Wednesday, June 20, 2007

Accord fight continues in Senate

I am having difficulty sorting this accord mess out. It does seem certain that Harper broke his promise but on the other hand there seems to be some truth that the original agreement was less fair than the present one and to a certain extent it is true that Nova Scotia and Newfoundland want to have their cake and eat it too. There is so much rhetoric around the issue though that perhaps I have misunderstood.

Premier takes accord fight to Senate

By STEPHEN MAHER Ottawa Bureau

OTTAWA — Premier Rodney Mac-Donald made Nova Scotia’s case before a Senate committee on Tuesday, arguing forcefully that Ottawa has broken the offshore accord.

Mr. MacDonald, who has in the past appeared to be a reluctant warrior on this issue, cast aside diplomacy, accusing the federal government of double-dealing, breaking a promise and misrepresenting the facts.

The premier urged senators to "restore the honour of the Crown" by amending budget legislation that changes the Atlantic accord.

"The federal government’s efforts to tear up the 2005 Canada-Nova Scotia accord are not only extremely harmful to Nova Scotia," Mr. MacDonald said.

"They do great damage to the reputation of the Parliament of Canada, fuel public cynicism, create regional divides and cast a dark shadow on the future of our federation."

The appeal Tuesday put Mr. MacDonald at odds with Prime Minister Stephen Harper and Liberal Leader Stephane Dion, both of whom agree that the unelected upper house does not have the moral legitimacy to change or defeat a budget adopted by the House of Commons.

The accord guarantees that Ottawa will send the province a cheque every year — separate from the equalization system — to compensate it for offshore revenue clawed back from the equalization system.

In the federal budget in March, a bit more than two years into the agreement, Ottawa presented the province with a choice. If Nova Scotia sticks with the old equalization system, it can continue to get those cheques, but if it wants a piece of a more generous new equalization system, which is available to all other provinces, it must accept a cap on offshore payments, based on the fiscal capacity of Ontario.

Mr. MacDonald said the budget was "intended to appeal to rich parts of the country by rendering null and void signed agreements with Nova Scotia and Newfoundland and Labrador, agreements that are not widely popular within the federal Finance Department or with those who mistakenly believe Atlantic Canada got something special."

Mr. MacDonald said the structure of the "ultimatum" the province faces is a "deliberate attempt by the federal government to confuse and confound Canadians about the facts of the offshore accord and the effects of the 2007 budget."

The premier was critical of Mr. Harper.

"The prime minister has repeatedly said Nova Scotia and Newfoundland and Labrador are asking him to sign side deals," he said. "Not true. We’re asking the prime minister to honour an agreement that is already in place, an agreement he didn’t just tacitly support but actively campaigned on while in opposition."

Mr. MacDonald said Mr. Harper and Finance Minister Jim Flaherty are not being honest.

"Both Prime Minister Harper and Minister Flaherty have repeatedly stated that not one comma of the accord has been changed and it remains in its original pristine form. Again, absolutely not true, and they know it. The federal government has unilaterally wiped out an entire clause of the agreement."

Ottawa says the choice Nova Scotia faces does not violate the accords, since the province can keep all of its offshore revenue if it sticks with the old equalization formula. Mr. Flaherty has been critical of the offshore accords as distorting the national equalization system, since other provinces’ resources are not excluded from the system, as Nova Scotia and Newfoundland’s are under the accords, so it was necessary to revamp equalization to base it on a "principled, long-term, predictable formula."

When campaigning for the accords, Mr. Harper, Newfoundland Premier Danny Williams and then-Nova Scotia premier John Hamm framed the debate as a struggle for control of resources.

On Tuesday, the premier repeatedly referred to the accord as an economic development agreement, no different from Ottawa’s large investments in aerospace in Quebec, the auto industry in Ontario, grain programs for western farmers or the Pacific Gateway in British Columbia.

"The 2005 accord is the only transfer in federal history that we are aware of that is clawed back," Mr. MacDonald said.

In testimony before the same committee earlier in the day, Mr. Flaherty said he did not believe the accord is an economic development agreement.

As evidence that it is, Mr. MacDonald and Finance Minister Michael Baker pointed to a federal Finance Department website that stipulates that the accord is separate from the equalization system.

"Nova Scotians know that our accord presented a rare window of opportunity to achieve greater prosperity, to provide a better future for our children and contribute to a stronger Canada," the premier said. "Today they feel betrayed and so do I."

Although Mr. Harper campaigned against an Ontario cap on the accords, the Tories now insist it’s necessary to prevent taxpayers in that province from continuing to send cheques east if the fiscal capacity of Nova Scotia or Newfoundland surpasses that province’s.

Mr. MacDonald and Mr. Baker were handled gently by East Coast Liberal senators, but several Tories and one Ontario Liberal suggested that Nova Scotia is asking for too much.

"In a lot of cases, this is not based on principles, this is based on the principle that we need more in Atlantic Canada," Manitoba Tory Senator Terry Stratton said.

Liberal Senator Art Eggleton of Toronto posed skeptical questions to Mr. MacDonald and suggested during Mr. Flaherty’s testimony that the government may have done the right thing.

After the presentation, Mr. Mac-Donald said he doesn’t know what he’ll do if, as seems almost certain, the majority of Liberal senators ignore his plea and pass the budget legislation unamended.

When he was in Ottawa last week to call on East Coast Tory MPs to vote against the budget, Mr. MacDonald presented a proposal to Mr. Harper to resolve the dispute. He said Tuesday the federal response has not been good enough.

"We did have some discussions but I’ve seen nothing that’s satisfactory to the people of my province."


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