Lorne Calvert to Harper: you shoulda let income trusts suck my treasury dry

While the federal government's decision on income trusts may have violated an election promise, failing to act in the way it did would have caused phenomenal revenue loss for both the federal and provincial governments.

That's the sort of simple background that makes Lorne Calvert's comments in St. John's on Friday undeniably bizarre.

Calvert told a local business luncheon:

"Whether you agree or disagree with the income trust decision - and it was clearly walking away from a promised commitment - he's at high jeopardy if he does that anymore," Calvert said after delivering a speech to the St. John's Board of Trade.

That sounds like Calvert would have been happy if the feds had left income trusts alone, just for the sake of keeping a promise. If Calvert was merely saying that Harper couldn't afford to break another promise, one must wonder at Calvert's logic.

If keeping the original promise would have produced financial problems for both orders of government, then it was sensible to break the promise. By the same token, then, if the second promise on resources and Equalization would cause as many problems as it fixes, then it's only sensible to trash the second promise as well.

On another point, the Canadian Press story linked above contains a glaring factual error:

Newfoundland's offshore oil revenues are protected by the Atlantic Accord, but Williams has expressed fears that Harper is leaning towards including them in a new formula.

Newfoundland and Labrador's offshore revenues are included entirely in the current Equalization formula. They are included for the purposes of determining the province's fiscal capacity and therefore, its entitlement to the Equalization top-up.

The O'Brien expert panel recommended excluding 50% of all resource revenues from the calculation. Premier Danny Williams originally proposed including all revenues in the calculation of Equalization entitlements. He now seeks their total inclusion, apparently.

Under no circumstances are the revenues in some form of jeopardy that requires them to be protected. This is a totally false presentation, the lie of which is confirmed by the admission in the Atlantic Accord (2005) that the Government of Newfoundland and Labrador sets, collects and retains 100% of provincial government revenues from offshore oil production.