1. A post on the First Law of Petropolitics, a reprint of a column from the Globe on the implications in Canada.
2. "Jobs out east", a look at the local supply and service sector for the oil industry.
3. Energy transportation issues.
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The real political division in society is between authoritarians and libertarians.
It is not true, then, to say that the Accord has been violated. It is true that Mr. Harper played Atlantic Canadians for suckers. At least he is paying the price.
June 13, 2007
APEC releases study on the Equalization Options of Budget 2007 for the Atlantic Provinces
APEC is today releasing a new report on the implications of the proposed changes to the Equalization program for the four Atlantic provinces. The report entitled Assessing the Equalization Options of Budget 2007 for the Atlantic Provinces has been prepared by Professor Paul Hobson of Acadia University and Professor Wade Locke of Memorial University, both Senior Policy Advisors of APEC.
Following on the recommendations of the Expert Panel on Equalization, the new Equalization program includes the re-establishment of a ten province standard, simplified measures of fiscal capacity and a more predictable and stable payment system that is formula driven. The new program also reverses a pre-election commitment to exclude natural resource revenues, and includes 50% of these revenues.
The study provides estimates of the revenue flows to the four provinces under the current program (Fixed Framework) and the new Equalization program for each fiscal year from 2007-2008 to 2019-2020, the year in which the Nova Scotia and Newfoundland and Labrador Offshore Accords expire. These simulations utilize publicly available data projected forward, based on certain key assumptions. In particular, it is assumed that the aggregate of the fiscal equalization payments under the Fixed Framework will grow at an annual rate of 3.5% (as currently specified by legislation) and that non-oil and gas fiscal capacities for all provinces grow at an annual rate of 1.4% (the aggregate rate of growth of per-capita fiscal capacity in Canada over the last ten years). In addition, the simulations take into account changes to the Fiscal Arrangements Act, and to Offshore Accord legislation as detailed in the Budget Implementation Act (Bill C-52).
The Atlantic Accord, signed in 1985, and the Canada-Nova Scotia Offshore Petroleum Resources Accord, signed in 1986, gave Newfoundland and Labrador and Nova Scotia, respectively, the right to collect royalties and to levy taxes on offshore operations as if the resources were on provincial land. In addition, the Accords provide Equalization offset provisions to compensate for potential reductions in Equalization payments as these additional revenues come on stream. The 2005 Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act provided for additional Equalization offset payments to Nova Scotia and Newfoundland and Labrador to ensure that each province would receive 100 percent of the benefit of its offshore revenues. That is, offset payments would ensure no claw back of offshore revenues through Equalization.
The summary revenue implications for each of the four Atlantic provinces are provided in the table below. Nova Scotia, New Brunswick and Prince Edward Island are better off financially under the new Equalization program for two years and thereafter are disadvantaged by the revised Equalization program. Newfoundland and Labrador is immediately worse off under the new program.
Specifically, the impacts on the provincial treasuries are:
o Nova Scotia - $159 million increase in revenues for the first two years under the new Equalization program, and reduced revenues in each year thereafter compared with the Fixed Framework: in aggregate, the province receives $1.4 billion less under the new Equalization program than under the Fixed Framework;
o New Brunswick - $68 million increase in revenues for the first two years under the new Equalization program, and reduced revenues in each year thereafter compared with the Fixed Framework: in aggregate, the province receives $1.1 billion less under the new Equalization program than under the Fixed Framework;
o Prince Edward Island - $7 million increase in revenues for the first two years under the new Equalization program, and reduced revenues in each year thereafter compared with the Fixed Framework: in aggregate, the province receives $196 million less under the new Equalization program than under the Fixed Framework;
o Newfoundland and Labrador - $654 million reduction in revenues for the first two years under the new Equalization program, an increase of $22 million in the third year, and reduced revenues in each year thereafter compared with the Fixed Framework: in aggregate, the province receives $1.4 billion less under the new Equalization program than under the Fixed Framework. It should be noted that Newfoundland and Labrador will no longer be a recipient of Equalization after 2008-2009, under both the Fixed Framework and the new Equalization program. [Emphasis added]
Beyond 2007-2008, both Nova Scotia and Newfoundland and Labrador can choose to permanently opt into the new Equalization program or remain under the Fixed Framework. The results clearly indicate that both provinces should remain under the Fixed Framework. Since other provinces were not offered this choice, this would result in an unprecedented situation in which two distinct Equalization programs are operating simultaneously, a situation which is not likely to be sustainable.
Furthermore, Equalization payments under the new program are constrained by a fiscal capacity cap. For purposes of the cap, fiscal capacity is measured, on a per-capita basis, as the sum of non-resource fiscal capacity, one hundred percent resource fiscal capacity, (pre-cap) Equalization entitlements and payments under the Accord legislation (applicable only to Nova Scotia and Newfoundland and Labrador). Total fiscal capacity of a receiving province cannot rise above that of the lowest non-receiving province. Should it do so, Equalization payments are to be reduced accordingly.
The Budget Implementation Bill contains significant changes to the 1985 Atlantic Accord, and to the 2005 Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act, necessitated by the introduction of the new Equalization program. The protection provided by the Accords is undermined by any Equalization reductions caused by the fiscal capacity cap, since any reductions amount to claw backs of Accord payments. In the authors’ view, this violates both the letter and the spirit of the Accords. [Emphasis added]
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The Atlantic Provinces Economic Council is an independent, non-profit research and public policy organization that seeks to advance the economic development of the Atlantic region.-srbp-
Williams sees new allies in OttawaHow times change.
CBC News
Premier Danny Williams says a new Conservative government in Ottawa is nothing to fear – and could deliver on long-standing issues involving the federal government.
"I think Atlantic Canadians are going to be very pleasantly surprised and pleased with the performance of Mr. Harper," said Williams.
While Williams embraced Harper's response to a letter he sent to the major party leaders on issues pertinent to Newfoundland and Labrador, he refrained from actively campaigning for the Conservatives in the election.
Instead, Williams planted a sign supporting Conservative candidate Norm Doyle outside his residence, and used cautious language during the campaign.
During the campaign, Williams also applauded a response from NDP leader Jack Layton to the same list of questions, while being cool to the response from Liberal leader Paul Martin.
Williams also denied a rift between himself and the new MP for Avalon, Fabian Manning.
Manning was booted from the provincial Progressive Conservative caucus last May, after Manning spoke out against the provincial government's controversial raw materials sharing plan for the crab industry.
Williams said the dispute was "a caucus issue" and applauded Manning's victory.
"In all fairness to Fabian, I wouldn't take anything from Fabian's victory tonight. It was expected," said Williams, who noted a number of the members of the provincial Tory caucus campaigned for Manning.
In fact, Williams suggested that the Atlantic Accord dispute – in which he launched salvo after salvo against the Martin Liberals in a campaign to wrest more financial benefits from the offshore oil industry – helped Manning take the seat.
"That was John Efford's former district. The Atlantic Accord played a big role in that particular district, as it has played a role in the entire province," Williams said.
Efford, who won the Avalon race in 2004 with almost 60 per cent of the vote, became a lightning rod for anger when he rebuked Williams in the early days of the Atlantic Accord fuss.
"We basically had to drag Ottawa kicking and screaming to come with the Accord deal … I think it played a significant factor."
Efford announced his retirement in November, citing his lengthy battle with diabetes.
Williams, meanwhile, said he looks forward to a productive relationship with Harper.
"It's a delicate job [and] it's a difficult job to manage the relationship between the premiers and the prime minister of the country. However, I think it will be a refreshing change," Williams said.
He said he expects Harper to follow through on pledges involving the fishery, energy issues and the "fiscal imbalance" in Atlantic Canada.
Provincial Politicians Weigh In on Election - Jan 24, 2006
VOCM
Premier Danny Williams says he was a little surprised at last night federal election results. Williams says he thought Stephen Harper's Conservatives would get a larger minority than they did. He's also surprised that Atlantic Canada did not go a little stronger towards the Conservatives. Overall though he is generally pleased with the
result. He says the biggest issue facing the province is the fishery.
Williams says he did give some consideration to calling a by-election in Placentia-St. Mary's today, but he says this wouldn't be fair to party workers having just come off a federal election which saw Fabian Manning win John Efford's old seat. The by-election will be held soon.
Opposition Leader Gerry Reid says Paul Martin has made the right decision to step down as Liberal leader. Following his defeat last night, Martin announced he will leave the post after an orderly transition of power. Reid says Martin realizes that he can't lead the party to another victory. Reid says he believes Brian Tobin would be a good choice and Canadians would accept him.
Provincial NDP leader Jack Harris says given the calibre of local NDP candidates he's very disappointed the Province hasn't sent an NDP member to Ottawa. As for the Conservative minority victory, Harris told VOCM Open Line the federal NDP will have a strong voice in the House of Commons.
The Atlantic Accord negotiating team photo. Insiders say that Sandra Buckler, the prime minister's communications director, instructed MacKay to sign the letter, which rejected any side deals with Nova Scotia.

Our voice in Ottawa must be strong and passionate, however it must also be rational and levelheaded. Only then will we be effective in achieving for this Province the rights and benefits we have earned and deserve. My government will work cooperatively and collaboratively with our federal counterparts. In so doing, we will develop a mutual respect with the federal government, which in my experience is the key to successful and productive relationships.Stephen Harper, from 2006:
It is my hope as Prime Minister to initiate a new style of open federalism which would involve working more closely and collaboratively with the provinces and the Council of the Federation to develop Canada’s economic and social union, to clarify appropriate federal and provincial responsibilities, and to resolve the fiscal imbalance between the federal and provincial-territorial governments...Jim Flaherty, from March 2007:
We believe that a new equalization formula should exclude non-renewable resource revenues for all provinces, but also that no province should be adversely affected during the transition to any new equalization formula. We look forward to hearing the suggestions of the expert-panel review currently underway on the equalization formula, and to working collaboratively with the provinces and territories to develop a renewed equalization formula that is fair and acceptable to all provinces and territories.
"Now we can get over the bickering and now the federal government can concentrate on our constitutional responsibilities."Stephen Harper, May 2007:
"If we cannot continue with this agreement ... we will have to address it ourselves in the courts."
In Stephen Maher's June 6 story, "Crosbie pushed PM to honour offshore deals," it says John Crosbie was "instrumental in negotiating the l980s deals under which the Conservatives under Brian Mulroney ceded control of offshore petroleum to Nova Scotia and Newfoundland."
In fact, and despite claims to the contrary, John Crosbie was never involved in the offshore negotiations with either province in the l980s. That task was assigned by prime minister Brian Mulroney to me, on the grounds that a Western MP and minister with an energy background would bring more balance to an issue which involved intense regional as well as national implications.
Mr. Mulroney was still leader of the Opposition when he signed the original principles of the Atlantic accord with then premier Brian Peckford on June 14, 1984, three months before the Conservatives won the federal election. The completion of negotiations, led by me, was a priority of his government.
There would be no Atlantic accords without the Conservative government of Mr. Mulroney. The primary objective was to treat the provinces with offshore resources on the same basis as provinces like Alberta with land-based resources, in the interest of national unity. That object has been accomplished.
The actions of Mr. Crosbie in attacking the Atlantic accord provisions in the Harper budget show Mr. Mulroney's concerns were valid.
Pat Carney, PC,
Senator for British Columbia

"2. (1) An action or proceeding does not lie or shall not be instituted or continued against the Crown or a minister, employee or agent of the Crown based on a cause of action arising from, resulting from or incidental to the disposition of the assets, business and other undertakings of FPI Limited or Fishery Products International Limited.
(2) A cause of action against the Crown or a minister, employee or agent of the Crown arising from, resulting from or incidental to the disposition of the assets, business and other undertakings of FPI Limited or Fishery Products International Limited is extinguished.
and...
3. A person is not entitled to compensation or damages from the Crown or a minister, employee or agent of the Crown arising from, resulting from or incidental to the disposition of the assets, business and other undertakings of FPI Limited or Fishery Products International Limited.