Nfld. premier: PM open to more talks

Nfld. premier says he and PM Paul Martin have agreed to talks aimed at solving an impasse over offshore revenues.

Newfoundland and Labrador Premier Danny Williams said Wednesday that he and Prime Minister Paul Martin have agreed to more talks aimed at solving an impasse over offshore revenues.

But the premier repeated his assertion that Martin broke his pre-election promise to give Newfoundland 100 per cent of its oil and gas revenues, without the conditions that Ottawa ended up imposing on the agreement.

Those conditions are:

  • The deal would be tied to the equalization formula, so that the money Newfoundland receives from richer provinces would fall as its offshore royalty revenues rose, either from higher oil prices or increased production.
  • The deal would end if the province's fiscal capacity – its ability to raise money from 33 separate sources including a variety of taxes – were to equal Ontario's.
  • The deal would be reviewed in eight years.

At the moment, Ottawa claws back about 70 per cent of the royalties from the oilfields off the province's southeast corner, at a time when the Newfoundland government says it's struggling to provide basic health care and education to its citizens.

"We are not prepared to have Ottawa keep the loaf and give us the crumbs," Williams said, losing his voice after three days of making his case in the national media.

"This agreement did not include a cap or a reference to fiscal capacity. It did not include any linkage to the fiscal capacity of other provinces. And it did not include a time frame. In fact, it specifically excluded it."

At a news conference in St. John's, Williams and his finance minister, Loyola Sullivan, showed reporters a chart that depicted the difference between the revenues Newfoundland would get under its proposal and the money it would receive under federal Finance Minister Ralph Goodale's counter-proposal.

The Newfoundland politicians said they would lose about $617 million in the 2006-07 fiscal year alone if they accepted Ottawa's version of the deal, and between $2.6 billion and $4.1 billion over the 21-year production life of the Hibernia, Terra Nova and White Rose offshore oilfields.

"We are not prepared to give away potentially billions of dollars in revenue to contribute to an already bloated fiscal surplus in Ottawa," Williams said.

He invoked the Upper Churchill Falls hydroelectric deal Newfoundland struck with Quebec under Joey Smallwood's administration in the 1960s, which allows Quebec to buy power from Newfoundland at ridiculously low rates and resell it to the United States at a profit of more than 1000 per cent.

"In the absence of an escalator [clause], this has cost this province hundreds of millions of dollars," Williams said.

Asked what power one small province has to force Ottawa to buckle under and offer the more advantageous terms he seeks, Williams replied: "The leverage that we have is our pride and our honour and our integrity, and the passion of the people of Newfoundland and Labrador."

He said letters and e-mails have been pouring into his office from across the country this week, adding that all the premiers, including Ontario Premier Dalton McGuinty, have expressed support for his position.

Williams said the prevailing mindset on the federal scene was that "poor old Newfoundland will take another little handout, run away with our tail between our legs and come back when we're down and out again."