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Danny Williams Isn't Winning My Sympathies
09/01/2005

Paul Martin has certainly lost an important semantic battle in the debate over the Newfoundland oil revenues. The media, in general, has adopted terms that favour Premier Danny Williams in his arguments. They typically refer to the debate being about whether or not Newfoundland should be allowed to "keep all of the offshore oil revenues". That's a funny way to put it.

Writing a column in the Toronto Sun, former cabinet minister John Crosbie brings a bit more detail without any more accuracy:

But because of the way Canada's equalization program works, there is a clawback so that Newfoundland loses up to 70% of its equalization grants, deducted from provincial oil and gas revenues received through the Atlantic Accord. The result is Newfoundland receives only 14% of the total government revenues from the offshore resources, while Ottawa receives 86%.

But the point is that Newfoundland actually keeps all the government revenues from offshore resources that it would normally get. What it doesn't get is the same amount of equalization payments. I.e., payments from the federal government to help Newfoundland afford some of the same services offered by other provinces. Once Newfoundland is getting more tax revenue from offshore oil, it doesn't need as much equalization.

Crosbie's argument is analagous to this one:

But because of the way Canada's employment insurance works, there is a clawback so that Newly-employed Bob loses up to 100% of his EI grants, deducted from the wages paid by his new job. The result is that Bob only receives 50% of the revenues from his labours, while Ottawa receives 50%.

Isn't it simpler to say that because Bob has a job, he doesn't get EI anymore? And because Newfoundland has more tax revenue coming in, it doesn't get as big a handout from Ottawa anymore? Ottawa isn't taking anybody's money in either scenario.

Well, I suppose arguments could be made that Newfoundland might need a temporary adjustment period. (I don't happen to see why Newfoundland should collect equalization disproportionate to its need.) All we seem to have instead is a lame collection of historical grievances like those brought up by Crosbie, or Danny Williams playing games with the flag.

Meanwhile, there is a real risk that Paul Martin is going to end up making an overly-generous deal, details of which can be found in the depths of this Globe and Mail article and this Toronto Star editorial.


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