|| That this House deplore the attitude of the Prime Minister of Canada at and following the First Ministers' Conference of October 26, 2004, and that it call on the federal government to immediately implement its pledges of June 5 and 27, 2004, to allow the provinces of Newfoundland and Labrador, and Nova Scotia to keep 100% of their provincial offshore oil and gas revenues.
He said: Mr. Speaker,I will be splitting my time with our deputy leader from Central Nova.
On June 5 of this year the Prime Minister arrived in St. John's, the capital of Newfoundland and Labrador. The context was the following. Obviously it was an election campaign when the Prime Minister was asked to respond to a longstanding Conservative commitment to ensure that the Atlantic provinces would enjoy 100% of their non-renewable resource royalties.
This is a commitment that was made by me in my capacity as leader of the Canadian Alliance when I first arrived here and has its origins in the intentions of the Atlantic accord signed by former Prime Minister Mulroney in the mid-1980s. These are longstanding commitments, our commitment to 100% of non-renewable resource royalties. It was our commitment during the election, before the election, and it remains our commitment today.
For the Prime Minister, this was something that he had opposed for 11 years and for most of his political career. But suddenly in the midst of an election campaign on June 5, he met with Newfoundland and Labrador Premier Danny Williams. He came out of that meeting and said the following:
|| I believe that Newfoundland and Labrador ought to be the primary beneficiary of the offshore resources, and what I have said to the premier is that I believe the proposal that he has put forth certainly provides the basis of an agreement between the two of us.
Premier Williams specified in a letter dated June 10 that:
|| The proposal my government made to you and your Minister of Natural Resources provides for 100% of direct provincial revenues generated by the petroleum resources in the Newfoundland and Labrador Offshore Area, to accrue to the government of Newfoundland and Labrador and be sheltered from the clawback provisions of the equalization formula--
The Prime Minister said he agreed with the Premier's proposal and he gave his word as Prime Minister of Canada. Premier Williams was asked at the press conference announcing the deal how he could be sure the Prime Minister would keep his word after the election. He replied that as a man of honour, that the solemn word of the Prime Minister was sufficient. Premier Williams said: “It's by word of mouth, and I'm taking him at his word, and that's good enough for me”.
Unfortunately, the solemn word of this Prime Minister turned out to be not good enough. The Prime Minister ignored letters from Premier Williams on June 10, August 5 and August 24 urging him to confirm his promise. Suddenly, the Prime Minister and his Minister of Natural Resources fell silent.
Finally, on October 24, two days before the first ministers' conference, the Minister of Finance finally replied offering:
||--additional annual payments that will ensure the province effectively retains 100 per cent of its offshore revenues--
Then the minister added two big exceptions limiting the offer:
||--for an eight-year period covering 2004-05 through 2011-12, subject to the provision that no such additional payments result in the fiscal capacity of the province exceeding that of the province of Ontario in any given year.
The eight year time limit and the Ontario clause effectively gutted the commitment made to the people of Newfoundland and Labrador during the election campaign.
Why should Newfoundland's possibility of achieving levels of prosperity comparable to the rest of Canada be limited to an artificial eight year period? Remember in particular that these are in any case non-renewable resources that will run out. Why is the government so eager to ensure that Newfoundland and Labrador always remain below the economic level of Ontario?
The Ontario clause is unfair and insulting to the people of Newfoundland and Labrador, and its message to that province, to Nova Scotia and to all of Atlantic Canada is absolutely clear. They can only get what they were promised if they agree to remain have not provinces forever. That is absolutely unacceptable.
Everyone in Canada would be happy if one day our Atlantic provinces could fully benefit from their natural resources, everyone except the federal Liberals.
The Liberal attitude is as typical as it is senseless. There is no point pulling back non-renewable resource revenues from a have not province. This is an opportunity and it is a one time opportunity. It is a short term opportunity to allow these provinces to kick-start their economic development, to get out of have not status, to grow this short run opportunity into long run growth and revenue that will be paid back to Ottawa over and over again and that will benefit the people of those regions of Canada for a very long time.
This is what happened in the case of my province of Alberta. Alberta discovered oil and gas in the 1940s and 1950s, Alberta was a have not province. From 1957 until 1965, Alberta received transfers from the equalization program. Alberta was allowed to keep 100% of its oil royalties and there was no federal clawback. This is what allowed Alberta to kick-start its economy, to expand and diversify, to build universities, to advance social services and to become one of the powerhouses of the 21st century Canadian economy.
Of course the Liberals expended endless effort to limit the growth of Alberta's revenues, culminating in the experience of the national energy program. Now we see already, with this opportunity in Atlantic Canada, the same attempts to limit the opportunity. The Prime Minister's Ontario cap effectively limits the maximum benefit of the offshore resource to $452 per person in the province of Newfoundland and Labrador. After that, every dollar will be clawed back by Ottawa, no matter how many billions the offshore resource turns out to be worth.
The Prime Minister, before he was here, was president of a company that largely depended on offshore activity. Does he not understand that energy resources are finite, temporary and a short term opportunity? The provinces of Newfoundland and Labrador and Nova Scotia should be allowed, indeed should be encouraged, to improve the living conditions of their citizens and to use this to attract new long term businesses to replace the temporary opportunities provided by the offshore resources.
Instead, when the Atlantic provinces rejected the latest federal offers, the caps, the limits and the exclusions, the government engaged in a clumsy divide and conquer tactic, a tactic which gave away its obvious objective of holding back the development of the Atlantic provinces. It has tried to negotiate with one province and not the other, but both Newfoundland and Labrador and Nova Scotia have made clear that their positions are the same and that they want to be dealt with fairly and at the same time.
Whether we live in Newfoundland and Labrador, Nova Scotia, Alberta or anywhere else, we are all Canadians. We all have a right to a better future. That future is not for the Liberal Party to decide to speed up or to slow down, to start or to stop. It is not to negotiate. The Prime Minister gave his word. The terms of his proposal were clear. Newfoundland and Labrador and Nova Scotia requested and were promised 100% of their offshore revenues without equalization clawback, period. There is nothing to negotiate.
What is at stake is the future of Atlantic Canada, an unprecedented and historic opportunity for those provinces to get out of the have not status that has bedevilled them for decades. What is at issue is very simple. It is the honour of the Prime Minister, and all he has to do is keep his word.
Madam Speaker, I am very honoured as a Nova Scotian and as a member of the Conservative Party to take part in what I believe is a critically important debate for the future of our province, for the future of Atlantic Canada and in fact for the best economic future of the country, because it is in everyone's interest, the interest of our entire country, to have the improvements to the economies of Atlantic Canada that we see happening elsewhere in this country.
I want to begin my remarks by congratulating the Leader of the Opposition for the passionate and poignant case he has made before Canadians today in defence of Atlantic Canada. As he has done on numerous occasions since the House has resumed, whether it be on BSE or on trade issues, issues that affect the lives of Canadians, he has put forward in a very articulate and straightforward way what should happen. That is the type of national leadership we need in this country and I applaud his actions on this file.
There has been a lot of discussion, even early in this debate, about the numbers and how equalization factors into the formula when it comes to the provision of the royalties scheme and the flow that we would see in Atlantic Canada from our own natural resources, mainly oil and gas.
A number of accords and agreements are in place already, signed by previous governments, as alluded to by the Leader of the Opposition, going back to the 1980s when there was a recognition by a Liberal government at that time and subsequently by Brian Mulroney's government that Atlantic Canada and Nova Scotia and Newfoundland in particular were entitled to the same treatment and the same benefits that they would receive from their natural resources as other provinces were, such as Alberta.
There was also a recognition that when an industry is started there is a lag time before those benefits actually begin, as in the province of Alberta, which was permitted to continue to receive equalization. And equalization is just that: it is meant to equalize opportunities, both financial and otherwise, for citizens of that region.
Alberta was permitted to have that industry kick start, to have that exploration that has to take place, the difference being--and I want to highlight this issue--that underground technology, the ability to extract oil from under the ground, is not nearly as expensive as it is to go down hundreds of fathoms in the ocean and extract it from the ocean floor. So there is a parallel here, an important issue, and that is the ability for Nova Scotia and Newfoundland to have that exploration and continue to receive the support of a revenue stream that will allow them to truly develop in the area of offshore oil and gas technology. It costs up to $100 million in some cases to drill a single well on the ocean floor. Equalization is about giving our region the ability to reach our potential and our future growth.
What we have in this instance is the Prime Minister making a desperate attempt to ameliorate things with voters in that region of the country by promising something that he now is reneging on, by promising something that was meant to simply buy votes from Atlantic Canadians. Now, in the stark light of day, faced with the reality that he has to keep his promise, he is pulling back. He is putting qualifications in place. He is indicating to Atlantic Canada, “On second thought, I don't think we can do just that”.
That is not good enough. That is not the type of deal that can be struck when it comes to the important matter of Atlantic Canada's future.
We in the Conservative Party have been putting forward this issue since the House resumed for this simple reason: we understand fully that Atlantic Canada wants to be a full participant in Confederation. We no longer want to have the status of have not. We no longer want to carry the stigma that our people are not able to attain the same level of success that people in this country in other regions have attained.
This issue is of historic proportions for Atlantic Canada. In the past, we have seen attempts made to put forward what I would describe as “election amnesia”. That is what the government seems to be suffering from today. It is not cognizant of the fact that it is on the record. It has been recorded as to what it put forward to Atlantic Canada. And the only number that counts--not the percentages, not the equalization formula, not the type of rhetoric we are hearing already from the government side--is 100%. One hundred per cent of our revenue.
The Minister of Fisheries, who is from the province of Nova Scotia, said back in September of this year:
|| The idea of the offshore accord...that we're looking forward to is one that allows each of the provinces to keep 100 per cent of their offshore oil and gas royalties.
This echoes the same words of the Prime Minister.
As well, he went on to say:
|| I've heard talk of working toward a deal in Newfoundland by the end of the summer, and that sounds like a good time frame for me...
That came from the federal minister of fisheries, who is from Nova Scotia.
Summer has come and gone and now we are faced with a situation where we are seeing the same type of provision, the clawback which is currently in place and takes 81¢ of every dollar generated from our offshore. In the Province of Newfoundland and Labrador, it is more. This results in billions of dollars coming to Ottawa that potentially would go into those regions, coming to Ottawa as opposed to the region that would build for the future and build the economic prosperity of that region. That is the dollar amount which will affect our provinces.
This type of folly, an election fortune that was so important to the Prime Minister, now appears to be falling away because people are realizing that without that true commitment, without the follow-through from the Prime Minister, we will not be able to enjoy that potential.
Therefore, Premier John Hamm of Nova Scotia and Premier Williams are very, very serious about holding the Prime Minister to his very, very serious commitment. That is what we in the official opposition want to see as well. These premiers understand, as does the leader of the opposition, that this issue is principally an issue of people. It would allow people to stay in the region in which they currently live to enjoy the future spinoffs that would come from this industry.
I want to refer to a study put forward by the Canada-Nova Scotia Offshore Petroleum Resources Accord. This study speaks very much to the impact that this would have on a province like Nova Scotia. In 2002, the Greater Halifax Partnership released this study by the Conference Board of Canada on the economic impact this would have on the province. The study predicts a steady rise of employment in Nova Scotia, with the creation of 57,000 additional jobs by the year 2020.
The study goes on to see the growth in the construction, manufacturing, utilities and services sectors. As for rural Nova Scotia, we know there is an increasing divide between rural and urban Canada, but the impact of this would be in the construction and manufacturing sectors while growth in the retail and services sector would be almost as pronounced as we see in our capital, Halifax. The study predicts a gain of $1 billion by 2020 in the construction industry alone.
That is the type of impact this would have. It would allow young people, our best natural resource, to stay at home, our young, educated, motivated Canadians who now have to leave their homes and go elsewhere, sadly, and sometimes out of Canada, to find employment, to find their future. For example, the Leader of the Opposition's roots go back to Atlantic Canada; his family, like many others, left that region to seek a future elsewhere. What Atlantic Canadians want is the ability to stay at home, to contribute to the growth of their own region, which they know and love, with the passion that they feel for their home, for their ground where they grew up.
That is very much tied to the ability of Nova Scotia and Newfoundland and Labrador and in fact all the provinces to benefit from their own natural resource, a non-renewable natural resource as has been pointed out. There is a finite time in which we can truly enjoy the benefits of this. To suggest that we should accept anything less, that we should now accept this qualified clawback of the Prime Minister's commitment, is ludicrous.
Premiers Williams and Hamm will continue to insist that the Prime Minister do what is right, what is fair, what is equitable and what is in the interests of all Canadians: to keep his word and allow the provinces of Nova and Newfoundland and Labrador to attain the same level of economic future and the same type of prosperity that exist elsewhere in this great country of ours.
We will continue on behalf of the official opposition to make that case passionately, with a great deal of support coming from all Canadians. I think that is a concept implicit in this debate. It is one of fairness. It is one that all Canadians respect and understand.
When the hon. opposition leader stood up he tried to promote his feelings toward Newfoundland and Labrador in a passionate way. I think the deputy opposition leader said the same thing.
Let me go back to the June election of this past year and before that when the opposition leader spoke very clearly about the defeatist attitude of Newfoundlanders and Labradorians. Now he is saying that the Prime Minister of the country is not keeping his word.
When I asked the deputy opposition leader to explain the four components of the proposed deal that was on the table for Newfoundland and Nova Scotia, he could not explain them. That is what I find most disturbing about this issue. The proposed deal is on the table. If people disagree with it, then they should know exactly what they disagree with. It is very simple.
Let me explain for members opposite what is on the table. First, Newfoundland and Labrador is receiving 100% of the provincial share of revenues, that includes royalties, corporate tax, personal tax and all other fees having to do with the offshore oil and gas industry. Those things have been there since day one.
Now we add to those revenues, the equalization as well as the offset mechanism clause that was put in the Atlantic accord in 1997, which is that 30% is exempt from equalization forever. That 30% is then added to the provincial share of the royalties and the revenues, which is 47%, and that is added to the equalization.
In the Atlantic accord that was signed in 1987 there was also the 70¢ of every dollar that we have to talk about. From 1999 until 2003 only 7% of that 70¢ was clawed back. In other words, we were receiving 93% up until the end of 2003. In 2004 we did it on a declining formula, where from 2004 to 2011 it will go down to zero. In other words, we will be losing 100% of that 70¢ if the Atlantic accord is not reopened.
The Atlantic accord is under my responsibility as Minister of Natural Resources. The Prime Minister, through the Minister of Finance, has committed to reopen the Atlantic accord which has seven years of life left. It is supposed to terminate in 2011 at which time another accord would be negotiated for the future. However, even though the accord has another seven years left, we have reopened it and added 100% of the provincial share of the royalties and revenues, with equalization of 30% on top of that. Now it is 100% of that 70¢ on top of that. We must clearly understand.
Mr. Norman Doyle: Is there a clawback?
Hon. R. John Efford: No, there is no clawback. Give me a chance to explain.
We have 100% of the provincial share of the revenues. We have the equalization that we are now receiving. We have the 30% in the offset mechanism that is there and is enshrined. Now we have 100% of the 70¢. In other words, all of those combined is 100%.
That is there for eight years, keeping in mind there are seven years left in the offset mechanism in the Atlantic accord. There is one year of grace to renegotiate a deal for the future, if that is necessary. I will get to that in a second. Those four components should and could bring Newfoundland and Labrador up to the Ontario standard. That is a notch above the standard of five provinces, which sets the equalization formula.
I know all Newfoundlanders and Labradorians on both sides of the House and everyone who supports this deal for Newfoundland hope we continue to get more oil. I do not believe the oil and gas will end. I think there are a lot more opportunities out there. I will be an optimist on this, as I always have been. We have a long, bright future ahead of us.
Let us suppose that we strike two or three more wells and our revenues grow. We will still keep 100% of the revenues regardless, the same as Alberta and Ontario, and the revenues will continue to grow. As we go above the threshold set by the equalization formula across Canada, the only thing that will start to depreciate is the equalization payments. The revenues will keep growing as long as revenues continue to go to Newfoundland and Labrador.
If at some point in time the revenues climb up to the same level as Ontario, the five province formula, this will not be worth discussing because we will be self-sufficient and we will not need to receive equalization payments. The Newfoundland minister of finance and I talked about that.
Speaking on behalf of every Newfoundlander and Labradorian, we all have pride. We do not want to be a receiving province. We want to contribute to Canada's economy which is what the equalization formula is based on, to bring all provinces up to a reasonable standard of parity across this country. We have dreamed about that all our lives.
Members say there is a cap. The only cap is on equalization and that will only be capped when revenues start to climb. Let me say this very clearly. Even when the revenues start climbing, that 30% and the 70¢ on the dollar in the offshore mechanism will still stay there for eight years. There will be no decline in that for the next eight years even though our revenues would continue to climb.
I am not being critical but I do believe there is a real misunderstanding of what is on the table, which is why I believe that we need to sit down and go through this again. It is very clear that Newfoundland and Labrador will not lose on this deal. What all people want to receive is 100% of their revenues. We are receiving 100% of the revenues and we want continue to receive 100% of the revenues. We also want to continue to receive equalization as long as it is within the standard set down by the country, a standard which makes this country one of the greatest places in the world to live. No one part of Canada should be better off than another part.
As a citizen of Newfoundland and Labrador, I feel very strongly that at some point in time our revenues will climb above the standard and we will become like Ontario and Alberta, proud people contributing to the economy of this great country.
What is on the table is exactly what was committed to by the Prime Minister. I would like to make a couple of points about the letters the premier sent to the Prime Minister.
The one thing the Premier of Newfoundland and Labrador and the Prime Minister agreed to after they had talked on June 5 was to go forward with the deal. There is no argument about that. However, what the Premier of Newfoundland and Labrador said very clearly, and it is on the record and he will not deny it I am sure, was that he would appoint his minister of finance, not the minister of natural resources, Ed Byrne, a good friend of mine. The Prime Minister said that he would appoint his Minister of Finance. If the deal had been completed in June, why would the leader of the Government of Newfoundland and Labrador and the Prime Minister of the Government of Canada say that the finance ministers need to be at the table? It was because they had the basis for a deal. Did they talk about timelines? Absolutely. I can assure members that the premier talked about timelines to me.
Did the Prime Minister talk about a ceiling on how far we could go? Yes, I believe what the Prime Minister said. Nevertheless, the negotiations between ministers of finance had to be on a day to day or week to week basis, either in person or by phone. Negotiations cannot continue in any other way. Do not tell me that they only spoke once after June and no more until the deal was completed. That is not possible. I spoke to the minister of finance of Newfoundland in Ottawa. I spoke to him by phone on several occasions. I spoke to the premier on several occasions.
Let us go ahead to when the deal was supposed to have been concluded. There is a disagreement. We will not argue about that fact. On the Friday morning, I was briefed by the finance minister on this deal. I believe in it very strongly, otherwise, as a Newfoundland and Labradorian, I would accept it. I am putting my reputation of 20 years on the line, on this deal, because I believe it is the right deal for Newfoundland and Labrador. This is what I understood from that briefing. Our finance minister and the finance minister from Newfoundland and Labrador had concluded their discussions. The Minister of Finance was supposed to go to the Prime Minister with the conclusion of the deal and sign-off. The finance minister of Newfoundland and Labrador was supposed to go back to the premier.
I went home that weekend full of excitement, but not saying a word because it still had to be completed by the two leaders. When I got to Halifax airport, I got the call that the deal had fallen apart. We had agreed not to talk about it on the weekend. On the Monday we would, either by phone or in person, go over what both leaders had said and discuss any problems. That is exactly what happened. Since then, all we have heard is rhetoric. We need to get past that. I will not point fingers at the premier, his minister or anyone else. We will all take full responsibility.
This deal matters to the future of our province. Do all of us want Newfoundland and Labrador to be a have province? Absolutely. We are a very proud people. We are limited to what we can do on our own on the Atlantic coast. We have lost our fisheries. There have been major economic differences and other problems in our province, but now we have a chance. The offshore oil and gas will give us that chance to get there.
Can we break up the equalization formula that has kept the country together and kept all parts of it at a reasonable parity and with a reasonable standard of living? No, we cannot do that. Nobody in their right mind would suggest that we do that. Can Newfoundland and Labrador reach a have province status? Absolutely. This deal will allow it the benefit and the ability to get there.
Let me just reference a deal that was put together back in 1984. I could photocopy this and give it to every member of the House. Jean Chrétien was minister of mines and managed by the Government of Canada. He went to Newfoundland and Labrador and offered almost exactly the same deal in 1984 as is being offered now. I will photocopy it and send it. The government of the day refused it. Then in 1987 that same government signed a deal with another government and accepted 30%. This deal is 100% of the revenues go to Newfoundland and Labrador. That was 20 years ago. Let us add all of the royalties, the revenues and the loss of income since 1984. Let us say it is $200 million a year: $200 million times 20 years is $4 billion.
Mr. Peter MacKay: There were no rigs in 1984. They weren't drilling in 1984.
Hon. R. John Efford: We are talking about royalties and revenues.
Mr. Peter MacKay: What revenues were coming from oil and gas in 1984? You don't know what you're talking about.
Hon. R. John Efford: I will explain it again. In 1984 this deal was on the table. We will be drilling and receiving oil and gas for another hundred years. This will not end in a year. Why did we sign it in 1987 and accept 30%?
Mr. Peter MacKay: There was no reduction in 1987. There was no production in 1987. Get a grip. You're having a brain cramp.
Hon. R. John Efford: The hon. member does not know what he is talking about. With all due respect, the deal was signed in 1987 by the Hon. John Crosbie, the Right Hon. Brian Mulroney and the Premier of Newfoundland, Brian Peckford. My colleagues from the opposite side of the House were there, and I was there when we celebrated in Newfoundland.
Money did not start flowing until 1999, when all the expenses were recovered. I know what I am talking about, unlike the hon. member opposite. The offset clause in the Atlantic accord expires in 2011. That is the reason we have negotiated this, so Newfoundland and Labrador can become a have province, contributing to the economy of Canada and enjoying 100% of its revenues, like Alberta and Ontario.
I am proud to say, speaking on behalf of Newfoundlanders and Labradorians, that is where they want to go.
Madam Speaker, I thank the Conservative Party of Canada for providing us with this opportunity to discuss fiscal relations between the federal and provincial governments. This is an important issue.
As members know, with the cooperation of the other two opposition parties, to which we are grateful, we launched the debate on what we call the fiscal imbalance. The federal government did not want to recognize the existence of an imbalance, but it is becoming increasingly part of the parliamentary culture. A special committee was even set up, with the support of the parties, following a motion by the Bloc Québécois, which I had the honour of presenting.
That motion called for the establishment of a special committee on fiscal imbalance. The committee must report by June 2 of next year on this whole situation, whereby the federal government has way too much money in its coffers, in light of its responsibilities, while provincial governments, including the Quebec government, do not have enough tax resources and tax room to fund public needs and priorities. These include health, education, income support for the poor, social housing and others.
We understand the outrage of the people of Newfoundland and Labrador, and of Nova Scotia. We sympathize with them. We also share the frustration of the premier of Newfoundland and Labrador, and we understand it. I think that an increasing number of Canadian provinces understand the frustration felt periodically by Quebec, because the federal government is not fulfilling its commitments. We have experienced that on many occasions with the Liberal Party of Canada, regarding the numerous promises and commitments made by the government, and it has left a sour taste in our mouths.
However, we feel that the motion of the Conservative Party is not the solution to achieve greater harmony in fiscal relations between the federal and provincial governments. It could even create more unfairness and more injustice than the problem that it seeks to correct for Newfoundland and Labrador and for Nova Scotia.
What is the situation? The whole debate is on equalization. In fact, what little was said during the election campaign on this issue dealt with as to whether, despite the oil revenues of Newfoundland and Labrador, the payments received by that province would be reduced under the equalization formula. Newfoundland and Labrador wanted the assurance that even if oil royalties were to increase in the future, this would not impact on the equalization payments that the province is getting.
Of course, a prime minister who is on the ropes, who fears that power is slipping out of his grasp, is ready to promise anything at all. That is what the Prime Minister did during the election campaign. His words were in the newspapers and on television. He promised that the issue of royalties would not affect the equalization payments of Newfoundland and Labrador and Nova Scotia.
He made that promise. He made a series of promises; he was casting them in all directions, and found himself empty-handed at the first ministers conference where he could not keep his word.
The problem, fundamentally, is the issue of equalization. We must understand what equalization is, and what it involves. We must understand what a negative effect a motion like this one by the Conservatives could have on the whole system, if the government were to implement it.
First of all, what is equalization? Equalization is the only program enshrined in the Constitution. It is the only income redistribution program that—since 1982—has been part of the Constitution. What equalization means is simply this: to ensure that, from sea to sea, provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.
This means that the richer provinces contribute, through the federal government, to lessening the disparities that may exist between themselves and the poorer provinces. The essence of equalization is to reduce these disparities and inequalities in order to better serve the population.
There is no other way to look at equalization. But now there is talk of differentiated equalization, in which the royalties obtained by a province would be set aside.
This would mean carrying on business as usual with an equalization formula that does not take into account this source of income, changing the very essence of equalization and creating the type of inequity that a constitutionalized equalization program is designed to correct. I repeat, this program is one of a kind.
How is equalization evaluated? The amount of money that each Canadian province is able to raise from taxpayers in the form of income tax, corporate tax, various other taxes like sales tax and property tax, revenue from natural resources in areas such as mining, hydro power and oil, is determined. Based on this, the fiscal capacity of each province, their respective ability to generate revenue from various categories of activities and taxpayers, is evaluated. Each province is evaluated using the same tax base, that is to say, the same revenue items. On the basis of this evaluation and of a standard corresponding to the average capacity of five out of ten Canadian provinces, it is determined whether or not a given province is entitled to equalization payments.
If a province is very rich and has a potential for revenue equal to the five province average, it will not be entitled to equalization. But a province whose capacity is lower than the five province average capacity to raise revenue from the taxpayers will receive equalization payments of an amount equal basically to the difference between the revenue it can raise per capita and the average of this per capita revenue for the five provinces used for calculation purposes. That is the amount that will be transferred to Quebec, Newfoundland and Labrador and other provinces.
For this plan to work, as I mentioned earlier, the same tax base absolutely must be used for each province. In other words, the same revenues have to be calculated for each province. This brings us to the Conservative Party motion. The Prime Minister made a promise during the election campaign that he did not keep, like so many of his promises—but we will come back to that later. The situation has changed. A source of revenue has just been taken out of the equalization formula that applies specifically to Newfoundland and Labrador. As a result, in calculating the fiscal capacity of Newfoundland and Labrador and comparing it to that of Quebec or Ontario we are no longer comparing the same thing since we do not have the whole picture.
Through an ad hoc agreement, we are creating unfairness right from the start. A mockery has been made of the spirit and the letter of the equalization program. We are no longer talking about equalization at all since differential treatment exists. An injustice has just been created.
What would justify taking away oil revenues from the tax base equalization calculation, which represents the fiscal capacity of each province, but leaving the revenues generated by hydroelectricity, for example? That is what the Conservative Party proposal is getting at. In Quebec, what right would they have to keep in the equalization formula things like income tax, corporate tax and so forth, including the dividends paid by Hydro Quebec to the Government of Quebec, while next door, in Newfoundland and Labrador, they would take away the oil royalties paid to the government of that province?
There is something inequitable here as well as a travesty of the equalization formula, and results in treatment that is unjust compared with that of the other provinces of Canada.
This would seem to be like giving a kind of premium to the oil-producing provinces, or in other words a premium for non-renewable resources, one paid for by the provinces that produce clean energy, renewable energy. Sort of like Hydro-Québec subsidizing oil exploration in Newfoundland and Labrador.
There is something rather illogical about all this debate, which creates a link between the particular needs of Newfoundland and Labrador and an equalization formula, which today's motion totally distorts. Either there is equalization in Canada, or there is no longer equalization in Canada.
This being a program enshrined in the Constitution and one of the principles of fiscal federalism, proposed in 1947, if I remember correctly by the Rowell-Sirois Commission, which addressed fiscal federalism, redistribution of wealth, and equitable treatment, for example for both east and west, I think that it would be worthwhile maintaining it.
However, if we want to look at reforming equalization, there are ways of doing so. There have been discussions on this for close to a dozen years, federal-provincial conferences, meetings between civil servants. No one knows where we are at now, because there are 33 variables in this pesky formula. There are all sorts of ins and outs, ups and downs. As the saying goes, why make something simple when you can make it complicated? One might say the equalization formula has evolved this way over the years. There has been talk of correcting it for 12 years, but no success. There are ways, however.
I would like to point out three problems that exist at present.
At the beginning of my remarks, I explained that an average is taken of the revenues of five provinces. This five-province average is used as a standard to determine whether or not a province should receive equalization payments. The potential tax revenues of Ontario, Quebec, British Columbia, Saskatchewan and Manitoba are taken and added together and then divided by five. It is a simple arithmetical average. Then the potential revenue of each province is compared to this five-province average, and the provinces with revenues less than the average are entitled to equalization payments.
Still, what is the logic behind it? Only five provinces are used in this exercise, but there are 10 provinces in Canada, and the territories, of course, but equalization only counts the provinces. Why take five provinces and not all ten? It would be a much more representative, Canada-wide standard of wealth than taking only five provinces. A number of the recipient provinces have been asking for this modification for a long time. It would give a much more accurate picture of each province's ability to generate tax revenues.
Why too are revenues not measured correctly? As I said, why make it simple, when you can make it complicated? This is a case where the economists at Statistics Canada and the Department of Finance have shown true originality in recent years to do intellectual backflips lending at econometric heights that are so difficult and so technically complex that the ordinary person is quite discouraged.
Why not, for example, evaluate the actual real estate taxes in Quebec and in the other provinces? Well, no; they used what is called in economic analysis a “guesstimate”. I would not want to speak ill of economic analysis; that would be shooting myself in the foot and cheering for the other side, but there are things we do well and things we do not do so well, and this is one we do not do well.
Therefore, they use what is called a “guesstimate”, which is an estimate of the potential real property taxes each province could raise, even though it is easy, by simply looking in a Statistics Canada catalogue, to find the real value of property taxes in Quebec, Ontario, or anywhere.
That correction alone would change the whole thing and would provide an accurate picture.
I will just give one example regarding property taxes. Based on these guesstimates or approximations that are so convoluted and technical that they are beyond most people's comprehension, in Quebec, the per capita real estate wealth is a surprising $71,406. This is the assessment of the per capital real estate wealth, as calculated under the equalization formula. However, the actual wealth figure for 2002 is around $30,621. So, the amount calculated is more than twice the actual figure. Do members see my point?
This has the effect of increasing Quebec's fiscal capacity. Moreover, the difference between Quebec's capacity and the five province average is inaccurate, because revenues are artificially inflated. The fiscal capacity in terms of property taxes is the figure I mentioned, the real capacity. However, under the formula, this capacity is more than double the actual figure.
There is also the unpredictability factor. We have been talking about it for years. It is not normal to be told, “Over the past three years, you received overpayments totalling $800 million. You must repay that money”. In fact, all the provinces would have to give back money. We doubt that Saskatchewan had to repay its $590 million, but we will get back to this later on. We are taking a close look at the issue.
In my view, Quebec is being pushed to pay back its $1.2 billion equalization overpayment. Reimbursement can be made over 10 years. How nice. Nonetheless—this is where we have our doubts—how come Saskatchewan, which owes $590 million to the federal government because of an equalization overpayment, would appear not to have to pay and may have its debt forgiven?
The amounts fluctuate from year to year. One year equalization might be positive: an additional $400 million. The following year it could be a whole different story. Two years ago an overpayment was made because our income tax estimate changed and GDP growth also differed from our estimates. It constantly varies like that. There are ways to correct this.
If all these major discrepancies—and a few others that I will not get into—were corrected, Newfoundland and Labrador alone would receive an additional $168 million in equalization payments for 2004-05. Simply correcting equalization would give it $168 million more. Nova Scotia would get an additional $291 million. I am talking about a lot of money: some $323 more per capita for Newfoundland and Labrador and $311 more per capita for 2004-05 for Nova Scotia.
No injustice or preferential treatment would result. The spirit and the letter of the equalization formula would not be distorted. By correcting the positive aspects of equalization and the imperfections I just described, additional money could be given to Newfoundland and Labrador and Nova Scotia. It is a question of the equalization formula and maintaining the spirit and the letter of equalization.
During the election campaign, we read the agenda of the Conservative Party of Canada. It was very clear. For this reason, we are worried about this going beyond excluding the oil revenues of Nova Scotia and Newfoundland and Labrador.
The Conservative agenda states that non-renewable resource revenues should be excluded from the equalization formula. Would that apply across Canada and would that mean that supporting a motion such as this would basically open the floodgates even further and keep potential hydroelectricity revenues in the formula, as I mentioned earlier? It makes no sense.
We want to change the equalization formula. We are prepared to work with all the parties in this House, but, for the reasons I just mentioned, we cannot support this motion.
Madam Speaker, I am pleased to participate in this debate. The New Democratic Party of Canada is pleased to read into the record the commitment that we made to Premier Williams in the run-up to the last election.
The premier had requested the party leaders to respond in writing to the situation facing Newfoundland and Labrador, and we were very pleased to respond. We may very well have been the first to respond. I simply want to read into the official record what we said at the time. It is a position that we continue to hold today:
|| The NDP supports Newfoundland and Labrador receiving 100% of its offshore oil and gas revenues to make it the ‘principal beneficiary’ of these resources based on the principles set forth in the Atlantic Accord. As I will repeat later in this letter, this view is part and parcel of the NDP's strong view that Canada needs a national energy strategy that not only corrects such fiscal imbalances regarding resource extraction, but also best positions our country for a future under the Kyoto Protocol and beyond.
|| Certainly, the people of Newfoundland and Labrador should have an ownership stake in offshore oil and gas developments as equity partners. We would expect that an ownership stake would be a pre-condition of all future developments. The Government of Canada, as an equity partner in Hibernia, has already recouped its investment and should transfer its 8.5% equity share of the Hibernia project to the Province.
We were the only party to make that commitment. We were responding to the very persuasive arguments put forward by the leader of the New Democratic Party in Newfoundland and Labrador, Jack Harris.
When it comes to equalization, I will quote further from our letter dated April 25 to the Premier of Newfoundland and Labrador:
|| Newfoundland and Labrador has the lowest personal per capita income, the highest unemployment rate, and the lowest labour participation rate in Canada. Federal government transfers to the province are shrinking. The NDP supports a renewed equalization formula that is based on a ten-province standard that would increase fairness and provide for greater equality across Canada.
|| The elimination of Established Program Financing and the Canada Assistance Plan was extremely destructive to health care, post-secondary education and social service programs across the country and has led to greater inequality between individuals and provinces. We agree that restoring transfers to the 1994-95 levels, adjusted for inflation, would be an extremely important step in restoring federal funding to these important national objectives.
There are a couple of aspects of this position which I would like to speak about today. First of all is the importance of making a commitment and then sticking to it after we have asked the voters to judge us on the basis of what we promised. That is why we put our commitment in writing in detail.
The people of Newfoundland and Labrador in particular have a reason to be skeptical about the positions taken by national leaders, particularly given the experience of the last number of years under the Liberal government. All kinds of promises were made at election time, then only to be broken. We have seen a list of broken promises from the Liberal Party which is so long that if we were to try to enumerate them, it would consume not only the remainder of my speaking time but probably the speaking time of most other members in this debate today.
What we are speaking about today is a broken promise, a promise made in the desperate rush to try to secure votes by the Prime Minister during the election, a promise to which he did not commit in writing, despite the request of the premier for him to put his commitment in writing. We now see why the commitment was never made in writing. There was never any intention to follow through. There was an intention to leave the impression that the Prime Minister was making the same commitment that, for example, our party was making, so that the voters would be confused or lulled into a false sense of security that if only the big red machine were elected, the various commitments made in the election would be honoured.
In fact what we have seen here is a case of false advertising of the worst and most disgusting kind. It elevated the hopes of people with the lowest incomes, people who are dealing with desperate situations, a province which is struggling with a huge financial challenge with the resources that are unavailable to some other provinces.
It elevated their hopes so that they would cast a ballot hoping that there would finally be some redress for their province and that they would finally be able to secure some of the benefits from the resources that lay offshore. A tragic slap in the face has been administered to them for the trust that they offered in the election with their votes. That in many ways is the most egregious element of the issue we are discussing today.
On the question of equalization, I spoke this morning with Jack Harris, the leader of the New Democratic Party in Newfoundland and Labrador. He made a number of very simple and straightforward points. He told me that if Newfoundland and Labrador were ever to be able to achieve or exceed the five province average or any other multi-province average for this federation, there would be dancing in the streets in Newfoundland and Labrador.
There is this notion that somehow we have to protect ourselves against the eventuality a number of years down the road that Newfoundland and Labrador would suddenly be wallowing in billions of dollars of resources and would simply sit on it and never even consider the issue of equalization adjustments in the future. That Newfoundland and Labrador would never participate in any discussions and would adopt some sort of arrogant attitude with regard to that is completely inconsistent with what we know about the people of Newfoundland and Labrador, their community spirit and their desire to play a role in Canada. Frankly, it stands as an insult. It is a profound insult particularly taken against the fact that they were made a promise and now that promise is being broken.
No wonder there is anger among the communities right across Newfoundland and Labrador today as we debate this matter. They are simply looking for fairness and justice and to be a full part of this federation in every way, so that the quality of life of their children and seniors can be addressed in the same way as it is addressed elsewhere in the country. Right now that is denied and all the evidence points to that fact.
What we need to do in Parliament is address inequalities that exist in our country. We need to take a look at the nature and extent of those inequalities and propose solutions. That is what we in the New Democratic Party did. We sat down and looked at the situation being faced by Newfoundland and Labrador. We looked at its resources. Just by virtue of the fact that they are offshore, the federal government is able to take 70% of the royalty revenue from those resources. What is fair about that?
Elsewhere in Canada if the resources are underneath the land mass, of course there is a much more significant revenue flow. It is for that reason the Atlantic accord was put together: to recognize these geographical facts and to try to insert some level of justice that could also allow us to achieve greater levels of equality in our country. That is why there was a fundamental commitment to shift the way in which those resource allocations were going to be made.
The premier and all of the parties at the time, in fact the whole population of Newfoundland and Labrador, called on those of us who were running for election to make a commitment. The premier wanted us to make our position absolutely crystal clear as to whether we were going to honour the needs and obligations that we have in a federation that is going to have some level of fairness associated with it. The consequence was that we put our commitments in writing and made them absolutely clear.
Voting for the motion today is one way in which we can acknowledge that we were serious when we made these commitments. We have full confidence that once those resource revenues start to flow, and we hope they start to flow soon to restore some hope to those communities, there will be a transformation in Newfoundland and Labrador. Then the can do attitude of the people of Newfoundland and Labrador will be unleashed because finally they will have available to them some of the resources from the natural wealth that lies offshore beneath the ocean.
They have been denied their way of life by virtue of the collapse of the cod stocks. We know that the people of Newfoundland and Labrador have been struggling with enormous adversities. We have a chance to right the balance. The question is, are we going to do it? Are we going to make a statement? Are we going to put pressure on the promise breaking government to do the right thing?
Our party will be standing with the people of Newfoundland and Labrador, saying that it is time for justice. It is time for some equality and it is time for promises to be honoured. That is where the New Democratic Party of Canada stands.
Let me address in a little more detail the issue concerning the whole question of the relationship between resource revenues, royalties, taxes, et cetera. I do not think it has been communicated well enough that even after this so-called 100% situation is fully rectified, the federal government will still be receiving enormous revenues from the oil and gas fiscal situation by virtue of corporate taxation.
According to Mr. Harris, the leader of the New Democratic Party in Newfoundland and Labrador, fully 53% of all revenues generated by the offshore, even after the 100% is guaranteed, will actually arriving at Ottawa's door.
Let us not try to pretend that somehow the federal government or the people of Canada would not be adequately protected or would not share in the revenues coming from Newfoundland and Labrador. The people of Newfoundland and Labrador are doing nothing more than asking for a fair share. Our position is that they are entitled to that fair share.
If we take a close look at the conditions of life in Newfoundland and Labrador right now, we would see that by most indicators the communities and individuals are struggling. The province is losing its young people. It is in deficit. It has a very large debt by comparison with its population. Surely the idea that some day there might be enough revenue that the province could actually address these issues should not be used as an excuse to not even provide it with the revenues in the first place. That is essentially the line of argument that we are hearing.
It is time that we took a look at problems that exist today and the solutions that are available today and that we are committed to, instead of looking off into the future and imagining scenarios that might or might not unfold and assume that no Parliament or group of provinces sitting down with goodwill in the future, if there were changed circumstances, could sort things out. That is a very pessimistic strategy that does not solve problems. We have problems right now that need to be addressed.
In closing, it is time for us, first, to honour the commitments that we made. The Prime Minister is in the process of breaking his promise. That is not acceptable. It is time for us to honour the right of Newfoundlanders and Labradorians to have a fair share of their offshore revenues so that they can build the kind of community in society that they have been desperately yearning to do and they will have that capacity if we provide them with the resources that are rightfully theirs.
Madam Speaker, it appears to me that the question is actually asking the members of the opposition to do the work that the government is supposed to have done. Where has the government been since the Prime Minister made the promise to the people of Newfoundland and Labrador?
It is now being suggested that we should develop the technical language so as to give effect to the proposals. What was going on during the months of July, August, September and October? What was the government up to during that period? Taking a holiday and contemplating which promises it was going to be able to break?
This is a completely unacceptable proposition. It is being suggested to the members of the opposition, who intend to support the motion, that we should be sitting down and revising the motion to come up with the technical wording, so as to do the job that the government was supposed to be doing.
It is very clear that the government had no intention of honouring its promise. The Prime Minister had no intention of honouring that promise. If he had, he would have put it in writing.
It is clear that the Leader of the Liberal Party at the time and now the Prime Minister was simply prepared to say whatever it took to secure votes and then did absolutely nothing in order to put together the kind of proposal in detailed, technical language that would have given effect to that promise. The consequence was that a premier felt that an entire population of a province had been slapped in the face. We share that view; we have the same analysis.
As it happens, the cap that has been proposed in the government's offer to the people of Newfoundland and Labrador will cost in this upcoming year $100 million in forgone revenue to the people of that province. By the year 2007, it will be $600 million.
If the House were to ask what is my source for that information, I would refer members to any one of the political parties in the province of Newfoundland and Labrador. They will provide exactly the same analysis. I happen to have received mine from Jack Harris, the Leader of the New Democratic Party in Newfoundland and Labrador.
I have received a lot more time for a three party consensus analysis of the impact of this from the people of Newfoundland and Labrador than I have from the government. The government has not presented any details. It has not even operated with what could be described as a modest amount of good faith. We have simply seen inaction, dragging feet, broken promises, and the unfair treatment of the people of that province, and we should add Nova Scotia as well, as the hon. member did in his question to me.
It is frankly the kind of strategy and behaviour on the part of the government that causes many people to lose faith all together. They really begin to lose faith in the political process when they see fundamental promises broken time and time again: promises on child care, broken for 11 years; promises on stopping the privatization of our health care and then doing absolutely nothing about it; advertising campaigns launched so that people would vote for the Liberals in order to avoid a George Bush agenda, and then we find discussions about implementing missile defence; and breaking all of the promises once again. It is a non-stop list. We could add Kyoto and the protocol to reduce emissions which is another broken promise. The list is so long that I am not going to consume the time of the House of Commons.
It is important that we move toward a vote on this issue and show the people of Newfoundland and Labrador that there are at least some members of the House of Commons, and the New Democratic Party members stand proudly among them, who are ready to honour the commitments that were made during the election because that is a fundamental element of a well-functioning democracy.
Madam Speaker, I have been following this debate and have certainly attempted to listen closely. I have listened very closely to the government members and their discussion over the language of the motion.
I would like to put the motion on the record:
|| That this House deplore the attitude of the Prime Minister of Canada at and following the First Ministers' Conference of October 26, 2004, and that it call on the federal government to immediately implement its pledges of June 5 and 27, 2004, to allow the provinces of Newfoundland and Labrador and Nova Scotia to keep 100% of their provincial offshore oil and gas revenues.
To talk about language is sheer lunacy. This is not a bill. This is not something that the government takes tomorrow and turns into cold hard cash and then revenue flows into Atlantic Canada. This is a motion that could become a bill. The government gets to manipulate and change the wording of the motion if it cares to implement it. Do not give me this trivial foolishness and excuse that somehow this motion cannot be accepted by Liberal members on the government side. That is absolute sheer lunacy.
This offshore accord for Newfoundland and Nova Scotia is a greater tragedy than the Ocean Ranger.
An hon. member: Oh, oh!
Mr. Gerald Keddy: I was working in the offshore. I was there. I don't know where the member was, but I was there. I worked on the rigs in Nova Scotia and I worked on the rigs in Newfoundland, and I saw a rig jacked up in the middle of the night so it could get an air gap so that the waves would not hit its bottom.
This is a huge tragedy. This is the future of Nova Scotia, this is the future of Newfoundland, and it is a tremendous tragedy.
Hon. Gerry Byrne: That is not an appropriate metaphor. Eighty-four people died.
Mr. Gerald Keddy: Let me tell you something. If you want to call me out of order, you try. I was there. I do not know where you were, but I was there.
Newly minted Liberal statisticians: that is what I have been listening to. As we know, a statistician is someone who often, when working with the numbers, first looks at what is required for an answer and then finds the means to manipulate the numbers to come to that answer. I would say that we have a newly minted group of Liberal statisticians in the House, because they have looked for the answer first and now they are attempting to find a way to get to the answer. I can tell members that is what I have been hearing from the government benches. We cannot do it. We owe more to the future of Nova Scotia and more to the future of Newfoundland and Labrador than that.
Madam Speaker, I should say that I will share my time with the member for New Brunswick Southwest.
It would be my sincere and heartfelt opinion that all government members in this debate, and especially the Minister of Natural Resources, should follow the sage advice of our elders that one really should not deliver a speech if one has no intention of improving on silence. Silence is what we are used to hearing from the Liberal members on this issue. Suddenly today some of them found their feet underneath them, but we have a series of Liberal cabinet ministers and parliamentary secretaries we have not heard from in this debate.
I will give the Minister of Natural Resources credit that at least he showed up. There are more in the series: the Minister of Fisheries and Oceans, the Minister of Public Works and Government Services, ministers from New Brunswick, ministers from P.E.I., and the parliamentary secretaries in all four Atlantic provinces. All of them do not deem this debate important enough to participate in. That is a real travesty of their right to be a parliamentarian.
Beyond the silence, we have heard excuse after excuse from the Minister of Natural Resources as to why he is not fighting. He is not fighting for the prosperity of Atlantic Canada. During the election as late as June 27, the Prime Minister assured Atlantic Canada--and won seats in Atlantic Canada based on his assurance--that he would deliver 100% of the offshore royalties.
I can tell members what we get today and I do not need to be a statistician to manipulate the numbers, because these are the facts. The Province of Nova Scotia receives 19¢ of every federal dollar from offshore revenue. The federal government receives 81¢. The Province of Newfoundland and Labrador receives 27¢ of every federal dollar. I do not think that is a fair cut. I do not know if these guys are card players or mathematicians or what they are, but if that is called equality, it is not equality based on the premise that I understand equality to be based on.
Why is it that the moment someone becomes a cabinet minister in this government he is suddenly emasculated and silent? Why is it that these ministers no longer understand the reason they were elected to this House, which is to stick up for the part of the country that they come from regardless of where that part of the country is?
Let us not mix this up with this convoluted equalization formula. This has nothing to do with equalization. This has everything to do with fairness and there is certainly no fairness here.
In 1987, when Nova Scotia signed the final Canada-Nova Scotia offshore accord, there was no offshore, so it was easy for the government of the day, and with good intentions, I would say, to say that Nova Scotia would be the chief beneficiary of any revenues flowing from the offshore.
Let me tell members, though, that Nova Scotia is not the chief beneficiary of the offshore. This is not about changing the language. This is very simple. This is all about fairness.
Let us take a look at what we in Atlantic Canada actually receive from the offshore. This agreement would be a baby step, a very important first step for the region, because excepting the royalties there is not much else in Atlantic Canada coming from the offshore. Most contracts that supply the rigs are with foreign-owned industry. Offshore resources are taken elsewhere. Refining, processing and petrochemical industries are not located in the region. Even with the agreement, the Atlantic provinces will not be getting the full benefits of their offshore resources. Places like Norway--where the industries are set up at source and around the coast and the jobs stay at home--get the royalties plus the benefits from the infrastructure.
How is one able to build infrastructure? By keeping the royalties and by having the wherewithal to build the infrastructure that puts those extra jobs in Nova Scotia and Newfoundland and Labrador.
If we look at the press releases and if we are following this closely, as I am sure all members in the House are, the Prime Minister committed to reforming the equalization system under which the richer provinces support the poorer provinces. He has not been able to do that, and on top of that he has not been able to even deliver to Newfoundland and Labrador and Nova Scotia the royalties that they deserve from the offshore. He made an election promise of 100%. I would expect and I would be certain that he would intend to respect his pledge and deliver 100%.
I have one minute left and a lot to say. It is almost criminal to think that to this government 100% means an eight year limit to a deal and then a clawback of royalties should Nova Scotia and Newfoundland and Labrador, heaven forbid, become as wealthy as Ontario. Could we imagine another province in this country as powerful and as wealthy as Ontario? Absolutely scandalous. Ontario is the breadbasket and the heartland of this country, but we should not link other provinces to being as wealthy as Ontario nor should we say shame on them if they are wealthier than Ontario. I do not think there is one person in Ontario who would think that is a fair formula, not one. I ask members to try to find one and get the person to state that publicly. It is ludicrous.
In my opening remarks I referred to statisticians. I would like to apologize to any and all statisticians if any of my comments caused hurt or cast aspersions on that very dedicated and illustrious group. However, I have no apology at all for the Liberal members opposite.
Mr. Speaker, I want to pick up where the member for South Shore left off.
In my mind the importance of the debate is to remind Canadians of a promise that the Prime Minister of Canada made and had no intention of keeping. When we get lost in the minutia of the equalization formula and the detail, I think we lose focus on what this whole thing is about.
The Prime Minister went to Newfoundland in the heat of an election campaign, with the bottom dropping out of his campaign, both going south in a panic mode, making a promise that he had no intention of keeping. What famous humorist came up with this expression: “We have lies, we have damned lies and then we have statistics”? The fact is that the Liberal Party of Canada wants to refocus the issue. It simply wants to get into the minutia and the details of an agreement.
However, as the member for Central Nova, our deputy leader, mentioned this morning in his remarks, what is it about 100% that the Liberals do not understand. The issue is that the Prime Minister made a promise that the province would keep 100% of the offshore revenues and that the revenues would not be clawed back in the equalization formula. It is that simple. As soon as we deviate from that we are playing into the hands of the Liberal Party of Canada because it has made so many outrageous promises over the years. In fact the leader of the NDP pointed out some of those.
Mr. Speaker, you and I have lived through some of those. I just want to remind the listening public of some of the promises made in the past that the Liberals did not honour. This is just one more, the promise made in the heat of an election in Newfoundland in terms of the offshore revenues.
Everyone will remember the GST. The Liberals said they would eliminate the GST. How many members over there got elected in 1993 because of that outrageous promise? They had no intention of keeping that promise. They did not keep that promise and yet they were elected on it.
That was the same party that said it would tear up the free trade agreement, if hon. members remember that one. That goes back to the 1988 election, the first election in which I was elected. The Liberals were demonizing the Americans at that time and said that they would rip up the free trade agreement if elected. Of course in 1993, along with the GST promise, was the promise that they would renegotiate the NAFTA agreement. They did not change a comma in the NAFTA agreement.
We talk about the success of Alberta, the oil patch in Alberta and how much wealth that has generated. We want the same level of fairness applied to Newfoundland. That is an argument that the member for Central Nova brought forward this morning, so I will not go through that.
I do want to touch on the national energy program. Prime Minister Trudeau at the time saw an opportunity to go out and rob Alberta of its revenues. The national energy program was all about bringing all that wealth into Ottawa so the Liberals could redistribute it at will. It took a Conservative government to unravel that program. The fact is that I think it will take a Conservative government to unravel the promise that the Prime Minister made.
The Prime Minister is used to getting up in the House and making outrageous promises or of pretending he knew nothing about nothing. It sounds like Tony Soprano to me, “I know nothing about nothing”. That is exactly what the Prime Minister does in this place, day in and day out. It is like the ignorance he enjoyed in the House in regard to Canada Steamship Lines and how much revenue was generated by contracts from the Government of Canada, which he said was just a few hundred thousand dollars. It turned out to be several hundreds of millions of dollars of revenue generated by his company under contract to the Government of Canada when he was finance minister.
The Prime Minister cannot be believed, and the election last June pretty well proves that. What the motion is all about today is forcing the Prime Minister of Canada to honour the commitment he made this past June in the middle of an election.
We are saying that the provinces of Newfoundland and Labrador and Nova Scotia should be allowed to keep 100% of their provincial offshore oil and gas revenues. It is that simple. We simply want the Prime Minister of Canada to honour a promise made in an election simply for the purpose of gaining public support and winning enough seats to come back here as Prime Minister of Canada.
I guess the strategy worked as a clever political strategy but I believe that time has caught up with the Prime Minister and with the Liberal Party of Canada. As I have mentioned, the Liberals have a history of doing this.
Let us do the right thing. Let us support the motion that is before the House today, let us keep the heat on the Government of Canada and let us give Atlantic Canada its fair share of the prosperity that the rest of Canada enjoys.
Mr. Speaker, before I start my remarks, I will be splitting my time with the member for Random--Burin--St. George's.
We are having what I consider a very interesting discussion on the motion, and it is a very important issue. I sense that we are somehow hearing a lot more about the politics of the issue rather than the real issue itself.
As everyone in the House is aware, equalization has been part of our economic and political fabric in the country for quite some time now. We are talking about a matter of principle that all Canadians, wherever they live from coast to coast to coast, ought to be treated equally. They ought to receive comparable levels of service at reasonably comparable levels of taxation. As everyone knows, we will never to get the system perfect. Also, as things have developed over the last number of years, it seems to be that the greater challenge going forward may be the discrepancies which exist between rural Canada and urban Canada. This is something perhaps that will be subject to another debate in the House of Commons.
From the comments from all parties in the House, the principle of equalization is certainly supported by everyone in the House and across Canada, and it is embodied in our Constitution. There have been problems with the equalization formula over the last number of years. I certainly had a lot of problems with it myself. I am very pleased about the agreement that was reached on equalization by the Prime Minister of Canada, the 10 provincial premiers and the three territory leaders on October 26.
One of the biggest problems was predictability. I had a lot of sympathy with the individual provincial ministers of finance, because they really did not know what their equalization funding would be for that year. I believe most provinces deal with a March 31 year end. They present their budgets late January, February or March of each and every year. They would be given a figure from the federal government and that would be the figure would be included in their provincial budgets. However, every provincial finance minister, present and previous, realized that this figure would change at least once, if not twice or three times during the year. Sometimes, and relatively speaking, these adjustments would be rather dramatic.
It was grossly unfair for a provincial minister of finance to receive a call at 3:30 or 4:00 on a Friday afternoon and be told by officials in Ottawa that his or her province's equalization funding would be reduced dramatically. As everyone in the House and people watching this on CPAC can understand, that caused a lot of problems in provincial finances and how provinces were operating. It may come as some surprise to hear this, but it also caused problems when the same finance ministers received a call on Friday afternoon indicating that they were getting considerably more than what they expected. The principles of caution and prudence would be thrown to the wind, some of the money perhaps would not be spent as wisely as it ought to have been, it would end up in the A-base funding of the province and it may not be there next year. We can see the problems that would be created. That was a problem that needed rectification, and it was rectified.
We also had the cap on equalization which again was a problem. That was remedied a couple of years ago. It was not dealt with in the last agreement that the first ministers made.
Another contentious issue, which has always been on the table and is very much a part of the debate today, was the whole issue of non-renewable resources. It had been the position of a lot of provinces, and we certainly have to agree with this to a certain extent, that a non-renewable resource, whether it be a gold mine, an oil well or a potash mine, was a finite resource. Once that mine was depleted or that oil well is dug dry, there was no future revenue source. At some point in time every mine or oil well would come to an end.
This was different in each and every province. It certainly was not the issue in Alberta because it was not an equalization receiving province. However, it certainly was a major issue in the provinces of Nova Scotia and Newfoundland and Labrador because they were dealing with a non-renewable resource, and it has caused problems.
Some of the developments in Newfoundland and Labrador which dealt with Voisey's Bay skewed decisions. The royalties that came from Voisey's Bay immediately provided the province with resource royalty revenue. In the long term the resource royalty revenue was deducted from Newfoundland and Labrador's equalization entitlements and there was really nothing at the end of the day. I think that was the real reason behind the substantial delay in that project going forward.
We are dealing with a relatively contentious issue. I have listened to the debate that has taken place. I believe everyone is on the same page. We all want the province of Newfoundland and Labrador to prosper. We all want the people who live in that province to prosper. Going back years ago, there were situations in the province that were mishandled, such as Churchill Falls. There are still repercussions from that today. There was also the situation with the collapse of the groundfish, which has caused tremendous problems for the people of Newfoundland and Labrador especially, but also for the people who live in Atlantic Canada. It still causes problems.
I sympathize with the comments that have been made today with respect to the oil and gas revenue in Newfoundland and Labrador and in the province of Nova Scotia. It is important that the Government of Canada, in dealing with the provinces, especially those two provinces, get it right and ensure that it is in the best interests of the people who live in those two provinces.
If I had given this speech eight months ago, I would have stated that both provinces deserved a better deal. That is why I supported the agreement that was reached between the Prime Minister and Premier Hamm and the Prime Minister and Premier Williams in June of this year. The funding would be increased dramatically and they would be entitled to receive 100% of their royalty revenues. I was also pleased with the agreement reached on October 26 which dealt with, to a certain extent, the issue of predictability. Whatever an equalization receiving province was told it was entitled to receive early in that year would not be decreased no matter what happened. That provides a lot of certainty to the financial projections of each province.
I was also pleased that the level of funding for equalization would go up from $8.9 billion to $12.5 billion over the next five years, which will add, I believe, $33 million to the equalization funding over the next five years.
The election commitments made by the Conservative Party in May and June of last year concern me. They also trouble the people who live in New Brunswick, Prince Edward Island and Manitoba. Its document states:
|| We will move towards a ten-province standard that excludes non-renewable resource revenues from the equalization formula...and do so in a manner that ensures no provinces receiving equalization will receive less money during the transition to the new formula than the current formula provides
If one does the calculations, it is extremely troubling. It would freeze those provinces forever and a day on the equalization formula. I am glad that has not happened. If there is anyone out there from Prince Edward Island, anyone out there from New Brunswick and anyone out there from Manitoba, I am glad we followed this formula and not the formula advocated--
Mr. Speaker, I want to thank my colleague for sharing his time with me on this very important date. I have listened with great interest to the views of all members this morning and this afternoon. I am pleased to say that this is a serious debate which is being taken very seriously by all members on all sides of the House.
I want to start by categorically stating that I support the desire of Newfoundland and Labrador to obtain 100% of revenues from its offshore resources. I want to go on the record at the outset as saying that I support the province of Newfoundland and Labrador receiving 100% from its offshore resources.
I remember very well the days of discussion and negotiation when it became apparent that there was a need for an Atlantic accord. Some of my colleagues on the other side were in provincial politics with me at the time. We remember it very well. It was emotional, it was heated and there was a lot of debate. Eventually the Atlantic accord was signed.
The principle of the Atlantic accord was that Newfoundland and Labrador and Nova Scotia would be the primary beneficiaries of their offshore resources. They would be the primary beneficiaries. That is the principle on which the Atlantic accord was negotiated, discussed and signed.
There are a couple of reasons. One is the location of our resources. They are offshore, under water. This morning someone referenced the cost of extraction which is true. The other very important point that has to be remembered is that the provinces of Newfoundland and Labrador and Nova Scotia have not been as well off economically, from a wealth point of view, as some other provinces in Canada. We have an enormous debt. In the past we have not benefited the way we should have benefited from our resources.
The Atlantic accord was supposed to correct that. That is what the debate is about today. Newfoundlanders and Labradorians feel very strongly that they are not the primary beneficiaries of their offshore resources. They feel strongly that the Government of Canada benefits from its offshore resources more than they do and they find that to be totally unacceptable.
Since this whole issue blew up a couple of weeks ago I have been preoccupied with trying to understand the problem. In order to solve any problem we have to understand what it is.
The Prime Minister is very committed and is very convinced that he has offered Premier Williams and the province of Newfoundland and Labrador 100% of its offshore resources. Premier Williams is just as committed and determined that the Prime Minister has not delivered the 100%. We have a basic, fundamental misunderstanding. I have been trying to understand where the problem lies.
There are a couple of issues that have created this problem. In Premier Williams' correspondence to the federal government, he consistently talked about a timeframe which would cover the petroleum production period. That really means that while oil flowed from the wells off our coast, this agreement would apply to it.
In the letter of the Minister of Finance back to finance minister Sullivan and the province a few Fridays ago, the federal finance minister referenced an eight year agreement. There is a big difference between eight years and the petroleum production period which is unknown. I guess we could project how long oil will flow from some wells; there is a certain amount of uncertainty, but the production span certainly would be more than eight years. That is a problem.
Another problem is when it comes to fiscal capacity. Newfoundland's fiscal capacity from own source resources is currently $4,900 per capita. When we add the equalization payments to that $4,900 it brings Newfoundland's fiscal capacity to $6,200. Of course, in his letter the Minister of Finance referenced the Ontario threshold which is between $6,600 and $6,700.
If we calculate the equalization payments that Newfoundland receives through its own source revenues, it does not give it a lot of room before the flow of revenue from the offshore revenues closes that gap. There will not be a significant amount of revenue flowing to the province before we reach the Ontario threshold. That is another fundamental problem that the province of Newfoundland and Labrador has with this.
The province contends that the equalization payments, which bring that gap up to $6,200, should not be calculated and included in its fiscal capacity. It is contending that its fiscal capacity from own source revenues, which is $4,900, should stay there, let the revenues from oil flow in and reach the Ontario threshold. It is not going to take the province long at $50 or $55 U.S. a barrel, if we put the equalization payments in with it, before the Ontario threshold is reached.
That is a fundamental problem which has to be addressed if we are going to reach an agreement on this.
Mr. Norman Doyle: John doesn't understand that. You're right Bill, you're right.
Mr. Bill Matthews: The member from St. John's is saying that I am right. I thank him for that.
I have tried to figure out, by discussing with federal financial officials, federal ministers, the Prime Minister, Finance Minister Sullivan and Premier Williams what this all means.
Finance Minister Sullivan told me as recently as this morning that based upon the province's projections for fiscal year 2005-06 at $50 a barrel, the flow of provincial own source revenues from our offshore would be $426 million. Minister Sullivan contends that, based upon the agreement he understands has been offered by the federal government, the province of Newfoundland and Labrador would only be allowed to keep $233 million. That is what Finance Minister Sullivan firmly believes. If in fact that is true, that is a difference of $193 million. For a province that is cash strapped and has a severe debt which it needs to get out from under, that is a significant amount of money in one fiscal year.
For fiscal year 2006-07 with three oil fields producing, when we will peak, the projections for the flow of provincial revenues for Newfoundland and Labrador would be $850 million. Minister Sullivan says that in that fiscal year, again the province would only be allowed to keep $233 million, which is a difference of $617 million. In fiscal year 2007-08 the province projects that the flow would be $731 million. It can keep $233 million for a difference of $498 million.
I have gone through this because we have identified three problems. There is the eight year period versus the petroleum production period, whether or not equalization should be calculated in Newfoundland and Labrador's fiscal capacity in reaching the threshold of Ontario, and of course, I just went through the projections and what Newfoundland and Labrador claims it would lose off the table with this deal. That is the problem.
My goal as one member of Parliament from Newfoundland and Labrador is to get the best deal possible for Newfoundland and Labrador. It is not about anything else. I do not have any other agenda. I do not have an agenda of ambition. It is about getting the best deal possible.
Where do we go from here? It is very important that everyone on all sides keep the rhetoric and the name calling down. Both sides have agreed to that. Premier Williams has agreed. Finance Minister Sullivan has agreed. The Prime Minister has agreed. The Minister of Finance has agreed. All the Newfoundland and Labrador MPs have agreed. We all agree that we should cut out the rhetoric and the name calling and get down to business. All I want to do here is to get back to business and sort this thing out.
There are fundamental differences and misunderstandings. Solutions have to be found. If we are ever going to get rid of the debt in Newfoundland and Labrador, if we are ever going to be able to offer the level of services that our people deserve, this is our chance.
I will stand for no less than 100% of offshore revenues accruing to the province of Newfoundland and Labrador on behalf of the people that I represent. I am interested in the two sides getting to the table and getting back to serious negotiation. Stop the posturing. If there are misunderstandings, if there is blame to go around, let us forget it. The main thing is to find a solution.
Mr. Speaker, I am pleased to offer a few remarks in the debate on this very important issue. I have spoken on the issue, as the House is well aware, probably 8 or 10 different times over the last couple of weeks either in question period or in debate. Every time I speak on the issue, I get very angry. I am going to promise today that I am not going to get angry. I am going to keep my blood pressure at its normal level if I can.
We all get angry when we know that we have been made victims. The realization of knowing we have been made a victim in this whole thing makes me very angry and that is why I have been angry every time I have spoken in this debate. We all get angry when we know we have been hard done by, when we have been made victims, and when we have been treated as if we do not matter. This is what has been going on here over the last couple of weeks in particular.
I got angry again today when I heard the Minister of Natural Resources speak in this debate. The minister is really the master of bafflegab. He implied something today in debate, which I think has to be corrected on the record. The minister made the allegation that the Premier and finance minister of Newfoundland and Labrador, two highly educated and intelligent gentlemen, really did not understand this particular proposal that was being made by the Minister of Finance and the Prime Minister and, as a result, they will never sign because they do not understand it. Nothing could be further from the truth, as we know.
The resolution we have before us today is going to serve a good purpose. It is going to highlight the broken promise made by the Prime Minister of Canada. What it should do as well is send a message to the Prime Minister of Canada that one cannot make a promise of that magnitude to the people of Newfoundland and Labrador, involving billions of dollars over the long term and the long term future of the people of Newfoundland and Labrador, and then simply walk away from it, renege on it or break it without suffering the consequences.
This is what the Prime Minister of Canada has done. I think the resolution is a very important one. We heard my colleague from Burin—St. George's a moment ago who made a very good speech, one that made sense. If the Minister of Natural Resources had the good common sense to make that kind of a speech today, all of us would be a whole lot better off because of it. It will give the Liberal members of Newfoundland the opportunity to tell the people of Newfoundland and Labrador where they stand on this issue.
Are we on the side of cheap, partisan political game playing, as the Prime Minister has been doing over the last three or four months at the expense of Newfoundland and Labrador or are we going to tell the federal government that it made a very important promise to the people of Newfoundland and Labrador that helped it win five seats in that province and now it has to deliver?
That is a bit partisan, but that is exactly what happened. I believe that if all seven members stick together on this issue, we have the opportunity to hold the federal government to account.
Let us not forget that the federal government is in a minority government situation. If we had the support of all five Liberal members from the province of Newfoundland and Labrador along with the two Conservative members here and the Conservative Party, we could make a difference and hold the federal government's feet to the fire on this particular issue.
If there ever was a time when we had to deplore the attitude of the Prime Minister and the Government of Canada, it is now. I think the time has come in the history of Newfoundland and Labrador. This is the defining moment. This is the cornerstone moment for the people in Newfoundland and Labrador. This is the time when we have to state our case.
I have been here now for about seven and a half years. I am not a great veteran of the House. What I have learned in the seven and a half year period is that we are treated like an annoyance by the federal government. We are treated like the pain that has to be tolerated because we exist. That is the way we are treated by the federal government. The federal government and the Prime Minister of this country have no respect.
The Prime Minister has no sympathy for the very difficult financial problems that we have to deal with in the province of Newfoundland and Labrador. He has no understanding of it. He certainly has no sympathy for it until an election rolls around and then we see the promises trotted out. Promises are thrown around like confetti. It is really disappointing that the Minister of Natural Resources has been part of that. He has aided and abetted the Prime Minister on this particular issue and he has not stood up for the people of Newfoundland and Labrador on this issue.
I have great criticism for the Minister of Natural Resources because he is our federal cabinet representative for Newfoundland and Labrador. He has failed miserably to stand up for the people of Newfoundland and Labrador.
Maybe that is why we used the word “deplore” in the motion we have before us today. People are saying that we should possibly remove that word. We should remove language that inflames. Who knows? I am not in a position to say that these words will be removed because it is deplorable. That is what the resolution actually reflects.
These are very tough times for our province. The gloves have to come off at certain times in our history. This is when the gloves have to come off. The province of Newfoundland and Labrador is in a very difficult position financially. There can be no room for soft language. We have to say to the people of Canada and to the federal government that now is the time when we become equal partners in Confederation. We have to make a stand for the people of Newfoundland and Labrador because this is deplorable. There is no room for mealy mouthed people who want an easy ride on this particular issue. It is time to stand up and count ourselves either in favour of Newfoundland and Labrador or against it.
Again, if we stand together on this particular issue, we can make a big difference for the people of Newfoundland and Labrador. We can hold the Prime Minister's feet to the fire on this particular issue. The time has come.
This is a very important issue. It is the biggest issue that has ever faced the people of Newfoundland and Labrador in a long time. Why? Because it has the potential to make us a have province, maybe not in 2, 3, 5 or 10 years, but in 15 or 20 years we may finally have the ability to keep our children home for a change. They might have a future if we can get this through.
Mr. Speaker, I am from British Columbia and we are taking a great interest in this debate. I want people in Atlantic Canada to know that Canadians from coast to coast to coast agree with them on this issue.
I have an interesting seating structure in the House. Beside me I have a member from Manitoba. Beside him is the member from St. John's. We all touch salt water. We all have issues with the federal government and the way it chooses to try to control either our resources or our resource revenues.
British Columbia has an offshore oil and gas resource and we are now past the 30 year mark on a federally imposed moratorium that is depriving British Columbia of an opportunity to make its own choices on that resource. This is something that needs to end, and soon, and we have two reports that are going to be tabled in the next month, I presume. They will focus on a summary of public opinion on the issue and a summary of first nations input. We are expecting a decision on that moratorium in 2005, from both our provincial and our federal governments.
However, when we look at the precedent in Canada, of course it comes from Newfoundland and Labrador and from Nova Scotia. Over the last three months I have talked to basically every significant major participant in the oil and gas sector in Canada. There is one message that I can boil down from what they have said about what we are talking about today, and that is, if the offshore oil and gas royalty regime in place today in Nova Scotia and in Newfoundland and Labrador persists, they are simply not interested.
They are not interested because as long as the feds continue to control the resource revenues, the taxation and the regulatory regime in the way they are now, then there is so much unhappiness at the provincial level. The provinces are not in control of their own destiny, their own incentives, and their own opportunity to do things in the way that is required. Industry then becomes collateral damage in all of this jurisdictional problem and there is a squeeze for revenues that makes these projects untenable, so this is a very significant debate.
We have a deep-rooted political and philosophical division between the party I represent, the Conservative Party of Canada, and the Liberal Party of Canada. If we dig into the Liberal Party's philosophical roots, its deep-seated roots, one can go back to statements by Marc Lalonde when he was principal secretary for Pierre Elliott Trudeau. In some of the early constitutional wrangles on resources, he said in reference to oil and gas that “we will have no more Albertas”. The Liberal Party has never changed its spots.
Even if today the Liberal Party were to fulfill the Prime Minister's oil and gas promises of June 5 and June 27, one could bet that at the first opportunity the Liberals would be trying to find a way to undo or undercut the deal or somehow manipulate it so that it really was not 100% of royalties going to Newfoundland and Labrador and to Nova Scotia. This is something that needs to change.
When the member for St. John's East talks about what a benchmark or significant moment this is for Newfoundland and Labrador, I totally agree, but I go beyond that. This is potentially a watershed for how the provinces and the federal government deal with and arrange jurisdiction over our resources.
Many of us who are from the west coast or other parts of Canada have spent time in Newfoundland and Labrador. We know how strong, independent and full of pride those people are. They deserve no less than the people of Alberta, who control 100% of resource royalties from their oil and gas resource.
I am a Canadian who is older than Newfoundland and Labrador. The province came into this Confederation in 1949. In 1949, the people of the province brought the offshore oil and gas with them, probably unknowingly at the time, but Alberta had already taken jurisdictional control of its resource in 1930. There is a grand precedent here and one that we need to overturn in terms of ensuring that the provinces are the beneficiaries of their resource revenues. Otherwise, the whole system does not work.
There are many people observing this debate today who are from beyond Newfoundland and Labrador and Nova Scotia. This debate does not just include the 10 provinces. The premier from the Northwest Territories is very interested in this debate. It affects the Mackenzie Valley pipeline. Right now, resource royalties in the Northwest Territories amount to about 4% after the clawback and all the other arrangements. This means that there will be no progress on the Mackenzie Valley pipeline proposal until that is dealt with. Let us guess what the precedent is. It is Nova Scotia and Newfoundland and Labrador, the very issue we are describing today. I completely sympathize with the direction they are taking. If Canada chooses not to resolve this in very quick fashion, we could potentially lose the opportunity, because the Alaska project has now received the full backing of the state of Alaska and the federal government, reconfirmed by the U.S. election this week. That project will proceed and ours will not, which would be a very negative thing for the country.
There is a very strong message for Canadians about all of this. The Liberal Prime Minister made promises on June 5 and June 27 for election purposes, the promise to Nova Scotia on the day before the election. All of his promises mean nothing after the election. The Liberals should be held accountable for that.
I will give the House some examples of other promises the LIberals made, although I realize my time is almost up. They said the border would be open by the end of the summer. They knew otherwise. They said that we in the party I represent were warmongers. Do members know why they said that? Because we wanted to fix the equipment and stop the rust-out of our military equipment within the Department of National Defence and fix other basic structural problems, and let us look what has happened. We have been proven correct on all of that.
The Liberals said that we were exaggerating the numbers in the budget. Who was exaggerating? What was determined very recently? Our surplus was $9.1 billion, not $1.9 billion and--
Mr. Speaker, it looks like my presentation will be broken up in sections, seeing as I will soon be interrupted for statements by members and then of course by oral question period. It will be my pleasure to complete my speech afterward.
Since the beginning of the debate this morning, I have had the opportunity to hear all sorts of arguments filled more with demagoguery thansubstance. I have heard Conservative colleagues from Newfoundland and Liberal colleagues from Newfoundland who clearly do not share the same view and, while claiming the best interests of Newfoundland, are clearly interested much more in their own political interests.
We on this side share the outrage of the Government of Newfoundland. We understand this outrage, because it is in response to the traditional arrogance of the Liberal government, which has once again betrayed and broken a promise it had made. That comes as no surprise to us. We are used to this kind of attitude on the part of the Liberal government.
I will give a few examples toward the end of my speech if I have any time left. In Quebec, we have had many opportunities to see this and previous Liberal governments make extremely generous promises to Quebeckers and back out once in office in cowardly fashion.
We do understand the outrage of Newfoundland. But at the same time we are finding it pretty amazing that, after so many years of Liberal government, anyone can still be surprised to realize that it is this government's trademark, so to speak, to make promises and then ignore them.
In fact, this attitude of the government party, which has become somewhat of an institution in Canada, is responsible for the very high level of cynicism for politicians in the population, the cynicism that the Prime Minister, when he was running for the leadership of the Liberal Party, claimed to want to eliminate by improving standards. But indications are that, as soon as he took office, he simply started repeating, imitating, copying the attitude of his predecessors. As my colleague from Saint-Hyacinthe—Bagot indicated, before the election, he promised the moon to everyone but, once in office, of course, he changed his attitude.
We of course agree with the concerns of the Newfoundland government, but the Conservative motion now before the House is a very inaccurate reflection of these concerns. While we understand the outrage of the Newfoundland government, and while we share its concerns up to a point, there is no way we can support the motion, as it is worded. After oral question period, I intend to provide a more detailed explanation of the reasons why we will not support this motion.
In the meantime, I will simply say that we are opposed to this motion because we believe that the potential negative effects of it and, of course, those of any agreement that might be reached between the federal government and the Newfoundland and Nova Scotia governments, could be worse than the benefits of it, and this is true even for Newfoundland and Nova Scotia.
This debate gives me an opportunity to go back, if only briefly, to the first ministers' conference on health, which took place in September. All the participants came out of that conference boasting, congratulating each other and saying that they had accomplished a great deal. However, we on this side said that we would not consider the conference a real success until after the October 26 conference. Obviously, the results speak for themselves. I will get back to this after oral question period.