Potential sale won't cut amount province pays to service its debt

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By SHAWN BERRY
Canadaeast News Service

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FREDERICTON - The provincial government appears to be clearing the air on a claim the NB Power--Hydro-Québec deal will settle a massive chunk of the provincial debt.

Speaking yesterday at a Fredericton Chamber of Commerce breakfast, Finance Minister Greg Byrne said the deal won't cut the amount the province pays to service the provincial debt.

"Right now we make interest payments on our own debt and those interest payments are significant, about $600 million a year. That is not going to change those interest payments," he said.

"I don't want to create this impression that we're going to have all this extra money to be able to spend on new programs."

That's in stark contrast to the impression left on many by earlier statements on the deal.

In an Oct. 30 speech announcing the signing of the memorandum of understanding, Premier Shawn Graham said, "For New Brunswickers, the benefits are numerous ... The elimination of almost 40 per cent of our provincial debt."

Since then, the figure has been widely repeated.

Auditor General Mike Ferguson has countered that perception.

"If Minister Byrne is being clear, then that's good, that's the type of clarity that needs to start coming forward," he said.

He noted that the province never really considered the NB Power debt part of its own debt, indicating that NB Power ratepayers were going to cover that debt.

Ferguson said Byrne's statement is a good step towards increasing clarity on the deal.

"That's my fundamental issue with what the government needs to do. They need to explain the information better," he said.

But Ferguson said there's plenty more of that explanation needed before the province signs onto the $4.75-billion deal to sell NB Power to Hydro-Québec.

For instance, he says, ordinary ratepayers have been told that their rates will be frozen for five years and will only increase by the consumer price index after that.

But Ferguson says the province also needs to be clear about whether NB Power customers might face higher bills through other charges.

And while the province has contended that debt is being erased by the deal, Ferguson says it's just being assumed by Hydro-Québec, which has to borrow the money for the sale and which will in turn recoup it from the same ratepayers who were paying for NB Power.

"There's still $4.75 billion that needs to be repaid."

Ferguson isn't the only one with questions.

In his opening remarks yesterday, Fredericton Chamber of Commerce president Lee Winchester noted that the organization has relayed concerns of members to the province.

Chamber CEO Anthony Knight said later that those concerns are broad in scope.

"Our members have more questions than they have answers to," he said.

"They're concerned about the speed at which the deal has been advanced.

Certainly the province says talks have been ongoing for several months, but the public needs time to catch up."

Union leaders have raised concerns that the memorandum of understanding between the two companies and governments don't leave them convinced that job and labour agreements are safe.

Mayor Brad Woodside asked Byrne to comment on the impact on people working in the Fredericton region.

"When we negotiate the final agreement, the language will be such that we will have those protections. It is important to us as a government. It is important to me, not only as an MLA, but as a person who cares about this community that we protect those people and we are going to do so."