or more particularly the perspective of former premier Brian Peckford has been a curious one indeed.
Take his letter in today's National Post. His defence of the January offset deal reveals an interesting take on recent events and those of his own era as Premier. It also reveals some curious twists of the English language but that is another matter.
Let's take his letter and look more closely at it's contentions:
"It should come as no surprise to the provinces and those interested in federal/provincial relations that equalization payments have been tabulated differently for some time, as they relate to Newfoundland and Labrador offshore oil and gas revenues."
Comment: Peckford begins with a surprising misrepresentation of the deal he signed in 1985. The Real Atlantic Accord actually provides that Equalization entitlement for Newfoundland and Labrador is calculated according to the formula extant in any given year, taking into account offshore revenues under the Real Accord as provincial own-source revenues.
"The equalization formula was first established in the Atlantic Accord, Section 39, which was signed in February 1985."
Comment: Well, to be honest, Brian, the Equalization formula was established in 1957 and has been amended from time to time thereafter. The Real Accord does not provide a formula for calculating Equalization entitlements.
The section referred to here establishes a series of declining offsets - that is supplementary payments - made in addition to revenues and Equalization per se. The offsets in the Real Accord expire in 2011, as Mr. Peckford accepted in 1985, thereby leaving the provincial government with whatever offshore revenues that existed at the time plus any Equalization entitlement and other federal transfers.
"Under that section of the accord, Newfoundland and Labrador received $522.1-million in equalization offset payments -- in addition to offshore revenues -- in the period from 2000 to 2005."
Comment: Since 2005 isn't over yet, and actually the 2005 fiscal year isn't even here yet, Mr. Peckford can't say what the Equalization offset payments under the Real Accord will be for the period he cites. Let's say they are at least that high. Let's also say that they reflect offsets almost equal to revenues collected. In some years, in fact, offsets have exceeded actual revenues.
"What is happening now is an increase in the amount of the equalization the province can keep. No new precedent is being set."
Comment: Well, yes and no, Brian. Let's do the "no" part first. Fundamentally, the new deal theoretically allows the province to gain extra federal transfers. On that basis, it is an increase in the amount that can be obtained by the province but it would be purely a matter of semantics to say the province retains - or keeps - anything at all. Since no province sends money to the federal government, and the federal government does not reduce provincial government revenues, it really isn't a matter of retention or keeping. After all, Equalization si not a right of each province.
As for the precedent, I'd agree this doesn't set a precedent as far as the notion of an offset payment is concerned. Equalization offset payments that were transitional - i.e., fixed term and declining - for offshore petroleum revenues were first established in the 1982 Nova Scotia Accord. They were carried forward into the Real Atlantic Accord.
The structure of this deal, though introduces a whole new concept in offset payments. Rather than being transitional, this deal - on paper - provides a full offset for a particular category of revenue for an extended period. In the case of Newfoundland and Labrador, the total period of offsets will be 20 years if the province qualifies for the second eight-year phase in the new deal.
It also creates a precedent in that a category of revenue held by one province alone is exempted. Previously, the generic solution provided the comparable benefit. In this instance it is hard to argue that a province which derives revenue from a unique source or where it holds the preponderance of a particular type of revenue should not attain a comparable Equalization offset based on local circumstances. The rules should apply fairly across the country, so it is possible that this agreement can be used by other provinces to justify comparable treatment.
"This is necessary given the collapse of the federally managed ground fishery collapsed and the loss of 40,000 jobs (which would be equivalent to 800,000 jobs in Ontario), the doubling of oil prices, the need to catch up to standards near the national average and to fulfill the constitutional provision (Section 36) that states that "Parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation." "
Comment: Blame Canada is a famous sport, but this revenue deal can hardly be considered reparations for the collapse of the fishery. No one has actually fixed blame and Mr. Peckford avoids looking in the mirror to find someone equally responsible for mismanagement of the fishery.
Doubling oil prices is not a reason to increase offsets, either. The higher the price of oil, the more cash flowing to the province under the Real Accord. This is what would truly make the sunshine and have not be no more.
"Without this recently announced improvement, levels of service and levels of taxation in Newfoundland and Labrador would have no chance of being "reasonably comparable." "
Comment: If a province squanders it revenues, no matter how large the revenues might be, then it will have difficulty having sufficient resources to provide services comparable to those available in other provinces. Newfoundland and Labrador history since Confederation is full of examples of provincial government mismanagement, including several notorious examples under the Peckford administration.
The constitutional obligation to provide Equalization to the provinces has been met by the original program, not by the offset payments of either the Real Accord or the January deal. Mr. Peckford knows the rights of this since he helped include Equalization in the 1982 revision of the constitution.
In general, given that Mr. Peckford was originally opposed to any attempts to modify the Real Atlantic Accord, his support of the Williams' deal seems almost hypocritical. His rationale provided in the Post today is more specious than specific.
Ah well, he is writing from the Wet Coast, after all.
