Hebron oil agreement, Danny Williams

The Newfoundland and Labrador Welfare State

By Myles Higgins

Monday, August 27, 2007

During the past few days, ever since news of the Hebron oil agreement reached the media, Newfoundland and Labrador premier, Danny Williams, has made it a point to highlight the contribution his province makes to Canada's economy.

Hebron oil grabbing the headlines has provided him with an opportunity to impress on Canadians that the stereotype of Newfoundlanders as "sucking at the federal teat" is one that is so far off base as to be ludicrous.

Ever since Newfoundland and Labrador was dragged, kicking and screaming into Canada in 1949, many in the country have held onto the false and backward belief that the province is nothing more than a drain on the nation and should be cut loose. What was it Globe columnist Margaret Wente called the place, "a vast and scenic ghetto"?

It seems that sort of narrow minded bigotry is displayed every time someone mentions battles over equalization, offshore revenues or anything else related to federal funding in the province. Many Canadians just shake their heads and comment that those "damn Newfies are whining for more welfare again".

The same people who are quick to make those sorts of statements are just as quick to accept it as natural when Ontario demands billions for the auto industry or for mass transit. The thinking is that Ontarians put far more into the federation than they take out, but those bloody Newfoundlanders just take and take and take and whine for more.

The utter stupidity of that attitude is a message the people of Newfoundland and Labrador have been trying to send for years. Unfortunately, it usually falls on deaf ears and closed minds.

These days we find premier Williams using public interest in the Hebron development as an opportunity to try to change that attitude. I wish him all the luck in the world. He'll need it.

What many Canadians never hear about, or refuse to see, is the contribution made by Newfoundland and Labrador each year in direct relation to what it receives.

Of course there are a lot of back and forth financial dealings between any province and the federal government, everything from health care dollars to environment funding and more. In that light Newfoundland and Labrador is no different than any other province (except it generally gets far less because of its small population).

That aside, the one financial figure most people use as a benchmark and the one that's been in the news so much recently is equalization. That's the one people most often use to paint Newfoundland and Labrador as a burden to Canada, so let's take a look at it.

According to the government of Canada, Newfoundland and Labrador received $632 million dollars in equalization payments in 2006-07. That figure was about half of the value of the payout to NS, NB or Manitoba and only about 10% of the figure paid to Quebec.

Now that we have a clear cut figure to work with, $632 million, perhaps it would be enlightening to compare that number with just a few of the contributions the province made to Canada during the same period.

The complete list of Newfoundland and Labrador's contributions to the rest of Canada, (just the financial ones alone that is) can never be covered in one article and likely never fully understood without an in depth study, however...

At a glance I can easily identify the $1 billion dollars Quebec Hydro makes each and every year from Churchill Falls power generated in Labrador, not to mention the industrial revenues available to them, thanks to the availability of that power.

I can also see the approximately $2 billion each year Ottawa receives from offshore oil projects in the province (not counting the upcoming Hebron project that's expected to generate even more).

Next to come to mind is the value of ore coming from the province and used to keep smelters operating in Ontario and Manitoba? That ore keeps hundreds, if not thousands, of direct workers on the job in those provinces and helps feed secondary spin off industries such as restaurants, bars, real estate sales, etc. and let's not forget the taxes it generates. For the sake of argument let's peg the value at an even 1 billion a year.

Speaking of taxes, what about the federal taxes paid directly by Newfoundlanders and Labradorians working at home and across Canada and let's not forget those paid by local companies. I can't even begin to guess at the value of that but I know this writer alone pays enough federal taxes to support another family so I'll conservatively put the number at another $1 billion.

By the way, those taxes, mine and yours, are what Ottawa uses to pay out equalization to the provinces. Now that you know that, the next time someone in Alberta or Ontario complains about their province having to pay for equalization, tell them to bite you. No province pays a penny for equalization, the taxpayers do, including the ones in Atlantic Canada.

I haven't even mentioned the value of Newfoundland and Labrador's contribution to Canada's GDP in other areas, its paper products and lumber, the value of its fisheries exports, etc. I don't intend to go through an exhaustive list but I think I've made my point.

When you consider that just the few items I've mentioned clearly exceed $5 billion each year, and likely far, far more than that, it should be easy for any intelligent person to understand why Newfoundlanders and Labradorians suddenly get defensive when someone from "the mainland" seizes on the few hundred million dollars the province receives from equalization as an excuse to propagate the myth of an east coast welfare state.

I'm glad Danny Williams has taken the opportunity given him to clarify the province's position on this ever present issue but as I said before, good luck to him. I, like many others, have tried for years to deliver the same message. It's a thankless and often frustrating task.