Wednesday, June 13, 2007

 

The more things change the more they stay the same

Repost

Great investigative journalistic piece here on the history of the machinations of the feds with respect to Nova Scotia's offshore oil and gas.

Harper not the first to ignore deal with N.S.

By ROGER TAYLOR Business Columnist
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ABOUT FOUR years ago I started writing about the political intrigue of offshore royalties and joked at the time that they were probably the last words an insomniac would read before finally dropping off to sleep.
Despite my attempt at humour, this has been and is a pretty serious issue from a Nova Scotia perspective.
Today, I’m still writing about the issue and although the political intrigue seems to have stepped up general interest in the subject lately, I still believe the underlying issue fails to make the radar for most Canadians — or, for that matter, Nova Scotians.
If you look at the history of accords between Nova Scotia and the senior level of government, however, things have not changed all that much.
For Nova Scotia, the ability to capture offshore and oil and gas royalty revenue without having it clawed back by the federal government has always been paramount. As far as Ottawa is concerned, it owns the offshore and therefore is reluctant to share the revenue with anyone, especially the provinces.
Until the Atlantic accord deal was reached in the run-up to the last federal election, federal governments have been reluctant to take provincial offshore royalties out of the calculation they use to determine federal revenue transfers to Nova Scotia. It is a hard sell to the wealthier provinces because the equalization program is intended to take revenue from wealthy provinces to help poorer provinces to achieve national health and educational standards.
Prior to the Atlantic accord, an aide to then-premier John Hamm calculated that the federal government deducted 81 cents in transfer payments for every dollar Nova Scotia earned in offshore royalties.
Hamm was the first to bring Nova Scotia’s case for gaining greater offshore royalties to public attention with his failed Campaign for Fairness. That campaign tried to convince Ottawa that allowing Nova Scotia to keep most of the offshore royalties was the right thing to do because it was an opportunity to turn a have-not province into one that didn’t need federal transfer payments.
As we all know, Hamm was largely ignored by the successive Liberal governments of Jean Chretien and his successor, Paul Martin.
While the Atlantic accord is garnering a lot of attention, aside from Hamm’s fairness campaign Nova Scotia has had plenty of signed deals with Ottawa, all aimed at provided plenty of additional income to the province and dating back to the 1980s.
Tory premier John Buchanan actually signed two agreements with the Ottawa dealing with the offshore. The first deal was signed in 1982, endorsed as part of then-prime minister Pierre Trudeau’s national energy program.
The agreement designated Nova Scotia as the largest beneficiary from the offshore; the province would only have to start sharing revenue with the federal government after its per capita fiscal capacity was more than 130 per cent of the national average. At the same time Nova Scotia would have the right to acquire 25 per cent equity stake in all offshore energy projects.
The revenue-sharing formula also took into account Nova Scotia’s unemployment rate, compared to the national average, in determining how much of the offshore revenue the province could keep. The 1982 agreement was notable for granting Nova Scotia ownership of Sable Island.
In 1986, Buchanan signed another accord with Progressive Conservative prime minister Brian Mulroney, which gave Nova Scotia the first right to buy into offshore projects if Canadian content in the project is less than 50 per cent.
The accord with the Mulroney government also recognized that there should not be a dollar-for-dollar loss of equalization payments as a result of offshore revenues flowing to the province, and the provisions established in the Trudeau agreement were to continue to apply.
The Mulroney government wanted to do away with Trudeau’s energy program and, as part of that process, negotiated an accord with Nova Scotia known as the Crown share deal. That deal called on the federal government to use revenue it received from the development of Nova Scotia offshore energy projects to compensate the Nova Scotia government for giving up its right to acquire 25 per cent equity stake in offshore projects.
As a result of the Crown share accord, Ottawa provided some upfront money to the provincial government, which was supposed to have been used to build up the province’s infrastructure for the offshore. But the money was mainly spent by the province on a new Dartmouth ferry service and an incomplete highway to the Eastern Shore.
Under the Crown share deal, Ottawa was supposed to be compensated for providing the infrastructure money first, but after that funding was repaid in full, Nova Scotia would begin getting its share under the funding arrangement. Although Nova Scotia calculated that Ottawa had been fully compensated, Nova Scotia never received the millions of dollars it was supposedly owed under the deal.
While most people are upset the Harper government is trying get out from under the Atlantic accord, in many respects the Harper Tories are simply following the tradition of ignoring signed deals with the Nova Scotia government. The only difference is, this time the federal government might pay a price for playing that game.
( rtaylor@herald.ca)
http://thechronicleherald.ca/Business/841120.html

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