Some video for Friday, the stuff that will set you thinking. Set you thinking that is, if you go here first.
Alanis' send-up of the Black Eyed Peas is funny.
But notice that you can really hear the lyrics and that is what will animate the link for you.
06 April 2007
05 April 2007
Queen's cowboys in another mess
This case will surely reach the Supreme Court of Canada.
Apparently the Mounted Police spokesperson is referring to this 1999 Supreme Court of Canada case, which on the face of it does not involve comparable circumstances.
The woman involved, who had mistakenly dialed 911 instead of 411 met officers on the front porch and while she denied them access to her private residence - as is her common law right - the attending could easily ascertain that there was nothing untoward occurring. Well, at least that's what the couple pursuing the lawsuit will contend.
The police will likely invoke the spectre of child porn and whatever other horrors might theoretically be going on in the residence in an effort to line up their actions with the reasoning laid out in the case law, including the 1999 SCC decision.
For a quickie summary of police detention powers, take a gander at this lucidity written piece.
Too bad the police didn't read this little summary provided by a law enforcement association in 2001 to British Columbia police officers.
Lawyers out there may wish to offer some insights.
Apparently the Mounted Police spokesperson is referring to this 1999 Supreme Court of Canada case, which on the face of it does not involve comparable circumstances.
The woman involved, who had mistakenly dialed 911 instead of 411 met officers on the front porch and while she denied them access to her private residence - as is her common law right - the attending could easily ascertain that there was nothing untoward occurring. Well, at least that's what the couple pursuing the lawsuit will contend.
The police will likely invoke the spectre of child porn and whatever other horrors might theoretically be going on in the residence in an effort to line up their actions with the reasoning laid out in the case law, including the 1999 SCC decision.
For a quickie summary of police detention powers, take a gander at this lucidity written piece.
Too bad the police didn't read this little summary provided by a law enforcement association in 2001 to British Columbia police officers.
Lawyers out there may wish to offer some insights.
R'uh R'oh
Premier Danny Williams may have given the Auditor General extra staff to shift the focus of his review of the House of Assembly spending scandal, but John Noseworthy is peeved about lack of access to documents to conduct a review of the fibreoptic deal.
This story, on top of Wade Locke's assessment of the Equalization racket, would make for as uncomfortable a weekend as he's spent since taking office.
We can expect to hear the moaning when he gets back.
And for the record, there is no truth to the rumour that Williams has hired a former senior DND official with experience in shagging up the Somalia inquiry to liaise with Noseworthy on this and other files.
In a scathing letter to Innovation, Trade and Rural Development Minister Trevor Taylor this week, auditor general John Noseworthy says his office still has not been provided with all necessary information.Good thing Danny's gone on vacation.
Noseworthy said he has identified documentation that has not been turned over by the government, and as a result, “it is becoming increasingly difficult for me to have any confidence in this process.”
This story, on top of Wade Locke's assessment of the Equalization racket, would make for as uncomfortable a weekend as he's spent since taking office.
We can expect to hear the moaning when he gets back.
And for the record, there is no truth to the rumour that Williams has hired a former senior DND official with experience in shagging up the Somalia inquiry to liaise with Noseworthy on this and other files.
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Wanted: big player with deep pockets
The new refinery proposed for the top of Placentia Bay needs at least one major backer with deep pockets.
Upodate: the original corporate news release.
The backers of a new refinery on the Newfoundland coast say the US$4.6-billion project will likely only succeed if a large international oil player steps up as a partner.From the Financial Post.
Upodate: the original corporate news release.
-30-
A rejoinder to the local fisheries myth-mongers
From Offal News, with chunks from Jeffrey Simpson's column.
We have at our disposal the policies to correct problems in the fishery.
Local myth-mongers simply refuse to change.
We have at our disposal the policies to correct problems in the fishery.
Local myth-mongers simply refuse to change.
-30-
Rejected license plate
The daily e-mails yeilded this mock-up of a rejected provincial license plate.
This one has a special meaning for your humble e-scribbler.
(h/t to Donny, via e-mail, whoever you are)
Update: The photograph of a sample license plate - HMV 049 - that accompanied the original news release has been replaced by the comms people at Confederation Building. It now leads to a drawing of the license plate.
Too late.
The license plate will be morphed as many times as the triffid logo was back when that fiasco was unveiled.
This one has a special meaning for your humble e-scribbler.
(h/t to Donny, via e-mail, whoever you are)Update: The photograph of a sample license plate - HMV 049 - that accompanied the original news release has been replaced by the comms people at Confederation Building. It now leads to a drawing of the license plate.
Too late.
The license plate will be morphed as many times as the triffid logo was back when that fiasco was unveiled.
-30-
Another Dan-didate?
Walter Noel, left, is a former provincial Liberal cabinet minister and a former federal Liberal candidate.On Open Line with Randy Simms this morning, Noel said he had written the Premier suggesting the province commission a report to look at the economics of Confederation and show how Newfoundland and Labrador hasn't been receiving its "fair share" or getting "fair treatment".
Noel claimed that the 2002 Airing of Grievances didn't produce such a report.
Well, not exactly.
There is a report titled "Newfoundland and Labrador: Towards an Assessment of the Benefits of the Canadian Economic Union."
Here's the executive summary:
This report was commissioned by the Royal Commission on Renewing and Strengthening our Place in Canada to provide information regarding the economic, fiscal and other benefits to Canada and to Newfoundland and Labrador of the province’s presence in the federation.
In 1949, Newfoundland and Labrador joined Canada to secure a brighter economic future for itself – and its new country. In the ensuing half century, Newfoundland and Labrador has certainly become wealthier but has struggled to keep pace economically with the rest of the country and with its trading partners. Perhaps unfairly, the province has too often been characterized as a place with no jobs and dependent upon the transfer payments it became entitled to upon Confederation.
A region’s growth involves at least four kinds of external relationships: (i) trade, or the import and export of goods and services; (ii) migration of people, both in their capacity as consumers and in their capacity as workers; (iii) interregional “migration” of other production factors, notably investment capital; and (iv) the national government’s revenue collection and expenditure in the region. This report examines the current state and evolution of each of these external relationships and in doing so provides information to help assess the benefits to Newfoundland and Labrador from the Canadian economic union.
Fiscal Benefits
This report finds that the federal government’s net spending in the province has not been a major factor in the overall national fiscal position. Newfoundland and Labrador’s size meant that more populous provinces receive substantially larger sums of federal money and have a larger impact on the federal government’s overall fiscal position.
Federal spending in Newfoundland and Labrador has declined over the last few years. In fact federal spending in Newfoundland and Labrador as a share of spending throughout the country has fallen 0.5% over the last decade – the largest decline of any province – while over the same period Ontario and British Columbia have seen their share of Federal spending rise.
Trade Benefits
The rest of Canada has and continues to benefit from the economic union by exporting goods and services to Newfoundland and Labrador. Companies in Ontario and Quebec have benefi ted the most from trade with Newfoundland and Labrador. While consumers in Newfoundland and Labrador have benefited from lower prices for imported goods and services since Confederation, it is only now that Newfoundland and Labrador businesses are starting to see a significant increase in their benefit from the domestic market.
Investment in the development of the province’s major oil projects will continue to support high levels of imports for a few years. The production from these projects will, however, start to generate substantial export revenue and help push the trade balance towards a surplus position.
Labour Benefits
People from Newfoundland and Labrador can be found across the country making significant contributions to their local economy. This study estimated that for every 10 current residents in Newfoundland and Labrador, there are 4 people born in the province that are now living elsewhere in Canada. By moving to fill jobs required in the rest of Canada, the Newfoundland and Labrador labour force has acted to reduce labour market disruptions caused by labour shortages in other provinces. The current study estimates that a flow of workers to other provinces the amount of which is equal in size to the number of people born in Newfoundland and Labrador but now resident in other provinces would reduce competitiveness and economic
performance leading to a $1.1 billion reduction in the federal government surplus. The latter amount is equal to about 40% of the current federal deficit in the province.
The loss of these people has, however, been at best a mixed blessing to Newfoundland and Labrador. The loss of productive workers and their associated demand depresses economic activity – but it does reduce competition for jobs for those that remain.
Natural Resource Benefits
For the last forty years investment capital has been concentrated in the development of the province’s natural resources. While these projects have brought jobs and income there are lingering questions about whether the province receives an appropriate return on its natural resource wealth.
The impact of the Churchill Falls hydro-electric power contract with Hydro Quebec is significant. The loss in real provincial GDP (1997 dollars) was estimated to be between $1,500 and $3,000 a person each year throughout the 1990s and – even at the lower end of the range – would be enough to pull Newfoundland and Labrador ahead of both Nova Scotia and New Brunswick in terms of per capita GDP. The benefits to Quebec’s economy have been equally large – supporting the development of a powerful manufacturing sector and providing windfall gains on their electricity exports. The situation has, up to now, stalled the development of hydro-electric resources that would reduce Canada’s dependence on fossil fuels and help us meet our greenhouse gas emissions targets.
The Government of Newfoundland and Labrador appears to collect, at best, a modest return on its natural resource assets.
• The high costs of development and exploration mean that the province collects about one eighth the revenue per barrel of oil that Alberta does. This low revenue rate, combined with a comparatively short lifespan for the projects, means that Newfoundland and Labrador will not benefit from this resource to the same extent that the other oil producing provinces have.
• Provincial revenues from other mining activity are similar to those in other provinces. The more critical issue for this sector is to process the minerals locally. The recent agreement on development at Voisey’s Bay should help the province benefi t in a more significant way from this resource.
• Provincial revenues from the forestry sector are the second lowest in the country. The benefit from this resource appears to accrue to the owners of the province’s pulp and paper mills.
Appropriate natural resources policies are extremely hard to define. Ideally, the province should capture a larger share of the economic rent from its natural resources to help ensure a more prosperous future. The analysis in this report, although limited in scope, would appear to support a review of the province’s natural resources policies.
Other Benefits
Confederation brought a host of other benefits to Canada. The new province helped “complete” the country from coast to coast to coast. While politically Confederation prevented Newfoundland and Labrador from slipping into the United States orbit it has not inhibited the province’s strategic importance to continental defence. By adding 406,000 square kilometres of land to the country, Canada gained a wealth of natural resources and dramatically extended its coastline. As a result, the adoption of the 200 nautical mile limit allowed Canada to add 1,826,000 square kilometers of offshore waters to its territory with access to all the riches of the Atlantic Ocean. This physical enlargement also provided a new shipping outlet on the Atlantic sea lanes with St. John’s harbour and Gander airport is an important waypoint for
international flights.
Finally, the people of Newfoundland and Labrador have not only contributed economically to the success of the rest of the country but have also enriched the culture of the nation through the work of its writers, artists, performers and politicians. The province also enriches our history as the site of the first European settlers in North America.
This report has explored some of the dimensions of the Canadian economic union and
Newfoundland and Labrador’s relationship with it. In 1949, a small economy became part of a larger economy. This action entailed the creation of a customs union for the movement of goods, services and capital; the removal of barriers to labour movement; and the reduction of non tariff barriers. The process of adjustment to these changes has defined economic development in the province since Confederation. With the tumultuous decade of the 1990s behind it, Newfoundland and Labrador can now look forward to a period of sustained growth. The process of adjustment and integration is still ongoing and the policy choices made in St. John’s, Ottawa and the other provincial capitals will help determine how the benefits of the economic union affect the people of Newfoundland and Labrador.
Maybe Wally didn't read the report since it doesn't conclusively demonstrate that his preconceptions are valid.
Maybe he is planning on running as a Dan-didate either provincially or federally next time out.
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Equalization options, by the numbers
The link to Wade Locke's analysis, a Powerpoint slide show. [The link dispappeared. Here's a text version from the Newfoundland Quarterly]
Read it carefully.
Enjoy all the nice graphs and charts.
This is a goldmine is useful information, including a clear indication that those who seek to poor-mouth the provincial government's revenues are dead wrong.
Update: Here's the cbc.ca story. Unfortunately, the equally solid Telegram article isn't available on line.
Read it carefully.
Enjoy all the nice graphs and charts.
This is a goldmine is useful information, including a clear indication that those who seek to poor-mouth the provincial government's revenues are dead wrong.
Update: Here's the cbc.ca story. Unfortunately, the equally solid Telegram article isn't available on line.
-srbp-
Bad names for groups
Maybe it's an age thing, but when this headline popped up on the screen, your humble e-scribbler thought it was a bit odd for the tongue that walks like a man to be upset about car seats.Groups and companies need to think about their organizational names just a wee bit.
Mock Williams' promises ad circulates widely in NL
Bond Papers e-mail got bombed with this mock up of a print ad using Danny Williams' own "promises" approach against him.
Here it is.
Think we'll see more of these before October?
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Wade Locke: the story running nationally
Here's what Canadian Press is running on Wade Locke's Equalization assessment.
Note the variance from the numbers cited in the earlier post.
On the other hand, the O'Brien approach - trashed by the Premier and others - generates significant extra cash compared to the existing arrangement for Newfoundland and Labrador.
Note the variance from the numbers cited in the earlier post.
In the first try at crunching the numbers, Memorial University economist Wade Locke -- one of the province's leading experts on offshore revenue deals -- has found if Newfoundland were to stick with the Atlantic Accord and the old equalization formula until 2020, it would receive $18.5 billion in combined revenues.While the 100% exclusion might be better, if it is politically impossible, then it really doesn't exist.
But if the province follows an optimal strategy -- where it would leave the accord in 2009 and opt into a formula where a fiscal cap is implemented and 50 per cent of non-renewable natural resource revenues are included -- it would receive $24.1 billion, Locke said.
On the other hand, the O'Brien approach - trashed by the Premier and others - generates significant extra cash compared to the existing arrangement for Newfoundland and Labrador.
-30-
Locke on Equalization: Prelim views
Memorial University economist Wade Locke released his own assessment of the various Equalization options last night.
Danny-lovers will rush forward to back their man, irrespective of the facts.
The rest of us can approach the whole business a little more insightfully that the local jingoists.
When the presentation is available on line, Bond will link to it and do a more detailed assessment.
In the meantime, here is a thumbnail sketch courtesy of Bill Callahan's synopsis on Night Line and Simon Lono's debrief via telephone. Under the circumstances, details here may be off, so wait for the full report before jumping off a cliff.
1. The old Equalization system with the offshore deals - the one the province still has - will generate approximately $18 billion for the province over a period of time (to 2020 or thereabouts?).
2. If the province opted for the O'Brien formula (50% exclusion of all resource revenues with a cap), then it would gain $22.8 billion over the same period.
3. The Harper option (100% exclusion of non-renewables only) would come out at $28.6 billion over the same period.
A few preliminary observations:
- Danny Williams was dead wrong about O'Brien.
Like stone cold, in the ground, stake through the heart kinda dead wrong.
So wrong, that being wrong any other way would seem right in comparison.
He claimed it was going to cost the province money.
It does the opposite.
Big time opposite.
Makes ya wonder if Danny reads his briefing notes.
Makes ya wonder if he understands his briefing notes.
Makes ya wonder if he just makes stuff up as he goes along.
- 100% non-renewables out is the best of the three options (if you only look at how much cash it nets.). Never mind the fact, that it is politically unattainable. Contrary to Ken Boessenkool's 2001 assessment, this approach actually generates bags of cash for a province like Newfoundland and Labrador.
Again, never mind that it is politically unattainable.
Unreachable.
A pipe dream.
- Danny Williams will claim vindication. His fellow jingoists will now feel their cause is just. The rest of us will wonder why they are out in the cold screaming when what they want is unattainable.
- No one wants to recall that Williams' own policy was for 100% inclusion of all resource revenues.
There's that pesky wrong thing again.
- 100% inclusion plus the offshore offset deals is still a decent option. It generates cash in the bank to the tune of $18 billion. Nothing to sneeze at. All depends on whether you piss it out the door or actually invest money properly.
- Of course, Danny Williams doesn't want to talk about developing a debt management plan right now, i.e. running the province properly. He's too busy getting his mug on TV.
- Locke apparently didn't assess another option in front of the province, namely 100% exclusion of non-renewables with a cap. Forgotten in the Premier's irk-fest is the fact that the Harperites have actually put three different Equalization formulas in play.
- The province hasn't lost anything.
- The province isn't jammed up, as the Premier seems to suggest.
- The province can still play the choice game and come out with significant bags of cash ahead of where it is today.
- Why is Danny Williams persisting in his racket and committing provincial government policy to a partisan row at public expense?
Danny-lovers will rush forward to back their man, irrespective of the facts.
The rest of us can approach the whole business a little more insightfully that the local jingoists.
When the presentation is available on line, Bond will link to it and do a more detailed assessment.
In the meantime, here is a thumbnail sketch courtesy of Bill Callahan's synopsis on Night Line and Simon Lono's debrief via telephone. Under the circumstances, details here may be off, so wait for the full report before jumping off a cliff.
1. The old Equalization system with the offshore deals - the one the province still has - will generate approximately $18 billion for the province over a period of time (to 2020 or thereabouts?).
2. If the province opted for the O'Brien formula (50% exclusion of all resource revenues with a cap), then it would gain $22.8 billion over the same period.
3. The Harper option (100% exclusion of non-renewables only) would come out at $28.6 billion over the same period.
A few preliminary observations:
- Danny Williams was dead wrong about O'Brien.
Like stone cold, in the ground, stake through the heart kinda dead wrong.
So wrong, that being wrong any other way would seem right in comparison.
He claimed it was going to cost the province money.
It does the opposite.
Big time opposite.
Makes ya wonder if Danny reads his briefing notes.
Makes ya wonder if he understands his briefing notes.
Makes ya wonder if he just makes stuff up as he goes along.
- 100% non-renewables out is the best of the three options (if you only look at how much cash it nets.). Never mind the fact, that it is politically unattainable. Contrary to Ken Boessenkool's 2001 assessment, this approach actually generates bags of cash for a province like Newfoundland and Labrador.
Again, never mind that it is politically unattainable.
Unreachable.
A pipe dream.
- Danny Williams will claim vindication. His fellow jingoists will now feel their cause is just. The rest of us will wonder why they are out in the cold screaming when what they want is unattainable.
- No one wants to recall that Williams' own policy was for 100% inclusion of all resource revenues.
There's that pesky wrong thing again.
- 100% inclusion plus the offshore offset deals is still a decent option. It generates cash in the bank to the tune of $18 billion. Nothing to sneeze at. All depends on whether you piss it out the door or actually invest money properly.
- Of course, Danny Williams doesn't want to talk about developing a debt management plan right now, i.e. running the province properly. He's too busy getting his mug on TV.
- Locke apparently didn't assess another option in front of the province, namely 100% exclusion of non-renewables with a cap. Forgotten in the Premier's irk-fest is the fact that the Harperites have actually put three different Equalization formulas in play.
- The province hasn't lost anything.
- The province isn't jammed up, as the Premier seems to suggest.
- The province can still play the choice game and come out with significant bags of cash ahead of where it is today.
- Why is Danny Williams persisting in his racket and committing provincial government policy to a partisan row at public expense?
-30-
04 April 2007
Mid-week round-up
1. Even the nationalists are moving from Newfoundland and Labrador. Greg will be missed by many of us.
2. This piece on Scottish separatism has been getting plenty of hits over at Offal News.
3. Then there's this Offal News devastating critique of Danny Williams' comments on Tuesday about the offshore oil industry.
4. It only took a decade, but the federal government is finally building new offices and training facilities for the Canadian Forces at St. John's. The new facility will house CFS St. John's, as well as army, air force and communications reserve units and cadet units.
It's a$101 million capital project.
2. This piece on Scottish separatism has been getting plenty of hits over at Offal News.
3. Then there's this Offal News devastating critique of Danny Williams' comments on Tuesday about the offshore oil industry.
4. It only took a decade, but the federal government is finally building new offices and training facilities for the Canadian Forces at St. John's. The new facility will house CFS St. John's, as well as army, air force and communications reserve units and cadet units.
It's a$101 million capital project.
So why the delayed budget?
Normally, the provincial budget is tabled by the end of March.
This year it will come on April 26.
How come?
The decisions have certainly been made.
This and this are just the latest of a string of budget announcements for the new fiscal year.
This year it will come on April 26.
How come?
The decisions have certainly been made.
This and this are just the latest of a string of budget announcements for the new fiscal year.
Dulce et decorum est
From The Telegram:
"If there doesn't happen to be a job for someone in St. John's in an engineering firm, that's unfortunate. I'm not happy with that. But there has to be some price paid in the short term," [Premier Danny Williams] said.
Partisan abuse of AG even worse
The use of the AG's office for partisan purposes is worse than first thought.
Here's what Premier Danny Williams said to reporters, yesterday:
Notice, by the way, that in the past decade, Danny Williams himself has been in the House of Assembly either as Leader of the Opposition or as Premier for six years.
60% of the key period.
Whatever the Auditor General was originally going to do was directly relevant to judging the behaviour of all people seeking re-election. It's especially relevant to use detailed information to balance what those individuals knew and did with what they promised to do.
The Premier also said this:
Don't count on that level of disclosure.
After all, the Premier still hasn't come clean on what he knew about the the secret bonus cash, when.
And that's really the crux of the problem for the Premier.
He set the bar.
He should be judged against what undertakings he gave to the electorate.
What Clyde Wells did should be irrelevant. Danny Williams just made it germane.
He won't like the consequences of that comparison.
Weighed.
Measured.
Came up really short.
Here's what Premier Danny Williams said to reporters, yesterday:
If three quarters of the people who were reported on happen to be Tory, then — if that was the case and there was some negativity — there then it would be disproportionate to the Tories," Williams said.Even though the problems in the House started after 1997 (by the AG's own reports), Danny Williams wants to use a whole bunch of other members of the House, mostly Liberal, to try and counterbalance what happened over the past decade.
"If we do this over the complete period of time, it's a fair representation, because it's all relative."
Notice, by the way, that in the past decade, Danny Williams himself has been in the House of Assembly either as Leader of the Opposition or as Premier for six years.
60% of the key period.
Whatever the Auditor General was originally going to do was directly relevant to judging the behaviour of all people seeking re-election. It's especially relevant to use detailed information to balance what those individuals knew and did with what they promised to do.
The Premier also said this:
"If people are going to decide on what's right or wrong in regards of what [incumbents] did was appropriate or inappropriate, then they are in a position to measure what went on before and what went on with other governments, and what the standard was," Williams said.That assumes that what voters see is a complete record, let alone one that is relevant to the goings-on in the House over the past decade.
Don't count on that level of disclosure.
After all, the Premier still hasn't come clean on what he knew about the the secret bonus cash, when.
And that's really the crux of the problem for the Premier.
He set the bar.
He should be judged against what undertakings he gave to the electorate.
What Clyde Wells did should be irrelevant. Danny Williams just made it germane.
He won't like the consequences of that comparison.
Weighed.
Measured.
Came up really short.
03 April 2007
New Leo 2s for Canadian Army in Afghanistan
Canadian Forces will be leasing 20 Leopard 2A6Ms for service in Afghanistan.
The new tanks will replace a squadron of 30 year old Leopard 1 tanks currently deployed.
The new tanks will replace a squadron of 30 year old Leopard 1 tanks currently deployed.
AG's office becomes partisan tool
Cabinet has decided to give Auditor General John Noseworthy double the staff so that he can conduct complete assessments of expense claims by every member of the legislature since 1989. The assessment will apparently be done before the general election in October.
Some are describing this as an extension of Noseworthy's mandate from cabinet from July 2006.
They are wrong.
Noseworthy was asked to assess claims to determine if their was overspending dating back to 1989.
He did that and found none.
The second phase of Noseworthy's mandate - at least according to the order-in-council issued last summer - was to conduct a comprehensive audit of the years from 1998 to the present. presumably that was to piece together the expense records for the entire legislature, given that the former financial director was fond of overwriting his spreadsheets.
Instead, Noseworthy is checking to see what members of the legislature claimed on their expense accounts. Premier Danny Williams says he wants the whole pile - over 120 current and former members - to be assessed so people can compare current sitting members of the legislature to those of the past.
This is a complete change of mandate, presumably with the full support of the cabinet. it's noticeable that the detail audit, which would have revealed far more about current members of the legislature on both sides of the House, has apparently been conveniently shelved.
Odd that Williams would do that.
Odd that is unless former members of the legislature, like say Danny Dumaresque, were planning to run again and Williams might be looking for more dirt to use during the campaign. He decries personal attacks when aimed at him, but loves to launch them against others.
Williams should release every single report, unedited to the public on every single expense by every single legislator.
That's the only way to be fair and non-partisan.
That way, we - the voters - can all see what happened.
Odds are though that Noseworthy will let the public see only measly dribs of information approved for disclosure and likely long after the information has been disclosed to cabinet.
Noseworthy's reports thus far have been grossly inadequate in virtually every respect. We should expect nothing better this time around.
Only full disclosure would be fair.
Anything else smells of dirty, old-fashioned partisan politics.
For some of us, the truly bizarre idea is that Williams would want to have himself compared to former members of the legislature.
For example, when it comes to accountability, transparency and accomplishment in a short time span compared to, say, a Premier 15 years ago, Danny Williams can be weighed, measured and found sadly wanting on every score.
Ditto for his deputy.
Some are describing this as an extension of Noseworthy's mandate from cabinet from July 2006.
They are wrong.
Noseworthy was asked to assess claims to determine if their was overspending dating back to 1989.
He did that and found none.
The second phase of Noseworthy's mandate - at least according to the order-in-council issued last summer - was to conduct a comprehensive audit of the years from 1998 to the present. presumably that was to piece together the expense records for the entire legislature, given that the former financial director was fond of overwriting his spreadsheets.
Instead, Noseworthy is checking to see what members of the legislature claimed on their expense accounts. Premier Danny Williams says he wants the whole pile - over 120 current and former members - to be assessed so people can compare current sitting members of the legislature to those of the past.
This is a complete change of mandate, presumably with the full support of the cabinet. it's noticeable that the detail audit, which would have revealed far more about current members of the legislature on both sides of the House, has apparently been conveniently shelved.
Odd that Williams would do that.
Odd that is unless former members of the legislature, like say Danny Dumaresque, were planning to run again and Williams might be looking for more dirt to use during the campaign. He decries personal attacks when aimed at him, but loves to launch them against others.
Williams should release every single report, unedited to the public on every single expense by every single legislator.
That's the only way to be fair and non-partisan.
That way, we - the voters - can all see what happened.
Odds are though that Noseworthy will let the public see only measly dribs of information approved for disclosure and likely long after the information has been disclosed to cabinet.
Noseworthy's reports thus far have been grossly inadequate in virtually every respect. We should expect nothing better this time around.
Only full disclosure would be fair.
Anything else smells of dirty, old-fashioned partisan politics.
For some of us, the truly bizarre idea is that Williams would want to have himself compared to former members of the legislature.
For example, when it comes to accountability, transparency and accomplishment in a short time span compared to, say, a Premier 15 years ago, Danny Williams can be weighed, measured and found sadly wanting on every score.
Ditto for his deputy.
Williams: Just the facts, Ma'am
In the ongoing spittle contest with the federal government, Premier Danny Williams held a scrum today and issued a news release on the facts of Prime Minister Stephen Harper's broken promise.
Did Harper break a promise?
Yes.
Has anyone shown the financial impact on the province?
Nope.
That's a set of facts the provincial government isn't talking about.
Are there things the Premier isn't talking about besides that?
Yes. Take this excerpt:
That's a cap built in to the 2005 offshore Equalization offsets deal.
or consider this bit:
Ok. Well, over the life of the projects - upwards of two decades - it likely will hit that number.
What about the provincial take?
Well, you won't hear those figures from the provincial government.
Provincial government revenue from the offshore isn't convenient when you have been busily spreading the myth that that every single development deal ever done before October 2003 was bad, that we always gave away our resources.
And for the record, the federal revenue from economic activity in Newfoundland and Labrador ran at about $4700 per person in 2004. Federal transfers to the provincial government, to individuals and to companies ran at about double that in the same year.
The Premier is right. Newfoundland and Labrador does contribute tremendously to the country.
It also reaps tremendous benefits.
Just as well to acknowledge the facts.
The question is how the province can grow and thrive in the future.
People certainly can't support good policies if all they have is a selective presentation of "facts" in a government news release.
We sure won't get anywhere with a pointless war of words with the federal government.
Did Harper break a promise?
Yes.
Has anyone shown the financial impact on the province?
Nope.
That's a set of facts the provincial government isn't talking about.
Are there things the Premier isn't talking about besides that?
Yes. Take this excerpt:
The Premier also agrees that for now there is no cap on the Atlantic Accord. But the province will be forced in the near future to take the same alternative as Nova Scotia was forced to take in their budget last week which results in a cap on its accord revenues.What the Premier didn't say is that he's referring to the point when the provincial government goes off Equalization, i.e. becomes a so-called "have" province.
That's a cap built in to the 2005 offshore Equalization offsets deal.
or consider this bit:
The Premier also pointed out that contrary to some commentaries recently Newfoundland and Labrador in fact contributes greatly to the Canadian federation, in particular as it relates to natural resource revenue.Note the conditional language; the federal government "could take in."
“Over the life of our three existing offshore oil projects, projections indicate the federal government could take in approximately $20 billion on those projects, and several billions of dollars on the Voisey’s Bay project,” added Premier Williams. “These are just two examples of the contributions our province make to this federation; contributions which greatly assist the federal government in delivering important programs and services to the Canadian people.”
Ok. Well, over the life of the projects - upwards of two decades - it likely will hit that number.
What about the provincial take?
Well, you won't hear those figures from the provincial government.
Provincial government revenue from the offshore isn't convenient when you have been busily spreading the myth that that every single development deal ever done before October 2003 was bad, that we always gave away our resources.
And for the record, the federal revenue from economic activity in Newfoundland and Labrador ran at about $4700 per person in 2004. Federal transfers to the provincial government, to individuals and to companies ran at about double that in the same year.
The Premier is right. Newfoundland and Labrador does contribute tremendously to the country.
It also reaps tremendous benefits.
Just as well to acknowledge the facts.
The question is how the province can grow and thrive in the future.
People certainly can't support good policies if all they have is a selective presentation of "facts" in a government news release.
We sure won't get anywhere with a pointless war of words with the federal government.
-30-
Matthews packs it in
Federal member of parliament Bill Matthews (Lib., Random-Burin-St. George's) announced on Tuesday he will wind up his 25 year career in politics when the writ is dropped for the next federal election.Matthews was first elected in 1982 as a provincial Progressive Conservative. He moved to federal politics in 1997 and crossed the floor to sit as a Liberal under Jean Chretien.
Speculation will now mount to see who might try to replace him.
Among the names likely to surface: former provincial Liberal cabinet minister Kevin Aylward, who represented a provincial seat in the western end of the riding. Current Liberal member of the House of Assembly Judy Foote's name will also likely be tossed around. Her provincial district is in the eastern end of the riding.
-30-
Defence report notes threat to oil refineries
According to CanWest's David Pugliese, an internal defence department report notes that oil refineries across Canada could become a target for terrorists aimed at crippling the North American economy.
A military exercise planned for the NorthWest Territories in April will apparently include a scenario involving threats against an oil refinery. Troops involved in the exercise will come from Western Canada and the Maritimes.
Offshore rig security is not a new issue. In February, a message posted to an al-Queda website called for attacks on energy infrastructure in North America, Venezuela and Saudi Arabia.
Canada's special operations unit, JTF 2, has trained for security incidents involving offshore oil rigs. [Photo: Department of National Defence]
Pugliese notes that some of the possible threats globally include attacks on choke points where tankers pass on the way to and from oil storage and refining facilities.
In Newfoundland and Labrador, such a choke point exists in Placentia Bay. Tankers laden with crude from the local offshore and from the Middle East regularly transit the Bay on the way to and from both the Come by Chance refinery and the Whiffen Head oil transshipment facility.
A military exercise planned for the NorthWest Territories in April will apparently include a scenario involving threats against an oil refinery. Troops involved in the exercise will come from Western Canada and the Maritimes.
Offshore rig security is not a new issue. In February, a message posted to an al-Queda website called for attacks on energy infrastructure in North America, Venezuela and Saudi Arabia.
Canada's special operations unit, JTF 2, has trained for security incidents involving offshore oil rigs. [Photo: Department of National Defence]Pugliese notes that some of the possible threats globally include attacks on choke points where tankers pass on the way to and from oil storage and refining facilities.
In Newfoundland and Labrador, such a choke point exists in Placentia Bay. Tankers laden with crude from the local offshore and from the Middle East regularly transit the Bay on the way to and from both the Come by Chance refinery and the Whiffen Head oil transshipment facility.
-30-
White Rose production increase approved
The provincial government has approved a production increase for the White Rose oil field, taking annual maximum production from 36.5 million barrels up to 50 million barrels.
The production increase will likely mean the project will achieve payout sooner. As a result provincial royalties will increase to 30% per barrel once payout is achieved.
According to the Globe and Mail, this production increase request was submitted at the same time as a proposal to bring additional oil on stream. That proposal hasn't been approved yet.
The production increase will likely mean the project will achieve payout sooner. As a result provincial royalties will increase to 30% per barrel once payout is achieved.
According to the Globe and Mail, this production increase request was submitted at the same time as a proposal to bring additional oil on stream. That proposal hasn't been approved yet.
-30-
Keith Coombs: poseur future Dan-didate
Keith Coombs, the St. John's city councilor chiefly responsible for the public money pit called St. John's sports and entertainment should perhaps think about showing some concern for his miserable track record.
More attention to that, say, rather than engaging in a completely pointless little speech about boycotting a meeting with Loyola Hearn. Coombs lacks credibility on matters of public finance given his sorry track record at city hall.
Prediction: Coombs is sucking around the Premier to see if he might get a nod to tackle Hearn on behalf of the premier in the next federal election.
If there was a provincial seat open in a St. John's seat, Keith might run there, but since the place is already chock-a-block full he can look at earning the favour of his Fearless Leader and run as a Dan-didate for the Premier's federal political party, soon to be announced.
Prediction the Second: Coombs will get his money-wasting political butt smeared all over the electoral map.
Residents of St. John's know Coombs too well.
Residents of Mount Pearl, who make up a chunk of the riding of Keith's dreams, don't want him any more than the people of Southlands do.
Closely Related Prediction: Oh yeah, speaking of municipal politicians looking to upgrade. Word out of Mount pearl is that Mayor Steve Kent's campaign team is organized and the cash is in the bank.
Kent, who just a few short months ago was backing Liberals at a Liberal convention in Montreal, is lined up to replace Harvey Hodder when he packs it in a few short months from now.
Kent will be running as a Dan-didate, by the way. The only political party that hasn't received the ambitious mayor's political attention would seem to be the NDP.
More attention to that, say, rather than engaging in a completely pointless little speech about boycotting a meeting with Loyola Hearn. Coombs lacks credibility on matters of public finance given his sorry track record at city hall.
Prediction: Coombs is sucking around the Premier to see if he might get a nod to tackle Hearn on behalf of the premier in the next federal election.
If there was a provincial seat open in a St. John's seat, Keith might run there, but since the place is already chock-a-block full he can look at earning the favour of his Fearless Leader and run as a Dan-didate for the Premier's federal political party, soon to be announced.
Prediction the Second: Coombs will get his money-wasting political butt smeared all over the electoral map.
Residents of St. John's know Coombs too well.
Residents of Mount Pearl, who make up a chunk of the riding of Keith's dreams, don't want him any more than the people of Southlands do.
Closely Related Prediction: Oh yeah, speaking of municipal politicians looking to upgrade. Word out of Mount pearl is that Mayor Steve Kent's campaign team is organized and the cash is in the bank.
Kent, who just a few short months ago was backing Liberals at a Liberal convention in Montreal, is lined up to replace Harvey Hodder when he packs it in a few short months from now.
Kent will be running as a Dan-didate, by the way. The only political party that hasn't received the ambitious mayor's political attention would seem to be the NDP.
A fair share of oil and gas revenues
It's the first anniversary of the death of the Hebron negotiations.
Following are three slides from a presentation by Memorial University economist Dr. Wade Locke tackling the question of whether or not the province is getting its "fair share" from oil and gas revenues.
The entire presentation and an article based on the slides can be found at links here.
Figure 1, above, compares the government "take" across several jurisdictions. Locke defines the government "take" as government revenues divided by net cash flows.
Figure 2, above, shows the change in government "take" as oil prices increase per barrel. Note where Newfoundland and Labrador falls in relations to the other jurisdictions, including Alberta.
Figure 3, above, compares net cash flows among the two orders of governments and the companies.
Reading the article and follow the slides one gets a very different impression than the one left by the provincial government on what is involved in the issue of offshore revenues and the provincial government's "fair share".
For example, as noted last year, Premier Danny Williams told the House of Assembly that the 4.9% equity position in Hebron was worth about $1.5 billion over the life of the project, compared to the estimated revenue to the treasury of $8.0 to $10.0 billion over the life of the project.
Following are three slides from a presentation by Memorial University economist Dr. Wade Locke tackling the question of whether or not the province is getting its "fair share" from oil and gas revenues.
The entire presentation and an article based on the slides can be found at links here.
Figure 1, above, compares the government "take" across several jurisdictions. Locke defines the government "take" as government revenues divided by net cash flows.
Figure 2, above, shows the change in government "take" as oil prices increase per barrel. Note where Newfoundland and Labrador falls in relations to the other jurisdictions, including Alberta.
Figure 3, above, compares net cash flows among the two orders of governments and the companies.Reading the article and follow the slides one gets a very different impression than the one left by the provincial government on what is involved in the issue of offshore revenues and the provincial government's "fair share".
For example, as noted last year, Premier Danny Williams told the House of Assembly that the 4.9% equity position in Hebron was worth about $1.5 billion over the life of the project, compared to the estimated revenue to the treasury of $8.0 to $10.0 billion over the life of the project.
-30-
02 April 2007
Feds take out radio, newspaper ads challenging NL Premier
OTTAWA - The federal Conservatives are hitting back at the premier of Newfoundland with radio and newspaper ads, The Canadian Press has learned.
The feds will respond to Danny Williams, who ran ads of his own last week accusing them of breaking a promise to his province with the recent federal budget.
The ads will begin running Tuesday, according to an internal government memo.
The memo includes talking points for Tory MPs when speaking about the federal-provincial imbroglio, including: Ottawa never broke its promise, Newfoundland and Labrador gets more money under the budget, and Danny Williams just wants a special deal which would be unfair to other provinces.
The budget has angered Newfoundland and Nova Scotia because it says they can only access a newer, more generous equalization program if they give up the Atlantic Accord.
That accord, signed with the previous Liberal government, excluded offshore oil revenues from equalization calculations.
Update: The Canadian Press version here.
The feds will respond to Danny Williams, who ran ads of his own last week accusing them of breaking a promise to his province with the recent federal budget.
The ads will begin running Tuesday, according to an internal government memo.
The memo includes talking points for Tory MPs when speaking about the federal-provincial imbroglio, including: Ottawa never broke its promise, Newfoundland and Labrador gets more money under the budget, and Danny Williams just wants a special deal which would be unfair to other provinces.
The budget has angered Newfoundland and Nova Scotia because it says they can only access a newer, more generous equalization program if they give up the Atlantic Accord.
That accord, signed with the previous Liberal government, excluded offshore oil revenues from equalization calculations.
Update: The Canadian Press version here.
-30-
Ont. links Lower Churchill support to feds and Quebec
Ontario energy minister Dwight Duncan told reporters in St. John's on Monday that his province won't be purchasing any Lower Churchill power unless Quebec and the federal government back the project.
Duncan spoke to reporters following a meeting with Newfoundland and Labrador natural resources minister Kathy Dunderdale.
The vocm.com story is based on comments by Premier Danny Williams, comments made before Duncan met with reporters. Obviously what Williams described as "a serious look" by Ontario at the project, doesn't match up with the reality.
As Bond Papers has noted before, the Lower Churchill project may not proceed. The current war between Williams and the federal government makes it extremely unlikely that the federal government will invest in the project in order to meet the 2009 timeline for project sanction.
Williams has also criticised Quebec for its supposedly unstable political climate.
In this cbc.ca story, the Dunderdale correctly describes the federal government's commitment to the project, saying: "Right now, we've got a commitment from Prime Minister Harper that he would consider financing for the project...". Premier Danny Williams consistently misrepresents Prime Minister Stephen Harper's commitment as being a loan guarantee.
Duncan's comments make it clear that potential customers will want to see the financials on the project before they consider buying. So far, the province's hydroenergy corporation hasn't been able to start purchase talks since the financials of the project are still being finalized.
Duncan spoke to reporters following a meeting with Newfoundland and Labrador natural resources minister Kathy Dunderdale.
The vocm.com story is based on comments by Premier Danny Williams, comments made before Duncan met with reporters. Obviously what Williams described as "a serious look" by Ontario at the project, doesn't match up with the reality.
As Bond Papers has noted before, the Lower Churchill project may not proceed. The current war between Williams and the federal government makes it extremely unlikely that the federal government will invest in the project in order to meet the 2009 timeline for project sanction.
Williams has also criticised Quebec for its supposedly unstable political climate.
In this cbc.ca story, the Dunderdale correctly describes the federal government's commitment to the project, saying: "Right now, we've got a commitment from Prime Minister Harper that he would consider financing for the project...". Premier Danny Williams consistently misrepresents Prime Minister Stephen Harper's commitment as being a loan guarantee.
Duncan's comments make it clear that potential customers will want to see the financials on the project before they consider buying. So far, the province's hydroenergy corporation hasn't been able to start purchase talks since the financials of the project are still being finalized.
-30-
Oram confirms government is aiming to defeat Harper at polls
The transcript confirms it.
Paul Oram, Premier Danny Williams' parliamentary assistant told radio listeners across Newfoundland and Labrador that the provincial government is aiming to see Stephen Harper's Conservatives defeated at the polls in the next federal general election.
As Oram put it:
Paul Oram, Premier Danny Williams' parliamentary assistant told radio listeners across Newfoundland and Labrador that the provincial government is aiming to see Stephen Harper's Conservatives defeated at the polls in the next federal general election.
As Oram put it:
You know people have the right to vote anyway they want and sure we right now as a government feel that he [we?] would really like to see Stephen Harper gone but the fact of the matter is the people will vote, its their voice that will vote and it's the same here. [Emphasis added]
-30-
Danny Williams: "My solution is to get rid of Harper."
From ctv.ca, based on Premier Danny Williams appearance on CTV's Question Period and reports from local affiliate NTV.
Williams told a vocm.com radio call-in show this morning that criticism of his efforts across the country are coming from or are influenced by the "communications spin" coming from the Prime Minister's Office.
Williams made the same claim during the 2004/05 flag flap. Polling conducted for Williams office showed that 60% of those surveyed were "not supportive at all" of Williams' decision to remove Canadian flags from any provincial government buildings in Newfoundland and Labrador.
Meanwhile, Williams' campaign to defeat Stephen Harper at the polls is causing rifts not only between the provincial Progressive Conservative Party and its federal cousin, but reportedly within the provincial party as well. Williams' branded federal Conservatives, saying anyone who supports the federal government has betrayed his or her province. In doing so, Williams also labelled three federal Conservative members of parliament, all of whom are very popular with local voters.
Update
Danny Williams saidon vocm.com's Open Line with Randy Simms:
But what's happening is you're being influenced by the PMO spin. I mean, you know, the Prime Minister's Office has a huge, huge communications network and, so, you know, this is where the letters to the Globe and Mail are coming from and all of that and they'll, they'll fight that.
-30-
01 April 2007
Taking out Harper
While it will take a check of the transcript to be certain, it sure sounded like Paul Oram, Premier Danny Williams' parliamentary secretary, told listeners to vocm.com's Night Line that the Newfoundland and Labrador government is working to see Stephen harper's government defeated at the polls in the next federal election.
Does that get bumped up ahead of taking ExxonMobil out or will Harper have to wait until last April's Big Promise is fulfilled?
Can anyone keep track of these unfulfilled promises?
Does that get bumped up ahead of taking ExxonMobil out or will Harper have to wait until last April's Big Promise is fulfilled?
Can anyone keep track of these unfulfilled promises?
-30-
The need for public discussion
Following is an opinion piece originally published in The Telegram during the offshore discussions in 2004. It is based on the longer piece of the same name, posted below in four parts.
The Government of Newfoundland and Labrador currently receives 100 per cent of provincial revenues. Under the 1985 Atlantic Accord, the provincial government gained the right to set its own revenue regime for offshore oil and gas developments and it has done so through legislation and development agreements with the companies that have brought Hibernia, Terra Nova and White Rose on stream. It collects every penny of the revenues defined in the Atlantic Accord, and set out in those development agreements. In addition, it collects revenues, mostly taxes, from the business that have grown up around oil production.
The Williams administration, like the Grimes administration before it, claims money is lost through an Equalization “clawback”. There is no clawback in the way that word would normally be used. Ordinarily, Equalization is a glorified top-up scheme. Any provincial government making less than a national standard from its own-source revenues gets a cheque from Ottawa to make up the difference. Make more money; get less of a top-up. If there was a sudden growth in high technology manufacturing – if the province became a Celtic Lynx – Equalization would be reduced accordingly.
The Atlantic Accord contains a provision than offsets any losses in Equalization transfers resulting from growing provincial government revenues, for a period of 12 years. The calculation is made on a 10 province standard, so it is no surprise that last year the province collected $123.8 million in oil royalties and received $178 million in offsets. The major problem with the offsets – if there is a problem - results from the fact the offset provisions are triggered by quantity of oil produced, not on their economic impact as such. Once triggered, they decline over time irrespective of how many oil fields have been developed or what their economic benefit has been to the province. Danny Williams’ current proposal is apparently aimed at changing the offset provisions of the Accord.
There are at least two major problems with the proposal from the Williams administration that would, as Danny Williams recently put it, “renegotiate the Atlantic Accord”. The most significant problem is that there is no plain English description of the problem or of the government’s proposed solution: it isn’t in writing. How can anyone judge the success or failure of upcoming negotiations between the federal and provincial governments if we do not know what the Williams administration is seeking?
The second problem is in the way the argument has been framed. The Williams administration claims that by changing the offsets, the provincial government can become the “principal beneficiary” of the offshore, as the Accord intended. Unfortunately, the Atlantic Accord does not say the provincial government will be the principal beneficiary nor is “principal beneficiary” defined as meaning provincial government revenues. The Atlantic Accord delivers significant benefits to the province as a whole. The provincial government gets the right to co-manage the offshore with Ottawa. The provincial government sets its own revenues, as if the resource was on land. The province as a whole gets industrial benefits, something Brian Mulroney considered to be a major aspect of the Accord. Those industrial benefits go against the spirit if not the letter of inter-provincial free trade agreements and the North American Free Trade Agreement, Right now, the Accord is exempt from NAFTA.
“Principal beneficiary” is central to the Accord; redefining it changes the Accord fundamentally. Change the Accord’s underlying principals and it may well become a new deal, one that would be subject to NAFTA. Of all the Accord provisions, the one that would clearly not fit NAFTA is the industrial benefits provision. We can’t be certain, in largest part because the Williams administration proposal has not be clearly stated and thoroughly examined. There is enough information, though, to encourage the provincial government to be cautious.
It should not escape notice that in making its proposal, the Williams administration is merely picking up where the Grimes government left off. 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. More important than mere contrariness though, the absence of public debate prevents a thorough discussion of options, a chance to see dangers and avoid them. Getting more cash from Ottawa is one thing. If that comes at a larger cost, namely bringing the Accord under NAFTA, then the Premier will need wider public support to continue on his path. If nothing else, the people of the province have a right to know what is being talked about. They will either reap the reward of the proposed changes or bear the burden.
_______________________
Which is to be master?
Public discussion, more information needed on Atlantic Accord changes
Public discussion, more information needed on Atlantic Accord changes
“The absence of public debate prevents a thorough discussion of options, a chance to see dangers and avoid them.”
The Government of Newfoundland and Labrador currently receives 100 per cent of provincial revenues. Under the 1985 Atlantic Accord, the provincial government gained the right to set its own revenue regime for offshore oil and gas developments and it has done so through legislation and development agreements with the companies that have brought Hibernia, Terra Nova and White Rose on stream. It collects every penny of the revenues defined in the Atlantic Accord, and set out in those development agreements. In addition, it collects revenues, mostly taxes, from the business that have grown up around oil production.
The Williams administration, like the Grimes administration before it, claims money is lost through an Equalization “clawback”. There is no clawback in the way that word would normally be used. Ordinarily, Equalization is a glorified top-up scheme. Any provincial government making less than a national standard from its own-source revenues gets a cheque from Ottawa to make up the difference. Make more money; get less of a top-up. If there was a sudden growth in high technology manufacturing – if the province became a Celtic Lynx – Equalization would be reduced accordingly.
The Atlantic Accord contains a provision than offsets any losses in Equalization transfers resulting from growing provincial government revenues, for a period of 12 years. The calculation is made on a 10 province standard, so it is no surprise that last year the province collected $123.8 million in oil royalties and received $178 million in offsets. The major problem with the offsets – if there is a problem - results from the fact the offset provisions are triggered by quantity of oil produced, not on their economic impact as such. Once triggered, they decline over time irrespective of how many oil fields have been developed or what their economic benefit has been to the province. Danny Williams’ current proposal is apparently aimed at changing the offset provisions of the Accord.
There are at least two major problems with the proposal from the Williams administration that would, as Danny Williams recently put it, “renegotiate the Atlantic Accord”. The most significant problem is that there is no plain English description of the problem or of the government’s proposed solution: it isn’t in writing. How can anyone judge the success or failure of upcoming negotiations between the federal and provincial governments if we do not know what the Williams administration is seeking?
The second problem is in the way the argument has been framed. The Williams administration claims that by changing the offsets, the provincial government can become the “principal beneficiary” of the offshore, as the Accord intended. Unfortunately, the Atlantic Accord does not say the provincial government will be the principal beneficiary nor is “principal beneficiary” defined as meaning provincial government revenues. The Atlantic Accord delivers significant benefits to the province as a whole. The provincial government gets the right to co-manage the offshore with Ottawa. The provincial government sets its own revenues, as if the resource was on land. The province as a whole gets industrial benefits, something Brian Mulroney considered to be a major aspect of the Accord. Those industrial benefits go against the spirit if not the letter of inter-provincial free trade agreements and the North American Free Trade Agreement, Right now, the Accord is exempt from NAFTA.
“Principal beneficiary” is central to the Accord; redefining it changes the Accord fundamentally. Change the Accord’s underlying principals and it may well become a new deal, one that would be subject to NAFTA. Of all the Accord provisions, the one that would clearly not fit NAFTA is the industrial benefits provision. We can’t be certain, in largest part because the Williams administration proposal has not be clearly stated and thoroughly examined. There is enough information, though, to encourage the provincial government to be cautious.
It should not escape notice that in making its proposal, the Williams administration is merely picking up where the Grimes government left off. 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. More important than mere contrariness though, the absence of public debate prevents a thorough discussion of options, a chance to see dangers and avoid them. Getting more cash from Ottawa is one thing. If that comes at a larger cost, namely bringing the Accord under NAFTA, then the Premier will need wider public support to continue on his path. If nothing else, the people of the province have a right to know what is being talked about. They will either reap the reward of the proposed changes or bear the burden.
-30-
Which is to be Master? Part 1
Originally written in mid 2004, Which is to be master? was an attempt to dissect the Williams' administration's efforts to change the Atlantic Accord (1985).
The issue of offshore revenues and Equalization hasn't disappeared in the past three years. Since this paper contains some useful background information, Bond Papers offers it in sections.
A. Introduction
It is now commonplace for people to believe that neither Newfoundland and Labrador nor Nova Scotia is being treated fairly by the federal government with respect to revenues from offshore oil and gas resources. As the story goes, the federal government claws back upwards of 85% of revenues to the two east coast provinces under the Equalization program, contrary to the two Accords that govern development of the oil and gas fields. Both Premier Danny Williams of Newfoundland and Labrador and Premier John Hamm of Nova Scotia contend that this clawback hampers their provinces from developing fully and from realizing the full benefits of the oil and gas resources off their coastlines.
This paper examines the Williams administration’s proposal to amend the Atlantic Accord. The findings are based on publicly available documents including the Atlantic Accord, the implementation legislation, the Williams government’s overhead slide presentation released to news media as well as papers and public comments offered by supporters of the provincial government’s approach.
B. The Williams Administration and the offshore
There is no single, concise, public statement of the Williams government’s proposal to amend the Atlantic Accord. To date the provincial government has released only a copy of an overhead slide presentation, apparently made to federal officials on 04 March 2004. In addition, the Premier has made public statements and issued at least three news releases on the subject. No other correspondence between the Government of Canada and the Government of Newfoundland and Labrador is in the public domain.
The Blue Print, the Progressive Conservative election platform, contains several references to resources and revenues from the offshore. Since they are the party’s platform they must be taken as statements of policy for the new government, or at least a statement of intentions to guide the government’s overall policy. This assessment is based on these documents, statements by senior officials of the Williams administration published before October 2003 as well as comments by John Crosbie.
The Blue Print commits the Williams government to “seek jurisdictional control and ownership over petroleum and other economic resources in the offshore as a means to achieve greater prosperity for our Province and more opportunity for our people.”
With respect to oil and gas revenues and revenue sharing, the Blue Print commits the Progressive Conservative party to “press the federal government to remove all non-renewable resource revenues from the calculation of equalization payments. In exchange, we will commit, in a formal federal-provincial agreement if necessary, to spend non-renewable revenues to modernize economic infrastructure in the Province and to bring down the provincial debt, so that future generations of Canadians living in this Province will continue to benefit long after the resources are used up.”
The only specific reference to the Atlantic Accord is a commitment to use its industrial offset provisions to the fullest extent possible. The Blue print also commits the provincial government to seeking transfer to the provincial government of the 8.5% share of the Hibernia project held by the Government of Canada.
In early 2004, Premier Danny Williams began discussions with the province’s federal cabinet representative John Efford to ensure that the province received what Premier Williams described prior to a February meeting between the two as “100% of our offshore revenues.” According to Williams, Ottawa gave a bad deal to Newfoundland and Labrador in the Atlantic Accord. The proposal would change the Equalization offset provisions of the Atlantic Accord to “provide a payment equal to 100% of the net direct provincial offshore revenue”. Net direct revenue is defined as “Royalties and Corporate Income Tax which is generated in the NL offshore area, less the equalization clawback (currently at 70%)”.
The objective was described in similar terms by a March news release: “Premier Williams has been actively pursuing the federal government to allow Newfoundland and Labrador to receive 100 per cent of the provincial revenues from offshore oil and gas.” A similar statement was made in April: “Premier Danny Williams today reiterated his government’s position on the Atlantic Accord and reaffirmed the province will continue to aggressively pursue the federal government to allow Newfoundland and Labrador to receive 100 per cent of the provincial revenues from offshore oil and gas.”
Changes to the offset formula would end what both the Blue Print and Premier Williams have repeatedly described as a “clawback” of resource revenues by the federal government through reductions in the province’s Equalization entitlement. The notion of an Equalization clawback is clearly described in the Blue Print:
Similar arguments have been advanced by John Crosbie, who served as co-chair of the federal Conservative Party’s 2004 election campaign in Newfoundland and Labrador.
Continued in Part 2
The issue of offshore revenues and Equalization hasn't disappeared in the past three years. Since this paper contains some useful background information, Bond Papers offers it in sections.
__________________________________
Which is to be master?
An assessment of the Williams administration proposal to amend the Atlantic Accord
"When I use a word," Humpty Dumpty said, in a rather scornful tone, "it means just what I choose it to mean - neither more nor less."
"The question is," said Alice, "whether you can make words mean so many different things."
"The question is," said Humpty Dumpty, "which is to be master - that's all."- Charles Ludwig Dodgson, (Lewis Carrol), Through the Looking Glass
A. Introduction
It is now commonplace for people to believe that neither Newfoundland and Labrador nor Nova Scotia is being treated fairly by the federal government with respect to revenues from offshore oil and gas resources. As the story goes, the federal government claws back upwards of 85% of revenues to the two east coast provinces under the Equalization program, contrary to the two Accords that govern development of the oil and gas fields. Both Premier Danny Williams of Newfoundland and Labrador and Premier John Hamm of Nova Scotia contend that this clawback hampers their provinces from developing fully and from realizing the full benefits of the oil and gas resources off their coastlines.
This paper examines the Williams administration’s proposal to amend the Atlantic Accord. The findings are based on publicly available documents including the Atlantic Accord, the implementation legislation, the Williams government’s overhead slide presentation released to news media as well as papers and public comments offered by supporters of the provincial government’s approach.
B. The Williams Administration and the offshore
There is no single, concise, public statement of the Williams government’s proposal to amend the Atlantic Accord. To date the provincial government has released only a copy of an overhead slide presentation, apparently made to federal officials on 04 March 2004. In addition, the Premier has made public statements and issued at least three news releases on the subject. No other correspondence between the Government of Canada and the Government of Newfoundland and Labrador is in the public domain.
The Blue Print, the Progressive Conservative election platform, contains several references to resources and revenues from the offshore. Since they are the party’s platform they must be taken as statements of policy for the new government, or at least a statement of intentions to guide the government’s overall policy. This assessment is based on these documents, statements by senior officials of the Williams administration published before October 2003 as well as comments by John Crosbie.
The Blue Print commits the Williams government to “seek jurisdictional control and ownership over petroleum and other economic resources in the offshore as a means to achieve greater prosperity for our Province and more opportunity for our people.”
With respect to oil and gas revenues and revenue sharing, the Blue Print commits the Progressive Conservative party to “press the federal government to remove all non-renewable resource revenues from the calculation of equalization payments. In exchange, we will commit, in a formal federal-provincial agreement if necessary, to spend non-renewable revenues to modernize economic infrastructure in the Province and to bring down the provincial debt, so that future generations of Canadians living in this Province will continue to benefit long after the resources are used up.”
The only specific reference to the Atlantic Accord is a commitment to use its industrial offset provisions to the fullest extent possible. The Blue print also commits the provincial government to seeking transfer to the provincial government of the 8.5% share of the Hibernia project held by the Government of Canada.
In early 2004, Premier Danny Williams began discussions with the province’s federal cabinet representative John Efford to ensure that the province received what Premier Williams described prior to a February meeting between the two as “100% of our offshore revenues.” According to Williams, Ottawa gave a bad deal to Newfoundland and Labrador in the Atlantic Accord. The proposal would change the Equalization offset provisions of the Atlantic Accord to “provide a payment equal to 100% of the net direct provincial offshore revenue”. Net direct revenue is defined as “Royalties and Corporate Income Tax which is generated in the NL offshore area, less the equalization clawback (currently at 70%)”.
The objective was described in similar terms by a March news release: “Premier Williams has been actively pursuing the federal government to allow Newfoundland and Labrador to receive 100 per cent of the provincial revenues from offshore oil and gas.” A similar statement was made in April: “Premier Danny Williams today reiterated his government’s position on the Atlantic Accord and reaffirmed the province will continue to aggressively pursue the federal government to allow Newfoundland and Labrador to receive 100 per cent of the provincial revenues from offshore oil and gas.”
Changes to the offset formula would end what both the Blue Print and Premier Williams have repeatedly described as a “clawback” of resource revenues by the federal government through reductions in the province’s Equalization entitlement. The notion of an Equalization clawback is clearly described in the Blue Print:
A Better Deal on Oil and Gas RevenuesOf particular interest, both Premier Williams and other Conservative party commentators have linked provincial government offshore revenues with the concept of the province being the principal beneficiary of offshore development under the Atlantic Accord. In his news release of 12 March 2004, Premier Williams said:
The Government of Newfoundland and Labrador will collect billions of dollars in revenues over the next 20 to 30 years from oil, natural gas, and other minerals. Less than a quarter of the revenues will stay in the Province. Ottawa will simply deduct most of the increased revenues from equalization payments. This deduction is known as "the equalization clawback".
The clawback denies us the opportunity to build a better future for our children and grandchildren. We should not have to consume our non-renewable resources for current expenses and leave none of the inheritance for our children and grandchildren.
"Essentially, we are asking the federal government to live up to the spirit and intent of the "principal beneficiary" component of the Atlantic Accord. Currently, the federal government receives 86 per cent of the revenues of our offshore petroleum resources, while the province receives a meager 14 per cent," added the Premier. "This revenue sharing is completely contrary to the spirit and intent of the accord and must be addressed now before these non-renewable resources are gone forever. Our province is facing a very serious fiscal situation which must be addressed. We are making tough choices to manage our expenditures and to grow our revenues at the provincial level. We, as a province, are putting into place a long-term plan to grow our economy; however, Ottawa must also be a part of the solution."The overhead slide presentation describes the Atlantic Accord as being a ‘“Memorandum of Agreement between the Government of Canada and the Government of Newfoundland and Labrador on offshore oil and gas resource management and revenue sharing.”’ The paper includes several slides purporting to confirm that “[a]nalysis shows that Newfoundland and Labrador will not be the principal beneficiary of the revenues generated from oil and gas developments.”
Similar arguments have been advanced by John Crosbie, who served as co-chair of the federal Conservative Party’s 2004 election campaign in Newfoundland and Labrador.
9. Mr. Martin’s commitment is worth nothing unless he puts in writing that “principal beneficiary” means that Newfoundland and Labrador is to receive 100 per cent of all offshore revenues, including royalties, provincial corporation income taxes, all fees and bonuses etc. on a net basis with no clawback effect and to be received until we become a “have” province with agreed benchmarks as to when “have” status is achieved. [Run-on sentence in the original. ]Flowing from these statements of the provincial government position, four issues must be addressed. These are ownership of offshore resources, the origins of the Atlantic Accord and federal government intentions, the existence of a “clawback” in the Equalization program, and definition of the term “principal beneficiary”.
Continued in Part 2
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Which is to be Master? Part 2
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
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
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
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