “That means Smoky Lake won’t get any water from us for at least another year.” I’m starting to think there is a cover up somewhere and nobody wants to step up to the plate and explain. To add further confusion to an already confusing situation a water conservation group has just released a report asking for a better water licensing system and urging the Alberta government to “….protect river health [because] without rivers that are healthy, everything else falls apart.” I’m getting really confused as to what’s going on and I’m starting to think that I’m mixing apples with oranges. Is the Alberta government procrastinating in its funding decisions because it lacks a well thought out water strategy for the province (and its communities) or is it simply a contract dispute between two greedy, unknowing water commissions in northeast Alberta? When all is said and done is it time for Smoky Lake to look at its current and quite adequate water supply system; a system that only needs upgrading and proper maintenance?

update

Smoky Lake Signal Article No. 239 (October 3, 2012) Whispering in the Wind Two political stories are unfolding that in my mind are good examples of how politics works in this country and the need for a lot more clarity and transparency from our elected politicians. First is the arena issue in Edmonton and the obvious dilemma Edmonton’s City Council is facing opposite Katz’s group. Second story is Justin Trudeau and the leadership of the Liberal Party of Canada. Daryl Katz Playing Hardball and Wants to Win Big Time – An agreement was reached about a year ago to keep the Edmonton Oilers in Edmonton for a long time – or so everybody thought. All that had to be done; a new arena would have to be built in downtown Edmonton, for an estimated $450 million - $125 million would come from the City of Edmonton; $100 would come from the Katz Group; User Payers would cough up $125 million and the federal and provincial governments would somehow contribute $100 million. Since then things have changed and the question is; has Daryl Katz been caught with his hands in the political cookie jar taking out far too many cookies? Mr. Katz is now asking the City of Edmonton to come up with more money – something like $25 million – he also wants a $6million a year subsidy for his operations in the arena and he wants to locate a casino in the new facility. Mr. Katz is refusing to meet publicly with City Council to answer questions regarding the recommended changes to the 2011 plan – he is also quite secretive about the financial performance of his hockey operations in Edmonton. To add some sweetness to his urgings for more public money, Mr. Katz recently went down to Seattle to talk about their $490 million arena – and to add some icing to his cookie grab he took along hockey icon, Wayne Gretzky – a real pompous threat if I ever heard one. So, as the National Hockey League season dwindles and millionaires continue to fight billionaires; will Daryl Katz stop playing hardball with City of Edmonton politicians and start cooperating with his prime stakeholder partner, or will the councilors draw a line in the sand and say that’s enough, that’s it! Justin Trudeau in the Race, No Meat but a Lot of Sizzle On November 3, 1948 the Chicago Tribune ran the following headline, “Dewey Defeats Truman” and the next day the newspaper had to write a retraction because the paper mistakenly declared Dewey the winner of the Presidency in the United States prior to the votes being counted. Well here I am about 24 hours prior to any announcement so I’m going to declare that Justin Trudeau announces that he is running for the leadership of the Liberal Party of Canada – tune into next week’s column should I have to print a retraction. I’m also willing to predict that Mr. Justin Trudeau will end up winning the leadership campaign and will be declared leader of the federal Liberals on April 14, 2013. From the bits and pieces of information coming from Trudeau’s handlers here is what’s going to happen over the next few days. On Tuesday, Mr. Trudeau declares his candidacy at a community center rally with about 500 of his closest friends in his Montreal riding of Papineau, then he is off to Richmond B.C. and then to Mississauga Ontario. Not much of an itinerary for someone that wants to follow in his father’s footsteps, but I think there is a lot of calculation in the strategy – for the next few weeks he is just trying to measure the mood of the country’s Liberals (particularly amongst the younger crowd, both Liberals as well as non-Liberals). We are also told that for the moment he is going to express his personal values without going into any meaty issues. That might work for the first few weeks but sooner or later he has got to show some meat and what he stands for.

Harper's Challenges

Smoky Lake Signal Article No. 238 (September 26, 2012) Whispering in the Wind I have often offered the opinion that NATION BUILDING is a must for Canada and should be a priority policy thrust for all of Canada’s political leadership – whether they are the premiers of the provinces or the prime minister of Canada. I have also said that Prime Minister Harper is the one most responsible for the country’s nation building endeavors and must continually demonstrate that his decisions and changes will make Canada stronger and better. To start with, Prime Minister Harper has to be congratulated for his efforts and keeping Canada’s economy relatively buoyant while much of the developed world is steeped in economic uncertainty, if not chaos. At this point in time, Canada’s economic buoyancy is largely due to: its resource endowments and how they are managed; having a strong, well regulated banking system and having a “practical” prime minister running a government that is without question, in charge. Nevertheless, Mr. Harper is facing a number of important challenges for which there are no easy solutions and from my perspective; the solutions will require government intervention, something Mr. Harper does not relish. Globalization vs. Nation Building – There is no question in my mind: philosophically, politically and practically speaking; GLOBALIZATION and NATION BUILDING are polar opposites – the question then becomes, can a line be drawn in the sand where both globalization and nationhood work in harmony and where will that line be drawn? The Pipeline Debate – The debate between Alberta’s Premier Redford and British Columbia’s Premier Clarke is a complex debate that requires intervention by the prime minister. As one reader of this column expertly put it: “…. there is an ideological issue for Harper when it comes to inter-provincial barriers to trade. He really does try to put provincial jurisdiction first, so in a case like this where the national interest is involved, he is paralyzed. By rights, he should be invoking the trade and commerce power and demanding BC recognize that there is a larger interest at stake which surmounts provincial interests and overcomes petty power plays of this sort: bottom line, BC does not have the right to prevent the sale of commodities in international markets, and it is Harpers duty to enforce that perspective, even to the extent of putting a reference to the Supreme Court.” The Nexen Inc. Factor – The proposed purchase of Nexen Inc. by the state owned China National Offshore Oil Corporation (CNOOC) for $15.1 billion is awaiting a “likely net benefit” decision by Canada’s Investment agency and Mr. Harper’s cabinet. Weighing in on the discussion is another arm of the Canadian government, Canada’s spy agency which issued a general warning in its annual report; suggesting that it unwise (I would say risky) for Canada to allow a foreign, state owned company to own the operations of a major Canadian company involved in one of Canada’s strategic sectors.. From my perspective, and I’ll repeat what I said a month ago – Canadian resources should be developed and traded in the international market place and that is why the pipelines going to the west coast and into the US are so important; but CANADA IS NOT FOR SALE! Secondly, it is time that Mr. Harper and the federal government got off their high horse and give its full support for the development of a national energy strategy that protects Canada’s interests, rather than sharing them.