I am not a lawyer and thus can not speak to the legalities involved here. I only know that the Newfoundland oil and gas resources are in our offshore and whatever rights existed then or arose later were rights that came as a result of our joining Canada. If we had not joined Canada, Canada would have no rights to them today. Despite this, the federal government steadfastly refused to give Newfoundland and Labrador its due. It took a change of government in Ottawa and a more balanced view of what Canada could and should be that we got the Atlantic Accord which provided that the offshore resources would be treated as if they were on land, thus making Newfoundland and Nova Scotia the prime beneficiaries of their offshore oil and gas resources.
The reality however is that this principle of being the prime beneficiaries has not worked out the way it was intended. The various federal revenues represents 54% of the total government take. The provincial revenues represented 46%. However the federal government takes back 70% of the province's 46% in its claw back mechanism, which gives the federal government 86% and leaves the province with 14%. Right now with the claw back, for every $1.00 of benefit to Newfoundland, Ottawa benefits by $6.14. Even if Danny Williams gets what he has asked for, for every $1.00 dollar of benefit to Newfoundland, Ottawa will still get $1.17. Who then, with this split in revenues (86:14) is the prime beneficiary in actual fact? This situation is what Premier Danny Williams is so upset about and what Prime Minister Paul Martin agreed to change during the election. He agreed that Newfoundland and Nova Scotia would get 100% of the provincial revenues without the claw back.
WHY you may ask, should Newfoundland and Labrador and Nova Scotia get 100% of the provincial oil revenues (still only 46% of the total government take) and at the same time get equalization as well. In other words, why is the claw back not appropriate here? Well, it is important to understand that the equalization bar is an annual measure of government revenues and government services. It essentially ignores the extent of provincial debt, tax burdens and infrastructure in place in a province. Consequently, when major funds such as oil revenues start to flow in, the equalization starts to flow out. The net result of this is almost a status quo position for the affected province which essentially prevents a province from being
able to help itself.
Another issue that is worth noting from a Newfoundland and Labrador perspective is with reference to the current sale of Petro Canada shares by the Federal Government which raised some hundred's of millions of dollars for Ottawa. It is important to know that a large part of Petro Canada's asset base is its holdings on the East Coast (Hibernia, Terra Nova, White Rose and Sable). Canadians may not be aware that those interests initially came as governmental crown share allocations for the discoveries on the East Coast. They were granted by the federal government who then claimed ownership in the resource and when Petro Canada was a federal crown corporation. If the principles later established in the Atlantic Accord had applied (namely that the resource was to be treated the same as on land), then any crown share would have accrued to the provinces of Newfoundland and Nova Scotia and not Ottawa. Clause 40 of the Atlantic Accord provides that the costs and benefits of crown share will be shared equitably by both governments. Does Newfoundland and Labrador or Nova Scotia have any claim to a share of proceeds of sale of Petro Canada shares? I don't know, but in principle, did a significant part of Petro Canada's asset base not include what was in essence a crown share in Newfoundland and Labrador's and Nova Scotia's offshore resources? Was
the principle of the Accord upheld in this respect? Has anyone addressed it?
I assure everyone that lowering the Canadian flag does not represent disrespect for the flag. The prime minister called it disrespectful...no matter that the province of Quebec also does not fly the Canadian flag on their public buildings. For Newfoundlanders and Labradoreans, this is not a separatist issue. We are proud Canadians and we love the flag as much as Canadians anywhere and we wear it proudly where ever we go. If there are Canadians who took offence to this action, we are sorry. But give your head a shake...we treated the flag with respect. It was simply lowered as a symbolic protest of the legitimate emotional and deep feelings that continue to linger and be carried inside us about how we have been treated by our federal government
Gil Dalton
Executive Vice-President and CFO of Baine Johnston Corporation
St. John's, NL, Canada