By Brian Peckford
As many of you know, I am a Newfoundlander, a descendant of English West Country fishermen and farmers from West Scotland via Cape Breton.
And I was involved in its politics from 1972 to 1989.
I spearheaded with others (competent, dedicated public servants) the Atlantic Accord, a groundbreaking “unconstitutional” agreement between the governments of Canada and Newfoundland and Labrador whereby the province’s offshore oil and gas resources are developed in the first instance for the benefit of Newfoundland and Labrador. The province receives royalties as if the resource were on land.
This accord has a joint management structure with the board headquartered in the province and with a special declaration that Newfoundland and Labrador is to be the “principal beneficiary.”
This is a truly historic arrangement with nothing like it in the long, troubled resource history of the province. The place was used as the resource base for West Country merchants in England, and it was only in the middle 19th century that we gained our own parliament. Successive governments of the late 19th and early 20th centuries made bad deals relative to the railway and the forest industry, and this continued right up to and including Confederation with Canada — highlighted by the transfer of effective control of the fishery, the chief industry, to the new federal government.
The cyclical nature of the fishery, its extensive geography and its obvious reliance on fickle international markets meant a rather unstable economic enterprise. Add to that poor government leadership, and you have a society that saw a consistently low standard of living.
Confederation was to change all of that, and the generous federal social programs did much to take the harsh edge off the rural fishing way of life.
However, the first premier, Liberal Joey Smallwood, was eager to “industrialize or perish,” and the fishery was not a priority. Many inappropriate industries were introduced to the province, almost all that failed.
Further resource development deals were begun in mining and processing, culminating in bad deals with shady promoters like John Doyle and John Shaheen. But topping it all off was the development of the Upper Churchill River in Labrador — the consequence of which saw almost all the electricity generated sold to Quebec for $2-a-barrel oil equivalent prices for 65 years. The economic rent lost to Newfoundland is estimated by experts to be somewhere between $500 million and $1 billion annually.
Most of this can be found in my first book, “The Past in the Present.”
Fast forward to the first Progressive Government under Frank Moores, 23 years after Confederation — a new approach, a new philosophy, an aggressive pursuit of provincial rights and fairness, a new emphasis on the fishery and a say in the management of it with the federal government. Additionally, a new aggressive approach on the burgeoning offshore oil and gas potential and the assertion of our jurisdiction over it.
Notwithstanding a defeat of those jurisdiction claims by the Supreme Court, the successor government (led by yours truly) to Frank Moores successfully negotiated through the back door what we were unable to get through the front door on offshore oil and gas resources off our shores. Hence, the Atlantic Accord was born, containing principles that hitherto-fore were thought impossible to accomplish. This is all documented in my second book, “Some Day the Sun Will Shine and Have Not Will Be No More.” Billions of dollars flowed to the province — over $20 billion in royalties so far, and many millions in industrial spin-off and taxes and thousands of jobs.
The province, though, resorting to behaviour of the past, has not managed this new-found unexpected wealth well. The groundfish industry collapsed. The public service has ballooned to the point where it has 30 per cent more provincial public servants than the Canadian average, and the per capita debt is the highest in Canada at $27,799. The provincial deficit was almost $1 billion last year. The population has decreased from 580,000 in 1984 to 519,000 in 2016.
Then, as if the Upper Churchill fiasco was insufficient, the province launched the Muskrat Falls project on the Lower Churchill River which has turned into another resource disaster. A special judicial inquiry is attempting to find out why the capital cost has doubled ($6.2 billion to $12.7 billion) — severely straining the province’s financial resources for generations and seeing Nova Scotia receiving electricity from the project with lower prices than what Newfoundlanders and Labradorians will pay.
It is into this circumstance that the province now finds itself with a provincial election pending and looking to the federal government for help, hand out for whatever comes along.
Meanwhile, the federal government is looking at its own election this year and with falling political fortunes in Atlantic Canada and a loan guarantee on the Muskrat Project.
What can be done for the N.L. government to combat its financial fortunes and enhance its own political standing? How can the federal government show that it “cares” and, in the process, attempt to arrest its falling political standing?
Presto — remember that eight per cent interest the federal government took in the first oil project, Hibernia, which turned out to be very profitable?
And so it came to pass that the Government of Canada and the Government of Newfoundland, with great fanfare, signed a new deal to “allow” N.L. to access some of the money the Government of Canada has made on its Hibernia interest.
Remember that locked-in deal of 65 years on the Upper Churchill?
The Newfoundland Government has done it again! Now it’s 37 years.
The amount Newfoundland receives is fixed — $2.5 billion over 37 years, which averages $67 million annually. The province’s budget in 2017/18 was $8 billion, deficit $900,000 million. What does one think these will be in 2056?
If the price of oil rises and more revenue is generated Newfoundland does not share in that extra revenue.
But what about opportunities to change the equalization arrangements or enhance joint management provisions both referenced in this new deal?
George and brother Jack own an inshore fishing skiff. They use a cod trap to fish, as their ancestors had done for generations. One spring, with good weather, they started fishing early and set their trap. Steaming back into the harbour after hauling their trap, they pulled up at the stage head. Someone there hailed the boys in the boat:
“How did it go?”
The boys answered: “Water haul.”
And such has been repeated again in this no deal.
“The Past in the Present.”
Brian Peckford served from 1979-89 Newfoundland and Labrador’s third premier. He writes from Nanaimo, B.C.