‘Fair share’ a matter of negotiations: ex-premiers

Danny Williams, Brian Tobin say big deals are about balance

Published on June 21, 2014
Brian Tobin and Danny Williams at the 2014 NOIA conference on Friday.
Keith Gosse photo

While serving as premier of Newfoundland and Labrador, both Liberal Brian Tobin and Tory Danny Williams had their moments of playing hard ball with big industry, pressing for more provincial benefits from natural resource developments.

And yet, sharing a stage at the St. John’s Convention Centre on Friday morning, both men said there are limits to how far leaders can go in those battles.  

The risk is driving away all investment by the same corporations — killing opportunities for capital investment and economic growth.

Addressing the 2014 Noia oil industry conference, Tobin said his administration tried to make responsible choices that would strengthen the provincial economy.

“Critical to our success was to try and create a balance where on the one hand we maximize the benefits from major projects, but at the same time we didn’t chase away investment dollars. We had to create a safe and sound climate which would encourage capital to flow into Newfoundland,” he said.

“And that is a delicate balancing act, making sure we get our fair share on the one hand — and every premier since Confederation has been charged with that role, that task — but on the other hand, recognizing we’re not alone in the world.”

He spoke about the future and major projects hoped for offshore Newfoundland and Labrador, tapping experience with developments such as Hibernia and Terra Nova.

In settling royalties and negotiating other benefits, he said, it must be remembered some 70 countries are in the business of developing offshore oil and gas fields worldwide.

“So we can hammer the table and say we want our fair share, but we have got to come to terms that reward risk, pay back early capital and allow those who put the money up to have a fair return on their investment.”

 

‘Not one spoonful’

It was Tobin who famously declared “not one spoonful” of unprocessed ore would be leaving the province, when negotiating with mining giant Vale on provincial benefits from a proposed nickel mine at Voisey’s Bay in Labrador.

Reflecting on the time, in September of 2013, Tobin’s successor Roger Grimes said the comment was a political misstep and killed any deal during Tobin’s time as premier.

“He made a really serious attempt to do a deal,” Grimes said.

But it was under Grimes, who presented a plan wherein the company could sell ore and reap returns before investing in a processing facility, that a deal was actually done in 2002, making the mine — with all of its associated jobs, supplier opportunities and royalties — a reality.

In sharing the stage with Tobin, Williams brought his now-trademark oratorial force and, at one point, referenced his famous, flag-lowering battle with the federal government over oil dollars.

In terms of private corporations, he pushed for more from natural resource projects, just as Tobin did.

He built upon a base offshore royalty regime laid out in Tobin’s time and, having established provincial Crown corporation Nalcor Energy, placed the province in a position to also call for an equity share in oil developments.

Williams told his audience — including in its count leaders from heavy hitters like Statoil, ExxonMobil, Suncor and Husky Energy — they should expect both current and future governments to press for what they consider to be a fair share of royalties and benefits.

 

What’s fair?

However, he acknowledged there is always a challenge in determining what constitutes that “fair share,” including how much of a major capital project gets built within the province.

Under the Atlantic Accord legislation, the province and provincial businesses are entitled to demand first crack at major project work, but essentially not at the expense of the project as a whole.

And so, more than how much the province “deserves,” the question regularly arises at the conference table as to how much the province’s businesses can afford to take on.

“You can never ask for enough. I can tell you right now, we should be getting anything we can handle, anything we can do, anything we can take. And that has been the position of every premier, I think, in this province, bar none. That should be the position on a go-forward basis, but we can only do what we can do. And once we get to the limit of our capacity, obviously it has to move on to somewhere else at some point,” he said.

“That’s the interesting part here,” Tobin added, “is that we can ask, we should ask, for every job we can get. But we shouldn’t ask for it if we don’t have the capacity to deliver the work in the province and if, as a consequence, we actually delay projects going ahead.

“So I think we both say, and every premier would say, give us every last job we can have, within our ability to deliver on those jobs.”

 

afitzpatrick@thetelegram.com