"We can't allow things that are inaccurate to stand." — The Word of Our Dan, February 19, 2008.

Friday, June 08, 2007

Crosbie's version

It has been interesting, and not a little disturbing, to listen to John Crosbie’s attempts at historical revisionism over the past 24 hours.

Last night on VOCM Nightline with Linda Swain, he said:

“Myself and Mr. Roland Martin… have been involved in the discussions and negotiations over these issues of equalization and the Atlantic Accord for the period from the original agreements in 1985 and 86, and for a period of some seven or eight years with the federal government, led by Mr. Martin, to try to persuade them that they weren't carrying out the full intention of the original Atlantic Accords; which was that Newfoundland and Nova Scotia, with respect to the revenues from offshore oil and gas, were to receive those revenues, in full, and were to be the primary beneficiaries of the offshore oil and gas resources, without any deductions such as the federal government was instituting with respect to equalization. They were deducting, from the royalties and revenues that we were supposed to get from the offshore, the amounts we were receiving for equalization, which was quite improper in our opinion.”
And today, on CBC Radio On the Go, he continued, unchallenged, in that vein:
“…for eight years while the Liberals were in power they weren’t following what we thought had been agreed in these Atlantic Accords of ‘85 and ’86…

What we’re [Crosbie and Martin] attempting to do is persuade the Prime Minister that the Accord has been unilaterally changed by one party, namely the federal government, and the change is not in the wording of the Accord, but a change introduced in the budget as it affects the equalization formula. That changes the equalization formula, contradicts the intention of the Atlantic Accords, and changes the objective. The objective and intention of the Atlantic Accord was to see that Newfoundland and Nova Scotia received revenues from their offshore oil and gas resources without any deduction from equalization payments or any other federal payments, that we should be allowed to get the revenues, that was promised in the original Accords, without the federal government clawing back anything, federal revenues we’re getting simply because we’re now getting revenues from the offshore resources.”
First of all, let’s put a big myth to rest.

It is a falsehood, it is a fiction, it is a fabrication, fairy tale, and fantasy, that the “principal beneficiary” clause of the Atlantic Accord was ever intended, as the Newfoundland historical revisionists, Crosbie included, now argue, to provide that the province would receive 100% of the public revenues associated with offshore oil and gas activity, and that the federal government receive none.

The Atlantic Accords make it very clear that the provinces, and only the provinces, can collect royalties from their offshore developments. It makes it equally clear, however, that the federal and provincial governments would also collect other taxes and revenue streams, of general application, which derive from the taxable economic activity associated with the offshore.

Instead, as was, briefly, clear at the time, the Atlantic Accord intended that the province as a whole – not just the provincial treasury – was to be the “principal beneficiary”.

No one has yet offered any evidence that this larger, and correct, notion of “principal beneficiary” has ever been violated.

All could have been made clear from the start. But the oft-cited phrase “principal beneficiary” was neither legislated (it appears in the Accord, but not in the enabling legislation), nor even defined.

Furthermore, it is also a falsehood, a fiction, a fabrication, fairy tale, and fantasy, that the “objective and intention” of the Atlantic Accords was that the provinces of Nova Scotia, and Newfoundland and Labrador, could, would, or should collect their offshore oil and gas revenues with no corresponding reduction in net federal transfers, forever.

How do we know?

Because it’s written right into the Atlantic Accords!

In the case of Newfoundland and Labrador, the “Part I” offset payments were to last for a period of twelve years. The “Part II” offset payments, which topped up the Part I payment, were for 90 cents on the dollar – not dollar for dollar – and after five years were to be reduced by ten per cent per annum. Those provisions are written right into Article 39 of the Newfoundland and Labrador Atlantic Accord, and Part V of the Canada-Newfoundland Atlantic Accord Implementation Act.

Similar provisions apply in Nova Scotia through Article 27 of the Nova Scotia Atlantic Accord and Part V of the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act.

If John Crosbie doesn’t believe it, he can ask John Crosbie.

In one of the many failings of the Vic Young Blame Canada Commission, John Crosbie was assigned to review the political legacy of… John Crosbie.

John Crosbie – the researcher for the Royal Commission, that is – wrote in his report:

Under Section 39, both governments recognized that “there should not be a dollar for dollar loss of equalization payments as a result of offshore revenues fl owing to the Province.” To achieve this, Canada agreed to establish special new “Equalization Offset Payments” to commence on April 1st of the first fiscal year following the attainment of cumulative production of 15 million barrels of offshore oil or the energy equivalent of natural gas. Thus there are now two parts to the equalization offset payments promises of the Government of Canada, first, already in place under the general rules of the Equalization Program for all provinces offset payments would be made equivalent to the loss of any fiscal equalization payments that resulted from any future changes to the floor provisions of the Federal-Provincial Fiscal Arrangements and Federal Post-Secondary Education and Health Contributions Act, 1977, as amended 1982. These provisions applied with respect to the phase-out of equalization entitlements generally if the changes were detrimental to Newfoundland and this general equalization provision has the effect of providing Newfoundland, while its per capita fiscal capacity is 70 per cent or less of the national average, with 95 per cent protection from year-over-year decreases in equalization, from whatever causes, on the “floor protection” basis already in effect under normal equalization rules in 1982. This is a commitment that if under the formula the Province will receive in a year 95 per cent or less of the equalization payments it received the previous year, then the decline would not exceed 95 per cent. To this would be added the new offset payments protections of the Accord.

The additional equalization protection that the Accord was designed to provide was that “Canada will make offset payments (Part II) equivalent to 90 per cent of any decrease in the fisscal equalization payment to Newfoundland in respect of the fiscal year in comparison with the payment for the immediately preceding fiscal year, as calculated under the prevailing Federal-Provincial Fiscal Arrangements and Federal Post-Secondary Education and Health Contributions Act, 1977, as amended from time to time, and taking into account both years, the offset component entitlement already available under Part One. In the fifth fiscal year after the threshold offshore production of 15 million barrels of offshore production of oil or the energy equivalent of natural gas was achieved, the new Part II offset payment rate would begin to be reduced by 10 percentage points in each subsequent year in addition to the original 90 per cent. The effect is that in year one Part II provisions would pay Newfoundland 90 per cent of the remaining decline not covered by Part I, or approximately 4.5 per cent which would decline to zero per cent for Part II payments in year 12.
If John Crosbie doesn’t accept the word of John Crosbie, perhaps he should go back and ask the Minister of Justice of the day some embarassing questions.

Why was “principal beneficiary” never defined in the Accord?

Why was the phrase not imported into the enabling legislation?

And why, if the “objective and intention” of the “principal beneficiary” clause was that there be no dollar-for-dollar reduction in federal transfers due to increasing provincial offshore revenues, was the legislation not drafted to give it effect, instead of drafted the way it was.

The Minister of Justice, after all, is responsible for overseeing the legal affairs of the Government of Canada, including legislative drafting.

And from September 17, 1984, to June 29, 1986, the period during which both provinces’ Accords were negotiated, and Newfoundland and Labrador’s was signed, the Minister of Justice and Attorney General of Canada was a St. John’s lawyer named John Crosbie.

That is the same John Crosbie who negotiated and drafted the Atlantic Accords which were applied and honoured in full, ever after, including by the former federal Liberal government that he felt compelled to take potshots at.

The Atlantic Accords operated, and operate, exactly as John Crosbie intended, and legislated, back in 1985 and 1986.

Indeed, the only government which has ever breached that black letter of the Atlantic Accord is the provincial government of Danny Williams, who tried last year to do an end-run around s. 12(2) of the Canada-Newfoundland Atlantic Accord Implementation Act and install Andy Wells, for reasons that only Danny Williams knows, as Chairman of the Offshore Petroleum Board.

So perhaps one of these John Crosbies – the researcher or the former federal Minister of Justice and regional political fixer for Newfoundland and Labrador in the federal cabinet – can set the current John Crosbie straight.

John Crosbie is entitled to his own opinions. And Flying Spaghetti Monster knows, he’s opinionated.

But John Crosbie is not entitled to his own facts.

He is only entitled to the same facts as everyone else. He does not get to make them up on the spot.

Nor is he entitled to a free ride from the media who accept, uncritically and without question, the Newfoundland nationalist revisionist — and wholly fabricated — version of history and the law which he, and others, have been spouting, for purely partisan reasons, in the last four years.


Post a Comment

Subscribe to Post Comments [Atom]

<< Home