“I am pleased to report that Premier Williams and I agree that the arrangements we have worked out today fully meet my commitment to address the province’s concerns about offshore resource revenues triggering reductions in Equalization payments,” stated the Prime Minister.
“This agreement delivers 100 per cent of the offshore revenues and 100 per cent protection of equalization. This deal is worth an estimated $2.6 billion to Newfoundland and Labrador between now and 2012, including an advance payment of $2.0 billion,” added John Efford, Minister of Natural Resources and Regional Minister for Newfoundland and Labrador.
Minister of Finance Ralph Goodale added, “I am delighted these intense negotiations have resulted in an arrangement that addresses the unique economic situation of Newfoundland and Labrador while being fair to all Canadians.”
No amendments to the Canada-Newfoundland Atlantic Accord or Equalization legislation will be required.
Payments under the offshore revenue agreement will be made separately from these accordss and the new Equalization-Territorial Formula Financing framework.
Details are provided in the attached backgrounder.
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Backgrounder
Elements of the Agreement on Offshore Revenues between the Government of Canada and Newfoundland and Labrador
This agreement provides the following benefits to Newfoundland and Labrador.
100 per cent protection from equalization reductions or “clawbacks” for eight years – one year longer than the life of the offset provisions of the existing Atlantic Accord – as long as the province receives equalization payments;
***An up-front payment of $2.0 billion to provide the province with immediate flexibility to address its unique fiscal challenges.
This amount equals about three-quarters of the agreed-upon estimate of potential benefits from this agreement between now and 2012.
This payment will serve as a pre-payment of the new 100 per cent protection.
The existing offset provisions of the Atlantic Accord will be retained unaltered;
In addition, this agreement provides for a further eight-year extension as long as the province receives equalization in 2010-11 or 2011-12, and that its per capita debt servicing costs have not become lower than that of at least four other provinces;
During the second eight-year period, if the province no longer qualifies for equalization, it will receive transitional payments for two years: In the first year, the transitional payment would equal two-thirds of the offset payments it received the previous year. In the second year, the transitional payment would equal one-third of the offset payments the province was entitled to the last year it received equalization.