Quebec’s possible new role as an energy player

If exploration turns up a significant amount of oil and gas in the Gulf of St. Lawrence, expect a ton of political weight to shift toward the province at the same time.

Rob Silver went down that road recently in his blog at the Globe and Mail. Silver posed a hypothetical situation in the federal government tried to introduce a carbon offset scheme at a time when Quebec is in the same boat as “Alberta, Saskatchewan and British Columbia”. Quebec’s interest may well shift as does its economic situation, according to Silver.

On the surface that’s a penetrating insight into the obvious. Newfoundland and Labrador, for example, shifted its environmental policy based on nothing more profound than electing what Danny Williams described as a Reform-based Conservative Party.

Now most voters in the province – including a great many Progressive Conservatives - likely didn’t think that’s what they were getting into back in 2001 or 2003, but that’s what they got. No need to wonder any more why the sustainable development act never got farther than it did in 2007. The whole thing was nothing more than a political ploy for an election year.

In any event, Silver’s idea of a provincial government shifting its policy based on a shift in economic interests isn’t an amazing thought.

On another level though, Rob Silver’s comments provoke another thought related to Newfoundland and Labrador. 

Your humble e-scribbler tossed out the idea a couple of years ago that a “few years from now, the poorest province of the country will join the select group of provinces that do not receive Equalization. That will have a major effect on the balance of the forces in the country which is always maintained in the Toronto-Ottawa-Montreal triangle.”

The idea was that a normally outward-looking province and its people could alter the balance of power in the country, especially at the national level, once the province was no longer perceived as an economic basket case. Now part of that idea was premised on a new administration and a new policy beyond the current one and its isolationism and wastefulness.

Admittedly it turned out to be a bit of a stretch. Newfoundland and Labrador today is more isolated than it has been for most of the past century.  Its influence at the national level in Canada has never been lower. The decline is a direct result of reckless provincial policies since 2003.

One can only imagine what might occur in a world where Quebec has significant oil and/or gas resources in addition to its other sources of influence.

- srbp -

The deafening silence

Federal finance leprechaun Jim Flaherty has been signaling the need to cap the Equalization system this year.

"It's a federal program; we will put a limit on the growth of it," Mr. Flaherty said. "This is not something that is discretionary. We must do this, otherwise the integrity of the program will be under attack."

Flaherty says that in the face of a possible federal deficit for the first time in ages (i.e. the last time the Conservatives ran the place), it won't be possible to have a 15% annual increase in the funds allocated to the federal transfer.

Based on government data, federal transfers to other levels of government have surged 57% in the past five years, to $46.1-billion in the most recent fiscal year from $29.3-billion in 2003-04.

"In this time of fiscal uncertainty, we cannot sustain that rate of growth," Mr. Flaherty said this week.

Flaherty is likely to lay out the whole thing for his provincial counterparts at a meeting in Toronto on Monday. 

Newly minted provincial finance minister Jerome Kennedy will be at the meeting.

Okay.

For the past five years, the current Provincial Conservative administration has been hammering away at the need for increasing federal transfer payments to Newfoundland and Labrador.

For the past two, the entire Family Feud between the Provincial Conservatives and the their federal cousins centred on an effort to get Equalization payments in addition to oil and gas revenues, even if, under ordinary circumstances, Newfoundland and Labrador wouldn't qualify for the Equalization top-up.  In fact, this idea of getting effectively 200% of oil revenues  (all the cash plus Equalization hand-outs) is the original demand Danny Williams made to Paul Martin. 

That's why it is so bizarre that the provincial government talked about anything but Flaherty's remarks over the past couple of days.

Trivia was the order of the day at the cabinet shuffle and what wasn't trivia was pretty much stock stuff. Take a look at the raw scrum tape - via CBC - and you'll see the lightweight routine.

There's a reference to being fine on the current budget, without understanding that means increasing public debt if the budget targets are met.

There's some slagging of the oil sands and a claim that there won't be any delay on Hebron. No one apparently noticed that the Hebron project hasn't been sanctioned yet.  How exactly can you forecast "no delay" in a project that has no timeline yet?

The ultimate superficial commentary came on the matter of representation.  In Ottawa, there's not a problem since it's like the local cabinet where everyone looks after everything everywhere. Later on, the Premier refers to Susan Sullivan and filling in the hole in the dough, giving proper cabinet representation for a region of the province not previously represented in the Conservative cabinet.  Sarah Palin couldn't have reasoned it anymore consistently, right down to insisting - in a manner of speaking - that a little fellow from up the shore could see Labrador from his house.

But nothing of the substantive issues facing the province, beyond a comment that there might theoretically be some difficulty in forecasting oil prices.

As for the consistent set of demands from the current cabinet for more cash hand-outs from Ottawa and Jim Flaherty's comments, there was nary a peep either from the cabinet or from reporters.

The silence was deafening.

Well, except for the CBC audio picking up messages coming to the Blackberries in the room.

The end result is that one wonders what, exactly will be the policy direction taken by cabinet "on a go forward basis".  Until now, the cabinet has been fairly consistent in its remands for reparations from Ottawa, in its insistence that it can go-it-alone provided Ottawa ponies up the cash. The same ministers sit in place today, with a very minor number of exceptions, as sat in place in October 2003.

Yet, there is an evident change in perspective.

It can't be driven by the prospect of going off the Equalization system.  That was forecast in 2004, even without the subsequent transfer deal with Paul Martin.

There's something else behind it.

You can tell by what isn't being said.

-srbp-