00:00:22.420You were walking out the door today, and I said, hey, can we do this show?
00:00:27.040it's a obviously been a burr in my saddle for the rest of us you know since the announcement came
00:00:32.340out and for the rest of the week i'm sure it will be but you said to me no yeah okay i will but i
00:00:37.360got to go home because i got a puppy waiting for me what kind of dog do you have uh vishla he's
00:00:42.600just about a year old so yeah he's uh yeah little little pup really is a pup well you know what i'm
00:00:48.980delighted that you would have your pup by your side while we uh shared about federal uh misappropriation
00:00:55.360of dialogue which is kind of what this feels like to me uh you know the other day i'm watching on
00:01:05.400the pier you know there's the prime minister you know for shed we've got both premieres standing
00:01:11.100on this pier talking about the church hill falls arrangement that really is not done at all but
00:01:18.220while i was watching it i was thinking hmm they don't all seem to have the same data in their
00:01:23.260talking points nobody seems super comfortable standing at the podium together and then i
00:01:29.080realized well it's an mou that still requires work right bothered me to no end why uh what about the
00:01:38.460uh what about the 2024 one though didn't that bring about so many positive results for everyone
00:01:43.780mike yeah i mean we just were one premier away from that getting put on pause because it had no
00:01:49.220And in fact, you know, I just read this, this kind of got to me, an independent review commissioned by Newfoundland and Labrador, Newfoundland, as it said properly, my bad, and Labrador subsequently concluded that the MOU as configured was not in the province's overall best long-term interest.
00:02:12.540But anyway, having said that, already there's pushback on this.
00:02:16.840Right. So do you see this MOU being put into action or do you think they're going to end up scrolling away from it here?
00:02:26.020Well, I'll tell you what I think. And I've worked all afternoon on this one. So please go with me on it.
00:02:30.920It feels a little bit Mickey MOU, S-E, if you ask me, because we continually have these.
00:02:39.100Like, Churchill Falls is not the only example of this, even in the last month or two. Between national projects and, you know, trade deals, we're literally drowning at MOUs and barely catching an actual deal anywhere.
00:02:56.560Right. It's a lot of talking about what we will do, but not a lot of actually doing.
00:03:03.120right so i'm not sure how this operates on the provincial level just with this one arrangement
00:03:08.600uh the mou that's been put together uh federally backed with billions of dollars of refurbishment
00:03:14.720but this all that the problem with these mous i think in this case for sure it seems like a way
00:03:21.500to calm everybody that something's being done uh look it's a bad deal for newfoundland and it's
00:03:28.740a great deal for Quebec, but yet we do need to refurbish this whole thing and expand it
00:03:33.240to make it useful. And so all of those elements seem to get put into one MOU that seems like it
00:03:42.940might be impossible to make binding. Well, yeah. And I think too, there's an element to it that
00:03:50.100a lot of these agreements and announcements act as marketing in the political world, right? It's,
00:03:58.320oh look how much we're investing i mean you even just drive down the highway right you see the
00:04:03.400we're investing 10 billion dollars into a new highway for you and you know they they never
00:04:10.620mentioned that it's your money in the first place it's not like that it's over 50 years
00:04:14.640yeah yeah but it does seem to me very much like a lot of these agreements and handshakes i mean
00:04:22.880it's it's an old cliche in the political world right everything's everything's a photo op but
00:04:27.800behind closed doors, a lot of things end up running up against the book bureaucracy and
00:04:33.800not actually coming into fruition. I find that this is happening in the trade realm as well
00:04:40.740right now. Even the deal that seems to be coming together as we record this, it seems like there's
00:04:48.280a lot of work to do on these MOUs to get them into a place where they are actually a productive
00:04:55.320agreement but here's a quick list and i'm only going to give you some of them but i counted
00:05:00.08026 press worthy mou moments um over the last uh year with uh with carney standing often at the
00:05:08.920podium uh canada china cooperation in combating crime uh who says combating i think it's combating
00:05:15.700don't worry i'm getting announcer lessons right after the show uh canada china modern wood
00:05:21.980Construction Agreement. Canada-China, Joint Committee on Culture. Canada-China, Food Safety
00:05:27.600and Animal Plant Health. Canada-China, Energy Cooperation. Critical Minerals. Canada-India.
00:05:33.980Canada-India-Australia, Technology and Innovation. And it goes on and on and on with all of these
00:05:39.260arrangements. But Liam, here's the thing. The only ones that have actualized so far is the
00:05:44.760Canada-Alberta Energy MOU. The implementation agreement was signed on May 15th. Liam, here's
00:05:49.980the thing. I can only see three of these MOUs have actually become deals. And one of the, I think,
00:05:54.880is still a little in the ether. Canada-Alberta Energy MOU, the implementation agreement was
00:06:02.180signed on May 15th. So that is one deal that is actually in place, although it hasn't enacted as
00:06:08.220of yet. Canada-Alberta Environmental Impact Assessment Committee within the MOU cooperation
00:06:14.620agreement was signed on April 1st. Okay, so this is Alberta saying, okay, we understand the impact.
00:06:22.400What we're going to do is not really an agreement, more an understanding of what the damage could be.
00:06:27.700And then Canada-Alberta Oil Sands Alliance, the pathways agreement, the subsequent agreement was
00:06:32.320reached on July 2nd, advancing the pathways carbon capture project alongside the proposed
00:06:38.340West Coast pipeline. However, they've now submitted that they would probably need to
00:06:43.840make some changes to this based on the scope of the project right and yeah so the very uh a very
00:06:51.300if that's if that's all that's coming out of it that's confirmed then there's a very low
00:06:55.500success rate when it comes around to these mous but i mean there's even another thing to keep in
00:07:00.260mind when it comes to a lot of these agreements is okay you have your two provincial leaders that
00:07:06.480sit there shake hands say let's get this deal done but then you know even in the churchill
00:07:12.940falls uh context you then have to go get indigenous consent right and get all of them to
00:07:20.060sign off on it as well so you know even if let's say your uh your your provincial political class
00:07:28.900wants to do something then if it turns around and nope this is gonna kick up an uproar a negative
00:07:35.140press uh press cycle or sometimes even legally i can't move forward with this without the
00:07:41.480permission uh then that's a whole nother essentially obstacle in the process it does
00:07:47.460seem like a light document when it comes to the actual working parts of these contracts and even
00:07:53.500budgeting it was so funny earlier today you raised a good point talking to me and and you've you've
00:07:59.180been talking about this on uh on blender by the way follow liam on blender without the e uh and
00:08:05.060um the second e but having having said that uh i i thought it was a really great perspective okay
00:08:13.340these mous are great maybe if they become deals but we've had mous that turned into deals such as
00:08:21.400the toronto light rail situation was is one that comes to mind yeah well and two right you get the
00:08:28.400announcements for for these ones right so you're talking big numbers about like 49 billion dollars
00:08:35.620of value for this project but you know 10 billion dollars of financing and all this kind of stuff
00:08:40.740well these are always just projections by the time the project actually gets put into place
00:08:47.820if it does uh and then goes through its uh goes through its actual build phase then there's going
00:08:55.300to be snags and everything along the way that drive up that cost and so yeah you look at something
00:09:02.040like the eglinton rail and when they initially announced that project it was projected at roughly
00:09:07.620five billion dollars but the final cost was 13 billion dollars so that's a that's a very big
00:09:14.500difference and you know i was even doing math recently on uh that alto line project that got
00:09:22.200announced in terms of the the 91 billion dollar uh plan and yeah okay along that line 10 15 years
00:09:31.940goes by you have all these added costs what does that end up running running towards yeah now at
00:09:39.260that point you're 100 over 100 billion dollars at least realistically yeah in fact it's so funny as
00:09:46.520you extrapolate some of these things, I mean, Churchill Falls, it's a $3.5 billion, you know,
00:09:53.760guarantee on loans by the federal government. It says that there would be equity stake in that by
00:09:59.120the federal government up to 40%. I'd be curious to see if they actually make that happen. If they
00:10:05.220do, I'm kind of for it, to be honest with you. But get to the agreement before you even hit the
00:10:12.000podium, I think. Really work out the details. Don't tell us you're in the process of working
00:10:17.860out details. Get to a deal, present it to us, and face the music, I think, a little bit. You know
00:10:24.280what I mean? Because when we look at these things, yeah, $3.5 billion, it's a 10-year
00:10:29.840arrangement just to get everything refurbished and operating at the bare minimum. That's two
00:10:37.500political terms and a bit away. And who knows where the economy is at on various supply elements
00:10:43.900required to do the job. Right, right. Yeah. I mean, even to you just think about the general
00:10:50.200inflation of the economy as a whole, you know, that's then when you actually put shovel to dirt
00:10:57.140with this project, you know, what's the what's the inflated cost by that by that point, too. But
00:11:03.040There was a really good article written called The Iron Law of Megaprojects, and they looked at megaprojects all over the world, these big public spending aspects, and you see how many come both over budget.
00:11:21.920It's pretty crazy. 91.5% go over budget, and the mean cost of that overrun is 62%.
00:11:31.960So, yeah, almost all projects go over budget, and the mean cost overrun is 62%.
00:11:39.240So when you see them toss out numbers like this, it's not being unfavorable from a statistical point of view to generally inflate all numbers they toss around by 50%, at least.
00:14:19.040This was one of my ideas about this, and I wonder how you feel about it, Liam, because I think in our world, what we post on social media leads people to the full content.
00:14:28.360What we're seeing here is social media fish food that makes it look pretty good for the federal government that they're doing something.
00:14:36.380You know, short sound bites about a new deal in place without any detail that it's not a real deal, that it still needs to be ratified, that there still has to be research and buy-in and all these things.
00:14:48.240that doesn't there's no room for that in social media all we get is there's a prime minister
00:14:53.800standing on the pier and he's done a deal right right well you know i mean this would even be a
00:15:00.480fun experiment to do on the on the general street and i mean i'm sure it goes every which way no
00:15:06.400matter who feels what and hey i could even uh be like this probably depending on uh the time and
00:15:12.460time and place but it's like go go down the street and ask everybody what their whether it's their
00:15:18.120local, whether it's their regional or their national leader, ask, what were you promised
00:15:23.820last election cycle and what has come around since then?
00:15:29.160And I bet there wouldn't be a lot of overlap in terms of, one, being able to remember the
00:15:35.560promises and, two, whether they came into fruition or not.
00:15:39.800You know, what we should do is just get out on the street and say to the general public,
00:15:43.900asked him the question, listen, do you think that we should get back
00:16:43.560I know they valued the initial MOU at $225 billion, and that was set to come up in April 30th, but nothing ever came through with that.
00:17:00.240I think that there was never an agreement put in place.
00:17:02.760It looks to me like we ended up with a new premier in Newfoundland, Labrador, and from that moment on, they just felt like it was a bad deal and it was time to get back to the table and get the federal government involved.
00:17:16.380This is where we land now, which, by the way, in my opinion, is a lot of hoopla for our federal government to go through.
00:17:24.740He's now referring to it as a national project.
00:17:27.260We're now hearing that there could be equity in this.
00:17:29.540I don't remember any of this in the national projects plan.
00:17:33.800I don't remember any of this in the budget.
00:17:36.300And so to say that it's a loan seems a little bald-faced to me
00:17:40.740because I don't think that that's a loan that gets paid back.
00:18:04.220And actually, you know, it's just dawning on me here while we're talking about it, but it's pretty crazy to think that, you know, all levels of these governments are running deficits.
00:18:15.160So when each one of them says, you know, hey, here's another couple billion dollars that we're putting into this project or that, it's like, yeah, where's this? Where's where's the money? Where's the money coming from? And as you see, you know, OK, the federal government is backing the provincial governments with these loan guarantees.
00:18:34.600But then, yeah, the federal government is running massive deficits right now in the tens of billions of dollars projected in the $90 billion range.
00:18:43.160So, yeah, it's just kind of crazy to think that, yeah, you've got essentially a bankrupt institution backing another bankrupt institution.
00:18:56.440Liam, it's like me lending you $100,000.
00:18:59.160It doesn't do either of us any good in the end, I promise you.
00:19:02.160yeah like uh by the way don't even ask it's not on the table liam so but but having said that yeah
00:19:10.020i agree with you how can some a country so broke this trying to repair itself now i do understand
00:19:15.800we do need this power uh hydro quebec uh definitely has leveraged it for a long time
00:19:21.900however we do need it it is a required power stream but that leads me to the next point which
00:19:28.180is one of the things in the mou that i didn't hear is how it's going to make a difference to
00:19:32.420power prices in quebec and uh newfoundland labrador if they didn't really get down to how this
00:19:39.820becomes a better value for canadians only that a deal was going to get done that it could be an
00:19:44.800equity share that it was going to be uh value-backed loans all of these sort of things were an
00:19:51.860interesting thing but what we didn't hear was and it's good for canadians because right
00:19:57.840Right. Right. That's a pretty that's a pretty important factor, you'd think, when you're tossing around some some taxpayer money like that.
00:20:06.240Kind of. And like you say, we don't really have it anyway. It's like the Gordie Howe Bridge.
00:20:10.620What an amazing deal that was until you peel back one layer of the onion.
00:20:15.180By the way, I am not sitting here being anti I'm not trying to be political.
00:20:21.380I'm getting tired of the MOUs and us not getting anywhere.
00:20:24.720And that's the real purpose here. But when you take a look at the Gordie Howe Bridge, you take a look at, you know, the pipeline, the inaccuracies and what the budgeting was and the forecasting was for that pipeline involving things like indigenous land, involving things like cost run-ups on certain materials that are going to be tariff enhanced.
00:20:45.560And so that project in itself is going to, I predict, will get stopped at some point along the way, revalued, and the federal government is going to have to step in and say, well, we can't really afford to do it.
00:20:58.480Yeah, I mean, that would be a pretty brutal scenario.
00:21:06.060But it remains in my heart that we get a lot of MOUs and very few deals.
00:21:10.760And the deals that we have got seem to be, you know, one or two, one deal.
00:21:17.680Everything that we have is in the West to start with.
00:21:20.280And they're all basic deals that you couldn't even operate an MOU on top of without these deals in place.
00:21:28.940But the rest, all the trade deals, still MOUs.
00:21:31.920And I get it. There's probably going to be, I can imagine there's a lot of, there's a lot of process that has to take place to make an international deal on trade.
00:21:42.140But we put a lot of people on it. You think that it could happen a little faster.
00:21:46.740you would think so well and actually even to one of the uh one of the most kind of mind-wracking
00:21:54.040numbers that uh i've come across in terms of these kind of bureaucracy costs and yeah announcements
00:22:00.640and projects all of that kind of stuff there was a great book called uh diagnosis red tape by joe
00:22:06.500carson who i believe actually even worked in the saskatchewan government but he analyzed the costs
00:22:12.040of bureaucracy all across the west and one of the numbers that he was talking about is that
00:22:17.580for every dollar that is paid in federal taxes uh 26 of it ends up just uh never re-entering
00:22:25.800the private economy so it essentially bureaucratic black hole and so you're thinking about this right
00:22:31.360when you're talking about how many people are on these agreements or these projects how many
00:22:35.940lawyers? How many people, how many salaries were put into place for these MOUs or that MOU in 2024
00:22:42.740that never got any action taking place? You know, hundreds of thousands of dollars or even more,
00:22:49.600maybe potentially. I would imagine there's millions of dollars in consulting, I would
00:22:55.100assume goes into each one of these deals. Right. You're paying people crazy amounts of money like
00:23:01.680these McKinsey-esque consulting companies to then come up with your projections and
00:23:08.880your budgets, and then you're taking that in the costs of the actual bureaucracy now
00:23:14.500to then formulate the agreements and pitch.