Address by the Honourable John F. Hamm, MD, MLA
Premier of Nova Scotia
OTANS / Industrial Cape Breton Board of Trade
January 19, 2001

Good day and thank-you for the kind invitation to be here today, I appreciate it.

I  want you to know that even without an invitation, I would be in Sydney today because I, like all of you, am disappointed over yesterday's news.

But I am not discouraged when it comes to the long-term prospects of Cape Breton Island.

In fact I'm here today to speak about the long-term future of Cape Breton, and the province as a whole --- but before I do, I want to put your minds at ease in terms of the government's commitment to steelworkers.

Steelworkers bargained in good faith with the province. Both parties agreed on a package for enhanced pensions and severance. My commitment was to treat workers fairly, and that commitment will be kept.

The government will honour the negotiated agreement. In fact we will expand it to include the 175 workers who were not covered. Every Sysco worker will have either an enhanced pension or severance.

Except for the people of this community, I doubt anybody wanted to see Sysco make a go of it more than I did.

But after 33 years of operation, and close to a decade of sales efforts, the time has come to turn the page and move on.

In fact when this luncheon was arranged a few weeks ago, my intention was to ask you as Nova Scotians to join me in leading the charge for Nova Scotia's future.

I want your support and that of every Nova Scotian as I begin what I believe is the most important task I have undertaken as Premier.

In the coming months I intend to cross Canada with a campaign to achieve "fiscal fairness" for the people of Nova Scotia and generations to come.

This "Campaign for Fairness" has several elements.

The one I will focus on today is the legal and business case for why Nova Scotia should, and must, receive the full financial benefits from our offshore natural gas and oil resources.

I want Canadians to know that Nova Scotia wants to earn economic independence by our own means and once again be social and economic equals within this great country.

This campaign is meant to strengthen our nation.

I want to be crystal-clear about the Offshore part of the Campaign for Fairness we are not asking Ottawa for one dime more. Not one.

All we are asking for is to be treated as others were before us. We are asking only for what Nova Scotians were promised.

And that is as the revenues from our offshore oil and gas grow, the additional financial benefits should flow to Nova Scotians.

When I entered public life in 1993, my goal was to see Nova Scotia become the best place in the world to live and to work, to raise a family and retire.

Over the past 18 months that vision has continued to evolve and become more concrete.

I foresee a day when our economy has been transformed, our educational system reinvigorated, and our province positioned for a future of financial independence.

I foresee a day when Nova Scotia is contributing to rather than drawing from the equalization fund.

If we share that vision, and all work together, we can achieve it. But it will take patience and dedication.

We already have a wonderful place to live.

We have opportunities in the energy field, in knowledge based industries and in many of our traditional sectors. There are examples of that right here in Cape Breton.

But those opportunities will be squandered unless we find ways to cut our personal and corporate taxes, so that our economic growth is accelerated.

That translates into better educational, health and essential public infrastructure and starts the growth cycle.

But, if we don't make the most of our offshore resources, then Nova Scotia's crushing debt will force government's hand for decades to come.

As I speak to you today our Net Direct Debt is approaching $11 billion dollars. We pay 900 million dollars a year in interest, or $2.5 million dollars every day!

I don't know about you, but that's hard on my digestion.

More importantly, our debt hurts Nova Scotia - and it weakens Canada.

Changing that fact will strengthen our province and our country.

Our opportunity to change that fact is at hand.

Now is the time for us to establish the winning conditions so that our non-renewable offshore resources our natural gas and oil lead to economic independence.

This is Nova Scotia's best opportunity since Confederation.

We've looked ahead into the middle of the next decade and projected the results. The results if we are able to use the full financial benefits of the offshore.

Under the right conditions - economic independence is on the horizon.

Let me use Alberta as an example.

From 1957 to 1965 Alberta was a recipient of equalization. The energy industry was in its early years.

But, with the right fiscal regime, grounded in its ability to use the benefits from its natural resources, Alberta has been enormously successful.

Having access to the financial benefits of their own subsoil resources has certainly been good to Alberta. They had an opportunity to get ahead.

In 1941, Nova Scotia and Alberta had almost the same percentage of Canada's mean income : approximately 79 per cent.

Within a decade Alberta had shot up by 21 points, while Nova Scotia had declined by 9.

Albertans has the chance to use their natural resource revenues to diversify its economy; improve standards of public service, and has now achieved a financial position that is rated as one of the best in the western world.

Today Albertans earn 104 percent of the national mean income while Nova Scotians earn only 84 percent.

Is there a clearer indication of what the retention of legitimate revenues from royalties can do for a province?

Nova Scotians deserve the same chance to build their own future. That's only fair, and that's the goal of my campaign - which could just as easily be called the Campaign for Economic Independence.

Over the next five years, exploration commitments total more than a billion dollars in 50 different licence areas.

This year we are forecasting the strongest exploration in over a decade.

In 1999 one pure exploration well was drilled; in 2000 that tripled to three; and in 2001 is expected to nearly triple again.

Potential is turning into reality and I believe Cape Breton is well positioned to benefit.

First of all we are optimistic that the dispute over the potentially resource-rich area between Nova Scotia and Newfoundland  the Laurentian Sub-basin will be resolved soon.

This area represents the potential of three SOEP projects  plus one Hibernia.

Resolving the dispute has been a priority for my me, and we have a solid legal case I don't want to bore you with legalese but here is our position — the line is the line.

Our brief to the Arbitration Tribunal argues that the boundary line was settled with Newfoundland and the other provinces in 1964 and was accepted for more than 30 years after that.

In less than two months from now the tribunal will hear final oral arguments, and we anticipate a decision later this spring.

If the Tribunal accepts our arguments, we will soon see the reactivation of old exploration licenses in the Laurentian Subbasin and an increase in activity in the surrounding areas.

You only have to look at the map to see the opportunities and the potential. We believe interest in new licence blocks will surge once the uncertainty is gone.

We see a lot of exploration activity in areas that are closer to Cape Breton than Halifax in the years ahead. There is a sound business case for supply bases close to the action.

But we want exploration done in the right way. Careful environmental regulations and modern technology means oil and gas can co-exist with the fishery and coastal communities.

There are concerns that exploration work under the Hunt and Corridor blocks off Cape Breton is being planned without proper consultation or consideration of the area's environmental sensitivities.

Our Government has joined with the Government of Canada to make sure those concerns were addressed. An Independent Commissioner is expected to be appointed soon to conduct a public review and report back to the regulator as well as the two governments.

The Commissioner will tell us what conditions need to be in place before coastal exploration off Cape Breton should proceed. This may mean a new type of prosperity for Cape Breton.

Rising energy prices, especially natural gas prices, only improve the outlook for our offshore resources because projects more quickly into a position where they pay very significant royalties to the Province

We have the resources to heat and light just about everyone from Sydney to New York - that right's including the Big Apple!

The benefits of exploration and development spending, the growth in supporting industries, should power our economy as well, power our future.

Nova Scotia's economic future should be assured. But, it is not.

Economic independence can only be achieved if we ensure the federal-provincial financial agreements allow the benefits from the offshore flow to Nova Scotians.

Canada's history has seen prosperity spread from east to west based upon natural resources. Vast new mineral and other resources were given to many provinces after Confederation. Sub soil wealth owned by Canadians given to provinces.

Quebec gained the riches of James Bay, Ontario the resources of northern territories, as did Manitoba after they joined Confederation.

The offshore area was to be Atlantic Canada's new resource opportunity, and we need to use our offshore wealth to transform our economies.

All agreed that revenues from such non-renewable resources should be used to make permanent economic changes.

And Nova Scotia should be the primary beneficiary and rightly so.

These offshore resources are part of Canada because Nova Scotians took these along when they joined Canada in 1867. They were ours then.

I believe they are ours now.

This promise was put into law under the 1986 Canada-Nova Scotia Offshore Accord, which was designed to set aside the dispute over who owned the resources and clear the way for development of natural gas.

The objective was clear and I quote:

" to recognize the right of Nova Scotia to be the principal beneficiary of the Petroleum Resources in the Offshore area, consistent with the requirement for a strong and united Canada."

But, fifteen years later that promise is nowhere close to becoming a reality.

That's because as each new offshore dollar flows in, Ottawa claws most of it back. The bulk of financial benefits from the offshore go to Ottawa - not Nova Scotia.

Our projections from the six most likely projects over the next 10 to 15 years, indicate that only 19 cents out of every new dollar from the offshore --- money from royalties and from Provincial and Federal Corporate Income taxes ---- only 19 cents stays with us.

The other 81 cents goes to Ottawa through direct taxation and by clawing back Nova Scotia revenues through the equalization formula.

That's 19 cents for Nova Scotians, and 81 cents for Ottawa.

These are our resources, and I believe that Nova Scotia deserves more than 19 cents on the dollar.

Right now, Nova Scotia stands to lose tens of billions of dollars over the next 30 years.

That money should go to:

• cutting personal and corporate taxes
• promoting broad-based economic growth
• strengthening essential public services, such as education, training, health care and transportation and debt reduction.

We have made significant progress over the last 18 months in coming to grips with the serious financial barriers that stand in the way of our future.

Our province has begun to get its house in order by making many difficult decisions that had been avoided for decades.

But that alone is not enough to stop the widening gap between Nova Scotia and other provinces.

We must act now so the opportunity to make long-lasting change is not lost.

Over the coming weeks I will be asking every Cape Bretoner, every Nova Scotian, and every Canadian to support our campaign for fairness.

I will ask the Prime Minister, Jean Chretien, to use this opportunity to deliver on the promise that Nova Scotia should be the primary beneficiary from the offshore.

The Minister of Industry, Brian Tobin, made it clear last week that he supports our goals and vision, and I know we can also count on the support of Nova Scotia's new federal cabinet minister Robert Thibault.

I want a solution that gives Nova Scotians what is rightfully theirs what they were promised ... the lion's share of the financial benefits from our offshore.

We have specific suggestions for fairness to discuss with the Government of Canada and the other provinces. In the months ahead I will outline them in more detail.

On issues such as offshore resources, equalization, transportation infrastructure — when Nova Scotia wins, other provinces win as well.

Nova Scotia needs the support of other provinces for fair treatment, not special treatment. We just want the tools that others provinces used to gain economic independence.

As a column in the National Post noted last week, Nova Scotia is pushing Ottawa to gain the tools to be competitive and independent — so we can stand on our own two feet.

We need the tools;

• the tools to lower taxes to grow the economy
• the tools to invest in education and training for a skilled workforce
• the tools to strengthen our health care system for a greater quality of life
• the tools to build the infrastructure required for a 21st century economy

That's what my campaign is all about. That's why I need your support.

Thank you.