At a time when the provincial government is screaming that it needs federal handouts to deal with a huge public debt, finance minister Tom Marshall defends fiscally irresponsible budgeting.
The Offal News take.
18 April 2007
17 April 2007
The North-South connexion
From Walrus magazine, a four-pager on growing economic ties between Canadian provinces and American states.
All three of these transnational political groupings represent a new chapter in North American governance, with both Canada and the blue states bringing powerful assets to the partnership. Canada’s vast energy reserves (including hydro, natural gas, oil from the Alberta tar sands, and, potentially, Newfoundland’s offshore reserves, as well as wind power across the Prairies) provide the kind of energy security that is essential to make transnational political regions semi-autonomous.
-30-
Conoco Canada boss looking at expanded presence
ConocoPhillip's new chief executive officer in Canada is interested in developing the company's Canadian assets.
Of the Newfoundland and Labrador offshore, Kevin Meyers said:
Meyers warned though: "You do worry when government starts to take away that advantage it has."
Like in Newfoundland and Labrador, one wonders.
Meyers should understand the political climate on Canada's Eastern Front. His last post was running Conoco's operations in Russia under Vladimir Putin.
Of the Newfoundland and Labrador offshore, Kevin Meyers said:
"There are a multitude of options out there [to reduce greenhouse gas emissions]. A lot of them will require technologies to be developed, so we are looking for greenhouse gas policies that are cognizant of this." Newfoundland: The company wants to explore in the Laurentian Basin off Newfoundland, but won't move forward until the province sets fiscal terms for natural gas production, likely in conjunction of Premier Danny Williams' long-awaited energy policy, expected this spring. "Do we want to drill? Yes. It is difficult for us to come forward with any public plans about drilling exploration wells in the Laurentian Basin until we have an understanding of what the fiscal regime is going to be," Mr. Meyers said.Meyers told the National Post that Canada is an attractive investment prospect since its stable political and fiscal climate offsets many of the challenges of developing oil and gas fields which, as Meyers describes it "can be marginal in nature. They are always in the cutting edge of cost and service or supply, but that stability of fiscal regime helps offset that.
Meyers warned though: "You do worry when government starts to take away that advantage it has."
Like in Newfoundland and Labrador, one wonders.
Meyers should understand the political climate on Canada's Eastern Front. His last post was running Conoco's operations in Russia under Vladimir Putin.
-30-
The future of rural Newfoundland
Craig Westcott's latest commentary for CBC radio [ram file] and Merv Wiseman's reaction. [ram file].
Westcott was his usual bold self. He called for government to stop paying lip service to problems, to stop "conning people" into believing that some bureaucratic plan built on a theatre festival will save things.
He notes that the salvation of rural Newfoundland would be creating a pool of skilled workers. Out of those educated young people will come the source of new ideas or people who can change and adapt more readily than their forebears.
Wiseman is an excellent proponent of the reactionary approach, rooted in the old rural development movement that infiltrated the economic development boards and turned them, in too many cases, from producers of results based on local opportunities to producers of government grant applications for further studies into the magical properties of another blueberry festival or golf course.
Wiseman essentially spouts buzzwords like innovation as if throwing up a few whalebones and calling it a museum actually gets at the core of the issue. He misses entirely the educational and demographic challenges that are already here in many parts of the province.
A clue to his headspace? Wiseman refers to the consequences of Newfoundland dieing, not rural Newfoundland but Newfoundland, as if what was in the mythical idyllic past is all that ever was and ever can be.
His major thrust was that Westcott was being too negative. That's it. Too negative. As if smiling and denying would suffice for anything except convincing people that you were in need of therapy.
There was nothing in Wiseman's comments to deal with the substance of the issue, namely the changes that will come - some inevitably - in the mythical entity Wiseman and Westcott call rural Newfoundland.
At least Westcott did that with his comments on education. Rather than seeking to hang on to as much of what was and is, Westcott talked about the simple foundation for adaptability. He pointed correctly to the value of education in building successful economies - and societies - in a host of places from Iceland to Asia.
Education was a key idea component in development ideas 15 years ago. More scholar for the dollar, as then education minister Phil Warren called it. Education reform in the early 1990s was about giving our young people the tools they need to build their own lives and with that their province and the future.
By the late 1990s though, and continuing today, education decisions were often about keeping schools in communities with fewer an fewer children as a symbol of the community's future. Keeping more and more teachers teaching fewer and fewer children with resource spread around such that the overall quality of education stayed about the same.
More dollar. Less scholar.
And Merv Wiseman? Well, he never really had any concrete, positive actions to show what is going on.
If they are out there and Wiseman had talked about them, he'd have been far more convincing than accusing Westcott of patronizing people.
Patronizing them is what the old rural development crowd do all the time with their talk. And if that's all they have, then Newfoundland and Labrador generally, not just the rural bits, is doomed.
Westcott was his usual bold self. He called for government to stop paying lip service to problems, to stop "conning people" into believing that some bureaucratic plan built on a theatre festival will save things.
He notes that the salvation of rural Newfoundland would be creating a pool of skilled workers. Out of those educated young people will come the source of new ideas or people who can change and adapt more readily than their forebears.
Wiseman is an excellent proponent of the reactionary approach, rooted in the old rural development movement that infiltrated the economic development boards and turned them, in too many cases, from producers of results based on local opportunities to producers of government grant applications for further studies into the magical properties of another blueberry festival or golf course.
Wiseman essentially spouts buzzwords like innovation as if throwing up a few whalebones and calling it a museum actually gets at the core of the issue. He misses entirely the educational and demographic challenges that are already here in many parts of the province.
A clue to his headspace? Wiseman refers to the consequences of Newfoundland dieing, not rural Newfoundland but Newfoundland, as if what was in the mythical idyllic past is all that ever was and ever can be.
His major thrust was that Westcott was being too negative. That's it. Too negative. As if smiling and denying would suffice for anything except convincing people that you were in need of therapy.
There was nothing in Wiseman's comments to deal with the substance of the issue, namely the changes that will come - some inevitably - in the mythical entity Wiseman and Westcott call rural Newfoundland.
At least Westcott did that with his comments on education. Rather than seeking to hang on to as much of what was and is, Westcott talked about the simple foundation for adaptability. He pointed correctly to the value of education in building successful economies - and societies - in a host of places from Iceland to Asia.
Education was a key idea component in development ideas 15 years ago. More scholar for the dollar, as then education minister Phil Warren called it. Education reform in the early 1990s was about giving our young people the tools they need to build their own lives and with that their province and the future.
By the late 1990s though, and continuing today, education decisions were often about keeping schools in communities with fewer an fewer children as a symbol of the community's future. Keeping more and more teachers teaching fewer and fewer children with resource spread around such that the overall quality of education stayed about the same.
More dollar. Less scholar.
And Merv Wiseman? Well, he never really had any concrete, positive actions to show what is going on.
If they are out there and Wiseman had talked about them, he'd have been far more convincing than accusing Westcott of patronizing people.
Patronizing them is what the old rural development crowd do all the time with their talk. And if that's all they have, then Newfoundland and Labrador generally, not just the rural bits, is doomed.
Facts do matter
Except to this man, apparently.From federal finance minister Jim Flaherty's latest Equalization news release:
To do so [not to alter two federal-provincial agreements unilaterally] would give Newfoundland and Labrador access to Equalization payments above all the other Equalization provinces even though its fiscal capacity is higher than Ontario's and British Columbia's, which receive no Equalization payments.If Newfoundland and Labrador's own-source fiscal capacity exceeds the national standard for Equalization, then the province doesn't qualify for either Equalization or for Equalization offsets contained in the 2005 agreement between Prime Minister Paul Martin and Premier Danny Williams:
5. If in any fiscal year in the period 2006-07 to 2011-12 the province does not qualify for receipt of an Equalization payment, no additional offset payment in respect of clause 4 will be made for that fiscal year beyond the payment specified in the existing Atlantic Accord.The federal Equalization formula currently used and the O'Brien formula contained in Flaherty's 2007 budget set the standard used to determine if a province qualifies for Equalization.
That standard in both cases is below the fiscal capacity of Ontario (the lowest non-recipient province) by several hundred dollars per person.
Yes, facts do matter, Jim.They just don't matter to the current federal administration.
Obviously.
16 April 2007
That was then. This is now.
Then, federal foreign affairs minister Peter MacKay said:
Forget a broken election promise.
Harper and his cabinet can't even stick to the same commitment over the course of four weeks.
To see the full impact of this latest revelation, compare Wade Locke's original analysis and the one based on capping what they said wasn't capped.
If the provincial government had waited until the evidence was amassed, the impact of this Conservative perfidy would hav been plain for all to see.
"It is important to note that if Nova Scotia opts for the new system, it doesn't have to give up its Accord–in fact, the Accord will be fully respected and continue to provide benefits to Nova Scotia," said Minister MacKay. The Accord provided Nova Scotia with $830 million immediately upon signing.Then - a mere few days ago - federal fish minister Loyola Hearn told reporters much the same thing:
Hearn insists the Atlantic Accord, which the province and Nova Scotia negotiated with the former Liberal government in 2005, is safe.Then, Prime Minister Stephen Harper told the House of Commons:
"Are we going to get screwed? The answer is no, we're not," Hearn told reporters Friday.
"Are we going to be disadvantaged … by a billion dollars or by a dollar? The answer to that is no, because the government of Canada committed that we would not be disadvantaged."
"The Premier of Newfoundland and Labrador asked repeatedly that this government reject the recommendation of the O'Brien commission that would have put a cap on the equalization benefits of the Atlantic accord," Harper said to the House.Now, finance minister Jim Flaherty admits that his budget caps Equalization offset payments in both the 1985 Atlantic Accord and a supplementary deal in 2005:
"The Atlantic Accord is preserved in this budget and is preserved due to the good work of the minister of fisheries and oceans and of course other members of our Newfoundland and Labrador caucus. Promise made and promise kept."
The province will also have the right to opt permanently into the new, improved, Canada-wide Equalization system. This choice provides the province with flexibility for the future and improves Newfoundland and Labrador's chance of qualifying for an extension beyond the existing system. If the province chooses the new Equalization system, it is only fair that the whole package would apply, including the fiscal capacity cap, to ensure fairness. In this case, it would not be just to other provinces if only Newfoundland and Labrador is allowed to double-dip or cherry-pick only those parts of the new Equalization program that will benefit the province.To apply the cap, the Government of Canada is unilaterally amending both the 1985 Atlantic Accord signed by Prime Minister Brian Mulroney and Premier Brian Peckford and the 2005 deal between Prime Minister Paul Martin and Premier Danny Williams.
To do so would give Newfoundland and Labrador access to Equalization payments above all the other Equalization provinces even though its fiscal capacity is higher than Ontario's and British Columbia's, which receive no Equalization payments. [Emphasis added]
Forget a broken election promise.
Harper and his cabinet can't even stick to the same commitment over the course of four weeks.
To see the full impact of this latest revelation, compare Wade Locke's original analysis and the one based on capping what they said wasn't capped.
If the provincial government had waited until the evidence was amassed, the impact of this Conservative perfidy would hav been plain for all to see.
-30-
Connies write off three NL ridings
A news release like this one virtually guarantees the seven seats in Newfoundland and Labrador will represented by someone other than a Conservative after the next federal election.
It confirms that federal government will be altering the 1985 and 2005 offshore agreements if and when the Newfoundland and Labrador government adopts the new Equalization program, something they never mentioned until caught at it last week.
How many times have the federal Conservatives said there were or would be no caps on the Atlantic Accord?
Surprise.
It isn't a cap.
It's a hood.
Around Bond Papers, we've been callin' 'em Connies for a couple of years.
Seems they are Connies.
Trying to con people into giving them votes.
Danny Williams must be especially rotted, seeing as he threw his lot in with these guys, even though it was painfully obvious at the time what the result would be.
Danny Williams even attributed things to Harper that Harper never even said, all in an effort to get Harper a few seats.
Wow.
That's gotta hurt.
It confirms that federal government will be altering the 1985 and 2005 offshore agreements if and when the Newfoundland and Labrador government adopts the new Equalization program, something they never mentioned until caught at it last week.
How many times have the federal Conservatives said there were or would be no caps on the Atlantic Accord?
Surprise.
It isn't a cap.
It's a hood.
Around Bond Papers, we've been callin' 'em Connies for a couple of years.
Seems they are Connies.
Trying to con people into giving them votes.
Danny Williams must be especially rotted, seeing as he threw his lot in with these guys, even though it was painfully obvious at the time what the result would be.
Danny Williams even attributed things to Harper that Harper never even said, all in an effort to get Harper a few seats.
Wow.
That's gotta hurt.
-30-
Update: Among the others like Danny Williams smarting at the latest Harper political shaft must be the local talk show maven who sometimes calls herself Hydroqueen.
She spent a lot of time shilling for Steve Harper and his local candidates during the last federal election.
She even invented bizarre political theories to bolster her argument. Hydroqueen was wrong in the theory and, as it turns out, in the practice as well.
Maybe we need to start a special Homer Simpson gallery of people who backed Harper in 2005, lambasted any Liberal in sight on a purely partisan basis, and who today are feeling just a wee bit used.
Update Update: Yet another person who fell for the Connie job. Well, "fell" doesn't accurately describe someone who actually reworked reality in an effort to back his cause, but let's be generous.
She spent a lot of time shilling for Steve Harper and his local candidates during the last federal election.
She even invented bizarre political theories to bolster her argument. Hydroqueen was wrong in the theory and, as it turns out, in the practice as well.
Maybe we need to start a special Homer Simpson gallery of people who backed Harper in 2005, lambasted any Liberal in sight on a purely partisan basis, and who today are feeling just a wee bit used.
Update Update: Yet another person who fell for the Connie job. Well, "fell" doesn't accurately describe someone who actually reworked reality in an effort to back his cause, but let's be generous.
NL town suffers second major landslide
The first was last fall.
The second was this past weekend and it continues on Monday.
Odd that only last month, the provincial government stopped paying assistance to people thrown out of their homes by the last emergency. The province also refused any financial assistance to people who could not return to their homes because of safety concerns.
Lucky for them, their houses have now fallen into the ocean.
Jack Byrne, the provincial municipal affairs minister, is now talking about getting the feds to compensate the homeowners.
The second was this past weekend and it continues on Monday.
Odd that only last month, the provincial government stopped paying assistance to people thrown out of their homes by the last emergency. The province also refused any financial assistance to people who could not return to their homes because of safety concerns.
Lucky for them, their houses have now fallen into the ocean.
Jack Byrne, the provincial municipal affairs minister, is now talking about getting the feds to compensate the homeowners.
Goodale calls Harper move "betrayal" of NL and NS
From Canadian Press.
"The worst betrayal of all was the barefaced failure to tell the truth on the issue of equalization and the Atlantic accord," he told Liberal MP Geoff Regan's nomination meeting.
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Get to vote on questions like "Is Andy Wells doing a good job as mayor?".
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Get to vote on questions like "Is Andy Wells doing a good job as mayor?".
Watch the results currently answering that question in the negative, 55% to 45%.
15 April 2007
Mario Dumont: a constitutional fantasyland
From ctv.ca:
M. Dumont peddles the same old fantasies that others have tried before. It would seem his version of something he calls autonomism is just the same old stuff we have heard before the Parti Quebecois and others.
Perhaps we should call it automatonism since that is what the federal government would likely be reduced to, a mindless follower of the dictates of one or all the provincial premiers.
And purely for local automatonists, a flashback to Morningside and a 38 minute discussion during the last effort to foist on the country the mythology of Quebec being outside the constitution.
Quebec's new Opposition leader says he's ready to begin major talks that would facilitate the signing of the 1982 Canadian Constitution.Is Quebec now in some sort of constitutional limbo?
M. Dumont peddles the same old fantasies that others have tried before. It would seem his version of something he calls autonomism is just the same old stuff we have heard before the Parti Quebecois and others.
Perhaps we should call it automatonism since that is what the federal government would likely be reduced to, a mindless follower of the dictates of one or all the provincial premiers.
And purely for local automatonists, a flashback to Morningside and a 38 minute discussion during the last effort to foist on the country the mythology of Quebec being outside the constitution.
The change Locke found
In Wade Locke's original analysis, he used the assumption that Equalization offsets provided for in the 2005 offshore revenue agreement and enabled by the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act, S.C. 2005, c. 30, c. 85, would continue as originally intended.
Under that Act as it currently stands, the additional offset is calculated based on the difference between what the provincial government received in Equalization under the formula in use at the time.
The Equalization changes contained in the 2007 budget gave the Government of Newfoundland and Labrador an option of which Equalization formula would apply.
However, s.84 of the budget implementation Act (C-52) makes a significant change to the 2005 implementation Act by imposing a definition of the Equalization system in use at the time to mean the O'Brien formula.
As a result, even in a year in which the province used the existing Equalization system (100% of resource revenues included), the additional offsets would be reduced since the O'Brien formula already offsets half of resource revenues.
Additionally, the use of the O'Brien formula, which includes a cap on payments, the proposed changes in the budget implementation legislation would change the meaning of s. 22 of the 2005 implementation Act. Under the current meaning of that legislation, no additional offset payment would be received if the provincial government did not receive an Equalization payment.
In the operation of the Equalization system and the offsets agreements as currently in effect, no payment would be paid if the province did not qualify for Equalization. However, under the O'Brien formula, the province may qualify for Equalization, but receive no payment in years where a combination of all revenues (own source plus Equalization plus Equalization offsets) exceeds the per capita fiscal capacity of the lowest non-recipient province.
Given the amendments contained in Bill C-52, Newfoundland and Labrador would actually receive no offsets at all in any year where its Equalization payment were reduced to zero as a result of the O'Brien cap.
There is no obvious reason for making this change. If the federal government wanted to give effect to both the 2005 agreement and the 2007 budget - allowing for choices - Bill C-52 would necessitate only modest changes, if any, to the implementation acts for 1985 Atlantic Accord and the 2005 agreement.
Under that Act as it currently stands, the additional offset is calculated based on the difference between what the provincial government received in Equalization under the formula in use at the time.
The Equalization changes contained in the 2007 budget gave the Government of Newfoundland and Labrador an option of which Equalization formula would apply.
However, s.84 of the budget implementation Act (C-52) makes a significant change to the 2005 implementation Act by imposing a definition of the Equalization system in use at the time to mean the O'Brien formula.
84. The definition “fiscal equalization payment” in section 18 of the Act is replaced by
the following:
“fiscal equalization payment” means (a) for the purposes of section 22, the fiscal equalization payment that would be received by the Province for a fiscal year if the amount of that payment were determined in accordance with section 3.2 of the Federal-Provincial Fiscal Arrangements Act, without regard to section 3.4 of that Act; and,
(b) for the purposes of sections 24 to 26, the fiscal equalization payment that would be received by the Province for a fiscal year under Part I of the Federal-Provincial Fiscal Arrangements Act if the Province’s total per capita fiscal capacity were the amount determined by the formula
A + B + (C / F)
where
A, B, C and F have the same meaning as in the definition "total per capita fiscal capacity" in subsection 3.5(1) of that Act.
As a result, even in a year in which the province used the existing Equalization system (100% of resource revenues included), the additional offsets would be reduced since the O'Brien formula already offsets half of resource revenues.
Additionally, the use of the O'Brien formula, which includes a cap on payments, the proposed changes in the budget implementation legislation would change the meaning of s. 22 of the 2005 implementation Act. Under the current meaning of that legislation, no additional offset payment would be received if the provincial government did not receive an Equalization payment.
In the operation of the Equalization system and the offsets agreements as currently in effect, no payment would be paid if the province did not qualify for Equalization. However, under the O'Brien formula, the province may qualify for Equalization, but receive no payment in years where a combination of all revenues (own source plus Equalization plus Equalization offsets) exceeds the per capita fiscal capacity of the lowest non-recipient province.
Given the amendments contained in Bill C-52, Newfoundland and Labrador would actually receive no offsets at all in any year where its Equalization payment were reduced to zero as a result of the O'Brien cap.
There is no obvious reason for making this change. If the federal government wanted to give effect to both the 2005 agreement and the 2007 budget - allowing for choices - Bill C-52 would necessitate only modest changes, if any, to the implementation acts for 1985 Atlantic Accord and the 2005 agreement.
14 April 2007
National Poetry month
A few suggestions:
1. The Poems of Ewan McTeagle.
2. Wilfred Owen
3. Celia, Celia, by Adrian Mitchell:
1. The Poems of Ewan McTeagle.
2. Wilfred Owen
3. Celia, Celia, by Adrian Mitchell:
When I am sad and weary4. Healy Willan, Canadian composer, organist and devoted limerick afficionado:
When I think all hope has gone
When I walk along High Holborn
I think of you with nothing on
There once was a man from East Sheen
Whose musical ear was not keen.
He said, "It is odd,
But I cannot tell 'God
Save the Weasel' from 'Pop! Goes the Queen'"
Soldiering on
An unidentified soldier salutes the remains of two comrades as they are loaded on Canadian Forces aircraft bringing them back to Canada.The soldier is from an unspecified community in Conception Bay, Newfoundland.
Evolution's bitch
Scientists have discovered similarities between Tyrannosaurus Rex DNA and that of a modern chicken.
From world-dominating predator to a lunch meat for kids all in a few million years.
T. Rex: Darwin's bitch.
Darwin's other bitches?
Guys who fancy themselves the next Mike Holmes just because they saw it on television.
From world-dominating predator to a lunch meat for kids all in a few million years.
T. Rex: Darwin's bitch.
Darwin's other bitches?
Guys who fancy themselves the next Mike Holmes just because they saw it on television.
Upping rates better than less for longer
A panel reviewing parental and maternity benefits is recommending that the claim period be extended.
How about just changing the amount paid instead?
Currently parental and maternity benefits under the Employment Insurance program are pegged at the same rate as EI, that is 55% of previous salary.
The panel also recommended changing the rates. Good for them.
That's a simple initiative most parents would readily accept, even if the benefit period remained limited to one year.
How about just changing the amount paid instead?
Currently parental and maternity benefits under the Employment Insurance program are pegged at the same rate as EI, that is 55% of previous salary.
The panel also recommended changing the rates. Good for them.
That's a simple initiative most parents would readily accept, even if the benefit period remained limited to one year.
13 April 2007
Premature gasket-blowing
From Tom Marshall, minister of finance:
As Offal puts it:
Wade Locke's latest analysis is interesting for two reasons.
First, it suggests that there is an interpretation of eligibility for Equalization offsets which is different from the one used in his original presentation. More will follow on that in a separate post.
Specifically, Locke quotes this section of an e-mail from an unnamed senior federal finance official:
What Locke has done here is identified a potential issue. It is far from proven conclusively. As well, the provincial government appears to have blown a gasket before conducting its own review. Tom Marshall stated in a number of interviews that his officials were still seeking clarification on the issue, he had endeavoured to have the issue clarified with his federal counterpart and that provincial justice officials were reviewing the federal legislation. In one interview it appeared that Marshall was entirely unaware of this issue until Locke brought it to his attention sometime before Locke's news release today.
The one thing that can be concluded from this entire episode over the past 24 hours is that federal-provincial relations are at an all time low state. Marshall's inflammatory news release, done with the full approval of the Premier presumably, will not help resolve this matter successfully.
Claiming to be misled is one thing, if you have evidence and can prove it. Flaming the federal government - or anyone, for that matter - without substantive evidence is grossly unprofessional.
Dr. Locke has provided an invaluable public service with his analysis. Would that the politicians acted with the same professionalism he has displayed.
The Honourable Tom Marshall, Minister of Finance and President of Treasury Board, today confirmed that the federal government has misled the Provincial Government and the people of Newfoundland and Labrador regarding the true implications of the new equalization program as outlined in its 2007 Budget.However, as Simon Lono points out at Offal News, there is something odd about Marshall's release in that it provides no provincial government calculations. Indeed, the provincial government has thus far provided not a shred of information or analysis to back its original contentions on Equalization. Ditto for the federal government, represented in this case by federal fish minister Loyola Hearn.
As Offal puts it:
You would think the Hearn would release numbers of his own to defend the federal position. He does not. Instead he's reduced to a weak claim that no province will be harmed.Apparently not.
But does he actually have any real idea whether the province will be harmed? Apparently not.
As for Marshall, he's definitely on the warpath now. And you can expect the Premier to be leading the barbarians at the federal gate as soon as he gets home.
But didn't Marshall already know that Locke's numbers were off in the first place?
Wade Locke's latest analysis is interesting for two reasons.
First, it suggests that there is an interpretation of eligibility for Equalization offsets which is different from the one used in his original presentation. More will follow on that in a separate post.
Specifically, Locke quotes this section of an e-mail from an unnamed senior federal finance official:
In effect, NL would be eligible to receive Equalization and offsets as long as long its own-source per capita fiscal capacity (including non-resource yields and 100% of resource revenues) is not equal to or greater than the own-source per capita fiscal capacity of the non-receiving province with the lowest per capita fiscal capacity. [Italics in original]On the face of it, this section does not contradict what appears to be the intention of the 2005 offshore deal or the 2007 federal budget as announced.
What Locke has done here is identified a potential issue. It is far from proven conclusively. As well, the provincial government appears to have blown a gasket before conducting its own review. Tom Marshall stated in a number of interviews that his officials were still seeking clarification on the issue, he had endeavoured to have the issue clarified with his federal counterpart and that provincial justice officials were reviewing the federal legislation. In one interview it appeared that Marshall was entirely unaware of this issue until Locke brought it to his attention sometime before Locke's news release today.
The one thing that can be concluded from this entire episode over the past 24 hours is that federal-provincial relations are at an all time low state. Marshall's inflammatory news release, done with the full approval of the Premier presumably, will not help resolve this matter successfully.
Claiming to be misled is one thing, if you have evidence and can prove it. Flaming the federal government - or anyone, for that matter - without substantive evidence is grossly unprofessional.
Dr. Locke has provided an invaluable public service with his analysis. Would that the politicians acted with the same professionalism he has displayed.
Wade Locke's latest analysis
Wade Locke has graciously provided his latest news release, which is reproduced below in its entirety:
Updated Estimates of
Table 1: Updated Estimates Based on Accord Eligibility Criterion Contained in the Budget Implementation Act for the Impacts of the Equalization Options on the NL Treasury from the 2007 Federal Budget - 2007/08 to 2019/20
| | Status Quo | 50% w Cap (original estimate) | 50% w Cap (updated estimate) |
| Period 2007/08 – 2011/12 | |||
| Oil Revenue | $7.30 B | $7.30 B | $7.30 B |
| Accord Payments | $2.51 B | $2.37 B | $1.72 B |
| Equalization | $0.59 B | $0.76 B | $0.76 B |
| Combined | $10.40 B | $10.43 B | $9.78 B |
| Period 2012/13 – 2019/20 | |||
| Oil Revenue | $7.37 B | $7.37 B | $7.37 B |
| Accord Payments | $0.0 B | $4.96 B | $0.0 B |
| Equalization | $0.76 B | $0.0 B | $0.35 B |
| Combined | $8.13 B | $12.33 B | $7.72 B |
| Period 2007/08 – 2019/20 | |||
| Oil Revenue | $14.67 B | $14.67 B | $14.67 B |
| Accord Payments | $2.51 B | $7.34 B | $1.72 B |
| Equalization | $1.35 B | $0.76 B | $1.11 B |
| Combined | $18.53 B | $22.76 B | $17.50 B |
On
Given the sensitivity and the emotion surrounding this particular issue, I feel it is important to document how things have evolved to this point. This should enable others to judge the credibility of the approach and the results derived there from.
In any empirical assessment, it is necessary to make assumptions about how elements of each province’s fiscal capacity are expected to evolve over time. The assumptions used in the Locke analysis are clearly specified in the original presentation and interested individuals are referred to www.arts.mun.ca/arts to view the original presentation. While different assumptions will yield different specific results, they are unlikely to change the basic finding listed in Table 1. However, I would encourage both officials in Finance
The crucial assumption utilized in the original presentation was the eligibility criterion for payments under the Atlantic Accord. Specifically, the original analysis assumed that, under the 50% option,
The specific questions asked and the responses received were:
Question #1: In calculating the accord under the new arrangement, is it the case that NL receives the accord if it qualifies for equalization on the new arrangement prior to the cap being imposed? In other words, while the cap can remove all equalization payments, but before that happens, the province could qualify to receive equalization pre-cap and as such be eligible to receive the accord. Is that correct?
Question #2: In calculating the accord under the new arrangement, it is my interpretation that the province is entitled to receive the accord so long as it qualifies for equalization before the cap is imposed, rather than after. Is that correct?
Response #2: The legislation before the House proposes that under the new arrangement, the test for determining whether or not NL qualifies for the 2005 Accord is whether or not it would receive Equalization payments under the base O’Brien formula – that is, 50% inclusion of resources plus the cap. If it receives EQ under that formula, then the next steps are taken to determine how much. In this case, the offsets are determined before the cap is applied.
At that point, I had asked for the specific legislation so that I could review it myself. I received it the next day after my presentation and reviewed it on Easter weekend. However, between 4:40 pm (the time of the email) and 7:00 pm (the scheduled start of the presentation) it was impossible to re-analyze the data with the alternate eligibility assumption. Instead, I modified the original presentation to flag the crucial assumption about Accord eligibility. I, as well, indicated in the presentation that if the eligibility assumption was changed, then the estimates under the 50% option would have to be modified, not realizing the extent of the change that would be required.
Economics: the dismal science
Wade Locke has adjusted his assumptions.
Now he says that what was originally a big gain for the province is in fact a loss.
Yes, the 50% exclusion now goes from being a six billion dollar gain for Newfoundland and Labrador over the status quo becomes a one billion net loss.
That's with a change in the assumptions, or more specifically, as CBC's David Cochrane described it, a reading of the budget implementation legislation. He referred to a "stricter" interpretation of what it would take for the province to qualify for Equalization in the future and there
fore how the offshore offsets deals would be affected.
Some quickie observations, before getting Locke's revised views:
1. Economics is a dismal science. After all, if adjusting some assumptions produces a variation of $7.0 billion - your entire Equalization and offsets work, incidentally - then you have some basic problems. Makes you wonder what it would take to have the Danny Williams option turn into a pig.
2. For all the big numbers, remove $14.7 billion. Locke includes offshore revenue in each of projections, for some inexplicable reason. Lop out that specific figure and you'll see the specific effects of Equalization changes and the offsets. That is assuming that Locke's assumptions on any given point are valid. That's not a sarcastic comment; it's a caveat.
3. The cap in the original 2005 deal obviously exists in one way or another. No matter how you look at it the cap built into the original deals - qualifying for Equalization or not - is still active. The real question Locke seems to be grappling with is when that cap cuts in.
4. Yes, there is a cap in the original deal. The offsets only flow as long as the province qualifies for the Equalization hand-out.
And for the record both for Mainland readers and the locals, Danny Williams' original goal in 2004 - not the one he settled for in January 2005 - was for a doubling of oil and gas revenues in perpetuity.
5. The original 2005 deal did not deliver as promised. Said it before. Say it again.
6. Wade Locke still hasn't assessed the other Harper option that still exists, i.e. 100% exclusion of non-renewables with a cap. Too bad Locke is apparently hauling ass out of the debate now that he's stirred it up. Maybe he got some angry phone calls from Florida or wherever the Premier is.
To be complete though, Locke should have assessed that variation since it is on the table.
And if 100% exclusion of non-renewables is such a good idea, then maybe applying the cap is better than what we have now.
At least according to the latest numbers, based on the latest assumptions.
7. Danny Williams had numbers like the ones Locke released initially. On March 26, Danny told CBC radio's Jeff Gilhooley that in all likelihood the province would shift to the 50% exclusion option within a year or two, i.e. by 2009, based on the government's analysis.
Now he says that what was originally a big gain for the province is in fact a loss.
Yes, the 50% exclusion now goes from being a six billion dollar gain for Newfoundland and Labrador over the status quo becomes a one billion net loss.
That's with a change in the assumptions, or more specifically, as CBC's David Cochrane described it, a reading of the budget implementation legislation. He referred to a "stricter" interpretation of what it would take for the province to qualify for Equalization in the future and there
fore how the offshore offsets deals would be affected.
Some quickie observations, before getting Locke's revised views:
1. Economics is a dismal science. After all, if adjusting some assumptions produces a variation of $7.0 billion - your entire Equalization and offsets work, incidentally - then you have some basic problems. Makes you wonder what it would take to have the Danny Williams option turn into a pig.
2. For all the big numbers, remove $14.7 billion. Locke includes offshore revenue in each of projections, for some inexplicable reason. Lop out that specific figure and you'll see the specific effects of Equalization changes and the offsets. That is assuming that Locke's assumptions on any given point are valid. That's not a sarcastic comment; it's a caveat.
3. The cap in the original 2005 deal obviously exists in one way or another. No matter how you look at it the cap built into the original deals - qualifying for Equalization or not - is still active. The real question Locke seems to be grappling with is when that cap cuts in.
4. Yes, there is a cap in the original deal. The offsets only flow as long as the province qualifies for the Equalization hand-out.
And for the record both for Mainland readers and the locals, Danny Williams' original goal in 2004 - not the one he settled for in January 2005 - was for a doubling of oil and gas revenues in perpetuity.
5. The original 2005 deal did not deliver as promised. Said it before. Say it again.
6. Wade Locke still hasn't assessed the other Harper option that still exists, i.e. 100% exclusion of non-renewables with a cap. Too bad Locke is apparently hauling ass out of the debate now that he's stirred it up. Maybe he got some angry phone calls from Florida or wherever the Premier is.
To be complete though, Locke should have assessed that variation since it is on the table.
And if 100% exclusion of non-renewables is such a good idea, then maybe applying the cap is better than what we have now.
At least according to the latest numbers, based on the latest assumptions.
7. Danny Williams had numbers like the ones Locke released initially. On March 26, Danny told CBC radio's Jeff Gilhooley that in all likelihood the province would shift to the 50% exclusion option within a year or two, i.e. by 2009, based on the government's analysis.
12 April 2007
When is a promise not a promise?
Well, according to the man at right, it all depends on who makes the promise.
When this man (left) - call him The Boss - makes a pledge, in writing no less, and on several occasions to reporters, it really shouldn't be taken at face value.The Boss may be a lawyer and the legal issues involved - including longstanding provincial government policy - may be well known, but well, even if he says absolutely "I will do it", that really isn't something you can take to the bank.
And even in making the explanation that the promise made by The Boss really isn't a promise, the guy doing the Noddy impersonation manages to trip himself up.The Boss did do a deal on trees, Noddy says. But he can't do what he appears to have committed to do in that typewritten thing that appears to contain a promise but in reality contains nothing at all.
Because somehow making a deal - entirely within provincial jurisdiction - on animals would somehow magically involve the federal government making a decision but at the same time making a deal on trees, also entirely within provincial jurisdiction, can somehow be done without involving people other than The Boss and his associate, Noddy.
Confused?
So is Noddy.
Obviously.
At least, Stephen Harper did something half-decent in place of what he promised.
The Boss hasn't even tried.
Excuses from a guy in a funny hat don't count.
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