N.L. to receive $2.5B from Ottawa over 38 years in renewed Atlantic Accord
The revenue stream from the federal government's equity interest in Hibernia is front-end loaded
The province will receive $2.5 billion in a "new guaranteed revenue stream" through a renewed Atlantic Accord deal with Ottawa, Premier Dwight Ball announced Monday in St. John's.
The revenue stream from the federal government's 8.5 per cent equity interest in Hibernia is front-end loaded, with $1.9 billion — about 60 per cent — of the funds to be received by 2030, Ball said.
Cash instalments will run from this year to 2056, with no restrictions on use of funds, said Ball, who touted the agreement as providing a predictable source of revenue for the province over time.
The result is the immediate reduction of provincial debt by about $5,000 for everyone in the province or $2.5 billion total, with a total debt reduction of 16 per cent and interest savings worth about $100 million over the life of the agreement, Ball said.
In addition, the federal government will work with the province on rate mitigation related to the beleaguered Muskrat Falls project, said Seamus O'Regan, the federal minister of indigenous services, at the announcement at the Sheraton Hotel — in the same boardroom where the initial Atlantic Accord was signed, O'Regan pointed out.
"The government of Canada will be expeditiously working with the province to examine the financial structure of the project so that the province can deliver rate mitigation," O'Regan said.
To that end, Bill Morneau, the federal finance minister, will travel to St. John's on Friday to work with the premier on electricity rate mitigation, said O'Regan, who played a key role in the talks as Newfoundland and Labrador's regional cabinet minister.
A federal committee to examine the financial structure of Muskrat Falls will be formed, along with a federal committee to strengthen joint management of the province's offshore development.
The Atlantic Accord was first signed in 1985 to manage the province's offshore oil and gas sector and direct its revenues between levels of government. Ball and O'Regan signed the renewed agreement the day after the 70th anniversary of the province's Confederation with Canada.
"The agreement we have achieved makes me just as proud to be a Canadian as I am proud to be a Newfoundlander and Labradorian," Ball said.
'Pre-election razzle dazzle'
Provincial Opposition Leader Ches Crosbie, who attended the announcement, said the deal requires further examination by experts in the coming days, but his first impression was that it's "pre-election razzle dazzle."
"The cheques are all in the mail, and some of them don't arrive for 40 years," Crosbie said after the deal was signed, adding that the money provided by the revamped deal won't eliminate the province's $600-million deficit.
Earlier Monday, Crosbie pressed Ball during question period at the House of Assembly to make the documentation behind the accord publicly available, post-announcement.
"Without the background materials and analyses, scholars, economists, members of the public and indeed members of this House of Assembly, whose constitutional responsibility it is to question the government's actions, will not be able to ask intelligent questions about the outcome," said Crosbie.
Ball dodged Crosbie's question several times before conceding, "That information will be made public."
He then alluded to the ongoing controversy surrounding the over-budget and behind-schedule Muskrat Falls project, saying, "The agreement will speak for itself. Money will go into the pockets of Newfoundlanders and Labradorians, not take money out."
Down to the wire
Ahead of Monday's announcement, multiple federal and provincial sources confirmed the agreement was reached after an intense final week of talks. Negotiations ran late into Sunday night, with a source briefed on the negotiations saying ink was still being put on paper on Monday.
Money will go into the pockets of Newfoundlanders and Labradorians , not take money out.- Premier Dwight Ball
A federal source told CBC News that when the talks began in earnest last fall, the two sides were billions of dollars apart and discussions came close to failing several times.
But the federal source credits the calm negotiating approaches of Ball and Morneau for keeping talks going at the table.
The negotiations centred around ensuring the province maintained its position as the principal beneficiary of the accord, and Ball and O'Regan both touted that position as the result of the deal on Monday.
The terms of the Atlantic Accord are no stranger to controversy, and were last renegotiated under former premier Danny Williams.
In 2003, the Royal Commission on Renewing and Strengthening Our Place in Canada revealed Newfoundland and Labrador was receiving only 15 to 20 per cent of revenues from the offshore sector, despite the accord's initial promise that 100 per cent would go to the province.
Following that, Williams led a very public charge against Ottawa, lowering Canadian flags from government buildings. The spat eventually ended with a revised accord in 2005, and about $2 billion handed down to Newfoundland and Labrador.
That version of the accord contained a clause calling for a review of its terms by the end of March 2019, with Ball writing to Trudeau in February 2018 asking for that review to begin.
With files from David Cochrane and Here & Now