The Atlantic Provinces only want what’s supposed to be coming to them, says former cabinet minister JOHN CROSBIE. Are you listening, Mr. Chretien?

When Nova Scotia Premier John Hamm launched his campaign to get Ottawa to accept Atlantic Canada’s claim to be the bene­ficiary of its offshore resources, many peo­ple labelled him a crank.

But the merits and principles of Pre­mier Hamm’s case are finally being recognised. This is not about changing the national equalisation formula to squeeze more funds out of the federal treasury, or to have a better deal than other equalisationreceiving provinces. It is not about wanting more health or education trans­fers. It is not about special handouts for economic development.

The case for offshore fiscal fairness is about honouring agreements entered into by both Liberal and Progressive Conserva­tive governments of Canada  agree­ments spelling out that the Atlantic Provinces were to be the “principal beneficiary” of offshore wealth. That intent was clearly stated in speeches by prime ministers Pierre Trudeau and Brian Mulroney; by Jean Chretien, when he was energy and mines minister; and by myself as minister of finance and later minister of justice. More importantly, the intent is embedded in various agreements of the federal and provincial governments of the day.

Currently, the provinces of Newfoundland and Labrador and Nova Scotia re­ceive approximately 20 cents of every offshore revenue dollar, while the govern­ment of Canada receives 80 cents, includ­ing federal corporate income taxes. This is hardly the “principal beneficiary” outcome that had been promised.

Premier Hamm’s efforts have been significantly enhanced in recent weeks by Premier Roger Grimes of Newfoundland and Labrador. Their provinces are prepar­ing a joint presentation to the federal gov­ernment on offshore fiscal fairness. Former Alberta premier Peter Lougheed, and current Premier Ralph Klein, among other national leaders, have also publicly stated their support for honouring the original intent of the two principal off­shore accords, namely that the province adjacent to the petroleum resources be the “principal beneficiary” of the benefits and revenues from these nonrenewable resources.

The intent of these agreements was and is that Nova Scotia and Newfoundland and Labrador should and would receive the revenues from their respective off­shore resources until their economies were at least at the nationalaverage level. In fact, in most documents they will re­main principal beneficiaries until they reach 110 to 140 per cent of national stan­dards, depending on certain circum­stances.

If anyone should doubt the accuracy of these ideas, read on.

It was Pierre Elliott Trudeau, on July 16, 1980, who said in the House of Commons (in response to a question from me): “The commitment we have made regarding the offshore is that until the provinces with resources off their shores have reached the average income in Canada, we intend to see that they get the overwhelming part of the resources from the offshore.”

Ottawa and the province of Nova Scotia followed up with their Agreement on Off shore Oil and Gas Resource Management and Revenue Sharing of March 2, 1982. The agreement provided that Nova Scotia’s share of the offshore revenues “shall equal 100 per cent, provided in that year the Nova Scotia government’s per capita fiscal capacity, including its share of off­shore revenues, does not exceed 110 per cent of the nationalaverage per capita fis­cal capacity plus 2 percentage points for every percentage point by which Nova Scotia’s average annual unemployment rate exceeds the national average annual unemployment rate.”

It was a complex way of saying that the province gets all the revenue until such time as its economy exceeds the national provincial average.

A few months later, the Trudeau gov­ernment offered a similar revenue sharing arrangement to Newfoundland and La­brador, noting that the province would only have to share the revenue once its economy had similarly exceeded the na­tional average.

Speaking on behalf of energy minister Jean Chretien, Leonard Hopkins told Par­liament that the CanadaNova Scotia agreement “ensures that Nova Scotia will receive the lion’s share of offshore petro­leum revenues. In fact, in the early years of the agreement, the province will receive substantially more revenues than if it owned the resource on land. There will be wider sharing of revenues only if the prov­ince’s relative fiscal capacity … exceeds that of almost all other provinces.”

When Brian Mulroney’s government was formed, negotiations took place be­tween Ottawa and St. John’s to finalise the accord proposed in the Trudeau  Chretien initiative. The so called Atlantic Accord of 1985 specified that the accord was in­tended “to provide for the development of oil and gas resources from offshore New­foundland for the benefit of Canada as a whole and Newfoundland and Labrador in particular”, and “to recognise the right of Newfoundland and Labrador to be the principal beneficiary of the oil and gas re­sources off its shores, consistent with the requirement for a strong and united Canada”.

An almost identically worded accord with Nova Scotia followed the next year.

A solution to the current offshore fiscal fairness debate between the government of Canada and the provinces of Nova Scotia and Newfoundland and Labrador is an important moral watershed for the Canadian federation. It is a true test of Prime Minister Chretien’s vision for our country and his sense of fairness in honouring the intent of agreements entered into with his provincial partners.

Both provinces are experiencing diffi­cult annual financial operating results, have extremely high accumulated debt burdens, high debt servicing charges, and very little flexibility to maintain standards of essential public services or to invest in the acceleration of provincial economic growth.

This is occurring when revenues from offshore oil and gas are beginning to grow. In about five years, they could be rela­tively large compared to the annual oper­ating budgets of these provinces.

But, unless something is done, most of those benefits will be going to the govern­ment of Canada, principally through the unfair” clawback” of equalisation payments that would otherwise be paid to Nova Scotia and Newfoundland and La­brador.

It is ironic, but had Ottawa entered into similar offshore natural resources agree­ments with British Columbia or Ontario, they would keep 100 per cent of any reve­nues because they do not receive equalisation payouts, and therefore are not subject to any revenue clawbacks.

Nova Scotia and Newfoundland and La­brador receive resource revenues from the federal government in one pocket, and have most of those revenues taken out of another.

This is not what the Atlantic and off­shore accords were intended to accomplish.

It’s time that Ottawa lived up to its agreements.

John Crosbie, a lawyer, was the MP for St. John’s West from 1976 to 1993, and a cabinet minister in the Joe Clark and Brian Mulroney governments