He builds his claim on the contention that it was the intention of the Government of Canada in 1985 - when he was the Newfoundland and Labrador regional minister - to ensure that under the real Atlantic Accord the Government of Newfoundland and Labrador would receive 100% of oil and gas revenues as well as Equalization in full as if the oil revenues did not exist. He appears to be saying that it was the intention to have this situation continue in perpetuity.
Mr. Crosbie is either:
1. Extremely forgetful;
2. Deliberately misleading the people of Canada and in particular, the people of Newfoundland and Labrador; or,
3. Attempting to blame others for his own failures in 1985.
Either way, the 1985 Atlantic Accord makes no such provision as Mr. Crosbie claims.
Indeed in 1990, Mr. Crosbie himself specifically dismissed the issue - with characteristic sneering condescension - as being a case of the provincial government attempting to bite the hand that fed the province.
Mr. Crosbie's efforts at historic revisionism make Stalinist photo retouchers look like kindergarten finger painters.
Following is an extract from an unpublished follow-on paper to Which is to be master?
Additionally, specific sections of the Mulroney offer, and of the Atlantic Accord, deal with Equalization. It is important to note that these are not included in the section on revenue sharing in either document. Therefore, Equalization was not seen by either parties to the Atlantic Accord as representing a form of revenue to be shared among the parties. The Mulroney letter contains the sentence: “The Current [sic] Equalization provisions will apply.” This clearly established that the Atlantic Accord and any revenues related to offshore oil would be subject to the Equalization program; as such, the provincial government’s Equalization entitlement would normally be reduced by growth in offshore oil revenue.Whatever the reasons for Mr. Crosbie's claims about federal (i.e. his intentions) in the 1985 Atlantic Accord, there is no question that what he claims today is simply not true.
The Mulroney offer contained a caveat that there should not be a dollar-for-dollar loss of Equalization payments as provincial own-source revenues increased from oil production. As such the Atlantic Accord contains a section to provide a payment to the Government of Newfoundland and Labrador in the form of an Equalization offset. It is clear from the structure of this section of the Accord and of the enabling legislation that the Government of Canada and the Government of Newfoundland and Labrador accepted this offset as a temporary, transitional and declining offset.
The offset mechanism established in the original Atlantic Accord did not provide the level of Equalization protection implied in Mulroney’s letter, although it matched in general outline the declining format he proposed in June 1984. The offset provisions of the Atlantic Accord, as signed in 1985, had the effect of shielding only three cents of every dollar in oil revenue from Equalization.
This was apparent by 1989-90 and was raised publicly by the Wells administration following the signing of the Hibernia agreement. In a speech in Clarenville, Premier Clyde Wells countered arguments that Hibernia was a massive make-work scheme by pointing to the direct and indirect benefits accruing to the Government of Canada. One of those benefits was reduced federal transfer payments to Newfoundland and Labrador. John Crosbie dismissed complaints about reduced transfer payments in this way:"That’s the whole point to the [Equalization] formula… This is nothing to complain about; this is something to be joyous about. So why would they try to pretend that Newfoundland gains nothing from the royalties? I mean this is absolutely bloody nonsense…".*The Wells administration had been briefed on this aspect of the Accord prior to the Hibernia signing and a further brief was sent to cabinet in December 1990 ; it is likely the shortcomings of the federal proposal were known in 1985.
In a 1991 assessment conducted for the Institute of Social and Economic Research at Memorial University, economist Wade Locke confirmed that the Accord offset actually shielded as little as 3% of provincial revenues from Equalization. Locke had earlier cautioned against public expectation that Hibernia development would cure the province’s unemployment or debt problems. In an article published in the Newfoundland Quarterly, Locke concluded that "[w]hile it may be true that the sun will shine one day, it does not appear that have not will be no more because of Hibernia." Similar cautionary flags had been raised by Doug House and others, as early as the environmental review of Hibernia in 1983.
His own words condemn him.
-srbp-
* Philip Lee, “Newfoundland Ottawa St. John’s 23 September 2004 , p. 14 [continued from page 1 under head: “Almost ‘dollar-for-dollar’ loss will leave province no better off, Gibbons claims”.
