Saskatchewan withdraws from battle

Premier-designate Brad Wall of Saskatchewan has adopted a conciliatory tone in the province's long-running feud with Ottawa over equalization payments. He says he will look carefully at the legal basis for the equalization lawsuit launched by the NDP government shortly before the election and suggested a compromise with the federal government is possible.

Why hasn't Premier Williams excoriated him as he did Rodney Macdonald?

Saskatchewan election update

Things are looking grim for Premier Lorne Calvert. With the election day only a week away on November 7th, his party is behind, most voters want a change in government and there is little enthusiasm for Calvert himself. So says a pair of new polls from Probe Research Inc.

The first poll, on voter ID indicates:

With the support of 50 percent of decided voters, the Saskatchewan Party is the province’s most popular political party. Well back, the governing New Democrats are currently supported by 35 percent while the Liberals are the party of choice for 10 percent of Saskatchewan adults. A modest two percent of voters each report they will cast ballots for either Progressive Conservative or Green Party candidates. Thirty-one percent of those surveyed were unwilling or unable to express their voting intentions.

And while things may change, voter intent points to a more likely shift to the Saskatchewan Party than to the NDP:

Looking at voter certainty, 64 percent of Saskatchewan Party supporters have fully committed to casting ballots for that party on November 7th compared with only 47 percent of NDP voters who say they are “very certain” they will actually mark NDP ballots. These findings suggest that any late campaign shifting that may occur would favour the Saskatchewan Party more than the NDP.

The second poll details voter views on leadership and government in general. It too bodes ill for Calvert's regime:

Across the province, more than one-half of adults (54%) agreed that “the NDP have been in power for too long and it is now time for a change”. This compares with only 26 percent who affirmed that: “The NDP, led by Lorne Calvert, deserve to be re-elected based on their record and accomplishments over the past years”. One in five respondents (20%) chose not to affirm either position.

As for Premier Calvert's personal standing, it seems to have suffered worse for wear:

When asked which of the three main party leaders they felt would make the “Best Premier” of Saskatchewan, the leader of the Saskatchewan Party, Brad Wall, beats out incumbent Premier Lorne Calvert. Thirty-seven percent of those surveyed pointed to Mr. Wall as the best candidate for Premier while 25 percent named current Premier Lorne Calvert. Twelve percent thought Liberal leader David Karwacki would make the best Premier, while nearly one in four citizens (26%) were uncertain as to who would be best suited to occupy the province’s highest political office.

As posted previously, this staunch Williams ally on the Equalization front will soon find himself unemployed leaving Williams with only Nova Scotia's Rodney MacDonald, himself in a precarious position.

Big cheese stands alone

While amateur local pundits are eager to place Premier Williams front and center of the national stage, the shape of the political landscape for their hero points to growing isolation and continuing national irrelevance into the indefinite future.

When you clear through the noise of the regular fall Ottawa ritual of the rutting political parties bellowing and taking runs at each other, one thing becomes clear: there will be no election this year. Over the next month or so, each opposition party will make separate and independent runs at the government and the government will pretend that the runs actually mean something and will make their appropriate noises. Then everybody will go home satisfied that they have been seen to be doing something.

The Conservatives are still locked in minority territory, the opposition parties are still unprepared for an election, there are no burning issues to run on and nobody wants to call an election to be conducted over the pre-Christmas season. Layton already made that mistake once and even he has learned it's not wise to do that twice.

The real game will start with the spring budget.

And the more time goes by, the fewer national allies Williams has to count on. MacDonald of Nova Scotia has looked after the interests of his own province and made a separate peace with the feds. In truth, he was never a reliable ally at the best of times because there was so little money at stake for him. And now with a single bland assurance, Harper and McKay have neutralized that problem.

Harper and MacDonald's success in burying the hatchet lies in the fact that talks continued between the governments through the conduit of Peter MacKay. He was critical to making the deal happen.

Williams has no such conduit. He has emasculated Loyola Hearn and our Ottawa plenipotentiary is nowhere to be seen.

There's no doubt that the deal was in the works for a while and the announcement was held off until after the NL provincial election. For one thing it takes up to weeks to coordinate a federal-provincial announcement of this magnitude. For another, Harper knew full well that Williams would use the deal as the excuse to launch yet another provincial jihad against Ottawa.

That's the problem with being so predictable - it gives the initiative to others.

Whether the deal is good or not for Nova Scotia is irrelevant. MacDonald is now out of the game and the Williams' parting shots at him as "weak" will make him disinclined to be sympathetic in the future.

Meanwhile, Premier Calvert of Saskatchewan has called an election and his outlook is not bright. He is a familiar and tired leader heading a familiar and tired party that has been in power for 16 years and has been 15-20% behind in the polls for too long. There is always a chance that he might pull it out but that's not where the smart money is going.

As for the other provincial premiers, the Williams hobbyhorse of broken federal promises that nobody ever expected to see kept anyways combined with absolutely no interest in Equalization as an issue in any premier's suite of any note across the country ensures a big ho-hum response to his same old song.

The key to long term success in federal-provincial relations is in making friends and influencing people through a combination of tenacity, flexibility and the ability to make allies through the sharing of common interests. Predictable, incessant, inflexible, noisy combativeness excites the local nationalist extremists back home; nobody else cares anymore.

Greenland oil profits stay in Greenland

This report from the The Copenhagen Post via the Denmark Ministry of Foreign Affairs reports that Greenland-Danish Autonomy Commission has recommended that Greenland should be granted the sole right to manage and sell potential oil reserves. This is another step in their process towards a Greenland Home Rule Act due in September.

Greenland, similar ethnographically to Nunavut, has sort of a territorial-like status within Denmark. It's in transition to becoming a self-governing nation in the Danish kingdom.

The commission has determined that all expenses incurred while conducting exploration for oil and income gained from the oil will go solely to Greenland.

They will not only be the primary beneficiary of this resource, they will be the only beneficiary of this resource.

Greenland receives from Denmark a kind of equalization-like annual block grant of DKK 3 billion (EUR 403 million) each year. That grant will be reduced by the amount of income taken in from future oil sales, but Greenland will still be entitled to at least DKK 75 million per year, according to the recommendation.

So much for exclusion of non-renewable natural resources in equalization. But you see no political jihads, no battles, no wars, no cries of separation - the Greenlanders see that option as sensible and reasonable.

For posterity, here is the full text

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OIL PROFITS LIKELY TO REMAIN IN GREENLAND
Income from potential oil deposits beneath Greenland are likely remain on the island

Greenland should be granted the sole right to manage and sell potential oil reserves, the Greenland-Danish Autonomy Commission recommended Wednesday.

The area in question is currently under joint Danish-Greenlandic control, but the commission - which will include the decision in its proposal for Greenland’s Home Rule Act in September - determined that all expenses incurred while conducting exploration for oil and income gained from the oil will go solely to Greenland, a self-governing nation in the Danish kingdom.

Denmark currently provides Greenland with a DKK 3 billion (EUR 403 million) annual block grant. That money will be subtracted from the income taken in from future oil sales, but Greenland will still be entitled to at least DKK 75 million per year, according to the recommendation.

Independent researchers as well as major oil companies have been conducting studies off Greenland’s west coast. Their findings indicate that up to 110 billion tons of oil could lie there - nearly 73 times more than Denmark’s North Sea oil reserves.

Lars-Emil Johansen, a Danish MP and Greenland’s former finance minister, said he was satisfied with the agreement.

‘It isn’t a goal for Greenland to continue to receive the block grant,’ he told financial daily Børsen. ‘We’re interested in a model where we gradually decrease the size of the grant as Greenland’s income from the oil increases - without it negatively affecting Greenlanders’ standard of living.’

There are currently eight oil research areas off Greenland’s west coast, but several other areas within Greenland’s territory have also been identified as potential oil reserves.

The Home Rule government has already received exploration applications from Exxon, Chevron, Husky and Denmark’s own Dong Energy.

The commission’s proposal is expected to be put into effect by June 2009.

Gary Lunn speaks (in abstentia)

Again, fresh from the NOIA site, the speaking notes of Minister Gary Lunn for the address never given.

Premier Williams was careful to pre-refute Lunn's leaked points but, as you can see here, while critical and testing, the speech was not as adversarial as it was billed.

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Thank you Caron, (Caron Hawco, NOIA Vice-Chair) for that introduction and thank you for inviting me to be here with you today.

It is always a pleasure to be in Newfoundland. I was here last March speaking to NOIA, just weeks after I was appointed as the Minister of Natural Resources.

I was impressed I was with the level of enthusiasm surrounding the oil and gas industry at that time. I remember telling you that this province was on the cusp of a bright sustained energy future, and that our Government would work with you to ensure a vibrant oil and gas industry in Newfoundland and Labrador.

We discussed the collaborative work with the provincial government and industry to build a competitive economy and sustainable communities so that Canadians right across this great country would benefit from all your hard work.

Today I do not sense that level of optimism or promise that I witnessed last year in this province.

I say that with sincerity and concern. And I am going to be blunt in my remarks today to describe the current state of Newfoundland and Labrador’s oil and gas industry, and what I think needs to be done to carry us forward.

All levels of Government and you – our industry partners – have an important task at hand. To ensure that the oil and gas industry in Newfoundland and Labrador remains strong, competitive, and above all, achieves its full potential for many, many years.

Our Prime Minister refers to Canada as an emerging “energy superpower”. The potential is real and it is on its way to being realized…along with the associated benefits…in many jurisdictions across this country.

Your industry is having a positive impact on the economy and, if managed properly, it should continue to grow.

The figures are truly staggering and I’d like to run over them briefly.

Over 28-hundred people are employed by the Hibernia, Terra Nova and White Rose projects.

Another estimate says around 14-thousand people are working in the support industries and businesses.

In total they represent 8% of all the people employed in Newfoundland and Labrador and that number can only grow. In 2005 the industry accounted for a quarter of your provincial GDP.

Let’s just focus on oil.

With 179 billion barrels…Canada’s crude oil reserves are second only to Saudi Arabia. Based on current projections, we should climb from 8th to 4th place in terms of oil production by 2015…jumping ahead of Norway, Mexico, China and Iran.

Newfoundland and Labrador is a critical part of Canada’s energy strength. Current estimates peg recoverable reserves at 2.8 billion barrels of oil, not to mention 10.2 trillion cubic of natural gas. But let’s be honest. We know we have only scratched the surface…what we need is to attract exploration to unlock and prove our true potential.

That said, to achieve this potential in Newfoundland and Labrador, we need to see new projects.

Canada’s strength does not just rest in its impressive resource base. We are more than a simple warehouse of natural resources.

Canada’s energy advantage is rooted in its people, its ideas, and its innovative capacity. I believe governments should add to that advantage by providing stable and competitive fiscal and regulatory regimes which encourage investment and innovation.

When you look across the country, you see governments…both federal and provincial…providing stable and competitive fiscal and regulatory regimes…which have led to a rush of innovation and investment on the part of industry…and jobs, revenues, and other benefits for governments and citizens.

Canada’s energy advantage is real. We live in a world of increasing demand for energy, including fossil fuels. But that world is also marked by increasing instability…particularly in key energy producing regions. While it is expensive to find and develop oil and gas in Canada, our strengths are as a significant, stable and secure supplier.

When you look around the world at the behaviour of some of our competitors, attracting investment should be a cake walk. And, it has been for some provinces.

In 1997…Hibernia’s first year…capital investment by the oil and gas sector across Canada stood at $19 billion. In 2007, that figure will come in at $45 billion. How is Newfoundland and Labrador doing? Well, in 2006, Newfoundland and Labrador only attracted about $700 million, about 1.5% of the Canadian total.

What is most concerning is that while other oil and gas provinces…such as Alberta, Saskatchewan and BC…have seen investment and activity surge, Newfoundland and Labrador have seen it drop dramatically.

The boom across Western Canada has created opportunities for Newfoundlanders and Labradorians…but most have been forced to leave their homes, families and way of life. Those opportunities should have been here for them…but they weren’t.

In a province so rich in oil and gas potential, how can it be that 50% of working age people are not working? That is 10% below the national unemployment average.

These should be the best of times…and they are in the other provinces I have mentioned. Does it feel like the best of times here? As business people, do you feel more optimistic about your future than you did four or five years ago? These are tough questions. Why are so few people asking them?

Maybe it is because you can still see and feel the decisions, discoveries and deals of the past. People are working on the existing projects and in the supply and service industries which account for about one quarter of your GDP. Provincial coffers have benefited from your industry. The province has collected over $850 million in royalties alone over the last 2 years.

But today is the product of discoveries made a quarter-century ago and three developments that collectively will soon hit their peak. We are only years away from significant declines in production and revenues.

A recent report suggested that Newfoundland and Labrador is on the cusp of becoming a have-province. I believe it. I have seen the graphs showing surging oil revenues over the next few years. But I have also seen the other side of those graphs…a cliff and plunging revenues without new developments.

Brian Peckford, in a powerful address, once dreamt aloud…”one day the sun will shine and have-not will be no more”. Newfoundland and Labrador’s time in the sun need not last for a brief moment, but that is in fact where it is headed. Again…tough stuff. But it needs to be said.

It does not have to be this way. Companies want to invest in Newfoundland and Labrador’s offshore area. But there is an atmosphere of confrontation and uncertainty that is preventing anything from moving forward.

Think back to the 1970s and early 80s when then relationship between the federal and provincial governments was marked by a divisive jurisdictional dispute, leading to two court references. Investment and development were held back by the uncertainty, to neither Canada’s or Newfoundland and Labrador’s advantage.

Two Conservative governments….that of Brian Peckford and that of Brian Mulroney…came together and negotiated the Atlantic Accord. Like any deal…the Accord required compromise and a spirit of good will. The benefits of that approach are obvious.

That spirit of good will and compromise have to be rediscovered if we are to move this industry forward. It is not too late…not by a long shot…and your federal government stands ready to pull its share of the weight.

Everyone here knows that Newfoundland and Labrador receives 100% of the offshore royalties – as they should. This year those revenues are expected to be over half a billion dollars.

There has been much talk about Equalization recently.

Newfoundland and Labrador has the option to accept the Atlantic Accord. Nothing has changed from what was signed in 2005. Nothing has been taken away from the provinces.

In Budget 2007, our Government brought in the new Equalization formula with the fiscal capacity cap. No province will be worse off because of this formula – in fact all provinces will receive more money as a result of our package.

But I want to emphasize here that the focus should not be on Equalization…it should be on increasing offshore revenues. Ensuring the economy continues to grow so that Newfoundland and Labrador will not have to rely on federal Equalization payments.

I understand Premier Williams announced to you this morning that discussions were back on with the partners for the Hebron project. This is good news – very good news. Although I have heard that discussions – not negotiations – have been on and off many times. But I do hope this is a sign of better things to come.

When many people talk about oil and gas, their minds immediately drift to the activities of the global exploration and development companies - what some call “big oil”.

But the reality is that it is your efforts to build and strengthen the local supply sector, and your capacity to compete – not just here but around the world – that are the real foundation of this industry.

In this regard, I am aware of the work that NOIA has been doing over the past few months to develop a strategic plan which will guide your future as an organization and an industry. I can assure you that our Government will be here – as we are now – to support your important efforts.

For us at least, there is nothing “annoying” about your work. You are the backbone of the oil and gas offshore industry.

Newfoundlanders and Labradorians deserve a fair share from the development of their resources. Every study I have seen suggests that they are receiving that fair share, but the provincial government has every right to mix things up… to try something new…and raise the bar.

But, at some point the provincial government has to lay out what it wants or people will start to question whether they know what they want or where they are going.

The test will be whether it attracts investment…if we see exploration increase…if developments proceed…if your businesses grow and prosper…and the people of Newfoundland and Labrador stop leaving.

At the end of the day, we have to remember that decisions…no matter how popular or appealing, have consequences.

By way of a concrete example, the nixed Hibernia expansion project would have represented a $500 million investment in platform upgrades, up to $5 billion in direct revenues to the province, and would extend the life of the field significantly.

Furthermore, the arrested development of the Hebron field would have resulted in $90 million in expanded offshore payrolls, almost $10 billion in direct revenue to the province, $32 billon in GDP, and significant spending on R&D and training.

And of course, of critical importance to you, it would have meant millions and millions of dollars in employment benefits through local fabrication, construction, procurement, and engineering activities.

Together these two projects could have delivered an additional $14 billion in revenue to the province….More than enough to wipe out the provincial debt.

The people of this province will have to live with the consequences of missing those opportunities.

It will not be felt today or tomorrow, but when oil revenues begin to decline the hard questions will come fast and furious.

All I am saying is do not wait until it is too late to ask those questions. I know the people of Newfoundland and Labrador are blunt…it is a virtue. And I believe in being blunt especially if it means being constructive.

Your federal government, which includes Fabian Manning, Norm Doyle and Loyola Hearn are ready to work with you and the provincial government to put this sector back on track.

This Conference is about identifying what needs to be done, and it is a valuable contribution. I will listen to your ideas and I will learn from them.

That’s how we’ve worked in the past and that’s how we’ve been successful.

As partners, we will find ways to address challenges and create opportunities.

I want to leave you with a message:

You have the resource potential, you have the people, you have the innovative capacity and there’s a strong partnership between our governments on science and technology and regulatory effectiveness. We need to leverage these strengths and work together to get on with growing the offshore industry to reap the benefits for the province and for Canada.

I hope you have a enjoyable and productive conference and thank you again for inviting me to speak with you today.

Thank you.

Tom Courchene weighs in on equalization

From today's Globe and Mail. . . . . "Should a program intended to redistribute wealth be able to significantly erode the ability of provinces to exercise their constitutional powers over natural resources?"

He makes the case for Saskatchewan and raises the idea that maybe it's time to rejig equalization completely.

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For nearly a quarter century, the old adage Why drill for oil in the provinces when you can drill for cash in Ottawa? has arguably held sway, but never has it been so prominent as in the on-going energy/equalization tug of war. To be sure, the stakes are much higher when oil is $60-plus per barrel and when the underlying issues are masked by a series of complex bilateral deals and a set of multiple and none-too-transparent equalization options. In any event, the equalization program, long viewed as an integral component of our East-West glue, seems to be coming unstuck.

Put simply, the current dispute puts three provinces - Nova Scotia, Newfoundland and Saskatchewan - at odds with the federal government over how the provinces' revenues from oil and gas should be treated in the equalization formula.

Nova Scotia and Newfoundland cut separate accords with Ottawa in the 1980s and again in 2005 to compensate them for equalization payments that were reduced because of the rising revenues from their energy sectors. The 2007 federal budget offers a variety of different approaches to the treatment of energy.

At one extreme, the two Atlantic provinces can continue with the status quo option - that is, they can apply the accords within the pre-existing model (3.5-per-cent annual growth in overall equalization).

The new model embodies a 10-province standard for calculating average fiscal capacity, a calculation that counts only 50 per cent of resources and a "cap," or ceiling, to ensure that an equalization-receiving province does not end up with total per capita revenues in excess of those of the lowest "have" province (in this case, Ontario). Provinces can also choose to calculate their equalization under a formula that excludes all non-renewable resource revenues, subject also to the above cap. This option was presumably included to respect Prime Minister Stephen Harper's election promise that non-renewable resources would be excluded from the equalization formula, although the provinces were quick to point out that the cap was not part of that electoral commitment.

The basic concern of all three provinces is obviously with the confiscatory cap. And the Atlantic provinces also argue that the manner in which the offsets interact with the cap under the accords serves to violate their spirit, even their letter.

Beyond this, Nova Scotia's concern is that while the new formula would, currently, be better for the province, the status quo option may be preferred in future as its energy revenues grow. Therefore, it wants flexibility to move between the two approaches, rather than the no-return feature of the new formula.

Newfoundland's additional problem is that, at existing energy revenues, it is likely to join the ranks of the have provinces, which would then mean that the province would not only be ineligible for the offsets under provisions of the 2005 accord, but that the accord itself would not be renewed in 2012. This cannot blamed on Mr. Harper.

Saskatchewan's cause for concern is that the current cap is only the latest version of a series of measures that have left it with precious little of the revenues it collects from its energy patch. It was denied access to the generous Atlantic accords and even to the 70-per-cent maximum clawback that applied to Nova Scotia and Newfoundland. Indeed, in the early years of this decade, the equalization clawbacks on Saskatchewan's energy revenues were at or near 100 per cent. To be sure, at current energy prices, Saskatchewan is a have province, but the cap will become confiscatory if and when prices fall back to the $50-a-barrel range.

The impact of the cap would be that for several hundred millions of dollars of energy revenues, the equalization offset would be dollar for dollar. So where is the incentive for a province like Saskatchewan to collect royalties in the first place? It would be rather strange if the equalization program, intended to help provinces provide comparable public services, led to the situation where it made sense for a province to abandon royalties altogether, perhaps in return for a guarantee from the energy companies to maintain the province's expensive energy infrastructure and maybe build a few hospitals and schools.

Intriguingly, the Atlantic provinces are seeking redress through the court of public opinion (which has finally brought Ontario into the fray as counterweight), whereas Saskatchewan has accepted Mr. Harper's invitation to pursue a court challenge.

The prevailing wisdom is that the equalization program is not justiciable. However, the issue at stake here is not related to equity. Rather, it would appear to be a division-of-powers issue: Should a purposively redistributive program be able to significantly erode the ability of provinces to exercise their constitutional powers over natural resources?

But matters need not go this far. In the short term, why not set the clawback under the cap at, say, 70 per cent, rather than 100 per cent, so that there is always some fiscal reward for collecting energy rents. This might not be far off an estimate of the costs borne by the provinces to run their energy sectors.

Moreover, this may not be very costly since, at current prices, Saskatchewan, for example, might still qualify as a have province.

While this would completely satisfy none of the provinces, it would make significant improvements on both the equity and allocation fronts.

Over the longer term, it might be better to follow Australian practice and bring both horizontal transfers (such as equalization payments) and vertical transfers (such as health and social transfers) within the ambit of equalization. That would provide more instruments that can be drawn upon to achieve cross-province fiscal equity. Within this larger framework, the equalization formula would require less fine tuning, since the vertical transfers could accommodate any remaining provincial variations.

But first, we have to get to the longer term.

Economics professor, School of Policy Studies, Queen's University and Senior Scholar, IRPP

Premiers spurn Premier

How does a premier garner national attention and support for their issue?

They make it a national issue and build support amongst colleagues using any national platform they can to push their agenda forward.

So it's more than just a little significant when the Council of the Federation* issues their agenda for their next meeting and Premier Williams' current topic de guerre is conspicuously absent.

On May 1, the Premiers meet in Toronto to talk about climate change and energy plans so they can meet in Moncton in August to talk about climate change and energy plans.

Oddly, equalization seems to have dropped off the national agenda. And that's not a problem unless you still have unresolved equalization issues.

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Council of the Federation is the current formal name for the Premiers' regular opportunity to complain about how the feds aren't giving them enough money fast enough.

He's right this time

It's no secret I've had little patience with the way federal-provincial relations have been conducted by this provincial government over the last few years.

I've never subscribed to the school of thought that says that the ideal NL politician has to come from the mould of the fighting Newfoundlander (and/or Labradorian).

You know the kind. We've had Smallwood and two Brians and now we have Premier Williams. Their defining characteristic is their willingness to drop their gloves at the slightest provocation and to fight fight fight for the people of the province.

They have been the enforcers of the province's rights and privileges in that great national hockey game of federal-provincial relations; political goons with the sharp elbows and the high stick.

But rarely are they able to do what this province really needs - score more goals and win more games.

And that applies to Premier Williams more than most past premiers. We thought we were electing a great negotiator. Instead we elected a showboating scrapper who has politically isolated himself and this province across the country while goosing local polls to stratospheric levels.

I always held the opinion that the best background and education for a NL premier would be a stint at the United Nations. I suspect that a successful diplomat with the negotiating skills to build bridges to other provinces, grease the way with the federal government and pave the way with industry to produce economic developments could accomplish great things.

A diplomat understands that your friend yesterday might be your enemy tomorrow and your ally next week. A negotiator recognizes that a great deal is one where everybody gives some, everybody gains some and everybody goes home happy.

But that just isn't possible with this premier. His enemy yesterday is his enemy today and his enemy next week and forever. And you don't need to take my word for it. I'm sure if you took aside Fabian Manning or Elizabeth Marshall or John Crosbie or any other of a number of good, faithful (Progressive) Conservatives of great integrity and skill, they might tell you the same.

And unless you can accept the idea that any set of negotiations must inevitably result in his win and your total and humiliating loss, then you had best take your business elsewhere. Again, my word for this doesn't count nearly as much as the word from any of the Hebron partners, for example.

In politics, friends come and go but enemies accumulate.

This is a long way to noting that in Premier Williams' latest salvo over the NL-fed equalisation dispute yesterday, Premier Williams called upon federal Finance Minister Jim Flaherty to resign.

It's worthwhile noting also that so far, in addition to calling on Flaherty's resignation, he's also called for the resignation of regional minister Loyola Hearn. While he hasn't yet called on the other local Conservative MP's , Fabian Manning and Norm Doyle, to resign immediately he has called on them to hang their heads in shame.

Just as well Norm Doyle is declining to run again. As for Manning, since Premier Williams has already promised a goose egg of federal Conservative MPs in the next election, Williams' threat to Manning could be considered a call for deferred involuntary resignation.

As for the federal government itself in toto, he has said that he can't wait until this government falls and another takes it's place.

So Premier Williams has called for the immediate or delayed resignation, or otherwise removal from office, of just about everyone in sight.

What's left for Premier Williams to do to get his point across?

Well, he does have the option of a cross-country speaking campaign. But he's already done that.

He could take out newspaper ads to slag the federal government and put forward the province's point of view. But he's already done that too. And of course there's always an alliance with another province in a similar spot to tag-team the feds into submission.

I think I've heard that he's already tried something like that too.

But here's the real question: after calling down the lightning, thunder and rain onto the heads of the terrible enemies of this province (that evil federal government) over and over again for political disputes of all kinds, will anybody pay attention anymore?

And, is this dispute with the federal government different in kind from the Williams-Ottawa disputes that have gone before?

I believe this dispute is different from the ones that have gone before. Previous fights with Ottawa were about money. And there will always be disputes with Ottawa about money. But this one is different because it now affects fundamental pieces of enabling legislation.

The federal government wants to unilaterally amend the 1985 Atlantic Accord.

The 1985 Atlantic Accord is not like other pieces of federal legislation. This Act was negotiated between the province and the federal government over many years to effectively transfer portions of federal jurisdiction to this province. Once agreement was reached, both levels of governments passed enabling legislation.

We forget that we don't own the oil offshore - we never did, we don't now and we never will. Ownership is in the hands of the federal government and that has been definitively confirmed by the highest provincial and federal courts.

But under this Act we are given the right to control development, to tax and otherwise manage the resource as if it were on land.

In effect, because of the nature and scope of the Atlantic Accord, it has a status above other normal pieces of legislation and falls just below the level of the constitution itself. It has the effect of a bilateral constitutional agreement.

To unilaterally amend this Act, without even informing this province, is unacceptable.

If the federal government can move forward on actions like this then it could unilaterally overturn any previously negotiated federal-provincial agreement at will and shred the fabric of prior negotiated settlements that has knitted this country together.

This is not right and Premier Williams is within his rights to make as much noise and generate as much pressure as he can to overturn this decision.

It's just too bad that Williams has no more diplomatic tools at his disposal when he, and this province, has so much need for them.

No balanced budget law in NL

Once thing you could say about former finance minister Loyola Sullivan, you could take him at his word even if you couldn't understand it. That stands in sharp contrast with his successor.

On CBC radio this morning is a report that Marshall won't be fulfilling the commitment of his predecessor to bring in a balanced budget law. He says that it's enough for government to merely explain to the public why there will be a deficit and that, in essence, he doesn't want his hands tied.

There are a few things about this worth noting.

A balanced budget law (BBL) does not prevent a government from running a deficit if it has to. A BBL is a law, passed by the House of Assembly which is a pledge, promise or commitment that any budget brought forward will not have a deficit.

Does it tie government hands? Only in a political sense. If circumstances change dramatically and the government is forced to bring in a deficit, it still can. It just has to amend or revoke the BBL to allow it.

But the BBL has the effect of raising the political bar to a budget deficit. If government is going to spend more than it brings in, it has to break that prior pledge not to in a very deliberate and explicit way by amending or revoking it's prior legislative commitment.

Marshall says it should be good enough for government to discharge its responsibility by explaining why the deficit has occured.

Well, minister Marshall, that's not good enough. It's that sort of low to nonexistent bar that has brought us to the position of having the highest per capita debt, and associated service charges, of any jurisdiction in the country.

If there was any time it was safe for this province to make the balanced budget pledge, it is now.

In 2005-06, this government had $500 million net surplus (cash and capital), carried forward $300million and put $200million on debt. In the following year, government still saw a surplus (while doomsaying to the contrary) despite the six month closure of the Terra Nova money flow.

Trends continue to look good for the next 5 to 10 years, and even longer if Hebron and Hibernia South comes on stream. Never in our province's history has the fiscal situation looked so good.

Does this government have to go into deficit even if revenues drop? Not even close. There is tremendous amount of give in the existing expenditure patterns. At $8600 in spending per person, it is the second highest of any province in Canada.

While this government perpetuates the myth that our geography increases the costs of supplying services, in fact doctors and nurses in Stephenville don't make close to what doctors and nurses make in Ontario urban centers. That's why Stephenville can't attract or retain doctors and nurses. That low cost of local labour of all kinds goes a long way to leveling the costs imposed by geography.

And that still doesn't justify the fact that we have more public servants per capita than any other province. We have more people on the government payroll today, in absolute and relative terms despite population shrinkage, than when this government took over.

Government talks a good game of debt reduction. At the same time it has been determined to avoid any kind of concrete pledge or commitment to actually doing anything about it. At the end of the Williams government first mandate, there is no sign of a debt reduction plan in any way shape or form other than an acknowledgement that is exists and it's a problem.

The size of the debt has been a constant refrain in government's case against the federal government in this ongoing equalization war. That plank in the government's case would be more believable if there was a debt reduction plan on the table.

Instead, debt reduction is a mere rhetorical tool to beat up on the feds.

It's not like this pledge was made by another government or that Sullivan made the pledge while he was in opposition (and as we all know, promises don't travel well on the trip from opposition to government). This pledge was made by Loyola Sullivan while he was minister of finance in this very government.

The pledge was good enough for this government then, why is it not good enough now?

Ministers victims to media reports - Can't read

I've worked for ministers over the years and I've seen the kind of briefing notes, files, books, binders, and boxes they have to plough through. Before any decision is made or any action taken, ministers are briefed with more information than you can imagine.

In my experience, there is rarely a problem with insufficient information. In fact, the reverse is true. Most times there is so much information coming at ministers on all kinds of issues, large and small, that they are overwhelmed.

Sometimes, it gets so bad that it's hard to distinguish what is an important issue from what is trivial.

Finance ministers, by virtue of the job they hold, get vast volumes of information, possibly more than any other portfolio. The get more kinds of numbers, scenarios, analysis and projections than you can shake a stick at.

Federal minsters who are also the regional ministers for their province, are flooded with information for their own portfolio and also the information for every other portfolio as it pertains to their province.

Under this system, in this province, you can be sure that Tom Marshall, Finance minister, and Loyola Hearn, federal regional minster, would be kept up to date on the most important fiscal issue and political hot potato in this province today - equalisation.

So why are these two politicians acting like they don't have a clue what the numbers are? Are they reduced to picking information out of the newspapers like the rest of us? Do they ever review their briefing materials or are they sailing along by the seat of their pants?

Early this week, local economist Dr. Wade Locke said that the federal offer, over the next 20 years, represented $6.5billion more while the provincial position represents an additional $4.5billion.

Keep in mind he was clear at the time that these were preliminary figures based on a provisional interpretation of the legislation and a whole lot of numerical assumptions. Locke's hope, he said, was that both sides would be forthcoming with numbers of their own so that clarity could come over this issue.

No such luck.

Instead both Hearn and Marshall seized the results and dashed to the news media claiming how Locke's research vindicated them. Hearn crowed about an additional $6.5billion and Marshall whined about a lost $4.5billion.

Then Dr. Locke has revised his numbers fairly dramatically. Now the federal offer apparretly represents $1billion LESS than the status quo, a shift down of $7.5billion from his earlier interpretations.

You would think the Hearn would release numbers of his own to defend the federal position. He does not. Instead he's reduced to a weak claim that no province will be harmed.

But does he actually have any real idea whether the province will be harmed? Apparently not.

As for Marshall, he's definitely on the warpath now. And you can expect the Premier to be leading the barbarians at the federal gate as soon as he gets home.

But didn't Marshall already know that Locke's numbers were off in the first place?

Both of these senior ministers have to have projections of their own. Are they keeping them to themselves for some high strategic reason? Are they getting around to reading them at all?

What happens next week if Locke or another analyst announces that the provincial and provincial offers are both exactly the same at, say, $16billion over the status quo. How will Hearn and Marshall respond then?

Will they know any different? And if they do, will they let us in on the secret?

Premier Williams - Not just all about equalization

Snagged from this weekend's Globe and Mail (my apologies)

Calvert influential - Williams, not so much

The Globe and Mail has a story covering Premier Lorne Calvert's interview on CTV's Question Period broadcast yesterday.

Calvert took the opportunity to show that he was just as angry as Premier Danny Williams and reinforced his claim that Prime Minister Stephen Harper simply didn't keep his promise to fully exclude non-renewable natural resources from the formula used to calculate equalization payments to the provinces.

The story goes on to point out that while the federal Conservatives have 12 of the 14 seats in Saskatchewan (the Liberals have the other 2, in NL the numbers are just 3 Conservatives (Liberal have the other 4).

This puts Williams, although noisier, in the unusual position of having less influence with less to bargain with than his erstwhile ally.

This raises and intriguing possibility: would Prime Minister Harper cut a deal for Saskatchewan in a bid to keep the those 12 seats and cut out Premier Williams?

The advantage to Prime Minister Harper would be the opportunity to be a hero in Saskatchewan and save 10% of his caucus. There seems to be no serious disadvantage except potentially losing minister Loyola Hearn who may not want to run again anyway.

It's not like Harper has very much to lose by further annoying Premier Williams.

Danny Williams: Losing his balance

There's a delicate balancing act that every NL politician must master in putting their position forward, especially, but not exclusively, to a national audience.

On one hand they need to be strong, clear, articulate. They also need to go farther than, say the Premier of Ontario, in order to overcome the obvious political disadvantages of coming from a relatively small province on the geographic margins of the country.

You need other qualities to compensate.

John Crosbie is probably the best example of a NL politician being successful on the national stage. No one doubted his smarts, skills and integrity.

But that wasn't enough to push his agenda forward. He also had to be witty, colourful and grab public attention in the way few politicians ever do.

Still, he never fell into the trap of becoming a caricature of the grasping, pork-barreling local pol-made-good even when he launched his internal war, on behalf of his province, within the Mulroney administration for federal investment in Hibernia.

People called him wrong and misguided but there was always underlying respect for him. In that delicate balance, few ever matched Crosbie's political gymnastic skill.

Then there is the current national public reaction to Premier Williams latest crusade. Here is a small sample of today's editorial coverage.

From the Globe and Mail

With his glib tongue and fast temper, Danny Williams has never been known for his diplomacy. But the Newfoundland and Labrador Premier has run amok over the past two weeks with his inflammatory complaints about how much his province will receive in transfer payments in the recent federal budget. Newfoundland has been "shafted," he declared.
. . .
Mr. Williams has long been anxious to obtain the best deal for his province in everything. But now he has become careless, because Canadians in other provinces are figuring out just how much he is pocketing. They should stand with Mr. Harper in his fight.

From the Windsor Star:

Governments at all levels and of all stripes already use tax dollars to fund advertising for policies that are nothing more than thinly disguised partisan ads. Spending even more tax dollars on advertising in a dispute that could better be waged with press releases and opinion articles in newspapers represents an extravagance governments in these lean times can ill afford.

If Williams and Harper can't start acting like adults, voters should think about cutting off their allowance.

From the Edmonton Journal

Of course, none of the substance of this is remarkable. Williams is indeed playing fast and loose with the facts on equalization, and the Conservatives' recent advertising assaults on the Liberals are no different from salvos fired in the other direction during past elections.

From the National Post

If Danny Williams, the Newfoundland and Labrador Premier, were trailing in the polls, his latest hysterical attacks on Prime Minister Stephen Harper could be explained away as mere electioneering. But his provincial Conservatives are so popular -- polls measure his support as being as high as 70% -- that their re-election is all but assured in this fall's elections. So there must be some other reason for his demagogic rantings and threats to deliver Mr. Harper "a big goose egg" of seats in Newfoundland in the next federal campaign. We suspect his theatrical fury is cover for his own recent disastrous mismanagement of his province's energy industry.
. . .
At his best, Mr. Williams is a charmer and a visionary. He seems genuinely committed to getting his province off the federal dole -- eventually. But at his worst -- such as when he is storming out of premiers' conferences and flying home to take down the Canadian flag from Newfoundland's House of Assembly --Mr. Williams' is a juvenile showman whose antics serve to cast his province as Canada's pouting brat. Newfoundland and Labrador deserves better.

It looks like Premier Williams' very public campaign against Canada's New Government has generated little sympathy for this province nationally. In fact, in many corners it's a wash at best.

Even worse, Premier Williams has squandered his national political capital and respect in a Quixotic attempt to take down a national government on an issue for which there is little natural sympathy for his position.

Premier Williams may not want to link his prior decisions on expenditures or policy, on potential offshore projects for example, but others do want to and they do. And he has no answer for that other than dissembling that he's making progress and he hopes for better in the future.

The problem with those who lose their balance is they are often in denial about it until they hit the ground. It's not falling that's hard, it's the stopping. There's an old saw about the guy who fell off the ten-story building. As he fell, people near the windows heard him say as he plummeted by, "So far so good."

Premier Williams is not the best judge of how this national campaign is going - the national audience is. At best the national audience is clearly hearing, "So far so good" and at worse he's already hit the ground.

The local audience is mixed but still overwhelmingly in the Premier's favour. But a lot of that support has been based on pure emotional response to the resonant message of "we are being shafted." Ultimately that message needs solid information and evidence as the foundation of the campaign otherwise that energy just dissipates.

Both the province and the federal government have avoided being pinned down on the equalization numbers preferring qualitative descriptions like "shafted" and "blessed".

But now thanks to Wade Locke of MUN, we have a much clearer idea of what the fight is over - the difference between $24.1 billion or $28.6 billion on a program which is already an improvement of $6 billion over what we were receiving before.

We'll see next week if, on this issue, the people of the province judge the program as a shaft or a blessing; the national audience have already rendered their decision.

Equalization - Much ado about nothing?

In this article from the venerable StarPhoenix, Lorne Calvert indicates that he's hopeful that a solution to this matter of the Sask/NL Equalization war with Ottawa.

The story says:

After an interview on Wednesday in which Prime Minister Stephen Harper hinted he would live up to his election campaign guarantee to take non-renewable resources out of the federal equalization equation, Calvert was cautiously optimistic his own message on the matter was getting through.

It makes you wonder what kind of tempest in a teapot this whole thing was in the first place.

If you recall, this war started when Harper refused to give iron-clad assurances to Premier Williams at the PC Party convention in Gander. Little wonder Harper was disinclined to cooperate given the shabby treatment Williams accorded the Prime Minister and his political fellow traveler.

Here's the real question of the day: Did Premier Williams whip Harper's refusal to give an immediate answer into a storm because he thought the answer would be disadvantageous to this province or simply because he decided to push the matter to personal political advantage?

It's odd that this Calvert/Williams roadshow has but two stops - Saskatchewan and NL. One would have thought that it might have made better sense to stray from home territories to make forays into Ottawa, Halifax, Toronto or Vancouver in order to convince a wider audience.

But staying close to home makes perfect sense if the goal is merely to play to the home fans.

In the end, if Harper finally indicates that Equalization will be resolved to Williams' satisfaction then Williams can claim it that was his fight that made Harper cave notwithstanding the consistent assurances from Harper and his proxies (Manning, Hearn et al) that this province would not suffer under any new regime.

Maybe if Harper decides otherwise, it would be because he calculated he had nothing to lose from stirring the Premier's pique.

Equalization roadshow - two different takes

Below is the text of a column (Straight Talk) by Randy Burton in StarPhoenix, a Saskatoon newspaper. That is followed by a local article on the same subject written by Craig Jackson of the Telegram.

As hard as it is to believe, there is actually a responsible opposing point of view to Premier Williams' case on Equalisation* although that's pretty hard to tell. It seems we live in a media environment that is supersaturated with mere echoes of the Premier's latest remarks on this or that.

Local media is largely a political monoculture.

I know that the first is a column while the second is a news piece but the fact is that the local columns and editorials almost all follow the same line with rare exceptions which prove the rule.

Show me a local column that comes anywhere close to the position taken by this Saskatoon column in taking on a fundamental position of the Premier and I'll buy you a drink - it seldom happens and when it does, it's ignored because it is so rare.

You have to wonder if the local media have a policy on premiers that is similar to the policy of many US media outlets on the presidency: domestic policy is fair game for criticism and comment; on foreign policy, back the man to the hilt in all cases.

The media does the province no good in acting like an echo chamber - it breeds denial.

----------------------------------------------------
The rhetoric of equalization

Newfoundland and Labrador Premier Danny Williams would have to be counted among the most persuasive orators in the country.

The way he can frame an argument, he could probably convince Sidney Crosby that he needs hockey lessons.
So no one should be surprised to hear that he can make an eloquent defence of Newfoundland and Labrador's special equalization deal.

It's the same deal Saskatchewan wants -- the one Prime Minister Stephen Harper has promised in writing no fewer than six times, in fact. The idea is that provinces with oil and gas, like Alberta, Newfoundland and Labrador and Saskatchewan, should be allowed to exclude the value of their non-renewable natural resources from the calculations under the national equalization plan.

This is a have-your-cake-and-eat-it-too plan, where you can enjoy a gusher of oil revenues and still get equalization payments.

Of course, Williams can dress it up much more nicely than that. He ties the issue to Newfoundland's long history of disappointment, from the death of the fishery to the province losing control over returns from its vast hydro-electric resources.

He equates his sweetheart deal, called the Atlantic Accord, with subsidies to the Quebec aerospace industry or aid to Western beef producers.

In the same way, Newfoundland merely wants to be able to help itself with its own resources and makes no apology for it, he told a Saskatoon audience on Tuesday.

"Gone are the days when we sit back quietly and watch our economic wealth leave our shores to benefit others. We fight tooth and nail for each and every benefit that we so richly deserve and that has evaded us for so long," he said.

The case he and Saskatchewan Premier Lorne Calvert make is a very simple one. As Harper likes to say, a promise made should be a promise kept. End of story.

There's no question it's an effective political argument, easy to understand and easy to sell.
The problem with it is that it ignores the fact equalization was never designed to be a regional development plan that makes a special case for less developed provinces.

It is supposed to be a national plan that allows provinces in different circumstances the ability to provide relatively equal services at relatively comparable tax levels.

There is no question equalization has failed to do that in the past, spectacularly so in Saskatchewan's case, where for a period of years we had more money clawed back through equalization than we actually made from oil and gas.

But to argue the solution is to simply load up the other end of the teeter-totter for a change makes no sense either.

If Calvert has his way, Ontario would actually have a smaller fiscal capacity than Saskatchewan. However, Ontario would still be contributing to equalization while Saskatchewan would be a big recipient. It's very hard to see how that passes the test of fairness that Saskatchewan claims is so critical.

When Saskatchewan Finance Minister Andrew Thomson suggests the federal government is "going to use Western oil money to essentially buy votes in Quebec," he is really sinking to a new rhetorical low in this debate.

In the first place, it can't be proven by looking at the available information on equalization. On a per-capita basis, Quebec contributes more to federal revenues, and thus to equalization, than Saskatchewan does.

These kinds of statements indicate just how far Calvert's New Democrats are prepared to go in their campaign against the Conservatives. Plainly, they aim to pit Saskatchewan and Western Canada against Central Canada and to paint Quebec as the illegitimate beneficiary of Western wealth.

This might be effective politics for the Saskatchewan NDP, but it's poisonously divisive for the country. Just for the sake of argument, let's say the Parti Quebecois takes power in the next Quebec election, a notion that is entirely possible. Thomson's accusation is just the kind of thing separatist premiers love to use when justifying another referendum.

There was a time not so long ago when Saskatchewan was regarded as a rational voice in federal-provincial relations. This debate is badly fraying that reputation.

For Calvert to stalk out of a meeting with the prime minister without so much as shaking his hand is not just rude, it's short-sighted. Whatever happens to equalization, Saskatchewan is obviously going to need federal co-operation on a whole range of other issues in the months ahead.

For whatever reason -- budgetary problems? -- the Calvert government is betting it all on this particular political initiative.

We have yet to count the costs of the collateral damage.

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Premier outlines 'wrongs' of Confederation; Takes message west

For decades, many a Newfoundland and Labrador premier attempted to dispel the myth that the province is sucking the life-blood out of the rest of Canada, that the country's most easterly jurisdiction is dependent on federal handouts for the delivery of welfare cheques, health-care, education and public services.

Premier Danny Williams joined the ranks of those before him Tuesday, delivering his views on Confederation - and what it has meant for this province - during a speech to about 200 people at the University of Saskatchewan. Williams also took the opportunity to meet with Saskatchewan Premier Lorne Calvert, who's on the same page as this province when it comes to federal equalization.

Burden
"When we joined Confederation almost 58 years ago, our per-capita debt increased tenfold the very day we joined," Williams said in his speech. "Ironically, to this day, we have the highest per-capita debt in the country.

"Before Confederation, we were a nation that had come through the war in good financial shape and abundant in natural resources. Since Confederation, things have changed."

Williams' comments are all a part of his fight to ensure this province gets to keep 100 per cent of revenue generated from non-renewable resources and that Conservative Prime Minister Stephen Harper keeps his promise that those benefits will not be clawed back through a revised equalization formula, an $11-billion program which allows for the delivery of an equal standard of public services nationwide.

"If you're going to convince someone to buy into your argument on equalization, and the need for us to have relief on non-renewable resource revenue, you need to give them some history of our background," the premier explained from Saskatoon Wednesday in an interview with The Telegram.

Give-aways
"It's an education for people so that they can understand why (the equalization issue) is so important to us now and why it's important we get a fair shake."

Williams said in his Saskatchewan address that this province gave up its right to manage offshore oil and gas resources when it joined Confederation in 1949. Other Canadian jurisdictions, however, owned and managed their oil and gas resources because "they are under ground instead of water," he said.

Accord
When the mid-1980s rolled around, the province signed the Atlantic Accord offshore deal with the Government of Canada, a document designed to rectify the wrong that had been written, he said, "but the promise of the Accord and the reality of its implementation were two entirely different beasts."

Williams, however, tackled that wrong in 2004, convincing former Liberal prime minister Paul Martin to renegotiate the Atlantic Accord. The premier returned home with a $2-billion agreement that served as an advancement on future offshore benefits.

The premier also cited other examples of where Confederation has not been entirely fair to this province.

He took aim at the federal government's refusal in the late 1960s to allow this province to transmit power through Quebec as part of the Upper Churchill hydro project. As a result, this province ended up in a lopsided deal with Quebec.

"Our loss is estimated at a billion dollars a year, a billion dollars from our resource that goes directly into Quebec's revenues every year, a billion dollars that could make us a have province," Williams said.

Fishery
The fishery, he said, is another example where the province passed control and management over to the federal government.

"Ottawa, in turn, used its control of our fishery to trade quotas to foreigners in exchange for other favours, and it mismanaged some species of our domestic fishery to the point of commercial extinction," he said.

"As a result of this mismanagement, tens of thousands of people have been forced to leave our province.

"Imagine, if in one day, 300,000 Ontarians suddenly lost their jobs as a result of the federal government's mismanagement of their (auto) industry. These circumstances would rightfully be described as a national disaster."

But when thousands of Newfoundlanders and Labradorians were displaced with the closure of the cod fishery in 1992, it was considered "a national nuisance," the premier said.

---------------------------------

* A basic point of principle I have to teach all my starting debaters is that there is always a responsible opposing point of view to virtually any side.