Federal offer on offshore revenues falls $1 billion short in first eight years alone

The offer proposed by the Government of Canada to the Government of Newfoundland and Labrador yesterday, could see the province lose at least $1 billion dollars of offshore revenue over the next eight years alone. Premier Danny Williams said the offer is insulting in that it falls far short of the 100 per cent the Prime Minister committed to in June of this year.

"Yesterday, the federal government raised the hopes and expectations of every Newfoundlander and Labradorian, by bringing myself and our officials thousands of miles across the country, three days before Christmas," said Premier Williams. "However, they clearly had absolutely no intention of concluding an agreement on our provincial offshore revenues. The federal government leaked their eleventh hour offer to the media before they shared it with us. While falling far short of the 100 per cent commitment, this proposal prevents us from capitalizing on future discoveries which could potentially be found in the Orphan Basin and Laurentian Sub Basin."

In addition, according to the federal proposal, in order to continue to receive increased benefits from offshore revenues beyond eight years, the province would have had to agree to eliminate a more than $700 million deficit in that time frame. This would mean onerous expenditure reductions and create significant hardship to many Newfoundlanders and Labradorians.

"I have always believed that we need to substantially reduce our deficit in order to achieve fiscal health, and our government has demonstrated a strong commitment to working towards that goal," added Premier Williams. "In fact, we have committed to eliminating our cash deficit within four years and we are well on our way to achieving that goal. However, to require the elimination of our accrual deficit of $700 million in such a brief period of time would mean expenditure reductions of an enormous magnitude that would be detrimental to social programs and economic investment. This is unacceptable to Newfoundland and Labrador and should be an unacceptable principal to every province and territory in this country.

"The federal government has an excellent understanding of our province�s position and I will immediately sign any agreement that honours the commitment that was made to Newfoundland and Labrador on June 5 of this year. However, I am not interested in wasting taxpayers resources or the valuable time of our elected members and officials, on a fool�s errand."

Premier Williams announced that Canadian flags at all provincial government buildings will be removed immediately for an indefinite period of time. "This is a clear signal to Ottawa, that Newfoundland and Labrador will not be taken for granted. The federal government has turned its back on the people of this province and we will not accept less than what was committed to by the Prime Minister, and to what we deserve."

Media contact: Elizabeth Matthews, Office of the Premier, (709) 729-3960 or (709) 690-5500

2004 12 23                    1:25 p.m.