22 October 2019

The Difference between Then and Now #nlpoli

A few months ago, SRBP wrote a two-part piece that described the change in the way politicians, bureaucrats, and the public looked at management and control of offshore oil and gas resources.
It’s worth looking at this again in light of a couple of recent developments.

In broadest terms,  the provincial government’s original objectives in the negotiations that led to the Atlantic Accord – the one signed in 1985 – were: 
  • Provincial control and administration, 
  • Revenue that would end dependence on federal hand-outs, and
  • Local benefits.

Since 2003,  the provincial government has dropped provincial administration and control and local benefits from its list of expectations.  Revenue is the only concern left of the original ones and even that one has become simply money.  The notion that the revenue would disconnect the province from federal hand-outs has also gone by the boards.

The 2005 revenue transfer agreement between Ottawa and St. John’s – deliberately misnamed by the provincial government as the Atlantic Accord – was initially about a transfer similar to Equalization and equal to the amount of revenue the provincial government collected each year from the oil companies as royalties under the 1985 agreement.

The argument for the 2005 transfer was based on lies and misrepresentations.  For example, the provincial government sets the amount of revenue it collects from the offshore as if the resource was on land and within provincial jurisdiction. It gets all the money. Politicians and other people claimed that the provincial government only received as little as 15% of what it should get. 

That wasn’t true and, in the end, the 2005 arrangement did not change the Atlantic Accord at all.  Nor did it change the operations of the Equalization program.  The 2005 agreement simply transferred $2.6 billion to the provincial government from Ottawa.  The only connection to the 1985 agreement was that the federal and provincial government used oil royalties and Equalization as the means to calculate the amount.  

In subsequent agreements to develop offshore fields, the provincial government focused on money alone, allowing local benefits to be dictated by the companies involved.  And in tis relationship with the federal government through the joint management board for offshore oil and gas, the provincial government allowed the federal government to take control of areas like environmental regulation. 

That pattern continued in the 2019 agreement and the weak provincial response to Bill C-69.  On the revenue side, the provincial government shifted its focus from royalty collection as the de facto resource owner to minority development partner in order to gain additional revenue.  As a minority partner, the provincial government is bound to follow the decisions of the oil companies.  Indeed, the development agreements include a clause that, as a condition of purchasing “equity”, requires the provincial government to side with the oil companies on issues such as regulatory change. 

These developments and changes have gone without public comment from any of the individuals and organizations associated with oil and gas development since 1985.  There was an objection to Bill C-69, but two aspects of that are worth noting.  First, the most important change on environmental regulation took place in 2012 and occurred with little or no public comment from government or industry.  Second, the provincial complaint about C-69 was not about the loss of provincial administrative control but that C-69 would slow down the chance to develop resources and let government and the companies make money.  In other words, the position taken by the provincial government was that of an entity subject to federal administrative jurisdiction, not an equal partner in the administration of the jurisdiction.

You can see that similar difference in perspective in two recent opinion pieces at CBC NL’s website.  The first, by Bob Hallett is part of a campaign driven by the guy who used to rate the province’s bonds during the time when it was overspending and ramping up Muskrat Falls.  He is now either convinced that the province will default or is trying to dry up the market for provincial bonds in order to create a crisis.  Either way, Walter Schroeder wants the federal government to give the provincial government in Newfoundland and Labrador a permanent annual transfer of about $1.4 billion.

Hallett takes about 2,000 words and bunch of old fairy tales and utter horseshit to try and score some federal cash.  Bear in mind that at the time Hallett wrote the CBC piece he didn’t mention that he was associated with Schroeder’s campaign for a permanent hand-out.  But the two were connected. 
Hallett doesn’t mention anywhere in his piece that the provincial government had already exhausted its own efforts to try and get government spending and Muskrat Falls under control. In fact, he doesn’t talk about the bigger of the two financial problems – chronic overspending – in favour of focusing on Muskrat Falls.  Hallett just leaped straight to “Save us Uncle Ottawa!” 

Well, to be a bit more accurate, Hallett’s argument was that all the spending decided by the provincial government was not actually the provincial government’s fault.  Nor was it the provincial government’s responsibility to pay for the things the provincial government did with the overwhelming support of the local population.  Nope, that job fell to the federal government.  Hallett just relied on an old, trumped-up rationalization to get to his pre-loaded conclusion.

Contrast Hallett’s view with the one taken by Brian Peckford.  He’s the guy who ran the province when it signed the 1985 Accord.  He’s also the guy once dismissed by Kathy Dunderdale – she really did this – because he apparently didn’t know anything about offshore oil and gas or hydro-electricity.
Anyway, Peckford throws out a few hoary myths of his own, like the one about the fatal flaw of Confederation being the fact that Ottawa got to control the province’s lifeblood, that is, the fishery.

But then, after a lengthy history of the struggle in Newfoundland and Labrador for local control of local matters, Peckford goes straight at Hallett’s argument:
Newfoundland and Labrador must use that spirit again to:  
  • Acknowledge our billion-dollar mistake.
  • Stop ceding what has already been won. 
  • Show prudence and financial responsibility in discharging our obligations as a province.
Then, and only then, shall we break from the past and have some leverage to right the ship and seek Ottawa's assistance.
The contrast between Hallett and Peckford could not be any starker.  And they parallel exactly the change in attitudes toward the role of the provincial government, the offshore, and the relationship between the people of Newfoundland and Labrador and government generally.

What was important for people of Peckford’s time, regardless of political stripe – self-government, responsibility, provincial control – are of absolutely no concern to people of Hallett’s way of thinking.  They are not even issues worth noticing.

This is very important as well, when considering the use of nationalist rhetoric by Brian Peckford in the 1970s and 1980s and the resurrection of the same language in 2004 and 2005 by Danny Williams.  The conventional view of these two episodes some 25 years apart in time – Collins/Reid or Marland for example - is that they are identical or that they are so similar that they can be treated as being identical.  They are not.

While the language used to describe the events or to rationalise the government position politically may appear to be the same, the meaning of the words and the reason they were used are radically different.  The difference between Hallett and Peckford points the way to understanding the difference in all its dimensions  and what that means for the province today.