There are some upward and downward revisions to federal transfers. Based upon current projections, the province can optimize cash revenues in 2007-08 by electing to move from the fixed framework Equalization formula to the new formula this year. The province expects that Equalization will increase by $255.1 million in 2007-08, offset by a reduction of 1985 Atlantic Accord payment of $188.6, a net cash gain of $66.5 million. This also means that the expected $305.7 million draw down from the balance of the $2 billion 2005 Atlantic Accord advance payment, originally forecast to be recognized as revenue in 2007-08, will not occur this year.
Government of Newfoundland and Labrador, 2007-08 Fall Update
How many times have you heard a provincial cabinet minister or government back bencher tell you that there was $305 million in new cash in the 2007 budget thanks to Danny Williams and something they like to call the "Atlantic Accord?"
Forgive me.
That question has been asked before.
Well, the answer is way too many, given that it isn't true. There is a number "$305 million" in the budget estimates as 2005 Atlantic Accord money but that does not represent new cash. It merely accounts for cash already received and spent in 2005.
But if you accepted the original government version, you might be just a wee bit confuddled by the sudden claim on Monday that the O'Brien formula would deliver $255 million in Equalization, which is a net gain of $66 million over the two Equalization offset payments.
Even in Joan Burke's newest new math, $188 million plus $305 million is $493 million.
And $255 million is less than $493 million not $66 million more than.
So what gives?
Well, two things.
First, that $305 million simply never existed as real cash in the current budget estimates.
Yes, that's right. The finance minister said things that weren't even close to being correct.
In fact, as recently as his shameful assault on former premier Brian Peckford in late November, finance minister Tom Marshall said:
We got this offset payment that made us whole. And as a result of what Premier Williams did in '05, the Atlantic Accord '05, you know, this year we're showing 305 million, which is allowing us to forecast a surplus of 261 billion, I'm sorry, 261 million and to pay down some debt and that's what's made the difference.
Yes, according to Tom Marshall a mere two weeks ago, the surplus was due to Danny Williams and the $305 million. on Monday, we found out it was due to something else entirely, like say super high oil and nickel prices.
And the $305 million? It went poof because it never really existed.
You see - and this is the second point - the only new offset cash in the 2007 budget was the bit coming from the 1985 Atlantic Accord - the real Accord. That was set to be $188 million. Under the amendments to the 1985 deal accepted by the provincial government either in the spring or just this past week - Marshall has never acknowledged when the province really accepted the O'Brien Equalization formula and approved the changes to the Real Atlantic Accord - the 1985 Equalization offset payments are wiped out entirely in favour of $255 million in additional Equalization.
The choice the provincial government faced was between $255 million in new cash and $188 million in new cash.
Logically, the provincial government took the bigger number.
And that making us whole thing was obviously bunkum too, but that's really the subject of another post.
-srbp-