Newpage, bailouts, and rural Nova Scotia
Should the now-dead deal to save hundreds of jobs at the Newpage Paper Mill in Cape Breton be a lesson in government bailouts, or is it instead just another sad blow to rural Nova Scotia? Is it both?
Word came in Friday night that Vancouver-based Pacific West Commercial Corp. has pulled out of a $33 million deal to buy the mill. Premier Darrell Dexter says the attempt to restructure its $124 million aid package exposed the province to too much risk. After the Canada Revenue Agency shot down an agreement between Pacific West and Nova Scotia Power, the writing was on the wall but the government appeared to want to go down swinging.
I have a bit of a tangent here. I’ve seemed, in my own mind at least, to be a bit of an NDP apologist. Given that it’s the party’s first shot at power, I was curious from the outset to see how they would do. I was willing to look past a few mistakes here and there because, like most governments, they talked a good game. The whole “Back to Balance” plan made sense. They seemed to be the kind of government we, the people, have said we wanted. That is, a government that would stop throwing our tax dollars into money-losing operations and focus on backing what was working, and work hard at getting back to sustainable balanced budgets.
The decision to end funding for the Yarmouth ferry service was really the first step in that direction, and one I thought was a good decision at the time. Then again, I didn’t understand how critical that service was to the economy in that area. I now do, and wonder like most people how the NDP could cut the legs out from under the south shore for a few million dollars a year.
In December, the government announced a $50 million bailout for the Bowater Mersey paper plant in Brooklyn which included a $25 mill forgivable loan. Fast-forward to June and Resolute Forest Products announces the mill is being closed indefinitely. Should the government have thrown money at the mill? Given the hundreds of jobs at stake, I can’t fault the attempt but people smarter than I am can argue the ins and outs of the bailout and what should have been done instead.
Now we come back to Newpage. About 600 workers lost their jobs when the mill closed last year and hundreds of forestry contractors were also heavily impacted. Those in the forestry sector now have one less buyer for their product, and I’m left wondering if there’s another viable buyer in the region. What else could the government do but try and make it work? Port Hawkesbury, Cape Breton and the rest of that region don’t exactly have a lot of major employers to bank on. The mill, despite being in a struggling industry, was one of those.
So we went through months of wrangling on bids to buy the operation, how the government would structure the bailout, and what it would take to see the mill up and running again. Complaints were made all along the way, and given how many people are impacted (by various degrees) that wasn’t a shock. $124 million in taxpayer dollars isn’t chump change, and how much has been lost now that the deal is bust?
Concessions were made by workers, we learned Pacific West wanted a number of conditions to close the deal and then the waiting game began. A lot of people were up in arms when the company reached a preliminary deal with Nova Scotia Power Inc., wondering what that would mean for our electricity bills if the mill was given a cheaper rate. The agreement was shot down by the CRA, leading to Friday’s announcement.
The bailout question gets raised any time the government throws money at a failing business, but I don’t remember there being as big a public outrage when the deal for Bowater Mersey or even the $300 million for Irving Shipbuilding. It could be because Newpage became a daily story and one that people became tired of hearing about.
The blame game will go on for a while now. Some will be mad at Pacific West for their demands (though if you’re buying a business, don’t you want to make sure it’s viable?), and others will target the province. Was the NDP approach the right way to go? The easy answer is to say no. It’s another thing to offer, in hindsight, constructive words of wisdom.
At the end of the day, thousands will be affected if a new owner can’t be found. Rural Nova Scotia will take another hit. After all of this, I’m still left wondering what take from the deal that’s collapsed.