By Richard Dooley
As appeared on page 4
The head of a local economic think-tank says the province should accept whatever equalization deal the federal government offers the province in exchange for future offshore oil and gas rights – with the full intention of backing out in the future.
“Do exactly what the federal government did,” Charles Cirtwill, acting president of the Atlantic Institute of Market Studies said. “Take the deal with the intention of renegotiating whenever you see fit.”
Cirtwill said the federal government has backed the province into a corner offering enhanced equalization payments in exchange for tearing up a 2005 deal with the former Liberal government.
The offer is part of federal Finance Minister Jim Flaherty’s budget tabled Monday in Ottawa.
The Atlantic accord ended the practice of clawing back 70 cents for every dollar in offshore oil and gas revenue in equalization payments to the province. The province already received $830 million in payments under the Atlantic accord with another $270 million to come. Many more millions could be sent to the province if more oil and gas projects start production.
Cirtwill said including offshore revenue in the equalization formula is a fundamental flaw in the federal government’s thinking.
“These revenues shouldn’t be used in the equalization calculation,” Cirtwill said.
Equalization payments are typically based on population and tax bases within a province and not the revenues from a non-renewable resource.
Cirtwill said the federal government has made a “politically expedient” decision forcing the province to decide if it wants to take short-term money and give up on the offshore.
Taking the enhanced equalization payments could end up being a “crass, short-term exercise,” Cirtwill said.
That’s especially true if planned offshore projects go into production.
But the head of the Nova Scotia Chambers of Commerce is asking the province to think carefully before making any decisions affecting the Atlantic accord.
Gary Cusack said he’s written to Premier Rodney MacDonald urging him to “do your homework” before replying to Ottawa’s offer.
Cusack offered the premier the expertise within his organization to help decide which offer to take. Cusack couldn’t say which is the right way to go: “The oil and gas industry has been so up and down we’ll really have to do our homework before making a decision.”