Today’s Globe and Mail (subscription required for access to the articles so they are not linked) contains two facts that confirms that, especially for the case of Newfoundland, the national perception that Atlantic Canada does not need a new deal is just wrong. These two facts are in addition to the current call for equality in tax sharing on resource revenue placing Newfoundland and Nova Scotia on a equivalent footing with the idle shieks of Alberta who lecture us on fiscal responsibility from the spewing tap of oil revenue which they sit upon solely through fluke of natural history.
The first fact is set out in a chart at page A4 of today’s edition. It shows that in 2002 the Federal Government sends $2.485 billion into Newfoundland while $2.187 is sent from Newfoundland into Federal coffers. The difference of 298 million is less than the transfer from Ottawa to PEI, is half the amount pledged for tsunami relief in another country, is roughly less than the annual budget of the City of Kingston. Hardly a national shame. Further, it is a 2002 figure which, following the preceding decade’s trend, might actually be no longer in deficit at all now into the third fiscal year after the chart’s end.
The second and more important point is made in Rex Murphy’s column in one sentence: “Churchill Falls alone nullifies the equalization ‘debt’.” In terms of gross provincial product, Newfoundland suffers from a legal falsehood, a valuation of the price of the electricity it exports through Quebec due to a sweetheart deal more imposed than negotiated soon after the nation of Newfoundland merged with the nation of Canada in 1949. Generally, throughtout the North American electrical grid, power generated in one place is “wheeled” though the transmission lines of others for a fair price to reach the customers of the generator. Under the Churchill Falls deal, there is a contractual deeming of the value of Newfoundland’s electricity which is vastly below fair market value. Hydro Quebec (I believe it is HQ) then sells the electricity on to New York state, Ontario, etc., effectively as if it generated itself and sells it at market value. It is a windfall to Quebec which Murphy values at over a billion dollars a year. Ottawa saves on that effect as Hydro Quebec is owned by the Porvince of Quebec and its windfall revenues off-set otherwise required transfers fom Canada. It is a loss to Newfoundland that swings it from a have to a have not province.
What is the effect? This chart shows one of them: Newfoundland lost 2.9% of its population from 1991 to 1996 and another 7% of its population from 1996 to 2001. Depopulation of those who are able to go. The capable. Without respect for the value of the resources, those who are able to run the province leave creating a vicious circle of dependency and creativity export and a perception that you have to leave to get ahead. What other province would put up with an economic situation which undermines its ability to continue itself?