Former East Coast Tory godfather John Crosbie sent two memos to Prime Minister Stephen Harper in a vain attempt to convince him to honour the 2005 offshore accords between Ottawa and Nova Scotia and Newfoundland and Labrador.The memos provide a strong argument in support of those, like Nova Scotia Tory MP Bill Casey, who argue that Mr. Harper and Finance Minister Jim Flaherty have violated the accords with the March budget.
Certainly, few people know more about the issue than Mr. Crosbie, who was instrumental in negotiating the 1980s deals under which the Conservatives under Brian Mulroney ceded control of offshore petroleum to Nova Scotia and Newfoundland.
“The authors of the Atlantic council report concluded that this government's budget ‘violates the letter and the spirit of the accords,’" said Deputy Leader Michael Ignatieff. “Even former Conservative Minister of Finance John Crosby said ‘they're changing the equalization formula so that it will cancel out the principles of the accord.’
Meanwhile the rage spreads as more Atlantic provinces realize the Tories have created a two tier form of equalization.
While the new equalization formula will provide New Brunswick with a $68-million increase in revenue for the first two years, the province will receive, from 2009 through 2020, a stunning $1.1-billion less than it would have under the existing framework. While Mr. Harper talks about fixing equalization, not only has he broken his promise to honour the Atlantic Accord in Nova Scotia and Newfoundland, but he also has created two classes of equalization.As an Albertan I empathize with the Maritimes. We were there once, in the thirties, despite our coal reserves, it was not enough to keep us afloat as the feds took the resource monies and gave us back a smidgen called equalization.Acadia University’s Paul Hobson and Memorial’s Wade Locke have done better than running to court. In a study released last week, they ran the numbers on the two equalization options presented in the budget – the old "fixed framework" that uses a five-province standard and the new "O’Brien formula" that upgrades to a 10-province standard, excludes some resource revenues and introduces a cap to claw back equalization if resource revenues push a have-not province above Ontario’s theoretical taxing capacity.
The bottom line: The new system is a financial bust for all four Atlantic provinces over the next 13 years, whether or not they have resource accords with Ottawa.
Jim Bickerton of St. Francis Xavier University in Antigonish believes the political battle surrounding the federal budget underscores a lack of understanding between the federal Conservative government and Atlantic Canada.
Bickerton says any attempt by Ottawa to portray the new equalization deal contained in the recent federal budget as a "fair and generous offer" for Nova Scotia and Newfoundland misses the point about why they were given offshore agreements in the first place.
"The symbolism of this went much deeper than simply just a broken agreement," he says.
Agreements signed in 2005 with Paul Martin’s Liberal government protected the two provinces’ offshore oil and gas revenues from federal equalization clawbacks. After a long and at times dramatic fight dubbed the "Campaign for Fairness," the deals were heralded as key economic development tools.
The current equalization offer forces the provinces to choose between a new formula or their offshore deals, a choice both fear could cost them millions of dollars over the long term.
"The broken trust was that the federal government had more or less admitted that this was the region’s one great opportunity to reverse its historic subordinate position within the federation and that it was willing to support them in doing that," says Bickerton.
Locke's work on equalization and the Atlantic Accord have been followed closely in political circles.
This spring, when he determined that Newfoundland and Labrador would actually benefit from the new equalization formula, federal Conservatives championed his work.
However, Locke dramatically revised his analysis when he obtained full details from the federal Finance Department on how the new equalization formula will work.
He found that Newfoundland and Labrador will not only lose money as compared to the status quo, but the province would have received about $11 billion more over the next 13 years had Prime Minister Stephen Harper maintained a 2006 pledge on equalization.
It was when we struck oil, and had the oil barons take over the State that we declared our constitutional autonomy through provincial control of our natural resources.
Alberta today pays into the equalization payments to other provinces. Not just Ontario. Which irks me no end when the Conservatives talk about capping equalization at the Ontario level. What about the Alberta level, well they don't want to mention Alberta since that might wake up the sleeping giant which hates Ottawa.
Yep you see the broken promise to Atlantic Canada goes along with a letter sent to Saskatchewan and Alberta promising to respect provincial resource rights and not include them in the equalization formula. Signed by the Grande Fromage his-self.
So once the Atlantic Accord was signed it set the conditions for Nova Scotia and Newfoundland to benefit from their offshore resources just like Alberta and Saskatchewan can from their inland resources.
Those resources being oil and gas. Which seem to be unique when it comes to the federal government. Unlike say mining, or hydro-electric power, two resources Ontario and Quebec have but are never considered part of the equalization formula, past or present.
The federal state controls offshore oil and gas reserves in a paternalistic fashion for the good of the provinces where they are. They still control the offshore resources 'in trust' for Nunavut, until such time as that 'territory' actually becomes a province.
Having to give up such a lucrative source of funds, is hard to do. And the Liberals were forced into expanding the Atlantic Accord originally signed by the Mulroney Conservatives. In doing so they gave the Atlantic provinces their just due.
The Harpocrite Conservative opposition demanded the Martin government honour 'their commitment' made during the 2004 election. A promise Harper went on to reiterate in the 2006 election.
But he broke that promise, by tying the provincial rights to resource revenues to equalization payments, a bit of sugar for two years and then claw backs. Albertans would never stand for this kind of treatment, regardless of the party in power in Ottawa.
And the Atlantic premiers as well as Lorne Calvert are correct in admonishing Albertans that Harpers betrayal bodes ill for us as well. Unfortunately it has fallen on deaf ears since the Calgary School Conservatives dominate both the Federal party and Stelmach's regime in Alberta.
It's a matter of fairness. The Maritimes could well become self sufficient with their oil revenues. And then and only then should equalization payments end, as they have with the former have not province of Alberta.
Equalization & The Atlantic Accord - 'A Deal is A Deal' Petition
Nova Scotia Premier Rodney MacDonald is encouraging all Nova Scotians and all Canadians to send a strong and united message to Ottawa by signing a petition on Nova Scotia's website.
www.gov.ns.ca/accord
The only problem with the petition is there is no space to put your city or province. So I used the space for phone number (optional).
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