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- Premier Rodney MacDonald and Finance Minister Michael Baker will meet today, Nov. 17, with economic forecasters from Canada's Banks as well as the Atlantic Provinces Economic Council (APEC) and the Conference Board of Canada. (More...)
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Premier Rodney MacDonald's column
The Accord is About More than Dollars
April 2, 2007
Nova Scotia’s Offshore Accord has a clear purpose: to improve our province’s self-reliance so that equalization might no longer be needed one day.
Two weeks ago, I told Prime Minister Stephen Harper that the Offshore Accord is not just about an agreement; it’s not just about dollars; it is about the hope that we Nova Scotians have for a better future.
We have always believed within ourselves that we will once again stand on our own two feet and give back to this great country to which we belong.
The Offshore Accord showed us that Ottawa shared our dream.
The Accord is a bilateral, legal agreement that continues in effect today. It is a fundamental agreement between Canada and Nova Scotia.
When the first Accord was signed in 1986, we expected that the offshore would eventually help us move from being a "have not" to a "have" province.
The Accord is rooted in the economic development principle that is enshrined in section 36(1) of the Constitution. In the opening statement of the Accord, the parties agreed that the development of the offshore resources would occur in a manner that builds “lasting social and economic structures.”
The Accord promises that Nova Scotia would be the principal beneficiary of the offshore revenues – 100 per cent.
But the federal equalization formula, with its power to claw back payments from Nova Scotia, posed a challenge. So, Canada agreed to pay Nova Scotia offset payments to neutralize the claw back.
History showed that the offset payments fell short, so Premier John Hamm started the Offshore Accord Review in 2002.
In Ottawa, it was then-Opposition Leader Stephen Harper who played the role of helping to champion our cause. He was key to helping Nova Scotia succeed in getting the federal government to respect the Accord.
The 2005 Agreement recognizes Nova Scotia’s “unique economic and fiscal challenges”, which includes its high debt levels relative to other provinces and “the strong commitment of the province to improve its fiscal situation.” In this regard, Nova Scotia demonstrated its commitment to debt reduction by applying the 2005 Agreement’s $830 million advance payment directly and fully to the provincial debt.
The 2005 Agreement to the Accord stipulates the offset payments from Ottawa are to be based on the equalization formula “as it exists at the time” – meaning the equalization model that would be in active use.
But in its budget delivered two weeks ago, the federal government gave us two equalization choices, neither of which is consistent with the 2005 Agreement to the Accord.
Ottawa’s newest equalization formula introduces a cap on Nova Scotia’s equalization entitlement. The cap is measured based on fiscal capacity alone and ignores Nova Scotia’s debt position.
Moreover, Nova Scotia’s offshore revenues are projected to exceed the cap, which would mean a cut in our equalization. We could thus fall short of the guarantee to receive the benefit of 100 per cent of our offshore revenues.
All Nova Scotians should be concerned about this. That's why my government is prepared to take every step to fight for our rights.
What is at issue is very simple. Equalization is a right under our Constitution, and our Offshore Accord is a legal, bilateral right.
Our offshore development revenues represent unprecedented and historic opportunity for us to get out of decades-old “have not” status.
Our future is at stake. We will not lose our focus: a Nova Scotia that ensures services for its citizens and keeps a promising future alive for our children and their children.