Address by the Honourable John F. Hamm, MD, MLA
Premier of Nova Scotia
Albany Club, Toronto
March 19, 2001

Thank you for the kind introduction.

Once again, I have the great pleasure of addressing Toronto business and community leaders. When I was here in October, I shared with Albany Club members the highlights of Nova Scotia's new economic reality.

I'm back again, with more highlights to share. Let's just call this a sequel.

And considering the ambitious nature of my message, some people might even call it Mission Impossible.

But I'll let you be the judge of that.

Your mission — should you choose to accept it — is to help Atlantic Canada become a strong, contributing part of this country. As always, if you should be caught, you can be sure someone will disavow all knowledge of your actions.

At this point, you may be hoping my microphone will self-destruct in five seconds.

I confess this mission won't be quite as action packed. The leading man is clearly not Tom Cruise. And there seems to be a shortage of evil villains.

There is no good guy or bad guy in this mission, just a promise that must be fulfilled.

For that reason, we can call it Mission Challenging, but I assure you it's not impossible.

With your help, and that of other influential business leaders across Canada, Nova Scotia will be treated in a fair and equal manner. We'll be able to stand on our own two feet and become contributors to programs like equalization. Although equalization is necessary at this point, it is a short-term fix.

It doesn't achieve long-term goals, and it doesn't translate into lasting positive change for either my province, or our country.

Creating lasting, positive change is the goal of what I call the Campaign for Fairness.

It is a goal that can be achieved if we can agree to share the same vision for the future of our country.

The day will come when another Nova Scotia Premier will fly to Toronto, step up to this podium and speak of Nova Scotia as one of Canada's strongest economies.

The day will come when Nova Scotia joins economic powerhouses like Ontario and Alberta in sharing our wealth with other provinces and territories.

The day will come when Atlantic Canada sheds its "have not" status.

As business people, you know a money losing branch or division of a company cannot be sustained indefinitely.

You know changes have to occur that will turn the situation around, or the entire company is weakened.

The same is true of a country. I am campaigning for changes that require no additional money — not one red cent. But these will turn Nova Scotia's financial situation around, invigorate the Atlantic region, and strengthen Canada in the process.

That's not going to happen tomorrow, or next year. But there is an opportunity to turn this vision into reality — if the federal government acts now.

That's why I have undertaken a Campaign for Fairness.

I'll describe for you the three elements of this campaign:

• It's about seizing a tremendous opportunity.
  
  
• Getting what was promised to Nova Scotia.
  
  
• And securing the tools needed to accelerate growth.

First, let me share a few details about this opportunity.

This past year alone, about $600 million was projected to have been spent on Nova Scotia offshore oil and natural gas activities, such as seismic surveying, exploration wells, and delineation wells.

In just one year, we have surpassed all the accumulated exploration activity of the past 33 years.

Nova Scotia has the interest of Exxon-Mobil, Shell, Marthon Oil, BP Amoco, Anadarko and Kerr-McGee. Some of the biggest players in the world.

Exploration commitments total more than a Billion dollars over the next five years, in 50 leases. And just last month, PanCanadian announced an additional $1 Billion in capital expenditures. All private sector money.

Production of natural gas from Sable Offshore began a little more than a year ago. It's now producing over 500 million cubic feet per day — providing 25 percent of New England's natural gas requirements.

Over the next decade, we'll be providing all of their natural gas requirements.

As a cleaner, more environmentally friendly fuel source, natural gas is steadily growing in popularity at a time when other conventional sources are running out or losing favour.

It's the ideal match between supply and demand: New England has a strong demand — Nova Scotia has ample supply.

In fact, a growing Nova Scotia company called Emera has become the first major company to convert to natural gas. Emera is branching out from its utility roots to be a regional player in all forms of energy sales and infrastructure.

We expect to be using more natural gas to generate electricity across the Atlantic provinces and we are working to attract a number of heavy industrial and commercial users.

Discussions about establishing gas fired electrical plants in Nova Scotia to export electricity directly have caught the attention of electric and gas utilities in New England. And Emera has been looking at this option carefully.

To give you a bird's eye view of Nova Scotia's potential, on the conservative side, we expect half a dozen Sable Island scale projects will be developed, or in the process of being developed, off Nova Scotia over the next 10 to 15 years.

Investment analysts in New York, however, believe this estimate is far too low. And Nova Scotia's gas reserves are really between 50 and 100 trillion cubic feet.

To provide a quick translation: Instead of six Sable-sized projects, the potential now exists for the development of 15 or more.

This gives you a glimpse of the magnitude of Nova Scotia's potential economic growth in just one sector.

And you now know I'm not exaggerating when I say Nova Scotia's capital city of Halifax is North America's new energy capital.

In the near future, Nova Scotia's offshore oil and gas will provide heat and light to New York City.

If our resources can power the Big Apple, then they should power the growth of supporting industries in Nova Scotia and throughout Atlantic Canada. They should power our economy, and our future.

They should, but we have a sizeable obstacle to overcome before they will.

Our projections from six of the most likely offshore projects show that over the next 10 to 15 years, 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 will go to Nova Scotians.

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

Eighty-one cents of Nova Scotia resources for Ottawa. Nineteen cents for Nova Scotia.

Put another way — production on these six most likely projects over the next three decades is expected to generate 36 Billion dollars. Of that, Nova Scotia would get only six billion dollars, while 30 Billion goes to the federal government.

Ottawa's gain will prolong Atlantic Canada's pain.

I don't expect you to feel as passionately about this as Atlantic Canadians do. I'm not asking that you leap to your feet and rush off to Parliament Hill to demand fairness on our behalf.

I'm asking that you look at this from a purely business perspective.

Just as Canada benefits from a strong Ontario economy. Just as Canada benefits from a strong Alberta economy. Canadians will benefit from a strong economy in Atlantic Canada.

I believe you would also agree that good business opportunities don't land in your lap everyday. More often than not, you have to go after them. And you have to be prepared to overcome obstacles that threaten your success.

Campaign for Fairness is about turning a stumbling block into stepping stones that will put Nova Scotia on the road to self-sufficiency.

There is a strong business and legal case for why my province should, and must, receive a more equitable share of our offshore natural gas and oil reserves.

Which leads me to the second element of Campaign for Fairness — getting what was promised to Nova Scotia.

To explain our legal position, I'll briefly touch on the history of resource allocation in Canada.

Vast new mineral and other resources were given to many provinces after Confederation. Through land allocations 1889, 1898 and 1912, Quebec gained the riches of James Bay, and Ontario the resources of northern territories.

Dominion lands owned by all Canadians provided to Quebec, Ontario, and Manitoba to all those provinces to build their economies - and it was the right thing to do. Resource centers such as Timmins, Kapuskasing and the James Bay have all provided significant benefits to Ontario and Quebec as a result of federal decisions.

And in 1930, Manitoba, Saskatchewan and Alberta were given subsoil rights through and amendment to the Constitution. Subsoil rights owned by all Canadians granted to individual provinces to grow the economy. And, it was the right thing to do.

Ottawa gave individual provinces adjacent lands and resources, previously owned by all Canadians, to help those provinces prosper. We in Atlantic Canada want the same treatment for our offshore area... our new resource opportunity.

Nova Scotia's offshore is part of Canada because our province brought it into Confederation with us in 1867.

During the 1970's and 80's there was public consensus that revenues from non-renewable resources should be used to transform our economies and make permanent economic changes.

On July 16, 1980, in response to a question by the Honourable John Crosbie, then Prime Minister Trudeau stated:

"The commitment we have made regarding the offshore is that until the provinces with resources off their shores have reached the average income in Canada, we intend to see that they get the overwhelming part of the resources from the offshore."

The federal government's conviction was so strong on this point, the Parliamentary Secretary to then-Energy Minister Jean Chretien made the following statement in the House of Commons on June 28, 1984 (and I quote):

"The legislation ensures that Nova Scotia will receive the lion's share of offshore petroleum revenues. In fact, in the early years of the agreement, the province will receive substantially more revenues than if it owned the resource on land."

"There will be wider sharing of revenues only if the province's relative fiscal capacity... exceeds that of all provinces."

"Until Nova Scotia's per capita fiscal capacity reaches 110 per cent of the national average..."

"...The province will receive all offshore revenue." End quote.

The spirit of this promise was written into the 1986 Canada-Nova Scotia Offshore Accord which set aside the dispute over who owned the resources and cleared the way for development and joint management.

The objective was clear and again 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."</p>

We were given a promise — both verbally and in writing. But 15 years later it is nowhere close to reality.

Under the existing regime, Nova Scotia is not now — nor will it ever be — the principal beneficiary of our offshore oil and gas.

That's because the bulk of financial benefits from Nova Scotia's offshore go to the federal government.

The third element of Campaign for Fairness speaks to the reasons why Ottawa must honour its promise ... why Nova Scotia needs to be treated fairly ... why we must have the tools needed to accelerate growth and optimize new opportunities.

We look to Alberta to find the precedent for our case. And to see where Nova Scotia's potential could lead.

From 1957 to 1965 Alberta received equalization from Ottawa. The energy industry there was in its early years, just as Nova Scotia's is now.

But there was one major difference — Alberta received 100 cents of every royalty dollar.

Ottawa didn't claw that money back from Albertans then like they do from Nova Scotians today.

Alberta has demonstrated how to use the full benefits of its natural resources to build a strong provincial economy — a financial position that is widely recognized as one of the best in the western world.

Under the same circumstances — and many of those circumstances are now falling into place — Nova Scotia can expect to see similar success.

That's one reason we viewed the province of Alberta as a potential ally. And when we took Campaign for Fairness there last month, Albertans didn't disappoint us.

Premier Ralph Klein and former Premier Peter Lougheed both expressed strong support for our efforts. And an editorial in the Calgary Herald noted that in "a decade hence, the concession will be well worth it, especially if it sets Nova Scotia on the entrepreneurial path that has made provinces such as Alberta and Ontario economic winners."

Nova Scotians can duplicate Alberta's economic transformation if we are given the same chance to make the most of our offshore oil and gas resources.

Nova Scotia has a growing number of opportunities in the energy sector, in knowledge-based industries, our ports and in many of our traditional sectors.

But all of these opportunities will be squandered unless we find ways to cut our personal and corporate taxes while building economic infrastructure so that our growth is accelerated.

We can't do this if our crushing debt continues to force government's hand for decades to come.

Nova Scotia's Net Direct Debt is approaching 11 billion dollars — one of the highest per capita debts in Canada. It's a fiscal reality that hurts Nova Scotians.

A solution — a sustainable solution based on Nova Scotia's own resources - is at hand.

Campaign for Fairness is about showing our fellow Canadians that Nova Scotians want to earn economic independence by our own means.

Except as needed to defend our case, we're not looking back — we're looking forward. We have a bright future to focus on. We have a mission. And success is not only possible, it's probable.

Support has come from federal Tories, the Canadian Alliance, the NDP and a number of Liberals. MPs and Senators from across the political spectrum have championed this cause.

And getting support from Alberta (perhaps the toughest crowd we have faced on the Campaign for Fairness trail) was very gratifying.

I hope you are also willing to share our vision of a day when Nova Scotia's economy is transformed.

Our offshore energy represents our best opportunity for becoming a strong, contributing member of this country — if we are treated fairly, as those before us have been.

Without a fair share, Nova Scotia will make only modest gains. We will struggle on as a recipient of equalization transfers for years to come.

Nova Scotians don't want that. I don't want that. And I doubt that neither the Prime Minister or my fellow Premiers want that.

Economic independence is within our grasp. But we need the co-operation of the federal government and the other provinces to achieve it.

We also need your support and that of business leaders across Canada. Every voice counts. And many voices will result in action.

Campaign for Fairness makes good business sense. It's about equity. It's about nation building. It's about keeping a deal.

Nova Scotia is on the threshold of economic rebirth. This is our best opportunity to build the strong economy our province enjoyed prior to joining Confederation.

I invite you to come see for yourself the tremendous potential of our offshore development, our growing knowledge-based economy, abundant resources, unique culture, rich history, and natural beauty.

Nova Scotia will not squander our opportunities. On the contrary, we will use our resources to build a strong provincial economy in the East, a province that is self-reliant and pays its own way in Confederation.

As a government, we are speaking out for what is right, what is fair and what is best for our province.

As influential leaders who can recognize the benefits of strengthening all parts of Canada, I ask you to join me in speaking out for what is right, what is fair, and what is best for our country.

Thank you.