Between a Rock and a Hard Place: The Report of the Newfoundland and Labrador Commission on Our Place in Canada Douglas Brown (updated, October 2010)

Our Place in Canada: Outline of Presentation A Case study in Regional alienation A Case study in Regional alienation Royal Commission Mandate Royal Commission Mandate Process Process Framing of the Issues Framing of the Issues Conclusions and Recommendations Conclusions and Recommendations Post-Commission developments Post-Commission developments

A Case study in regional alienation A struggling province still trying to find its place A struggling province still trying to find its place A weak government searching for a new intergovernmental strategy (pre Danny Williams) A weak government searching for a new intergovernmental strategy (pre Danny Williams) A uniquely comprehensive analysis of a single province and its relationship in the federation. A uniquely comprehensive analysis of a single province and its relationship in the federation. Useful benchmarks for measuring NL progress since 2003 Useful benchmarks for measuring NL progress since 2003

The Royal Commission’s Mandate To return to 1949: what were the expectations on joining Canada? To return to 1949: what were the expectations on joining Canada? To be comprehensive: examine all aspects of NL relations with Canada To be comprehensive: examine all aspects of NL relations with Canada To be forward-looking: how to renew and strengthen “our place” in Canada To be forward-looking: how to renew and strengthen “our place” in Canada Somewhat open-ended: how to increase “prosperity and self-reliance” for NL Somewhat open-ended: how to increase “prosperity and self-reliance” for NL

Commission Process Appointed May 2002; reported July 2003 Appointed May 2002; reported July 2003 Three Commissioners: Vic Young, Elizabeth Davis and James Igloliorte Three Commissioners: Vic Young, Elizabeth Davis and James Igloliorte Small staff Small staff 25 public meetings, dozens of private ones 25 public meetings, dozens of private ones Research program of 30 studies Research program of 30 studies budget of only $2.3 million budget of only $2.3 million

Why a Commission? General malaise due to long-term effects of 1992 cod moratorium, out-migration and federal budget cuts of 1995 General malaise due to long-term effects of 1992 cod moratorium, out-migration and federal budget cuts of 1995 A specific political rationale to give the Grimes government a boost, to find new ideas for intergovernmental strategy A specific political rationale to give the Grimes government a boost, to find new ideas for intergovernmental strategy Political risks: “creating a monster” of raised expectations, no new solutions, too big a mandate, not enough time Political risks: “creating a monster” of raised expectations, no new solutions, too big a mandate, not enough time

Framing the Issues Trying not to blame Canada Trying not to blame Canada Facing hard truths Facing hard truths Embracing a sense of place Embracing a sense of place Seeking a “new way of relating” Seeking a “new way of relating” Devising an integrated strategy Devising an integrated strategy

Hard truths Economic disparity…still in last place Economic disparity…still in last place Fiscal crisis…again Fiscal crisis…again Fisheries teetering on the brink Fisheries teetering on the brink Rural communities in sharp decline Rural communities in sharp decline Severe out-migration Severe out-migration Weak constitutional position Weak constitutional position

Key conclusions and recommendations 1. No to separation, no to the status quo 2. Need for collaborative federalism 3. To be the “principal beneficiary” of offshore oil revenues 4. Concerted effort to restore the fisheries 5. A new partnership for hydro development 6. Putting the fiscal house in order 7. Facing up to rural sustainability

1. No to separation… NL’ers proud to be Canadian NL’ers proud to be Canadian Only 12 percent want independence Only 12 percent want independence But huge level of dissatisfaction with how Canada works But huge level of dissatisfaction with how Canada works Terms of Union cannot be amended Terms of Union cannot be amended

2. Collaborative Federalism Need collaborative, not competitive federalism Need collaborative, not competitive federalism Need respect for NL as a province Need respect for NL as a province Need more federal presence Need more federal presence More flexibility and accommodation to unique needs More flexibility and accommodation to unique needs Senate Reform Senate Reform Support a Council of the Federation Support a Council of the Federation

3. Offshore Oil The Atlantic Accord, negotiated by Mulroney and Peckford governments in 1985: NL was to be the “principal beneficiary” in fiscal terms The Atlantic Accord, negotiated by Mulroney and Peckford governments in 1985: NL was to be the “principal beneficiary” in fiscal terms Initial fiscal projections of Accord were unrealistic Initial fiscal projections of Accord were unrealistic From Government of Canada reaped 75 to 80 percent of total revenues From Government of Canada reaped 75 to 80 percent of total revenues Conclusion: strike a new deal. Conclusion: strike a new deal.

4. Last Chance for the Fishery The devastation of the groundfish (cod etc.) moratorium of 1992 The devastation of the groundfish (cod etc.) moratorium of 1992 Too much fed-prov squabbling Too much fed-prov squabbling Need an action plan to address stock rebuilding, prevent foreign over-fishing, have joint management of licensing. Need an action plan to address stock rebuilding, prevent foreign over-fishing, have joint management of licensing.

5. Churchill River Hydro Churchill Falls contract of 1969 with Hydro Quebec still costs NL an estimated $800 million a year in lost profits Churchill Falls contract of 1969 with Hydro Quebec still costs NL an estimated $800 million a year in lost profits But forget about linking new “Lower Churchill” project with renegotiated deal on Churchill Falls But forget about linking new “Lower Churchill” project with renegotiated deal on Churchill Falls Instead get other partners (e.g. Feds, Ontario) to promote an equitable new development Instead get other partners (e.g. Feds, Ontario) to promote an equitable new development

6. Provincial Fiscal Reform Unsustainable fiscal deficit Unsustainable fiscal deficit Offshore oil revenues not going to close the gap [or so they thought then] Offshore oil revenues not going to close the gap [or so they thought then] Need to balance the budget, engage in program review (i.e. can’t do it all) … and address unfunded pension liabilities Need to balance the budget, engage in program review (i.e. can’t do it all) … and address unfunded pension liabilities

7. Rural Sustainability Survival of rural Newfoundland is at stake Survival of rural Newfoundland is at stake No one wants to discuss the issue No one wants to discuss the issue Commission failed to get consensus Commission failed to get consensus Need for a sustained public dialogue or deliberation Need for a sustained public dialogue or deliberation There is a cross-Canada search for solutions (we’re not alone in this…) There is a cross-Canada search for solutions (we’re not alone in this…)

Impact of Commission NL is here to stay in Canada NL is here to stay in Canada Confident sense of place: something to build on Confident sense of place: something to build on Greater sense of realism Greater sense of realism Portrays urban-rural gaps in cohesion as a community Portrays urban-rural gaps in cohesion as a community Some said report was not bold enough Some said report was not bold enough Provided a good foundation for a fresh approach [which Danny Williams took up soon after] Provided a good foundation for a fresh approach [which Danny Williams took up soon after]

Developments since 2003…1 Williams government gets elected November 2003, program very similar to Commission report Williams government gets elected November 2003, program very similar to Commission report Williams takes aggressive line with: Williams takes aggressive line with: – the feds over equalization and the fishery – with business over oil, hydro and mineral developments –With Quebec over hydro, oil Province pursues cooperative, multilateral strategy – strong participant in new Council of Federation and in the Council of Atlantic Premiers. Province pursues cooperative, multilateral strategy – strong participant in new Council of Federation and in the Council of Atlantic Premiers.

Developments since…2 Paul Martin and Stephen Harper both promise a new deal on the offshore – Martin government delivers, Feb – but Harper restricts the benefit of the agreement in Paul Martin and Stephen Harper both promise a new deal on the offshore – Martin government delivers, Feb – but Harper restricts the benefit of the agreement in Williams runs “ABC” (Anybody but Conservative) campaign in federal election, Williams runs “ABC” (Anybody but Conservative) campaign in federal election, April 1, 2009: NL officially becomes a “have” province…no longer qualifies for Equalization. April 1, 2009: NL officially becomes a “have” province…no longer qualifies for Equalization.

Developments Since 2003…3 Budgetary position of province much improved: Budgetary position of province much improved: –Offshore oil revenues exceeded income tax revenue for first time in ($1billion) –Debt/GDP ration in decline –Surplus budgets Oil-driven economy pushes NL into 5 th largest economy per capita among provinces Oil-driven economy pushes NL into 5 th largest economy per capita among provinces Unemployment rate lowest in 20 years Unemployment rate lowest in 20 years However…rural out-migration continues However…rural out-migration continues