So What Are Those Newfoundlanders Mad About?
...well, not just the Newfies. Apparently the Nova Scotians are a little upset about this whole Atlantic Accord situation too. Since I'm currently residing in Vancouver, it puzzled me as to why people on the East Coast are so upset. According to a friend of mine in Newfoundland, the Conservatives are taking a beating in the province, even in the Conservative stronghold of St. John's. Apparently, everyone is talking about the 'Atlantic Accord fiasco'. But what are they really saying beyond the rhetoric of feigned betrayal? Does anyone even understand what the Atlantic Accords entail?
The ‘fiasco’ starts with the concept of equalization payments. The equalization payment is set up to redistribute wealth between provinces. Simply put, equalization payments transfer money from the ‘have’ provinces to the ‘have-not’ provinces. Of course, there is a formula in place to determine how much payment a province will get, and the more revenue a province raises per capita before the transfer payments, the less transfer payments it will get.
As for the accords, there are two major points of relevance contained within them. Firstly, both
provinces are to receive all offshore resource revenues as if the resources were on land (offshore resources are nominally under federal jurisdiction). Secondly, the federal government will essentially offset any loss in equalization payments that result from these revenues. In other words, the federal government will not include offshore resource revenues in the calculation of equalization payments. Since these offshore resource revenues are not included in the calculation of transfer payments, N.S. and Nfld. get more money in transfers than they would otherwise.
In the Conservative Government’s 2007 budget, a new equalization formula was proposed based on a report called the O’Brien report. The O’Brien formula puts a ‘cap’ on equalization payments if the two provinces’ fiscal capacity (i.e. revenues per capita) exceeds that of Ontario’s. This ensures that Ontarians won’t be paying money to the Atlantic Provinces even when these provinces make more than they do.
Was there a lie here? Was the Accord broken? The fact of the matter remains that nothing obliges the Atlantic Provinces to choose the new formula! The budget stipulates that the provinces has two choices: they can stay with the old formula and continue to be covered under the Atlantic Accords, or they can switch to the new formula, which promises greater short-term payouts with a cap that only exists if the fiscal capacity of the Atlantic Provinces exceeds that of Ontario. So what’s wrong here? What do Messrs. Williams and MacDonald demand? Well, as Andrew Coyne so eloquently put it, they want to “have their cake, eat it and spin it above their heads”. They want equalization payments, offshore resource revenues and no cap. If the provinces can choose the status quo, I see no wrongdoing here. Who loses? This is all about the provinces clamoring for more payments and revenues with no regard to the rest of the country.
The Accords are extremely technical and complicated, and I doubt that more than a few people understand why exactly they should be angry, if at all. I suspect that Atlantic Canada, as a peripheral region, may be overwhelmed by a tendency towards excessive deference to offense that is exacerbated by demagogic Premiers. These Premiers play on a feeling of inadequacy that is prevalent in almost all areas of peripheral Canada (essentially any area outside Quebec and Ontario). All this rhetoric about betrayal and lies are hyperbolic. I believe that any reasonable person, upon being presented with the facts, would realize that there is nothing to be worked up about, that all the provincial rabble-rousing is the same old intergovernmental posturing for a bigger piece of the pie.
The ‘fiasco’ starts with the concept of equalization payments. The equalization payment is set up to redistribute wealth between provinces. Simply put, equalization payments transfer money from the ‘have’ provinces to the ‘have-not’ provinces. Of course, there is a formula in place to determine how much payment a province will get, and the more revenue a province raises per capita before the transfer payments, the less transfer payments it will get.
As for the accords, there are two major points of relevance contained within them. Firstly, both
provinces are to receive all offshore resource revenues as if the resources were on land (offshore resources are nominally under federal jurisdiction). Secondly, the federal government will essentially offset any loss in equalization payments that result from these revenues. In other words, the federal government will not include offshore resource revenues in the calculation of equalization payments. Since these offshore resource revenues are not included in the calculation of transfer payments, N.S. and Nfld. get more money in transfers than they would otherwise.In the Conservative Government’s 2007 budget, a new equalization formula was proposed based on a report called the O’Brien report. The O’Brien formula puts a ‘cap’ on equalization payments if the two provinces’ fiscal capacity (i.e. revenues per capita) exceeds that of Ontario’s. This ensures that Ontarians won’t be paying money to the Atlantic Provinces even when these provinces make more than they do.
Was there a lie here? Was the Accord broken? The fact of the matter remains that nothing obliges the Atlantic Provinces to choose the new formula! The budget stipulates that the provinces has two choices: they can stay with the old formula and continue to be covered under the Atlantic Accords, or they can switch to the new formula, which promises greater short-term payouts with a cap that only exists if the fiscal capacity of the Atlantic Provinces exceeds that of Ontario. So what’s wrong here? What do Messrs. Williams and MacDonald demand? Well, as Andrew Coyne so eloquently put it, they want to “have their cake, eat it and spin it above their heads”. They want equalization payments, offshore resource revenues and no cap. If the provinces can choose the status quo, I see no wrongdoing here. Who loses? This is all about the provinces clamoring for more payments and revenues with no regard to the rest of the country.
The Accords are extremely technical and complicated, and I doubt that more than a few people understand why exactly they should be angry, if at all. I suspect that Atlantic Canada, as a peripheral region, may be overwhelmed by a tendency towards excessive deference to offense that is exacerbated by demagogic Premiers. These Premiers play on a feeling of inadequacy that is prevalent in almost all areas of peripheral Canada (essentially any area outside Quebec and Ontario). All this rhetoric about betrayal and lies are hyperbolic. I believe that any reasonable person, upon being presented with the facts, would realize that there is nothing to be worked up about, that all the provincial rabble-rousing is the same old intergovernmental posturing for a bigger piece of the pie.
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