N.S. and Newfoundland and Labrador Agree to Work for Offshore Fiscal Fairness

PREMIER'S OFFICE--N.S. and Newfoundland and Labrador Agree to Work for Offshore Fiscal Fairness

Premier Roger Grimes of Newfoundland and Labrador today announced that his province will renew its efforts to seek its fair share of offshore resource revenues and will work with Nova Scotia Premier John Hamm to seek a better deal from the federal government.

Newfoundland and Labrador and Nova Scotia are not the principal beneficiaries of their respective offshore accords because of the clawback, or the tax-back rate, Ottawa imposes on resource developments. Both premiers been publicly seeking a better deal from the federal government through the elimination or reduction of the clawback to retain a greater portion of offshore resource revenues.

"For every dollar Newfoundland and Labrador makes in offshore oil revenues, we only keep 30 cents," said Premier Grimes. "This current arrangement makes it almost impossible for the province to get on its feet and eventually move from 'have not' to 'have' status and contribute significantly to the national growth."

The premier said Newfoundland and Labrador has a longstanding position on seeking a fairer deal on resource revenues and he has been personally lobbying for the province's fair share.

"Since becoming premier, I have been lobbying extensively for Newfoundland and Labrador's fair share of our offshore revenues," said Mr. Grimes. "I have met with the prime minister of Canada, Finance Minister Paul Martin and Industry Minister Brian Tobin on this issue."

"Newfoundland and Labrador is currently not getting its fair share of our own offshore resources and this arrangement must change," he said. "Our province must become the primary beneficiary of any revenues collected from the offshore so that as the revenues from our offshore oil and gas grow, the additional benefits will continue to flow to our province."

Nova Scotia's Premier John Hamm agrees.

"We want a solution that will allow us to keep all our offshore revenues until our economy is at the national average," said Premier Hamm. "This kind of solution allows us to use our non- renewable offshore resources to make the transition to a diversified and sustainable economy." He said the two provinces simply want to follow the path used by other energy-rich provinces.

The two premiers pledged to develop a joint submission to the federal government on the principal beneficiary issue. They both believe the prime minister is sympathetic to the principle of securing long-term economic change in the two provinces. Premier Hamm said the two provinces will also work together on assessing the economic impact of this issue on the Atlantic region, which should help the provinces argue their case for action.

The premiers also acknowledged that although there are many similarities in the situation for each province, they may look for different solutions in some areas.

Mr. Grimes added that this would enable the province to capitalize more fully on its opportunities in the resource sector, assisting Newfoundland and Labrador to further expand its economy and reduce the economic and fiscal disparities that currently exist between our province and the rest of Canada.