C. Ownership of resources offshore Newfoundland and Labrador
The Blue Print does not define the phrase “jurisdictional control”, although it clear commits a Progressive Conservative government to seeking it. There term is not specific and there is no plain language interpretation of the words which can give any clue as to their meaning.
Jurisdictional control could mean co-management. If that is so, then the Atlantic Accord already establishes that right. Jurisdictional control could mean ownership. Ownership of offshore resources was resolved in the Supreme Court of Newfoundland (Court of Appeal) and the Supreme Court of Canada. While the reasoning of both courts was slightly different, both held that the Government of Canada held all rights to offshore oil and gas resources and any other mineral resources beyond the 12 mile territorial sea surrounding Newfoundland and off the coast of Labrador.
The Government of Newfoundland and Labrador did not establish any reservations or objections on resource ownership when it signed the Atlantic Accord in February 1985. As such, barring the ruminations of some clever lawyer or comments from the province’s pseudo-nationalist community, Newfoundland and Labrador’s legal claim to offshore resource ownership ended 20 years ago.
The only way this matter could be revisited is on the basis of a political agreement between the Government of Canada and the Government of Newfoundland and Labrador. It is beyond the scope of this paper to review in detail the likelihood of such an agreement. It should be instructive to observers, however, that the Government of Newfoundland and Labrador has not elected to pursue its current proposal on the basis that the offshore resources belong to this province as a matter of right.
D. Provincial Offshore Revenues
Brian Mulroney’s proposal on offshore oil and gas resources, dated 14 June 1984, provided that “Newfoundland will be entitled to establish and collect resource revenues as if these resources were on land.” Mulroney’s proposal contained 15 provisions covering the areas of management, revenue sharing, Crown share, local benefits, Equalization offset, entrenchment of the agreement in the Constitution and implementation.
That single sentence, however, contains the essence of the Mulroney proposal on revenue sharing: the provincial government gains the right to set its revenues as if the resources were within its jurisdiction. The Government of Newfoundland and Labrador determines its direct revenues by legislation and through specific development agreements for each of the three projects currently producing oil offshore Newfoundland and Labrador. There is no discussion in publicly available documents that indicates the Mulroney government intended the province to receive a defined percentage of revenues.
Sections 36, 37 and 38 of the Atlantic Accord define the basis of revenue sharing between the Government of Canada and the Government of Newfoundland and Labrador, establish a definition of revenues to be collected by the Government of Newfoundland and Labrador and set a mechanism as to how these revenues are to be collected. Section 37 states:
On the basis of the foregoing, Newfoundland shall receive the proceeds of the following revenues from petroleum related activity in the offshore area:
(a) royalties;
(b) a corporate income tax which is the same as the generally prevailing provincial corporate income tax in the province;
(c) a sales tax that is the same as the generally prevailing provincial sales tax in the province;
(d) any bonus payments;
(e) rentals and licence fees; and,
(f) other forms of resource revenue and provincial taxes of general application, consistent with the spirit of this Accord, as may be established from time to time.
While the Atlantic Accord (Section 38) provided that these revenues were to be collected by the Canada-Newfoundland Offshore Petroleum Board (CNOPB), these revenues are actually collected by Natural Resources Canada (NRCAN) with the consent of the Government of Newfoundland and Labrador. They are remitted by NRCAN in full to the provincial government.
The Government of Newfoundland has never released the full amount of direct revenues it receives under these provisions of the Atlantic Accord. The only figure to be made public is the royalty amount, which Premier Danny Williams stated was $123.8 million in 2003. No one has indicated that these revenues are reduced before the provincial government receives them or that the provincial government is required to remit any of these revenues to the federal government.
E. Equalization and the Accord’s offset provisions
The current provincial proposal to amend the Atlantic Accords focuses on its Equalization offset provisions. Brian Mulroney stated definitively in his letter of 14 June 1984 that the Government of Newfoundland and Labrador should not see a “dollar-for-dollar” decline in Equalization as revenues from offshore development increased. In light of the provincial government’s current argument it is interesting to note that Mr. Mulroney did not include the idea of Equalization offsets in the section of his proposal dealing with revenue sharing. Rather, it was contained as a separate provision in the original letter, in the Atlantic Accord and in the implementation legislation that followed.
From the outset of this discussion, it is important to appreciate the premise of Equalization and how the program operates. Officially, Equalization is a “[f]ederal transfer program that allows all provinces, regardless of their ability to raise revenue, to provide roughly comparable levels of services at roughly comparable levels of taxation. Eligibility to receive equalization funding is determined by a formula measuring each province's revenue-raising capacity against a five-province standard. Currently, eight provinces receive equalization: Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba, Saskatchewan and British Columbia.” Two provinces do not receive Equalization. No provincial government pays into Equalization since the program funds come out of the federal government’s general revenues.
Essentially, Equalization is a top-up scheme for provinces. The federal government determines a national standard amount each province should theoretically be able to raise from its own sources of revenues. These “own-source” revenues include royalties on resources, personal income tax, corporate tax, sales tax, park fees, vehicle licensing fees and so forth. The federal government then compares the provinces actual income against the per person standard. A provincial government falling below the average gets a cheque for the difference. Meet or exceed the standard and a province will get nothing.
It is also important to appreciate that there is no indication that the either the federal government or the provincial government intended that the Atlantic Accord would exempt Newfoundland and Labrador from the Equalization program. There is no provision which allows offshore oil and gas revenue to be treated differently in the calculation of Equalization entitlements. Rather, Brian Mulroney’s initial offer to the province is perfectly clear: “The Current [sic] Equalization provisions will apply”. The overhead slide presentation, in fact confirms that the Equalization program was understood to apply to oil and gas revenues.
Section 39 of the Atlantic Accord provides the Government of Newfoundland and Labrador with an Equalization offset payment in addition to its direct revenues. According to Brian Mulroney, for the first four years the province would receive an amount equal to “90% of a year’s reduction in equalization payments. Beginning in the fifth year of production, this offset rate would be reduced by 10% for each subsequent year.”
The trigger for the offsets was production of a specific quantity of oil, irrespective of the price per barrel of oil or the overall economic impact of the production. The offset was triggered in 1999/2000 and will expire in 2011/2012. In 2003, the federal government transferred $178.0 million to the Government of Newfoundland and Labrador under this provision of the Accord. The total of royalties plus offsets was $301 million in revenue to the Government of Newfoundland and Labrador in 2003. Since the Premier has only discussed specific figures for royalties in public, total direct revenues may be higher. Indirect revenues have not been made public.
Continued in Part 3
01 April 2007
Which is to be Master? Part 3
F. The Williams administration’s rationale for change
The Williams administration is seeking changes to the Equalization offset provisions of the Accord so that the province will receive both direct and indirect revenues and the maximum possible Equalization payments. The provincial government’s position is based on three contentions.
First, reductions in any Equalization payment attributable to increased non-renewable resource revenues amounts to a “clawback” since these resources are finite. Second, as David Norris has argued for example, declines in Equalization amount to added revenue for the Government of Canada and hence violate the commitment that Newfoundland and Labrador should be the principal beneficiary. Third, the existing offset mechanism will run out before the most significant revenue benefit can be realized. Let us examine these in order.
The non-renewable “clawback”: The Equalization program has consistently operated as a form of top-up for certain province’s revenues. Any increase in a province’s own-source revenues would mean a lowering of the top-up amount. If Newfoundland and Labrador experienced a growth in revenue from information technology, it could reasonably expect to see its Equalization entitlement reduced. Newfoundland and Labrador is treated like all other provinces when it comes to the application of the Equalization program.
Clawback is a simple concept and applies in many areas of individual and business life. A clawback is defined by the Concise Oxford Dictionary as meaning to “regain gradually or laboriously, to take back (allowance by added taxation, etc.)” WordNet and Dictionary.com similarly define clawback as “finding a way to take money back from people that they were given in another way; ‘the Treasury will find some clawback for the extra benefits members received’”.
Since the Government of Canada remits in full offshore revenues to the Government of Newfoundland and Labrador, and applies no special tax or levy on those revenues, there is no clawback of these revenues as the term would be generally understood. Since the Atlantic Accord contains specific provisions to offset losses in Equalization, there is also no clawback of direct offshore revenues in that sense either.
The “clawback” argument is based on the contention that non-renewable resources hold a special status among provincial revenue sources. As the argument goes, these resources are finite and hence the period of time in which a province can derive benefit from the resources is finite. A province cannot achieve maximum benefit from non-renewable resources if it loses Equalization as revenues grow from these non-renewable resources. Hence these revenues should be exempted in some fashion from the Equalization calculation.
Two aspects of the argument on non-renewable resource “clawback” approach are worth considering in greater detail.
First, no source of revenue will exist for all time. Non-resource enterprises that generate sales tax and corporate and personal income taxes succeed and fail based on many factors. Western countries, states and provinces, that a decade ago made substantial income from the information technology sector and call centres, are now watching these revenues migrate to India and other Asian countries.
Even supposedly renewable natural resources such as fish can be destroyed by folly or a fundamental misapprehension of the circumstances affecting the health of the stocks. The reasonable lifespan of a mine or oil field may be 50 to 100 years. It took a mere 50 years for human misadventure to decimate the supposedly renewable fish stocks that had fed most of the Western world for five centuries.
Second, the “clawback” argument is one most often advanced by advocates of increased federal Equalization transfers to provinces. No one should forget that the Equalization program is funded entirely through federal general revenues. In other words, a significant portion of federal revenues derive from the very same sources for which the provincial governments claim a theoretical exemption from Equalization. Logically, what is sauce for the provincial fiscal goose should be sauce for the federal gander. The federal government holds obligations to provide services to residents of Canada just as the provinces do. Therefore, if one accepts that some revenues come from “non-renewable” sources, it would be logical for the federal government to seek the same exemption for its revenues as the one demanded by some provinces.
It is beyond the scope of this paper to calculate the level of federal funding from “non-renewable” sources. Were the amount to reach $10 billion – approximately the total outlay for Equalization – it is conceivable that the federal government would seek to eliminate the Equalization program altogether, possibly transform the system to one of low-interest loans or seek to control how province’s spend the Equalization transfer.
The 85:15 revenue split: In the overhead slide presentation, the provincial government includes several colourful charts that purport to show that the federal government receives 85 per cent of revenues from the offshore with the Government of Newfoundland and Labrador receiving only 15 per cent. A similar argument and similar slides are also found in the report of the Royal Commission on Renewing and Strengthening Our Place in Canada and in two research papers completed for that Royal Commission, one by David Norris and the other by John Crosbie.
Sadly for those wishing to assess the argument, none of these documents contains the data used to compile the charts. Neither the provincial government overhead slides nor Mr. Crosbie’s paper contain any figures. Mr. Norris does provide some evidence of his calculations. David Norris was a member of the provincial government team that negotiated the Atlantic Accord. A former provincial deputy minister of finance, Mr. Norris is currently a senior advisor to Premier Danny Williams. In 2002/2003, Mr. Norris served as senior researcher for the Royal Commission on renewing and strengthening our place in Canada. Mr. Norris is also author of one of the research papers the Royal Commission released with its final report. The fiscal position of Newfoundland and Labrador is broad overview of the provincial government’s financial status. It includes prominent sections on offshore revenues that undoubtedly form much of the basis for current government policy. In it, Mr. Norris argues, among other things that “The revenue analysis concludes that the Government of Canada is the “principal beneficiary” of future offshore oil revenues.” Given the obvious connection between Mr. Norris and current government policy and the fact that his paper is reasonably detailed, the remainder of this section will discuss the revenue split argument as he presented it.
Mr. Norris’ conclusion follows a lengthy preamble in which he sets the bases for his remarks and his assumptions on revenues and relative amounts flowing to each of the provincial and federal governments. He also quotes from section 2 (c) of the Atlantic Accord, the now famous “principal beneficiary” clause and deduces that “[a]ccordingly, revenue offset provisions were incorporated in the Accord which were intended to protect the province against sharp downturns in equalization entitlements.” He produces a chart showing the revenue sharing based on his analysis.
[Table 3-1 ]
On the face of it, his argument is persuasive. It does not stand up to closer scrutiny, however.
One of the fundamental problems with any economist’s projections is that they are based on assumption. Adjust the assumptions and the outcomes change, sometimes dramatically. Aside from the traditional economist’s folly of assumption, there are at least five reasons to doubt the validity of Norris’ contention.
First, the “principal beneficiary” provisions of the Atlantic Accord are undefined. It is erroneous to conclude that the phrase is synonymous with provincial government revenues. As a member of the negotiating team for the Atlantic Accord, Mr. Norris may be privy to information that does not exist in the public domain. Until such time as his contention is properly documented, we must remain skeptical of it. The matter of principal beneficiary is dealt with in greater detail below.
Second, as discussed above, the Atlantic Accord is based in part on the premise that the Equalization program would continue to apply. Knowing the premises on which the Accord was based, it is ludicrous for Mr. Norris and others to argue now the opposite of what was said 20 years ago. That single point is sufficient to cause Mr. Norris to remove the Equalization adjustment from his revenue chart above. Eliminate that single contention and the revenue sharing split moves from being a 76:24 split favouring the federal government to a 62:38 split favouring the province.
Third, the Accord’s Equalization offset provisions were never included in any public statement as being part of the revenue sharing arrangement between the Government of Canada and the Government of Newfoundland and Labrador. Mr. Mulroney’s original proposal is absolutely clear on revenue sharing: “Newfoundland will be entitled to establish and collect resources revenues as if these resources were on land.” As such, it is ludicrous to now suggest that the Government of Canada and the Government of Newfoundland and Labrador intended Equalization to be used in the calculation of relative incomes. In fact, the Atlantic Accord makes no mention of how much revenue or what proportions of revenue are to flow to each order of government. The intention of the two parties, as evident from the signed agreement, is merely that the province may have the opportunity to raise such revenues as it can.
Fourth, and flowing in the same vein, the Accord Equalization offset provisions are not structured to ensure that the flow of maximum financial benefits to the province, i.e. revenues plus offsets, are timed to coincide with the maximum level of revenues based on actual development of the offshore fields. Simply put, the offset provisions begin when oil reaches a defined level - irrespective of value. They decline until an arbitrary period has expired, in this case 12 years. As it turned out, and indeed as anyone may have reasonably expected in 1985, production from one discovery was sufficient to trigger the offset provisions. It would be ludicrous to suggest that anyone believed all four commercially-viable discoveries that existed in 1985 could have been fully developed and in production within four years. Hence it is virtually impossible for the existing offset provisions to have coincided with a period of maximum revenue for the province using both the provincial government’s revenues plus Equalization offsets.
Fifth, even if one allows that his contentions about revenue sharing are correct, Mr. Norris presents only a portion of the revenues flowing to the province. As noted in Section D of this paper, the province is entitled to collect revenues of no fewer than six general types. In addition, the provincial government receives indirect revenues from such sources as personal income tax, new business start-ups and revenues that come from the construction and development phase of each project.
In his chart, Mr. Norris includes only royalties, which the federal government does not claim and corporate taxes, which are in fact collected by both the federal and provincial governments. The total economic impact of offshore oil development is not considered in his argument. If these wider sources of revenue are included in the province’s claim or the paper by John Crosbie, sadly, we cannot tell since they have not made this information public.
The offset runs out too soon: Under the existing Atlantic Accord Equalization offset formula, the period of maximum potential benefit expired last year. The maximum offset existed only for the first four years after the oil production trigger was reached. Within that time, the provincial government received the largest type of Equalization offset. After four years, the level of offset declines, such that while provincial direct revenues may well grow as White Rose and later, Hebron/Ben Nevis, come on stream, the level of additional money received from the Equalization offset will diminish by 10% per year. On this point, proponents of an amendment to the Atlantic Accord are correct. That is what the Accord provides.
In assessing this argument, it is important to compare the intentions of the Trudeau and Mulroney governments on the revenue issue. The intention of the Mulroney government is clear: the Government of Newfoundland and Labrador would receive the right to set its own direct revenues for offshore resources, as if the resources were on land. Additionally, for a period of 12 years, the province would receive additional money in the form of an Equalization offset. The province would also receive local job and industrial spin-off benefits. That is what the Atlantic Accord provides; that is what has occurred.
The Trudeau government approach was different in one key respect. “The province will receive all provincial-type taxes and the largest remaining federal tax, the Petroleum and Gas Revenue Tax, the PGRT. No one can question the generosity of this proposal. When would the provincial government be expected to share some of these revenues with other Canadians? Not until the Newfoundland Government’s fiscal capacity reached 110 per cent of the national average, with an adjustment for regional unemployment that would now raise this to about 125%.”
More significantly, the Trudeau revenue sharing arrangements reflect the strategic policy commitment the Government of Canada was prepared to make prior to 1984. The federal proposal, made in September 1982, ‘ “recognizes the Government of Newfoundland and Labrador’s fundamental goal of attaining economic development and self-sufficiency by creating a strong and diversified provincial economy able to contribute fully to prosperity throughout Canada.” This goal is shared, the document states, by the Government of Canada.’
Therein lays the major flaw in the Atlantic Accord as it was originally proposed and signed: the duration of the province’s maximum potential revenues (direct revenues plus Equalization offsets) is determined by oil production levels, irrespective of the actual market value of the oil or the impact of oil development on overall fiscal capacity. Under the Trudeau proposal, it would have been linked to overall economic development.
Given the nature of industrial megaprojects of the type offshore Newfoundland and Labrador, it is not at all surprising that each project takes a considerable period of time to bring on stream. The Hibernia development agreement was signed in September 1990; first oil was achieved fully seven years later. It was fully two years after that date that Hibernia reached a sufficient level of production to trigger the Accord’s Equalization offset provisions.
Admittedly, the provincial government did not have the benefit of experience in making its calculations about the Atlantic Accord’s various benefits. However, as the overhead slide presentation indicates, the provincial government apparently anticipated rapid development of the existing fields, continued offshore discoveries at the pace experienced between 1979 and 1984/85, higher royalty regimes and oil prices remaining at then-prevalent levels.
It is beyond the scope of this paper to assess the validity of these assumptions in detail. Such an effort has not been undertaken to date and, in fact, much of the information required would be exempt from public disclosure since they were contained in documents submitted to cabinet. On the face of it, however, it would appear that the provincial government used optimistic projections when assessing the Mulroney offer. Any downward revision of their assumptions – for example, lower per barrel prices for oil – and the revenue impacts alter significantly.
Interestingly, according to slide 7, the provincial government expected that “have status” for Newfoundland and Labrador, i.e. that the province would no longer receive Equalization was “a foregone conclusion”. The one data table from 1985 that has been released (overhead slide 9) does not appear to support that contention, at least in so far as the chart might represent an anticipated worst case scenario. “Revenue and Equalization – 1985 Expectation” examines only royalties, instead of all revenue sources, and only from the Hibernia project. The graph clearly shows that royalties alone from Hibernia would not be sufficient to replace Equalization. In fact, anticipating the Accord offset provisions would begin in 1991, the graph shows the province expected Equalization transfer to climb beginning in 2004/05 and exceed pre-Hibernia levels by 2013.
That said, there can be no doubt that the Atlantic Accord Equalization offsets are working as intended by the Government of Canada and the Government of Newfoundland and Labrador. The provincial government expectations provided in the overhead slide presentation are not reflected in any aspect of the Atlantic Accord or the subsequent implementation legislation.
Given several years of experience and based on the intention of the federal government prior to 1984, it is possible to make a case for amending the Accord’s Equalization offsets. This will be addressed below.
Continued in Part 4
The Williams administration is seeking changes to the Equalization offset provisions of the Accord so that the province will receive both direct and indirect revenues and the maximum possible Equalization payments. The provincial government’s position is based on three contentions.
First, reductions in any Equalization payment attributable to increased non-renewable resource revenues amounts to a “clawback” since these resources are finite. Second, as David Norris has argued for example, declines in Equalization amount to added revenue for the Government of Canada and hence violate the commitment that Newfoundland and Labrador should be the principal beneficiary. Third, the existing offset mechanism will run out before the most significant revenue benefit can be realized. Let us examine these in order.
The non-renewable “clawback”: The Equalization program has consistently operated as a form of top-up for certain province’s revenues. Any increase in a province’s own-source revenues would mean a lowering of the top-up amount. If Newfoundland and Labrador experienced a growth in revenue from information technology, it could reasonably expect to see its Equalization entitlement reduced. Newfoundland and Labrador is treated like all other provinces when it comes to the application of the Equalization program.
Clawback is a simple concept and applies in many areas of individual and business life. A clawback is defined by the Concise Oxford Dictionary as meaning to “regain gradually or laboriously, to take back (allowance by added taxation, etc.)” WordNet and Dictionary.com similarly define clawback as “finding a way to take money back from people that they were given in another way; ‘the Treasury will find some clawback for the extra benefits members received’”.
Since the Government of Canada remits in full offshore revenues to the Government of Newfoundland and Labrador, and applies no special tax or levy on those revenues, there is no clawback of these revenues as the term would be generally understood. Since the Atlantic Accord contains specific provisions to offset losses in Equalization, there is also no clawback of direct offshore revenues in that sense either.
The “clawback” argument is based on the contention that non-renewable resources hold a special status among provincial revenue sources. As the argument goes, these resources are finite and hence the period of time in which a province can derive benefit from the resources is finite. A province cannot achieve maximum benefit from non-renewable resources if it loses Equalization as revenues grow from these non-renewable resources. Hence these revenues should be exempted in some fashion from the Equalization calculation.
Two aspects of the argument on non-renewable resource “clawback” approach are worth considering in greater detail.
First, no source of revenue will exist for all time. Non-resource enterprises that generate sales tax and corporate and personal income taxes succeed and fail based on many factors. Western countries, states and provinces, that a decade ago made substantial income from the information technology sector and call centres, are now watching these revenues migrate to India and other Asian countries.
Even supposedly renewable natural resources such as fish can be destroyed by folly or a fundamental misapprehension of the circumstances affecting the health of the stocks. The reasonable lifespan of a mine or oil field may be 50 to 100 years. It took a mere 50 years for human misadventure to decimate the supposedly renewable fish stocks that had fed most of the Western world for five centuries.
Second, the “clawback” argument is one most often advanced by advocates of increased federal Equalization transfers to provinces. No one should forget that the Equalization program is funded entirely through federal general revenues. In other words, a significant portion of federal revenues derive from the very same sources for which the provincial governments claim a theoretical exemption from Equalization. Logically, what is sauce for the provincial fiscal goose should be sauce for the federal gander. The federal government holds obligations to provide services to residents of Canada just as the provinces do. Therefore, if one accepts that some revenues come from “non-renewable” sources, it would be logical for the federal government to seek the same exemption for its revenues as the one demanded by some provinces.
It is beyond the scope of this paper to calculate the level of federal funding from “non-renewable” sources. Were the amount to reach $10 billion – approximately the total outlay for Equalization – it is conceivable that the federal government would seek to eliminate the Equalization program altogether, possibly transform the system to one of low-interest loans or seek to control how province’s spend the Equalization transfer.
The 85:15 revenue split: In the overhead slide presentation, the provincial government includes several colourful charts that purport to show that the federal government receives 85 per cent of revenues from the offshore with the Government of Newfoundland and Labrador receiving only 15 per cent. A similar argument and similar slides are also found in the report of the Royal Commission on Renewing and Strengthening Our Place in Canada and in two research papers completed for that Royal Commission, one by David Norris and the other by John Crosbie.
Sadly for those wishing to assess the argument, none of these documents contains the data used to compile the charts. Neither the provincial government overhead slides nor Mr. Crosbie’s paper contain any figures. Mr. Norris does provide some evidence of his calculations. David Norris was a member of the provincial government team that negotiated the Atlantic Accord. A former provincial deputy minister of finance, Mr. Norris is currently a senior advisor to Premier Danny Williams. In 2002/2003, Mr. Norris served as senior researcher for the Royal Commission on renewing and strengthening our place in Canada. Mr. Norris is also author of one of the research papers the Royal Commission released with its final report. The fiscal position of Newfoundland and Labrador is broad overview of the provincial government’s financial status. It includes prominent sections on offshore revenues that undoubtedly form much of the basis for current government policy. In it, Mr. Norris argues, among other things that “The revenue analysis concludes that the Government of Canada is the “principal beneficiary” of future offshore oil revenues.” Given the obvious connection between Mr. Norris and current government policy and the fact that his paper is reasonably detailed, the remainder of this section will discuss the revenue split argument as he presented it.
Mr. Norris’ conclusion follows a lengthy preamble in which he sets the bases for his remarks and his assumptions on revenues and relative amounts flowing to each of the provincial and federal governments. He also quotes from section 2 (c) of the Atlantic Accord, the now famous “principal beneficiary” clause and deduces that “[a]ccordingly, revenue offset provisions were incorporated in the Accord which were intended to protect the province against sharp downturns in equalization entitlements.” He produces a chart showing the revenue sharing based on his analysis.
[Table 3-1 ]
On the face of it, his argument is persuasive. It does not stand up to closer scrutiny, however.
One of the fundamental problems with any economist’s projections is that they are based on assumption. Adjust the assumptions and the outcomes change, sometimes dramatically. Aside from the traditional economist’s folly of assumption, there are at least five reasons to doubt the validity of Norris’ contention.
First, the “principal beneficiary” provisions of the Atlantic Accord are undefined. It is erroneous to conclude that the phrase is synonymous with provincial government revenues. As a member of the negotiating team for the Atlantic Accord, Mr. Norris may be privy to information that does not exist in the public domain. Until such time as his contention is properly documented, we must remain skeptical of it. The matter of principal beneficiary is dealt with in greater detail below.
Second, as discussed above, the Atlantic Accord is based in part on the premise that the Equalization program would continue to apply. Knowing the premises on which the Accord was based, it is ludicrous for Mr. Norris and others to argue now the opposite of what was said 20 years ago. That single point is sufficient to cause Mr. Norris to remove the Equalization adjustment from his revenue chart above. Eliminate that single contention and the revenue sharing split moves from being a 76:24 split favouring the federal government to a 62:38 split favouring the province.
Third, the Accord’s Equalization offset provisions were never included in any public statement as being part of the revenue sharing arrangement between the Government of Canada and the Government of Newfoundland and Labrador. Mr. Mulroney’s original proposal is absolutely clear on revenue sharing: “Newfoundland will be entitled to establish and collect resources revenues as if these resources were on land.” As such, it is ludicrous to now suggest that the Government of Canada and the Government of Newfoundland and Labrador intended Equalization to be used in the calculation of relative incomes. In fact, the Atlantic Accord makes no mention of how much revenue or what proportions of revenue are to flow to each order of government. The intention of the two parties, as evident from the signed agreement, is merely that the province may have the opportunity to raise such revenues as it can.
Fourth, and flowing in the same vein, the Accord Equalization offset provisions are not structured to ensure that the flow of maximum financial benefits to the province, i.e. revenues plus offsets, are timed to coincide with the maximum level of revenues based on actual development of the offshore fields. Simply put, the offset provisions begin when oil reaches a defined level - irrespective of value. They decline until an arbitrary period has expired, in this case 12 years. As it turned out, and indeed as anyone may have reasonably expected in 1985, production from one discovery was sufficient to trigger the offset provisions. It would be ludicrous to suggest that anyone believed all four commercially-viable discoveries that existed in 1985 could have been fully developed and in production within four years. Hence it is virtually impossible for the existing offset provisions to have coincided with a period of maximum revenue for the province using both the provincial government’s revenues plus Equalization offsets.
Fifth, even if one allows that his contentions about revenue sharing are correct, Mr. Norris presents only a portion of the revenues flowing to the province. As noted in Section D of this paper, the province is entitled to collect revenues of no fewer than six general types. In addition, the provincial government receives indirect revenues from such sources as personal income tax, new business start-ups and revenues that come from the construction and development phase of each project.
In his chart, Mr. Norris includes only royalties, which the federal government does not claim and corporate taxes, which are in fact collected by both the federal and provincial governments. The total economic impact of offshore oil development is not considered in his argument. If these wider sources of revenue are included in the province’s claim or the paper by John Crosbie, sadly, we cannot tell since they have not made this information public.
The offset runs out too soon: Under the existing Atlantic Accord Equalization offset formula, the period of maximum potential benefit expired last year. The maximum offset existed only for the first four years after the oil production trigger was reached. Within that time, the provincial government received the largest type of Equalization offset. After four years, the level of offset declines, such that while provincial direct revenues may well grow as White Rose and later, Hebron/Ben Nevis, come on stream, the level of additional money received from the Equalization offset will diminish by 10% per year. On this point, proponents of an amendment to the Atlantic Accord are correct. That is what the Accord provides.
In assessing this argument, it is important to compare the intentions of the Trudeau and Mulroney governments on the revenue issue. The intention of the Mulroney government is clear: the Government of Newfoundland and Labrador would receive the right to set its own direct revenues for offshore resources, as if the resources were on land. Additionally, for a period of 12 years, the province would receive additional money in the form of an Equalization offset. The province would also receive local job and industrial spin-off benefits. That is what the Atlantic Accord provides; that is what has occurred.
The Trudeau government approach was different in one key respect. “The province will receive all provincial-type taxes and the largest remaining federal tax, the Petroleum and Gas Revenue Tax, the PGRT. No one can question the generosity of this proposal. When would the provincial government be expected to share some of these revenues with other Canadians? Not until the Newfoundland Government’s fiscal capacity reached 110 per cent of the national average, with an adjustment for regional unemployment that would now raise this to about 125%.”
More significantly, the Trudeau revenue sharing arrangements reflect the strategic policy commitment the Government of Canada was prepared to make prior to 1984. The federal proposal, made in September 1982, ‘ “recognizes the Government of Newfoundland and Labrador’s fundamental goal of attaining economic development and self-sufficiency by creating a strong and diversified provincial economy able to contribute fully to prosperity throughout Canada.” This goal is shared, the document states, by the Government of Canada.’
Therein lays the major flaw in the Atlantic Accord as it was originally proposed and signed: the duration of the province’s maximum potential revenues (direct revenues plus Equalization offsets) is determined by oil production levels, irrespective of the actual market value of the oil or the impact of oil development on overall fiscal capacity. Under the Trudeau proposal, it would have been linked to overall economic development.
Given the nature of industrial megaprojects of the type offshore Newfoundland and Labrador, it is not at all surprising that each project takes a considerable period of time to bring on stream. The Hibernia development agreement was signed in September 1990; first oil was achieved fully seven years later. It was fully two years after that date that Hibernia reached a sufficient level of production to trigger the Accord’s Equalization offset provisions.
Admittedly, the provincial government did not have the benefit of experience in making its calculations about the Atlantic Accord’s various benefits. However, as the overhead slide presentation indicates, the provincial government apparently anticipated rapid development of the existing fields, continued offshore discoveries at the pace experienced between 1979 and 1984/85, higher royalty regimes and oil prices remaining at then-prevalent levels.
It is beyond the scope of this paper to assess the validity of these assumptions in detail. Such an effort has not been undertaken to date and, in fact, much of the information required would be exempt from public disclosure since they were contained in documents submitted to cabinet. On the face of it, however, it would appear that the provincial government used optimistic projections when assessing the Mulroney offer. Any downward revision of their assumptions – for example, lower per barrel prices for oil – and the revenue impacts alter significantly.
Interestingly, according to slide 7, the provincial government expected that “have status” for Newfoundland and Labrador, i.e. that the province would no longer receive Equalization was “a foregone conclusion”. The one data table from 1985 that has been released (overhead slide 9) does not appear to support that contention, at least in so far as the chart might represent an anticipated worst case scenario. “Revenue and Equalization – 1985 Expectation” examines only royalties, instead of all revenue sources, and only from the Hibernia project. The graph clearly shows that royalties alone from Hibernia would not be sufficient to replace Equalization. In fact, anticipating the Accord offset provisions would begin in 1991, the graph shows the province expected Equalization transfer to climb beginning in 2004/05 and exceed pre-Hibernia levels by 2013.
That said, there can be no doubt that the Atlantic Accord Equalization offsets are working as intended by the Government of Canada and the Government of Newfoundland and Labrador. The provincial government expectations provided in the overhead slide presentation are not reflected in any aspect of the Atlantic Accord or the subsequent implementation legislation.
Given several years of experience and based on the intention of the federal government prior to 1984, it is possible to make a case for amending the Accord’s Equalization offsets. This will be addressed below.
Continued in Part 4
Which is to be Master? Part 4
G. Why is Alberta different from Newfoundland and Labrador?
This question has been asked many times in relation to oil and gas development. In some senses, it is like asking why a duck is different from a horse. Two significant differences are important to bear in mind when assessing oil and gas resources.
First, note that Alberta’s resources are on onshore. They are physically within the jurisdiction of the Government of Alberta. More importantly, however, and with the exception of the tar sands, Alberta’s oil and gas resources are relatively easy to develop. A small group of middle-class investors can raise the funds - scarcely more than $100, 000 - needed to drill an oil well in Alberta. Located as they several hundred kilometres out to sea in the North Atlantic, oil and gas resources offshore Newfoundland and Labrador can only be exploited by the combined efforts of multi-national oil companies able to invest the hundreds of millions needed for a comprehensive exploration and drilling program. A structure like Hebron/Ben Nevis which is fragmented and contains heavy oil demands even greater investment to bring to on stream.
Second, note that Alberta’s oil and gas resources have been exploited since the late 1940s. As such, Alberta is home to a well-established oil industry with secondary and tertiary development and a sophisticated, experienced support system of government and business. By comparison, the Newfoundland and Labrador offshore is scarcely seven years old if measured from the time of first oil production. It takes time to develop fully a mature oil and gas industry. Newfoundland and Labrador is still in the early years of its growth.
In that light, the Atlantic Accord offset provisions are also deficient. They fail to account for the relative underdevelopment of the offshore industry in this province. They also fail to consider the length of time which was likely required to bring existing fields on stream or that would be required to find any new, commercially-viable fields.
H. The federal share of Hibernia
When Brian Mulroney first proposed a deal on offshore oil and gas resources to Brian Peckford, it was done in the context of the National Energy Program. That program included significant federal revenues from oil and gas developments throughout the country and, at one point, anticipated the federal government would hold a 25% interest in every development on what was termed frontier lands. Mr. Mulroney proposed that “[i]f, on assuming office the new government decides to vest in itself the Crown carried shares offshore Newfoundland and Labrador, then these rights and shares will be shared equitably by both governments.”
This Crown share proposal survived in the Atlantic Accord as section 40, however, by the time the Accord implementation act was drafted and passed, the Mulroney government had eliminated federal shares in oil and gas fields except as may have been obtained through PetroCanada.
The Hibernia shares held by the federal government are not the type of shares anticipated by the Atlantic Accord. Hence, their disposition cannot be governed by any intentions signaled by the Accord. The Government of Canada invested in the Hibernia project as a means of salvaging it, at a time when one of the commercial partners withdrew. The federal government invested in Hibernia under very specific circumstances, not as part of a broader government policy on oil and gas resources. Moreover, these shares would not exist as Crown shares if the project had proceeded as originally proposed by the consortium of oil companies or had other commercial partners emerged who were willing to purchase the interest owned by Chevron in Hibernia. As a consequence, the federally-owned shares fall outside the scope of revenues to which the Government of Newfoundland and Labrador could reasonably have expected to have some portion.
It is interesting to note that the overhead slide presentation makes no reference to transferring the federal shares. The only publicly available reference to share transfer remains the Blue Print and letters to the three federal Conservative leadership candidates and the letter inadvertently sent to New Democratic Party leader Jack Leyton.
The Hibernia shares carry with them a prospect of immediate cash return either through their sale or through a transfer from the Government of Canada to the Government of Newfoundland and Labrador. They also carry with them liabilities; the owners of the shares must be prepared for the costs associated with closing the Hibernia field whenever it runs out. It would be foolhardy for any Government of Newfoundland and Labrador to acquire shares in Hibernia without considering, and disclosing publicly, all the implications of owning a portion of the Hibernia field.
I. Being the “Principal Beneficiary”
The Atlantic Accord is as much a child of politics as it is one of policy. Brian Mulroney was leader of the Progressive Conservative Party and Leader of the Opposition when he wrote to the premiers of Nova Scotia and Newfoundland and Labrador to propose an agreement that he believed would settle the ongoing negotiations on offshore resource development.
The Mulroney proposal “would recognize the right of Newfoundland and Labrador to be the principal beneficiary of the wealth of the oil and gas off its shore, consistent with a strong and united Canada.” This sentence appears in the second paragraph of Mulroney’s letter. It sets one of the basic principles underlying the Accord. This phrase is particularly interesting since the idea of “principal beneficiary” had not previously appeared in public discussions of offshore resources.
While the phrase “principal beneficiary” is undefined in Mulroney’s original correspondence, it is clear from a reading of the original proposal and the subsequent Atlantic Accord, that the province as a whole was to benefit in at least four significant ways.
First, the provincial government would gain the right to manage the offshore jointly with the federal government, particularly with respect to setting the mode of production. This had significant implications for local benefits, as evident from construction of the gravity-based system (GBS) for Hibernia. Second, the provincial government gained the right to collect revenues from the resources as if they were on land. This established that the provincial government would determine its own revenues to be collected from offshore oil and gas development and production just as a province like Alberta is able to do. These revenues would, de facto, be treated as “own source” revenues like income tax, sales tax and other similar levies.
Third, the province as a whole would benefit from the development of local jobs. Mulroney committed that oil-related infrastructure would be sited in the province, where possible. This was no small matter. Mulroney’s letter contains strong language and conveys a deliberate intent on the part of the future Prime Minister to provide this province with significant job and business benefits. “Local job creation and labour development would be of paramount concern.” Fourth, the province would benefit since the provincial government would not see a dollar-for-dollar loss of Equalization payments that would naturally result from growth in the government’s own-source revenues. The Government of Newfoundland and Labrador would receive all of its own-source revenue, potentially a portion of any federal shares in the offshore, and as well, additional payments to offset any losses from Equalization.
The same general approach was taken by the Liberal administrations which preceded Mr. Mulroney. For example, the comprehensive proposal made by the Government of Canada in 1982 stated that “it is recognized that Newfoundland should enjoy the major share of the revenue that offshore resources are expected to generate…” and that “the people of the province would realize the greatest and the most direct benefits from the development of offshore oil and gas resources in terms of growth and income, jobs, opportunities for new businesses, and significant new provincial government revenues.” The federal Liberal proposal on revenue sharing was linked inextricably to the overall performance of the provincial economy and hence may be taken as further evidence of the extent to which the federal government before 1984 viewed the benefits from the offshore to this province to be greater than just the sums flowing to the provincial government’s treasury.
While local job benefits merited two short paragraphs in the original Mulroney letter, both the Accord itself and the enabling legislation provide an elaborate structure aimed at managing local benefits. No one can underestimate the value of local industrial benefits to the province; nor can anyone easily dismiss the contention that the architects of the Atlantic Accord saw local industrial development as a significant factor in establishing this province as the principal beneficiary of offshore oil and gas development.
The Atlantic Accord and enabling legislation predate both the North American Free Trade Agreement and various inter-provincial accords on free trade. The Schedule of Canada, Annex 1, “Reservations for Existing Measures and Liberalization Commitments” of the North American Free Trade Agreement (NAFTA) specifically exempts the Atlantic Accord implementation legislation and its local benefits provisions from NAFTA.
It has long been the contention of those familiar with the Atlantic Accord that any substantive change would negate the reservation or, at least, give an interested party sufficient grounds to challenge the reservation established when NAFTA was signed. The Williams administration has not addressed the issue of the Accord and NAFTA, likely since it believes the changes to the Equalization offset section are not sufficient to trigger a NAFTA-related review of the Accord or jeopardize the Accord’s current NAFTA exemption. A simple change to the offset provisions would not normally constitute a significant change to the Accord itself and hence the NAFTA reservations would remain intact.
A change to the Accord’s fundamental principles would constitute a substantive change to the Accord. The objectives of the Accord are enumerated in Section 2 and include the commitment that Newfoundland and Labrador is to be the principal beneficiary of offshore resource development. Their ordering is no accident or whim; the words used are not selected by happenstance. They reflect the considered view of the signatories as to the major purposes the agreement is to achieve.
It appears that the Williams administration is seeking to alter a fundamental principal of the Atlantic Accord. By linking the argument on Equalization offsets to the objectives of the Accord, the provincial government may well open the industrial benefit provisions of the Accord will be lost and offshore Newfoundland and Labrador will be subject to international free trade for goods and services. If this is an objective of government policy, then it should be debated in full so that the general public can make an informed choice. If it is not, then the provincial government must make clear the scope and impact of the changes it is proposing. The overhead slides are not sufficient.
J. Amending the offset: an alternative approach
As presented by the Williams administration, the proposal to amend the Atlantic Accord Equalization offset provisions is founded on somewhat shaky ground. It relies primarily:
- on general confusion over what benefits currently are provided by the Accord;
- an argument about supposed “clawbacks” that is either flawed in theory or which ties the province to other logical arguments that would work against the province’s overall revenues;
- a re-definition of the concept of “principal beneficiary” that may jeopardize substantial benefits to the province as a whole;
- an approach that ignores the intentions of the Government of Canada through two administrations; and that,
- ignores the practical circumstances affecting development of resources offshore Newfoundland and Labrador.
The Atlantic Accord Equalization offset provisions are clearly deficient when viewed from the standpoint of development of the province’s economy. The existing Accord approach is built on a simple calculation that makes no allowance for issues affecting development of the fields or the overall impact which offshore oil and gas resources have had and will continue to have in developing and diversifying the economy of one of the country’s financially weakest provinces.
Based on the foregoing, the provincial government should reformulate its proposal to the federal government to produce an amendment that is simple, based on logical, practical and historical premises and which will have a definite termination. Disentangle the Accord proposal from other arguments and make it as straightforward as possible. What remains is a robust concept:
Amend the Atlantic Accord offset provisions to give the provincial government a full Equalization offset, as currently calculated by the Accord for the first four years, until such time as the province’s fiscal capacity reaches 110% of the national average and its employment rate meets or exceeds the national average or for a period of 25 years, which ever comes first.
It is hard to imagine that any Liberal administration in Ottawa could reject a proposal that is founded on the very ideas it predecessors advanced 20 years and more ago. The proposal leaves intact the broader benefits which two national governments have intended for this province to receive from oil and gas resources off its shores. It is a proposal that is divorced utterly from the extreme and often partisan rhetoric which has surrounded recent discussions of public policy in this province.
K. Conclusion
The commonplace conclusion mentioned at the outset of this paper is based on mistaken information or incomplete information. The provincial government sets its own revenues for offshore oil and receives its revenues in total. The Atlantic Accord is clear on this point and no one has publicly suggested that the Accord provisions on this point are not being followed. As for the supposed Equalization clawback, losses in Equalization are offset under the Atlantic Accord according to a formula agreed to by the provincial government in 1985. The formula appears to be working as intended. No one can make a thorough assessment of this matter however, since the provincial government has not released thorough, accurate information on revenues, on the Accord offset provisions nor on provincial government expectations in 1985.
In general, however, the following can be said with confidence:
1. The Government of Newfoundland and Labrador currently receives 100% of provincial revenues from offshore oil and gas resources.
2. The Equalization offset provisions of the Accord are functioning as intended, although amending the Equalization offset provisions is desirable for the provincial government. A better deal is attainable based on the stated intentions of the Trudeau administration before 1984.
3. Altering the definition of “principal beneficiary” to refer only to provincial government revenues may jeopardize other benefits the Accord provides to the province.
4. Disposition of the federal government’s share of the Hibernia project is outside the Atlantic Accord. Acquiring the shares must be examined in greater detail since they carry responsibilities and financial implications once the field is exhausted.
Brian Peckford’s phrase “One day the sun will shine and have not will be no more” is now part of our political vocabulary. That phrase, about sun and “have not” embodied for many people their hopes about the future of Newfoundland and Labrador and the unprecedented opportunity offered by oil and gas for ending our status as a people dependent on hand-outs from richer cousins in the rest of Canada. The very term “have not” derives from the Equalization program – receiving provinces are said to be “have nots”; the money comes from the “haves”.
Peckford’s goal was to use oil and gas wealth to end the indignity of a proud people living on a form of national dole. At the time he spoke, more than 60 per cent of the province’s annual budget came from federal transfers, much of that from Equalization. The Atlantic Accord may not be perfect, it may not cover all contingencies, but it is the deal that has produced tremendous economic and social benefit in Newfoundland and Labrador. We tinker with it at our peril. The percentage of provincial revenues coming from federal transfers has declined. This is due in part because of federal changes to transfer programs, but also in part because of growth in new industries like oil production. As Rob Strong wrote recently, though, it is important to remember that the East Coast oil and gas industry is still growing. There is much more to come.
The Williams administration is proposing to alter a landmark document in the province’s economic and political history, the net effect of which, at the very least, would increase federal transfers to the province. The Atlantic Accord is not holy writ, but it is a large part of the province’s current wealth. More importantly, it holds the prospect of providing considerably more wealth with future discoveries in the Orphan Basin and the Laurentian sub-basin. The Premier is proposing his changes, however, without an informed public discussion, without releasing a concise statement of the provincial government’s position and, as it would seem, without relying on the plain meaning of words. Given the importance of the Accord to the province, we should be careful in seeking adjustments to it.
It should not escape notice that in making its proposal, the Williams administration is merely picking up where the Grimes government left off. In fact, there is precious little difference among the three political parties in the province on this issue. In itself, that should be cause for concern, as Mark Twain warned. The absence of debate or substantive discussion carries with it greater implications than the denial of contrariness. Without a clear understanding of what is being sought< how can anyone – politicians, reporters or the public at large - judge the government’s success or failure?
Getting more cash from Ottawa is one thing. If it comes at a larger cost, namely bringing the Accord under NAFTA, then the Premier will need wider public support to continue on his path. Newfoundlanders and Labradorians have a right to know what is being talked about because they are the ones who will either reap the reward of these changes or bear the burden.
This question has been asked many times in relation to oil and gas development. In some senses, it is like asking why a duck is different from a horse. Two significant differences are important to bear in mind when assessing oil and gas resources.
First, note that Alberta’s resources are on onshore. They are physically within the jurisdiction of the Government of Alberta. More importantly, however, and with the exception of the tar sands, Alberta’s oil and gas resources are relatively easy to develop. A small group of middle-class investors can raise the funds - scarcely more than $100, 000 - needed to drill an oil well in Alberta. Located as they several hundred kilometres out to sea in the North Atlantic, oil and gas resources offshore Newfoundland and Labrador can only be exploited by the combined efforts of multi-national oil companies able to invest the hundreds of millions needed for a comprehensive exploration and drilling program. A structure like Hebron/Ben Nevis which is fragmented and contains heavy oil demands even greater investment to bring to on stream.
Second, note that Alberta’s oil and gas resources have been exploited since the late 1940s. As such, Alberta is home to a well-established oil industry with secondary and tertiary development and a sophisticated, experienced support system of government and business. By comparison, the Newfoundland and Labrador offshore is scarcely seven years old if measured from the time of first oil production. It takes time to develop fully a mature oil and gas industry. Newfoundland and Labrador is still in the early years of its growth.
In that light, the Atlantic Accord offset provisions are also deficient. They fail to account for the relative underdevelopment of the offshore industry in this province. They also fail to consider the length of time which was likely required to bring existing fields on stream or that would be required to find any new, commercially-viable fields.
H. The federal share of Hibernia
When Brian Mulroney first proposed a deal on offshore oil and gas resources to Brian Peckford, it was done in the context of the National Energy Program. That program included significant federal revenues from oil and gas developments throughout the country and, at one point, anticipated the federal government would hold a 25% interest in every development on what was termed frontier lands. Mr. Mulroney proposed that “[i]f, on assuming office the new government decides to vest in itself the Crown carried shares offshore Newfoundland and Labrador, then these rights and shares will be shared equitably by both governments.”
This Crown share proposal survived in the Atlantic Accord as section 40, however, by the time the Accord implementation act was drafted and passed, the Mulroney government had eliminated federal shares in oil and gas fields except as may have been obtained through PetroCanada.
The Hibernia shares held by the federal government are not the type of shares anticipated by the Atlantic Accord. Hence, their disposition cannot be governed by any intentions signaled by the Accord. The Government of Canada invested in the Hibernia project as a means of salvaging it, at a time when one of the commercial partners withdrew. The federal government invested in Hibernia under very specific circumstances, not as part of a broader government policy on oil and gas resources. Moreover, these shares would not exist as Crown shares if the project had proceeded as originally proposed by the consortium of oil companies or had other commercial partners emerged who were willing to purchase the interest owned by Chevron in Hibernia. As a consequence, the federally-owned shares fall outside the scope of revenues to which the Government of Newfoundland and Labrador could reasonably have expected to have some portion.
It is interesting to note that the overhead slide presentation makes no reference to transferring the federal shares. The only publicly available reference to share transfer remains the Blue Print and letters to the three federal Conservative leadership candidates and the letter inadvertently sent to New Democratic Party leader Jack Leyton.
The Hibernia shares carry with them a prospect of immediate cash return either through their sale or through a transfer from the Government of Canada to the Government of Newfoundland and Labrador. They also carry with them liabilities; the owners of the shares must be prepared for the costs associated with closing the Hibernia field whenever it runs out. It would be foolhardy for any Government of Newfoundland and Labrador to acquire shares in Hibernia without considering, and disclosing publicly, all the implications of owning a portion of the Hibernia field.
I. Being the “Principal Beneficiary”
The Atlantic Accord is as much a child of politics as it is one of policy. Brian Mulroney was leader of the Progressive Conservative Party and Leader of the Opposition when he wrote to the premiers of Nova Scotia and Newfoundland and Labrador to propose an agreement that he believed would settle the ongoing negotiations on offshore resource development.
The Mulroney proposal “would recognize the right of Newfoundland and Labrador to be the principal beneficiary of the wealth of the oil and gas off its shore, consistent with a strong and united Canada.” This sentence appears in the second paragraph of Mulroney’s letter. It sets one of the basic principles underlying the Accord. This phrase is particularly interesting since the idea of “principal beneficiary” had not previously appeared in public discussions of offshore resources.
While the phrase “principal beneficiary” is undefined in Mulroney’s original correspondence, it is clear from a reading of the original proposal and the subsequent Atlantic Accord, that the province as a whole was to benefit in at least four significant ways.
First, the provincial government would gain the right to manage the offshore jointly with the federal government, particularly with respect to setting the mode of production. This had significant implications for local benefits, as evident from construction of the gravity-based system (GBS) for Hibernia. Second, the provincial government gained the right to collect revenues from the resources as if they were on land. This established that the provincial government would determine its own revenues to be collected from offshore oil and gas development and production just as a province like Alberta is able to do. These revenues would, de facto, be treated as “own source” revenues like income tax, sales tax and other similar levies.
Third, the province as a whole would benefit from the development of local jobs. Mulroney committed that oil-related infrastructure would be sited in the province, where possible. This was no small matter. Mulroney’s letter contains strong language and conveys a deliberate intent on the part of the future Prime Minister to provide this province with significant job and business benefits. “Local job creation and labour development would be of paramount concern.” Fourth, the province would benefit since the provincial government would not see a dollar-for-dollar loss of Equalization payments that would naturally result from growth in the government’s own-source revenues. The Government of Newfoundland and Labrador would receive all of its own-source revenue, potentially a portion of any federal shares in the offshore, and as well, additional payments to offset any losses from Equalization.
The same general approach was taken by the Liberal administrations which preceded Mr. Mulroney. For example, the comprehensive proposal made by the Government of Canada in 1982 stated that “it is recognized that Newfoundland should enjoy the major share of the revenue that offshore resources are expected to generate…” and that “the people of the province would realize the greatest and the most direct benefits from the development of offshore oil and gas resources in terms of growth and income, jobs, opportunities for new businesses, and significant new provincial government revenues.” The federal Liberal proposal on revenue sharing was linked inextricably to the overall performance of the provincial economy and hence may be taken as further evidence of the extent to which the federal government before 1984 viewed the benefits from the offshore to this province to be greater than just the sums flowing to the provincial government’s treasury.
While local job benefits merited two short paragraphs in the original Mulroney letter, both the Accord itself and the enabling legislation provide an elaborate structure aimed at managing local benefits. No one can underestimate the value of local industrial benefits to the province; nor can anyone easily dismiss the contention that the architects of the Atlantic Accord saw local industrial development as a significant factor in establishing this province as the principal beneficiary of offshore oil and gas development.
The Atlantic Accord and enabling legislation predate both the North American Free Trade Agreement and various inter-provincial accords on free trade. The Schedule of Canada, Annex 1, “Reservations for Existing Measures and Liberalization Commitments” of the North American Free Trade Agreement (NAFTA) specifically exempts the Atlantic Accord implementation legislation and its local benefits provisions from NAFTA.
It has long been the contention of those familiar with the Atlantic Accord that any substantive change would negate the reservation or, at least, give an interested party sufficient grounds to challenge the reservation established when NAFTA was signed. The Williams administration has not addressed the issue of the Accord and NAFTA, likely since it believes the changes to the Equalization offset section are not sufficient to trigger a NAFTA-related review of the Accord or jeopardize the Accord’s current NAFTA exemption. A simple change to the offset provisions would not normally constitute a significant change to the Accord itself and hence the NAFTA reservations would remain intact.
A change to the Accord’s fundamental principles would constitute a substantive change to the Accord. The objectives of the Accord are enumerated in Section 2 and include the commitment that Newfoundland and Labrador is to be the principal beneficiary of offshore resource development. Their ordering is no accident or whim; the words used are not selected by happenstance. They reflect the considered view of the signatories as to the major purposes the agreement is to achieve.
It appears that the Williams administration is seeking to alter a fundamental principal of the Atlantic Accord. By linking the argument on Equalization offsets to the objectives of the Accord, the provincial government may well open the industrial benefit provisions of the Accord will be lost and offshore Newfoundland and Labrador will be subject to international free trade for goods and services. If this is an objective of government policy, then it should be debated in full so that the general public can make an informed choice. If it is not, then the provincial government must make clear the scope and impact of the changes it is proposing. The overhead slides are not sufficient.
J. Amending the offset: an alternative approach
As presented by the Williams administration, the proposal to amend the Atlantic Accord Equalization offset provisions is founded on somewhat shaky ground. It relies primarily:
- on general confusion over what benefits currently are provided by the Accord;
- an argument about supposed “clawbacks” that is either flawed in theory or which ties the province to other logical arguments that would work against the province’s overall revenues;
- a re-definition of the concept of “principal beneficiary” that may jeopardize substantial benefits to the province as a whole;
- an approach that ignores the intentions of the Government of Canada through two administrations; and that,
- ignores the practical circumstances affecting development of resources offshore Newfoundland and Labrador.
The Atlantic Accord Equalization offset provisions are clearly deficient when viewed from the standpoint of development of the province’s economy. The existing Accord approach is built on a simple calculation that makes no allowance for issues affecting development of the fields or the overall impact which offshore oil and gas resources have had and will continue to have in developing and diversifying the economy of one of the country’s financially weakest provinces.
Based on the foregoing, the provincial government should reformulate its proposal to the federal government to produce an amendment that is simple, based on logical, practical and historical premises and which will have a definite termination. Disentangle the Accord proposal from other arguments and make it as straightforward as possible. What remains is a robust concept:
Amend the Atlantic Accord offset provisions to give the provincial government a full Equalization offset, as currently calculated by the Accord for the first four years, until such time as the province’s fiscal capacity reaches 110% of the national average and its employment rate meets or exceeds the national average or for a period of 25 years, which ever comes first.
It is hard to imagine that any Liberal administration in Ottawa could reject a proposal that is founded on the very ideas it predecessors advanced 20 years and more ago. The proposal leaves intact the broader benefits which two national governments have intended for this province to receive from oil and gas resources off its shores. It is a proposal that is divorced utterly from the extreme and often partisan rhetoric which has surrounded recent discussions of public policy in this province.
K. Conclusion
The commonplace conclusion mentioned at the outset of this paper is based on mistaken information or incomplete information. The provincial government sets its own revenues for offshore oil and receives its revenues in total. The Atlantic Accord is clear on this point and no one has publicly suggested that the Accord provisions on this point are not being followed. As for the supposed Equalization clawback, losses in Equalization are offset under the Atlantic Accord according to a formula agreed to by the provincial government in 1985. The formula appears to be working as intended. No one can make a thorough assessment of this matter however, since the provincial government has not released thorough, accurate information on revenues, on the Accord offset provisions nor on provincial government expectations in 1985.
In general, however, the following can be said with confidence:
1. The Government of Newfoundland and Labrador currently receives 100% of provincial revenues from offshore oil and gas resources.
2. The Equalization offset provisions of the Accord are functioning as intended, although amending the Equalization offset provisions is desirable for the provincial government. A better deal is attainable based on the stated intentions of the Trudeau administration before 1984.
3. Altering the definition of “principal beneficiary” to refer only to provincial government revenues may jeopardize other benefits the Accord provides to the province.
4. Disposition of the federal government’s share of the Hibernia project is outside the Atlantic Accord. Acquiring the shares must be examined in greater detail since they carry responsibilities and financial implications once the field is exhausted.
Brian Peckford’s phrase “One day the sun will shine and have not will be no more” is now part of our political vocabulary. That phrase, about sun and “have not” embodied for many people their hopes about the future of Newfoundland and Labrador and the unprecedented opportunity offered by oil and gas for ending our status as a people dependent on hand-outs from richer cousins in the rest of Canada. The very term “have not” derives from the Equalization program – receiving provinces are said to be “have nots”; the money comes from the “haves”.
Peckford’s goal was to use oil and gas wealth to end the indignity of a proud people living on a form of national dole. At the time he spoke, more than 60 per cent of the province’s annual budget came from federal transfers, much of that from Equalization. The Atlantic Accord may not be perfect, it may not cover all contingencies, but it is the deal that has produced tremendous economic and social benefit in Newfoundland and Labrador. We tinker with it at our peril. The percentage of provincial revenues coming from federal transfers has declined. This is due in part because of federal changes to transfer programs, but also in part because of growth in new industries like oil production. As Rob Strong wrote recently, though, it is important to remember that the East Coast oil and gas industry is still growing. There is much more to come.
The Williams administration is proposing to alter a landmark document in the province’s economic and political history, the net effect of which, at the very least, would increase federal transfers to the province. The Atlantic Accord is not holy writ, but it is a large part of the province’s current wealth. More importantly, it holds the prospect of providing considerably more wealth with future discoveries in the Orphan Basin and the Laurentian sub-basin. The Premier is proposing his changes, however, without an informed public discussion, without releasing a concise statement of the provincial government’s position and, as it would seem, without relying on the plain meaning of words. Given the importance of the Accord to the province, we should be careful in seeking adjustments to it.
It should not escape notice that in making its proposal, the Williams administration is merely picking up where the Grimes government left off. In fact, there is precious little difference among the three political parties in the province on this issue. In itself, that should be cause for concern, as Mark Twain warned. The absence of debate or substantive discussion carries with it greater implications than the denial of contrariness. Without a clear understanding of what is being sought< how can anyone – politicians, reporters or the public at large - judge the government’s success or failure?
Getting more cash from Ottawa is one thing. If it comes at a larger cost, namely bringing the Accord under NAFTA, then the Premier will need wider public support to continue on his path. Newfoundlanders and Labradorians have a right to know what is being talked about because they are the ones who will either reap the reward of these changes or bear the burden.
Rex gets it right
Rex Murphy points out that the ADQ is actually not a federalist party.
The local sovereignists didn't miss it, that's for sure.
The rise of the ADQ is not a funeral for separatism. It is a refashioning of the quest, a more beguiling referendum-free path to that fractious future.How did that really simple point slip past so many in this country?
The local sovereignists didn't miss it, that's for sure.
-30-
New X Files movie in '08?
It's been in development for a while, but it looks like production of a new X Files movie will begin shortly, with release in 2008.
According to some reports, Gillian Anderson, left [Photo: gilliananderson.ws] has bowed out of the deal.
Her replacement?
Julianne Moore, right.
According to some reports, Gillian Anderson, left [Photo: gilliananderson.ws] has bowed out of the deal.Her replacement?
Julianne Moore, right.-30-
31 March 2007
Wade Locke on public policy discussions
Part 2 of Geoff Meeker's series on local media reporting of current events includes some prescient comments by Memorial University economist Wade Locke.
Check it out, especially the bit about emotion and logic.
Check it out, especially the bit about emotion and logic.
-30-
58 years of Confederation
Yes, ladies and gentlemen, it has been almost six decades since Canada decided to join with the people of Newfoundland and Labrador in a bold experiment.Negotiations were long and difficult but ultimately the feisty Canadians realised it was better to give in to what The Fates had long since ordained.
The dream of Newfoundland visionaries - their own manifest destiny that one day Canada would come out of the self-imposed isolation and be embraced by Newfoundlanders and Labradorians with welcoming familial arms - was at last realized.
Sure there are those in Newfoundland and Labrador who can only imagine Newfoundland as a puny, subsidiarist enclave, but there are others who dream bigger dreams, who think bolder thoughts.
Today, there will be those who wear black armbands, who pop Secret Nation into the VCR and watch the bootleg edition of what they still insist is a documentary.
Well it is sort of.
Its author lives in Ottawa these days doing something other than meeting with federal ministers and officials like he gets paid to do. His boss has just about put him out of a job, it would seem.
I digress.
But there are others, numbering now in the millions across Canada, who will have a tot of rum or down a cold Black Horse and smile.
Grin a marvelous grin as we consider how much a great nation has become even greater.
And it all started, one a chilly March night 58 years ago.
-30-
NL only province to see capital investment drop in 07/08
RBC Economics is the latest to forecast that the Newfoundland and Labrador economy will trail the country in growth in 2008, at 1.5%.
The decline will be led by what RBC calls a "retreat by capital investment".
In fact, according to RBC, Newfoundland and Labrador will be the only province in Canada to experience a decline in capital investment.
Nova Scotia is the province with the smallest forecast growth, at around 2.5%.
Newfoundland and Labrador's capital investment is expected to shrink by 7.5%.
The decline will be led by what RBC calls a "retreat by capital investment".
In fact, according to RBC, Newfoundland and Labrador will be the only province in Canada to experience a decline in capital investment.
Nova Scotia is the province with the smallest forecast growth, at around 2.5%.
Newfoundland and Labrador's capital investment is expected to shrink by 7.5%.
With all three oilfields now operational and the labour disputes at Voisey’s Bay in the past, we expect the province to post above-average growth of 4% this year. Beyond 2007, growth will be much weaker as dwindling oil production and a decline in capital spending — led by a retreat in private investment — drag growth to a 1.5% pace in 2008. The weakness in construction markets is expected to span both non-residential and housing markets. Newfoundland is the only province reporting a decline in overall 2007 capital spending intentions. Broadbased weakness in housing markets has also emerged with several indicators down this year compared to year ago levels.
Unlike last year, this year’s federal budget will have little effect on Newfoundland other than a new transfer funding formula that requires provinces to include 50% of resource revenues in the equalization formula. But, since the Offshore Accord shields offshore resource wealth in Nova Scotia and Newfoundland from clawbacks, they now both have the option of sticking with the existing system until the accord expires or opting into the new formula.
-30-
30 March 2007
Local remittance economy picks up speed
Fish plants in the Maritimes are increasing offers in the hopes of luring Newfoundland and Labrador workers to their companies as migrant labour.
-30-
Great Quotes: Yes, he actually said it
The only way to deal with a bully is to confront him.
Premier Danny Williams, VOCM Back Talk with Bill Rowe, 30 March 2007
-30-
Hydro boss all wet: Offal
From Simon Lono at Offal News, a different take on Dean MacDonald's Rotary speech.
This one challenges the technical and financial viability of the subsea transmission route idea.
Warning: contains pesky facts.
This one challenges the technical and financial viability of the subsea transmission route idea.
Warning: contains pesky facts.
-30-
Flags of our fathers
Dean MacDonald is a fine example of his generation of Newfoundlanders and Labradorians.
Bright and articulate, he has made a reputation for himself as a success in the private sector.
He's a fine choice as chairman of the province's Crown-owned Hydro Corporation.
If he can deliver a Lower Churchill project that delivers economic and other benefits to the project over its entire lifespan, then he will have done something no one else has been able to do in 40 years. It will be good for him and there will be no one, save for a few cranks who oppose shipping anything out of the province at all, who will hesitate to stand up and cheer.
However, his remarks to the St. John's Rotary club, as reported by the Telegram, miss the point of current issues about Equalization, the Lower Churchill project and how the province can move forward.
Of the subsea transmission route for Lower Churchill power, MacDonald is quoted as saying this:
No one questions the technical feasibility of undersea transmission. Since the Churchill Falls project was first considered in the 1950s and early 1960s, one option for transmitting Labrador power to market involved underwater transmission either over short or long distances. MacDonald is right when he says that more power is transmitted over longer distances elsewhere on the planet.
The undersea approach is definitely more costly than hooking into existing land lines and that's really the crux of the decision on transmission route: money.
Every analysis of the undersea approach to date has concluded that while it is technically feasible, it hasn't been possible to get the power to market at a cost that is competitive, let alone profitable. At one point, even a land line route to the United States couldn't deliver power to market at a price the customer would pay. Times change and maybe times have changed on the undersea option.
But given the back end of MacDonald's remarks on this issue, though, it doesn't look like the undersea route is any better financially today than it was 35 years ago. MacDonald frames the cost as being good - not in terms of profitability - but in terms of not having to deal with Quebec.
Saving toll costs would be good since, if the price is the same at the point of delivery, Lower Churchill power would be more profitable for Hydro using the undersea route. Unfortunately for MacDonald, his boss, Premier Danny Williams, has talked about deferring revenues on the underwater route. That suggests that the toll costs wouldn't wind up as profit in Hydro coffers. Rather, Hydro would wind up in that scenario selling its power at cost or at a much lower profit or Heaven forbid below cost - than if it used the land route and paid the wheeling charges for running lines through Quebec.
[Now let's leave this option open. If Dean MacDonald wants to give some better information than what the Telegram offered, if he wants to put accurate information on the cost issues in the underwater route in the public domain available, this space is his to use. MacDonald has the e-mail address. He can fire off a submission and Bond will carry it, unedited and in its entirety. Bond readers include most of Hydro's target audiences.]
If the reward is pride, thanks very much but no thanks. But if the reward of MacDonald's approach is more cash, then more power to him, puns aside.
On the current Equalization fracas, there's no surprise that MacDonald unequivocally backs his former business partner Danny Williams:
Rather he, and apparently MacDonald, can do nothing but wave the flags of our forefathers. those flags are the time-honoured cry of previous generations having been hoodwinked by foreigners, of rolling over, of falling into traps and of having generally and always having signed bad deals.
MacDonald decries our collective insecurity, yet the very words that he and his boss use repeatedly do nothing except reinforce the old insecurities.
In the final remarks in the Telegram article, MacDonald returns to another of the old flags of our post-Confederation forefathers:
MacDonald also mentioned fallow field legislation. Of course, what he did not say is that the circumstances offshore Newfoundland and Labrador do not offer up examples of kind found elsewhere where fallow field legislation actually makes field management or financial sense.
At the end though, this is yet another of the flags of our fathers, namely that some foreign oppressor is trying to keep us down.
Poppycock, to borrow MacDonald's word.
Politicians and others wave those flags because they believe them, but as time passes, they have become threadbare. Those flags have served as nothing but a distraction, as a means of keeping people in the province from looking more closely at decisions made by our own politicians irrespective of partisan stripe.
Unfortunately for MacDonald, people are increasingly looking through the tattered strands to see what is behind. in the business community, if nowhere else, we have learned that lines in the sand and "deferred revenue" are red flags, not banners to rally behind.
If MacDonald can produce a profitable project on the Lower Churchill, then he will be lauded.
If at the end, MacDonald produces nothing at all, or worse, a deal that delivers nothing but the benefits of the "deferred revenue" Churchill Falls project, they will understand that while MacDonald is a fine example of the current generation, he can be all too easily distracted by the flags of old.
That would be the shame of this entire Hydro exercise.
Bright and articulate, he has made a reputation for himself as a success in the private sector.
He's a fine choice as chairman of the province's Crown-owned Hydro Corporation.
If he can deliver a Lower Churchill project that delivers economic and other benefits to the project over its entire lifespan, then he will have done something no one else has been able to do in 40 years. It will be good for him and there will be no one, save for a few cranks who oppose shipping anything out of the province at all, who will hesitate to stand up and cheer.
However, his remarks to the St. John's Rotary club, as reported by the Telegram, miss the point of current issues about Equalization, the Lower Churchill project and how the province can move forward.
Of the subsea transmission route for Lower Churchill power, MacDonald is quoted as saying this:
"It's not poppycock. It's fact," he said of the much-maligned subsea route.Well, sort of.
MacDonald said there are examples "all over the world" of more power being transmitted over longer distances under the sea.
He said it may cost more to build, but the people of this province will reap the rewards in the end.
"The cost is such a damn good cost to not have to depend on anybody. To maybe pay a little more to build it, but when you sell it, we don't have to pay a toll charge on the way," he said.
No one questions the technical feasibility of undersea transmission. Since the Churchill Falls project was first considered in the 1950s and early 1960s, one option for transmitting Labrador power to market involved underwater transmission either over short or long distances. MacDonald is right when he says that more power is transmitted over longer distances elsewhere on the planet.
The undersea approach is definitely more costly than hooking into existing land lines and that's really the crux of the decision on transmission route: money.
Every analysis of the undersea approach to date has concluded that while it is technically feasible, it hasn't been possible to get the power to market at a cost that is competitive, let alone profitable. At one point, even a land line route to the United States couldn't deliver power to market at a price the customer would pay. Times change and maybe times have changed on the undersea option.
But given the back end of MacDonald's remarks on this issue, though, it doesn't look like the undersea route is any better financially today than it was 35 years ago. MacDonald frames the cost as being good - not in terms of profitability - but in terms of not having to deal with Quebec.
Saving toll costs would be good since, if the price is the same at the point of delivery, Lower Churchill power would be more profitable for Hydro using the undersea route. Unfortunately for MacDonald, his boss, Premier Danny Williams, has talked about deferring revenues on the underwater route. That suggests that the toll costs wouldn't wind up as profit in Hydro coffers. Rather, Hydro would wind up in that scenario selling its power at cost or at a much lower profit or Heaven forbid below cost - than if it used the land route and paid the wheeling charges for running lines through Quebec.
[Now let's leave this option open. If Dean MacDonald wants to give some better information than what the Telegram offered, if he wants to put accurate information on the cost issues in the underwater route in the public domain available, this space is his to use. MacDonald has the e-mail address. He can fire off a submission and Bond will carry it, unedited and in its entirety. Bond readers include most of Hydro's target audiences.]
If the reward is pride, thanks very much but no thanks. But if the reward of MacDonald's approach is more cash, then more power to him, puns aside.
On the current Equalization fracas, there's no surprise that MacDonald unequivocally backs his former business partner Danny Williams:
"I'm mad as a Newfoundlander and Labradorian about what's gone on here. There may be a price to pay in the short term, but we have to draw a line in the sand," MacDonald said.There's also no surprise that MacDonald couldn't put a value on the price. His boss hasn't been able to do it. There's no surprise also that MacDonald offers up nothing more than Danny-esque rhetoric of drawing lines in sand and getting ready for "war". Danny Williams' latest war may be justified, however, as with every other war he has raged, Williams has been unwilling or unable to provide any substantive evidence to back his ire.
Rather he, and apparently MacDonald, can do nothing but wave the flags of our forefathers. those flags are the time-honoured cry of previous generations having been hoodwinked by foreigners, of rolling over, of falling into traps and of having generally and always having signed bad deals.
MacDonald decries our collective insecurity, yet the very words that he and his boss use repeatedly do nothing except reinforce the old insecurities.
In the final remarks in the Telegram article, MacDonald returns to another of the old flags of our post-Confederation forefathers:
"Why is it when Newfoundland and Labrador asks for it, it's something that we don't deserve or it's something we shouldn't get? Well, it's so important that we don't roll over on it."Fortunately for us, his other remarks on this point were carried by CBC radio's On the go. MacDonald referred to Alberta's oil royalty regime. No one has opposed that since the 1985 Atlantic Accord. Newfoundland and Labrador today is in exactly the same position with respect to oil and gas royalties as any province in the country. In some respects, for example in comparison to the tar sands, our existing royalty regime is infinitely better than the Alberta regime.
MacDonald also mentioned fallow field legislation. Of course, what he did not say is that the circumstances offshore Newfoundland and Labrador do not offer up examples of kind found elsewhere where fallow field legislation actually makes field management or financial sense.
At the end though, this is yet another of the flags of our fathers, namely that some foreign oppressor is trying to keep us down.
Poppycock, to borrow MacDonald's word.
Politicians and others wave those flags because they believe them, but as time passes, they have become threadbare. Those flags have served as nothing but a distraction, as a means of keeping people in the province from looking more closely at decisions made by our own politicians irrespective of partisan stripe.
Unfortunately for MacDonald, people are increasingly looking through the tattered strands to see what is behind. in the business community, if nowhere else, we have learned that lines in the sand and "deferred revenue" are red flags, not banners to rally behind.
If MacDonald can produce a profitable project on the Lower Churchill, then he will be lauded.
If at the end, MacDonald produces nothing at all, or worse, a deal that delivers nothing but the benefits of the "deferred revenue" Churchill Falls project, they will understand that while MacDonald is a fine example of the current generation, he can be all too easily distracted by the flags of old.
That would be the shame of this entire Hydro exercise.
-30-
Another sign of the Apocalypse?
Federal Conservatives tackling Danny Williams.
Provincial Progressive Conservatives lambasting their federal breathren.
John Crosbie once lamented having to deal with Brian Peckford and his constant attacks.
Well, just to reinforce the extent to which Danny Williams marks a return to exactly the kind of government (and the economy?) this province had in the 1980s, take a gander at this CBC online story.
If you see four guys on horses, hear trumpets and people start breaking seals, you know something is up.
Provincial Progressive Conservatives lambasting their federal breathren.
John Crosbie once lamented having to deal with Brian Peckford and his constant attacks.
Well, just to reinforce the extent to which Danny Williams marks a return to exactly the kind of government (and the economy?) this province had in the 1980s, take a gander at this CBC online story.
If you see four guys on horses, hear trumpets and people start breaking seals, you know something is up.
29 March 2007
QC or NL?
Their deep insecurity and old fears force them to shut the doors and barricade the frontiers. They attempt to drag us along in their withdrawal by giving their misadventure the allure of a crusade, as if rage could be known as courage and bitterness could replace spunk.
Comment by a well known contrarian, Nov 10, 1968
Sign of the decline: offshore trade show cancelled
dmg World Media announced on Thursday it was cancelling the 2007 offshore trade show.
The show is still listed on the company website but a spokesman for dmg's Calgary office said the show wasn't drawing enough interest this year.
He said the show may also be cancelled next year as well.
Never fear, though, NOIA's annual conference is still going ahead full steam.
Danny Williams should take up NOIA's long-standing invitation and address a NOIA function. So far - after three years and long before Hebron died - he's been giving the event and the organization a cold shoulder.
Bond Papers will now officially start the rumour that if Williams doesn't take a keynote slot this year, NOIA will invite your humble e-scribbler to speak.
Danny.
Paisan.
Tovarisch.
That's something you really don't want, is it?
Leave the gun, Danny.
Take the NOIA offer.
The show is still listed on the company website but a spokesman for dmg's Calgary office said the show wasn't drawing enough interest this year.
He said the show may also be cancelled next year as well.
Never fear, though, NOIA's annual conference is still going ahead full steam.
Danny Williams should take up NOIA's long-standing invitation and address a NOIA function. So far - after three years and long before Hebron died - he's been giving the event and the organization a cold shoulder.
Bond Papers will now officially start the rumour that if Williams doesn't take a keynote slot this year, NOIA will invite your humble e-scribbler to speak.
Danny.
Paisan.
Tovarisch.
That's something you really don't want, is it?
Leave the gun, Danny.
Take the NOIA offer.
Westcott on lost opportunities
Business Post publisher Craig Westcott's take on the oil industry and Danny Williams, subtitled, as Craig put it "Stuck in the middle with you."
The reaction to the speech has already been strong.
Undoubtedly it will be stronger.
The reaction to the speech has already been strong.
Undoubtedly it will be stronger.
Inkless Wells on the Williams fracas
Paul Wells offers two thoughts on the issue:
1. His question of the day on what possible issues Stephen Harper might use to "hurt" Danny Williams.
2. A follow-on post listing the rest of the stuff the pugnacious Premier wants from Ottawa or needs help on from the feds.
Paul will get nasty e-mails.
1. His question of the day on what possible issues Stephen Harper might use to "hurt" Danny Williams.
2. A follow-on post listing the rest of the stuff the pugnacious Premier wants from Ottawa or needs help on from the feds.
Paul will get nasty e-mails.
28 March 2007
Why Danny's campaign will fail
John F. Kennedy said: "Ask not what your country can do for you but what you can do for your country."
I say to Newfoundlanders and Labradorians: "Ask not what we can do for our country, because we have done enough. Let's ask our country what they can do for us."
Danny Williams, April 7, 2001
For a quarter of a million bucks, you'd think Danny Williams could do more with his print ads than a bunch of text on a crappy layout.
You'd think there'd be more than the obvious, namely that the federal Conservatives didn't do exactly what they promised on Equalization.
Inquiring minds, or even the ones who haven't already written Williams off as nothing more than a guy needing to have his political bile ducts surgically removed, would wonder how exactly Harper's decision has damaged Danny Williams and the province he leads.
Those who lost money in the income trust decision can point to their lost income.
They have numbers.
Hard facts.
Incontrovertible evidence of harm.
If Danny Williams had such evidence, he'd have used it. That he can only talk in vague terms - as he is wont to do on just about everything - suggests that he has no evidence.
That lack of evidence undermines the credibility of his argument.
Williams undermines his own argument further by making the statement that Newfoundland and Labrador does not need the federal government and its cash. If that's the case, then there is no need for Williams to be in High Dudgeon yet again. If the economy was relentlessly growing, then he'd be calmly getting on with the business of developing the provincial economy into the powerhouse it could be.
Logic is not Danny Williams long suit, evidently.
For everyone other than the faithful disciples of the Williams Church of Victimology, there are facts. Those facts find their way into articles like the latest John Ivison column in the National Post. The Globe did the same thing with its editorial last Saturday. Those facts make it plain that Williams' argument will have no traction where he would need it, namely among the crowd on the mainland.
For Williams' latest tantrum to have any political impact, he would need to do more than threaten to turn the seven Newfoundland and Labrador federal seats to a party other than the Conservatives. Williams simply has no political influence outside his own province. In fact, few provincial premiers from this place ever have. What Manitoban or British Columbian ever felt moved by the antics of a Brian Tobin or Brian Peckford or Frank Moores?
The only Premier of Newfoundland and Labrador to make a political impact outside his own province was Clyde Wells. That impact, during the Meech Lake constitutional fracas was built around a national Canadian argument. Wells' arguments against creating a special status for one province and in favour of meaningful reform like a triple-E senate applied as much to Ontarians, Albertans and Quebeckers as they did to the people in Goose Bay or Pasadena.
It should be remembered that Wells did not stay in a perpetual condition of irk. On other issues, such as economic development, social welfare reform, or fiscal responsibility, Wells could sometimes agree with the federal government. In some instances he disagreed with a federal policy, but while he could argue forcefully and passionately, Wells never did he resort to the sort of foot-stomping that is Williams' one trick. He persuaded - or attempted to persuade - with reason.
Consider as well, that by 1993 - about the same time in his first mandate as Williams is at right now - Wells' administration had produced an unprecedented economic development plan for the province. His administration had begun dramatic education reform, not merely to save money but to improve the quality of education to support long-term economic development. All this was done in a financial climate in which the provincial debt was the equal of the provincial gross domestic product, when all three of the province's economic engines were in decline simultaneously and the federal government's own financial resources were strained.
Taken all together, any argument that Wells could made was backed by substantive evidence of a responsible provincial government that was acting to address the province's many challenges. When he approached federal issues, Wells focused on equal and equitable treatment for all Canadians, especially Newfoundlanders and Labradorians.
Compare that to where Danny Williams sits today and one can easily see another reason why his latest tirade will fall on deaf ears across Canada and increasingly at home.
Three years into his first administration, Danny Williams can only talk of plans. Rather than encouraging new economic opportunities - as with Hibernia - Canadians from Cape Spear to the farthest tip of Vancouver Island can see Danny Williams turn away $14 billion in provincial government revenue from oil development for only the vaguest, and one suspects insubstantial, of reasons. Rather than fair and equitable treatment, Williams speaks of getting the most for his province, and implicitly, giving not even a tinker's damn about the rest of the country.
Ultimately, politics is about persuasion. Persuasive arguments are internally consistent, factually based and reasonably - even if passionately - delivered. Danny Williams' argument on Equalization has none of those qualities.
Those argument are framed to appeal to the audience. No aspect of Williams' argument, including the copy in his advertising, is aimed at the audience or audiences he needs to persuade if his whole campaign is to have any effect whatsoever.
Well, an effect beyond strengthening the cash flow of a few newspapers and an advertising agency and getting rid of some surplus cash near the end of the fiscal year.
-30-
Harper smacks backover Williams' ads
This is something Williams hasn't faced before: a federal government that bites back.
Breaking: Chief electoral officer packs it in
Chuck Furey has had enough.
Six months before the next provincial election and on the eve of the electoral office starting a massive enumeration program, the chief electoral officer is quitting.
Six months before the next provincial election and on the eve of the electoral office starting a massive enumeration program, the chief electoral officer is quitting.
Williams launches ad campaign against Harper
This will be remarkably ineffective except for the cash flow of the agency that got the contract to run the campaign.
This is like bringing a knife to a gun fight, or to put it clearly running an advertising campaign when it requires issues management/public relations skills.
Clue to the Premier: the word is "unequivocal".
Unfortunately, the Premier said this and the Globe quotes him verbatim: "It was a simple equivocal promise. And he broke it.”
If it was an equivocal promise, i.e. one that is "of uncertain nature or significance", then we'd find it hard thing to break. If we applied another meaning to equivocate, namely designed to mislead, then we'd expect that Harper's promise was something couldn't have been trusted in the first place.
This is like bringing a knife to a gun fight, or to put it clearly running an advertising campaign when it requires issues management/public relations skills.
Clue to the Premier: the word is "unequivocal".
Unfortunately, the Premier said this and the Globe quotes him verbatim: "It was a simple equivocal promise. And he broke it.”
If it was an equivocal promise, i.e. one that is "of uncertain nature or significance", then we'd find it hard thing to break. If we applied another meaning to equivocate, namely designed to mislead, then we'd expect that Harper's promise was something couldn't have been trusted in the first place.
Advice from three- year-olds
Former Martin speech scribe Scott Feschuk gives some advice to danny Williams on throwing tantrums. From Feschuk's Macleans blog.
Exploration slowdown offshore NL
From the National Post, another story on the decision by a consortium of oil companies to postpone further exploration in the Orphan basin until 2008.
The major reason for this decision is the availability of the rig Eirik Raude given other demands on the rig in the Gulf of Mexico. It isn't about the investment climate, as Paul Barnes of the Canadian Association of Petroleum Producers told the Post.
But, as ExxonMobil's Alan Jeffers notes, the experience in the Orphan Basin demonstrates that working offshore Newfoundland "really does require high levels of technical and financial capability to explore for and produce in those harsh environments."
The major reason for this decision is the availability of the rig Eirik Raude given other demands on the rig in the Gulf of Mexico. It isn't about the investment climate, as Paul Barnes of the Canadian Association of Petroleum Producers told the Post.
But, as ExxonMobil's Alan Jeffers notes, the experience in the Orphan Basin demonstrates that working offshore Newfoundland "really does require high levels of technical and financial capability to explore for and produce in those harsh environments."
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.''
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.''
Oil and gas: the impact of opportunities missed
1. From CBC television's Here and Now, this report by David Cochrane [ram file], as we come up on the first anniversary of the collapse of the Hebron negotiations.
2. Then there's a luncheon talk by The Business Post's Craig Westcott, Thursday March 29 at the Delta Hotel, St. John's, starting at 12:30 PM. Sponsored by NOIA. Title: "Weighing the cost of lost opportunities."
Interestingly enough Danny Williams spent part of question period in the legislature last week quoting from the Business Post about how wonderful things are in the local economy.
He'll probably be running around encouraging people to come out and hear what Craig has to say.
2. Then there's a luncheon talk by The Business Post's Craig Westcott, Thursday March 29 at the Delta Hotel, St. John's, starting at 12:30 PM. Sponsored by NOIA. Title: "Weighing the cost of lost opportunities."
Interestingly enough Danny Williams spent part of question period in the legislature last week quoting from the Business Post about how wonderful things are in the local economy.
He'll probably be running around encouraging people to come out and hear what Craig has to say.
Williams congratulates Charest
It's the neighbourly thing to do.
Premier Danny Williams made no observation - at least in the short news release - on the accuracy or inaccuracy of his previous comments on Quebec's supposed volatile provincial political climate.
Premier Danny Williams made no observation - at least in the short news release - on the accuracy or inaccuracy of his previous comments on Quebec's supposed volatile provincial political climate.
Cdn foreign spy agency on backburner
The Conservative promise to create a foreign intelligence agency for Canada has apparently slipped down the government's list of priorities, according to the Globe and Mail.
It's also supported by the legislation governing the security intelligence agency.
Moreover, CSIS [the Canadian Security Intelligence Agency] has convinced Public Safety Minister Stockwell Day that it is able to do more spying abroad than it has in the past without the trouble of asking for parliamentary approval to start up a new agency.That assessment is apparently supported by the Prime Minister's security advisor.
It's also supported by the legislation governing the security intelligence agency.
Charest hangs onto minority
Among the implications: Danny Williams will almost certainly be forced to work around Quebec and look at no profit or reduced profit.
Of course, Williams has already decided to do anything but sell power to Quebec. He's also said government is seriously considering deferring revenues (read sell power at cost or a miniscule profit) until at least 2041.
There will be much talk - as there has been already - of thinking in the long-term. That's just code for "We've boxed ourselves into a corner and the only way out is to spend your money, taxpayer."
If Joe Smallwood were alive today, he'd be focussed on 2041 too, just Dean MacDonald and Danny Williams are right now. He be calling the below cost power price a case of "deferred revenue".
There was the potential for a Lower Churchill development that made money.
It's been gone since the Premier rejected out-of-hand the joint Ontario/Quebec proposal.
Meanwhile, to get to some serious stuff on the Quebec general election:
1. Big Loser: the PQ.
2. The Big Loser: Jean Charest.
3. Meanwhile, across the river from Hull... expect the Harper minority government to look for a spring general election. There's no link. It's just a suggestion.
Of course, Williams has already decided to do anything but sell power to Quebec. He's also said government is seriously considering deferring revenues (read sell power at cost or a miniscule profit) until at least 2041.
There will be much talk - as there has been already - of thinking in the long-term. That's just code for "We've boxed ourselves into a corner and the only way out is to spend your money, taxpayer."
If Joe Smallwood were alive today, he'd be focussed on 2041 too, just Dean MacDonald and Danny Williams are right now. He be calling the below cost power price a case of "deferred revenue".
There was the potential for a Lower Churchill development that made money.
It's been gone since the Premier rejected out-of-hand the joint Ontario/Quebec proposal.
Meanwhile, to get to some serious stuff on the Quebec general election:
1. Big Loser: the PQ.
2. The Big Loser: Jean Charest.
3. Meanwhile, across the river from Hull... expect the Harper minority government to look for a spring general election. There's no link. It's just a suggestion.
26 March 2007
Danny Williams on Harper and Equalization
From CBC Radio Morning Show, Premier Danny Williams speaks with host Jeff Gilhooly.
Among Williams' choice comments: The Equalization formula with a cap was a case of federal bureaucrats convincing "weak-kneed" federal politicians to shaft Newfoundland and Labrador.
This has got to be the first time anyone accused Harper of being a wuss and keeping a straight face.
Among Williams' choice comments: The Equalization formula with a cap was a case of federal bureaucrats convincing "weak-kneed" federal politicians to shaft Newfoundland and Labrador.
This has got to be the first time anyone accused Harper of being a wuss and keeping a straight face.
25 March 2007
Responsible government not their concern
The Bloc-head mentality is spreading in Newfoundland and Labrador and it does so to our collective detriment.
A few years ago, then-Premier Roger Grimes suggested the way forward for the province lay with electing a group of members to the federal parliament (MPs) who had nothing as their goal save bringing back the maximum level of booty from Ottawa.
The same idea, now called electing "independent" MPs, is getting more support in the wake of the latest federal budget.
Proponents of this idea can only claim is that prime minister Stephen Harper "broke his promise" to remove non-renewable resource revenues from calculations of Equalization entitlements.
Not a single one - including Premier Danny Williams - has been able to state clearly and simply how the federal budget proposals will adversely affect Newfoundland and Labrador.
Not a one.
Of course, facts have never bothered the purveyors of the victim mythology in Newfoundland and Labrador politics. They charge ahead undaunted.
If Newfoundlanders and Labradorians were genuinely concerned for the betterment of their province, then they would reject out of hand the views of columnists like Bob Wakeham and Peter Jackson, both of the Telegram, for example.
Wakeham's effort is little more than series of hideously inaccurate and inappropriate references to Newfoundland and Labrador as a battered wife. It is devoid of anything substantive, unless one already is persuaded of the view that the people of this province are perennial victims, incapable of running their own government either in the province or as part of the federal government.
Jackson's effort is not a direct endorsement of the Bloc-head party but it does use the warmed over myths of victimization.
The problem with Jackson's comment on the 1985 Atlantic Accord is that it is completely wrong.
The 1985 agreement provided Newfoundland and Labrador with the ability to set and collect its own revenues from offshore oil as if it was on land and therefore entirely within provincial jurisdiction. The Accord provided the province with co-management rights and in most cases, control over development. Look at the Hebron and Hibernia South projects as proof that Newfoundland and Labrador controls offshore development.
The original deal also provided temporary declining Equalization offsets. The deal worked exactly as intended. The intended spirit was honoured in its entirety.
All this makes plain the hypocrisy of Wakeham's final sentences:
If Newfoundlanders and Labradorians were interested in the betterment of their province, they'd reject out-of-hand the tired presentations of journalists like Wakeham and Jackson.
After all, if Newfoundlanders and Labradorians want to stop being treated not just like sixth graders but like ignoramuses, why not start at home?
That would be the first move to recalling that in 1949, we gained responsible government. Too bad many opinion leaders in the province, politicians and journalists, seem bent on promoting the opposite form of government.
A few years ago, then-Premier Roger Grimes suggested the way forward for the province lay with electing a group of members to the federal parliament (MPs) who had nothing as their goal save bringing back the maximum level of booty from Ottawa.
The same idea, now called electing "independent" MPs, is getting more support in the wake of the latest federal budget.
Proponents of this idea can only claim is that prime minister Stephen Harper "broke his promise" to remove non-renewable resource revenues from calculations of Equalization entitlements.
Not a single one - including Premier Danny Williams - has been able to state clearly and simply how the federal budget proposals will adversely affect Newfoundland and Labrador.
Not a one.
Of course, facts have never bothered the purveyors of the victim mythology in Newfoundland and Labrador politics. They charge ahead undaunted.
If Newfoundlanders and Labradorians were genuinely concerned for the betterment of their province, then they would reject out of hand the views of columnists like Bob Wakeham and Peter Jackson, both of the Telegram, for example.
Wakeham's effort is little more than series of hideously inaccurate and inappropriate references to Newfoundland and Labrador as a battered wife. It is devoid of anything substantive, unless one already is persuaded of the view that the people of this province are perennial victims, incapable of running their own government either in the province or as part of the federal government.
Jackson's effort is not a direct endorsement of the Bloc-head party but it does use the warmed over myths of victimization.
In Mulroney’s day, keeping the Hibernia project afloat was a major battle in itself. When Gulf Canada pulled out of the Hibernia consortium in 1990, then-cabinet minister John Crosbie and others convinced Ottawa to take an 8.5 per cent equity share. This was achieved against a backdrop of relentless criticism of government involvement in such a high-risk project, most notably from West Coast oil analyst Ian Doig.
The subsequent Liberal government reaped the benefits of this inheritance while steadfastly refusing to restore the intended spirit of the Atlantic Accord, i.e., affording maximum benefits of offshore oil to the province without equalization clawbacks.
The problem with Jackson's comment on the 1985 Atlantic Accord is that it is completely wrong.
The 1985 agreement provided Newfoundland and Labrador with the ability to set and collect its own revenues from offshore oil as if it was on land and therefore entirely within provincial jurisdiction. The Accord provided the province with co-management rights and in most cases, control over development. Look at the Hebron and Hibernia South projects as proof that Newfoundland and Labrador controls offshore development.
The original deal also provided temporary declining Equalization offsets. The deal worked exactly as intended. The intended spirit was honoured in its entirety.
All this makes plain the hypocrisy of Wakeham's final sentences:
And, as well, letting the country know Newfoundlanders are quite capable of taking care of themselves.The entire basis of Wakeham's argument is that Newfoundlanders and Labradorians cannot take care of themselves. He absolves the provincial government - successively and of any political stripe - of having any responsibility for any decisions at all, let alone for running the economy of Newfoundland and Labrador.
That they’re not to be treated like sixth-graders.
That they know all about responsibility.
And integrity.
If Newfoundlanders and Labradorians were interested in the betterment of their province, they'd reject out-of-hand the tired presentations of journalists like Wakeham and Jackson.
After all, if Newfoundlanders and Labradorians want to stop being treated not just like sixth graders but like ignoramuses, why not start at home?
That would be the first move to recalling that in 1949, we gained responsible government. Too bad many opinion leaders in the province, politicians and journalists, seem bent on promoting the opposite form of government.
Separate or join Quebec: Rowe's idiocy knows no bounds
Mark Watton's got a decent take on Bill Rowe's latest anti-Confederate ramblings in the Telegram.
Rowe's talk about separation is just so much hot air.
Only a few short weeks ago Rowe was seriously arguing that since Newfoundland and Labrador has had such a hard time of it as a part of a federal state, instead the whole place should unite with Quebec and leave Canada.
Forget the leave Canada part, Rowe, who spends about as much time pissing on Quebec as he does at Ottawa seems to think the real answer to all the local woes would be to give up self-government entirely and be run from Quebec City.
Rowe is a former cabinet minister and Rhodes scholar.
And then people wonder why some of us despair for the state of our educational system and government.
Rowe's talk about separation is just so much hot air.
Only a few short weeks ago Rowe was seriously arguing that since Newfoundland and Labrador has had such a hard time of it as a part of a federal state, instead the whole place should unite with Quebec and leave Canada.
Forget the leave Canada part, Rowe, who spends about as much time pissing on Quebec as he does at Ottawa seems to think the real answer to all the local woes would be to give up self-government entirely and be run from Quebec City.
Rowe is a former cabinet minister and Rhodes scholar.
And then people wonder why some of us despair for the state of our educational system and government.
23 March 2007
Our man in a Blue Line cab
In the House of Assembly Thursday, opposition House leader Kelvin Parsons asked questions about the role being played by the provincial government's representative in Ottawa in developing a productive relationship with the federal government.
For the record, here's the response from intergovernmental affairs minister John Ottenheimer. The best thing Ottenheimer could come up with was that Fitz travelled around with visiting ministers.
On the back of the government business cards, it must read: "When in Ottawa, ride with Fitz in a Blue Line taxi."
A doctoral degree in history and the guy's a tour guide?
Surely goodness Ottenheimer could give us a better explanation than that. Then he would have avoided Parson's rejoinder - obviously scripted - about Dr. Feelgood's limousine service.
Incidentally, for those who are curious, Fitzgerald's phone number is listed in the government phone directory under the Premier's Office, not the intergovernmental affairs secretariat where bureaucrats normally work.
Fitz's job is obviously all political, so all that business about ducking interviews because he is a public servant are just a tad overdone.
For the record, here's the response from intergovernmental affairs minister John Ottenheimer. The best thing Ottenheimer could come up with was that Fitz travelled around with visiting ministers.
On the back of the government business cards, it must read: "When in Ottawa, ride with Fitz in a Blue Line taxi."
Ottenheimer: I have no idea, Mr. Speaker, where the hon. member gets his information. Dr. Fitzgerald plays a very significant role, a role of importance, representing the Office of the Premier, representing the Government of Newfoundland and Labrador, and representing the people of Newfoundland and Labrador, in Ottawa.That's got be the most expensive taxi hailer on the planet.
Mr. Speaker, in addition to that, when any minister travels to Ottawa to meet with his or her federal counterpart, he is at all times accompanied by Dr. Fitzgerald. In fact, only two or three weeks ago I travelled to Ottawa. I met with three or four of my federal colleagues, and on each occasion I was accompanied by the good doctor; so, I say to the hon. member, what he is saying is completely irrelevant. It is not in any way representative of the truth. He plays a very significant role of importance on behalf of the people of this Province.
A doctoral degree in history and the guy's a tour guide?
Surely goodness Ottenheimer could give us a better explanation than that. Then he would have avoided Parson's rejoinder - obviously scripted - about Dr. Feelgood's limousine service.
Incidentally, for those who are curious, Fitzgerald's phone number is listed in the government phone directory under the Premier's Office, not the intergovernmental affairs secretariat where bureaucrats normally work.
Fitz's job is obviously all political, so all that business about ducking interviews because he is a public servant are just a tad overdone.
Williams set local oil patch back 25 years
That's the view of one local oil industry executive who wished to remain anonymous in comments in The Telegram.
In the House of Assembly, Danny Williams dismissed the executive's comments as cowardly, since the individual did not wish to be named.
If the individual had let his name be used, what are the odds Williams would have laucnhed into a personal attack on the guy?
No takers on that bet?
One offshore industry executive said the delay could cost hundreds of offshore jobs.The rest of the Moira Baird story is on the slowdown in drilling offshore Newfoundland the consequent job losses.
“It’s extremely disappointing,” said the executive, who did not want to be named.
“The net loss of jobs … could be up to 500 jobs.”
Those jobs include full-time rig crews, offshore supply boat crews, divers, well logging and testing personnel, weather observers and caterers.
“With no energy plan in place, no gas royalty regime in place, no Hibernia South, no Hebron and now no exploration activity — when are we going to see this industry develop?”
Another industry executive, who also didn’t want to be named, pegged the payroll loss of a rig, such as the Eirik Raude, at more than $1 million per month.
“It’s grossly disappointing.”
The executive also levelled criticism at Premier Danny Williams, saying he has set back the province’s offshore industry by 25 years.
That process started, said the executive, with the loss of the Hebron project and Hibernia South, and continues with the lack of a natural gas royalty regime to kick-start gas exploration by companies like ConnocoPhillips.
“As far as everyone is concerned globally, we’re not open for business. No one wants to deal with him,” said the executive.
“All he does is fight. The business community here is sick of it.”
In the House of Assembly, Danny Williams dismissed the executive's comments as cowardly, since the individual did not wish to be named.
If the individual had let his name be used, what are the odds Williams would have laucnhed into a personal attack on the guy?
No takers on that bet?
For the record: Danny Williams on federal provincial relations
It's amazing how times change.
Danny Williams used to believe that vicious personal attacks are no use.
From 2003, before he got elected, Danny Williams sang a very different tune from the one that has him branded today:
____________________________________________
Williams touts national trek: Similar Grimes' trip failed because premier 'didn't do his homework'
By: Barb Sweet
The Telegram (St. John's)
Saturday, October 11, 2003
Page: A1
If Tory Leader Danny Williams were premier, he would massage provincial-federal relations. But if that didn't work, he'd launch a national marketing campaign and try to get other premiers to back Newfoundland and Labrador's cause.
"If they're not going to be fair to us, then I would basically launch a national marketing campaign to let people know exactly what the story is in Newfoundland and Labrador, how there is unfairness and I would lobby the premiers right across the country," the election front-runner said in an interview this week.
SOUNDS FAMILIAR
But wait -- isn't that what Premier Roger Grimes tried and failed to do this past summer with his cross-Canada trek, trying to sell the province's case to his fellow premiers? Hasn't the province been there and done that?
Angered by the latest fisheries closure, Grimes vowed to push for a constitutional amendment to allow joint federal-provincial management of the fishery.
But it fizzled when the other premiers didn't seem all that interested and he agreed to work jointly on a "rebuilding and recovery" program for the cod, which fell short of his goal for joint management of fisheries in waters adjacent to the coast of Newfoundland and Labrador.
Williams said in an interview this week that Grimes' problem was he took the wrong tack.
"Roger Grimes didn't do his homework. He picked up and said 'I'm going to go and see if I can't get constitutional reform.' What I would be doing is I would be talking to (Prince Edward Island Premier) Pat Binns and (Nova Scotia Premier) John Hamm and (New Brunswick Premier) Bernard Lord and (Ontario Premier) Dalton McGuinty and (Alberta Premier Ralph) Klein and say 'Look now, here's our situation, here's our case.' And I'd have the homework done in advance," Williams said.
"These are all premiers, they advocate for their own provinces, but I think they're fair and they can understand. It's easy for the federal government to stand back and take the Mother Ottawa approach and say 'Well, I'm going to be good to Ontario, I'm going to be good to Quebec and all the rest don't count.'"
But before he'd do all that, Williams is counting on a new regime under Paul Martin, Prime Minister Jean Chretien's uncrowned successor, to help smooth the waters. He's also planning on fostering a more congenial relationship with Ottawa and said he won't fight with the federal MPs from the province, regardless of their political stripe. [Emphasis added]
The Tory platform promises a Newfoundland and Labrador office of provincial-federal relations to be set up in Ottawa.
Williams blames Grimes for taking a hostile approach, waging war with MPs -- even his own Liberal counterparts like, federal cabinet minister Gerry Byrne -- as well as with Ottawa. [Emphasis added]
Williams would only go to war if Ottawa doesn't play ball.
"The politics of the personal attack doesn't work. I'm going to nurture -- if an MP happens to be a Tory or a Liberal or an NDP -- it's not going to make any difference to me. They're Newfoundlander and Labradorian representatives and we need to work together," Williams said. [Emphasis added]
He points to the all-party committee on the fishery, saying Grimes broke ranks and that's why the province didn't get Ottawa to change its mind on closing the Gulf and the northeast coast fishery.
Williams insists he's a better negotiator and would have gotten a better deal on the province's resources, such as oil, Voisey's Bay and the yet-to-be-completed Lower Churchill negotiations.
Williams' comments came in an interview about his infrastructure platform.
He's embarking on a lofty crusade to improve rural infrastructure, including roads, ferries, Internet and air links, the province's highways and sewage and drinking-water systems. The platform also calls for a fixed link across the Straight of Belle Isle. He also proposes to grapple with mounting school and hospital infrastructure woes that get placed on the backburner due to a system already taxed by program and service delivery demands.
Recent stories on hospital and school board submissions for capital repairs and upgrades revealed schools boards need $60 million to patch leaky roofs, repair rotting floors and cure air-quality problems. That list is getting compounded every year. In this fiscal year's budget, the province allocated a $3.5-million contingency fund for school maintenance and repairs and $3.3 million for capital construction.
Hospitals need $20 million for similar problems and that's just for this year. Each board, however, is getting just a handful of items on its list approved -- a fraction of what's needed.
Adequate infrastructure, Williams said, is key to bringing businesses and industry to Newfoundland, particularly rural Newfoundland.
"This government and the previous governments over the last 10-15 years have allowed our infrastructure to deteriorate to the point now where the job's getting much bigger to do," Williams said.
Like the Liberals, he's talking about using the provincial fuel tax to fix roads. But Williams is also counting on hammering out a new federal-provincial roads agreement and achieving a better equalization formula and an end to clawbacks from Ottawa to help fund the improvements. He would promise Martin if the clawback on the province's increasing revenues was eliminated, the funds would go directly into infrastructure.
"In other words, 'Paul Martin, if you can give us those funds, we'll put them directly into infrastructure. We won't put them into tax cuts, we won't put them into anything else. We will make a commitment to you and guarantee you that's where they'll go.'"
Other premiers have tried and failed to negotiate a better fiscal deal with Ottawa.
"If they don't accept the rational approach, based on planning and fairness, then we have to consider whether or not they're our true partners in Confederation, whether they are our friends, whether they are being reasonable with us," Williams said.
Danny Williams used to believe that vicious personal attacks are no use.
From 2003, before he got elected, Danny Williams sang a very different tune from the one that has him branded today:
____________________________________________
Williams touts national trek: Similar Grimes' trip failed because premier 'didn't do his homework'
By: Barb Sweet
The Telegram (St. John's)
Saturday, October 11, 2003
Page: A1
If Tory Leader Danny Williams were premier, he would massage provincial-federal relations. But if that didn't work, he'd launch a national marketing campaign and try to get other premiers to back Newfoundland and Labrador's cause.
"If they're not going to be fair to us, then I would basically launch a national marketing campaign to let people know exactly what the story is in Newfoundland and Labrador, how there is unfairness and I would lobby the premiers right across the country," the election front-runner said in an interview this week.
SOUNDS FAMILIAR
But wait -- isn't that what Premier Roger Grimes tried and failed to do this past summer with his cross-Canada trek, trying to sell the province's case to his fellow premiers? Hasn't the province been there and done that?
Angered by the latest fisheries closure, Grimes vowed to push for a constitutional amendment to allow joint federal-provincial management of the fishery.
But it fizzled when the other premiers didn't seem all that interested and he agreed to work jointly on a "rebuilding and recovery" program for the cod, which fell short of his goal for joint management of fisheries in waters adjacent to the coast of Newfoundland and Labrador.
Williams said in an interview this week that Grimes' problem was he took the wrong tack.
"Roger Grimes didn't do his homework. He picked up and said 'I'm going to go and see if I can't get constitutional reform.' What I would be doing is I would be talking to (Prince Edward Island Premier) Pat Binns and (Nova Scotia Premier) John Hamm and (New Brunswick Premier) Bernard Lord and (Ontario Premier) Dalton McGuinty and (Alberta Premier Ralph) Klein and say 'Look now, here's our situation, here's our case.' And I'd have the homework done in advance," Williams said.
"These are all premiers, they advocate for their own provinces, but I think they're fair and they can understand. It's easy for the federal government to stand back and take the Mother Ottawa approach and say 'Well, I'm going to be good to Ontario, I'm going to be good to Quebec and all the rest don't count.'"
But before he'd do all that, Williams is counting on a new regime under Paul Martin, Prime Minister Jean Chretien's uncrowned successor, to help smooth the waters. He's also planning on fostering a more congenial relationship with Ottawa and said he won't fight with the federal MPs from the province, regardless of their political stripe. [Emphasis added]
The Tory platform promises a Newfoundland and Labrador office of provincial-federal relations to be set up in Ottawa.
Williams blames Grimes for taking a hostile approach, waging war with MPs -- even his own Liberal counterparts like, federal cabinet minister Gerry Byrne -- as well as with Ottawa. [Emphasis added]
Williams would only go to war if Ottawa doesn't play ball.
"The politics of the personal attack doesn't work. I'm going to nurture -- if an MP happens to be a Tory or a Liberal or an NDP -- it's not going to make any difference to me. They're Newfoundlander and Labradorian representatives and we need to work together," Williams said. [Emphasis added]
He points to the all-party committee on the fishery, saying Grimes broke ranks and that's why the province didn't get Ottawa to change its mind on closing the Gulf and the northeast coast fishery.
Williams insists he's a better negotiator and would have gotten a better deal on the province's resources, such as oil, Voisey's Bay and the yet-to-be-completed Lower Churchill negotiations.
Williams' comments came in an interview about his infrastructure platform.
He's embarking on a lofty crusade to improve rural infrastructure, including roads, ferries, Internet and air links, the province's highways and sewage and drinking-water systems. The platform also calls for a fixed link across the Straight of Belle Isle. He also proposes to grapple with mounting school and hospital infrastructure woes that get placed on the backburner due to a system already taxed by program and service delivery demands.
Recent stories on hospital and school board submissions for capital repairs and upgrades revealed schools boards need $60 million to patch leaky roofs, repair rotting floors and cure air-quality problems. That list is getting compounded every year. In this fiscal year's budget, the province allocated a $3.5-million contingency fund for school maintenance and repairs and $3.3 million for capital construction.
Hospitals need $20 million for similar problems and that's just for this year. Each board, however, is getting just a handful of items on its list approved -- a fraction of what's needed.
Adequate infrastructure, Williams said, is key to bringing businesses and industry to Newfoundland, particularly rural Newfoundland.
"This government and the previous governments over the last 10-15 years have allowed our infrastructure to deteriorate to the point now where the job's getting much bigger to do," Williams said.
Like the Liberals, he's talking about using the provincial fuel tax to fix roads. But Williams is also counting on hammering out a new federal-provincial roads agreement and achieving a better equalization formula and an end to clawbacks from Ottawa to help fund the improvements. He would promise Martin if the clawback on the province's increasing revenues was eliminated, the funds would go directly into infrastructure.
"In other words, 'Paul Martin, if you can give us those funds, we'll put them directly into infrastructure. We won't put them into tax cuts, we won't put them into anything else. We will make a commitment to you and guarantee you that's where they'll go.'"
Other premiers have tried and failed to negotiate a better fiscal deal with Ottawa.
"If they don't accept the rational approach, based on planning and fairness, then we have to consider whether or not they're our true partners in Confederation, whether they are our friends, whether they are being reasonable with us," Williams said.
NS joins Harper Equalization plan
The Nova Scotia government has opted to accept the Harper Equalization plan.
However this CBC story contains a glaring factual error that needs to be corrected.
The feds have given Nova Scotia a one year grace period in which to take the Equalization option that gives the province the greatest return.
Meanwhile in Newfoundland and Labrador, the provincial government continues to moan about the whole Equalization business without demonstrating that the province has lost anything at all. The radio call-ins shows are full of complaints and talk of separation but not a single caller so far - including the Premier's parliamentary secretary and several cabinet ministers - could make any factual statements.
However this CBC story contains a glaring factual error that needs to be corrected.
This means the province will no longer have control of offshore oil profits, but it said it chose the short-term federal funding to avoid tax increases and program cuts.Sheer bunk. The Nova Scotia government sets and collects its own offshore revenues. It controls them now and it will continue to control them as long as its accord with Ottawa (from the 1980s) remains in place.
The feds have given Nova Scotia a one year grace period in which to take the Equalization option that gives the province the greatest return.
Meanwhile in Newfoundland and Labrador, the provincial government continues to moan about the whole Equalization business without demonstrating that the province has lost anything at all. The radio call-ins shows are full of complaints and talk of separation but not a single caller so far - including the Premier's parliamentary secretary and several cabinet ministers - could make any factual statements.
Subscribe to:
Posts (Atom)