27 March 2007

Ottawa and NS in Equalization slapfest

Ottawa will go to court against N.S. if necessary over Atlantic Accord: MacKay

27 march 2007

HALIFAX (CP) Nova Scotia's representative in the federal cabinet says Ottawa is prepared to go to court, if necessary, if his home province sues over having to abandon its offshore accord.

In question period on Tuesday, Peter MacKay defended his government's decision to offer Nova Scotia a new $1.46 billion equalization deal that offers an additional $79 million over last year.

However, the deal forces the province to set aside provisions of its cherished Atlantic accord, which allows it to keep oil and gas revenues without clawbacks in equalization payments.

In responding to a question from Liberal MP Robert Thibault over that tradeoff, MacKay said he will "continue to work with the province of Nova Scotia'' and hope to avoid legal action on the issue.

But if provincial lawyers head to court, MacKay said, "we will see them there.''

Nova Scotia's Tory government accepted Ottawa's recent equalization offer in his government's budget, but Finance Minister Michael Baker promised the province would use "every capacity,'' including potential legal action, to maintain the accord in the future.

Thibault and other Liberal MPs have made the issue a major focus of their questions in recent days in Parliament.

"The government is a poison pill. If we opt into the new formula we lose the accord and jeopardize the future prosperity of Nova Scotia. If we maintain the status quo we are shut out of new money for the people of Nova Scotia,'' he said during question period.

MacKay, the minister of Foreign Affairs, countered that "there must be an epidemic of grumpiness breaking out across the way.''

"The province of Nova Scotia does have options. It can take a very good deal for Nova Scotia, the Atlantic accord, or it can take an even better deal which is offered to the province in this budget, plus it has the option of going back to the accord after a period of time,'' he said.

"It is good news and more good news for the people of Nova Scotia and there will be more coming.''