Mr. Speaker, I want to thank my colleague for sharing his time with me on this very important date. I have listened with great interest to the views of all members this morning and this afternoon. I am pleased to say that this is a serious debate which is being taken very seriously by all members on all sides of the House.
I want to start by categorically stating that I support the desire of Newfoundland and Labrador to obtain 100% of revenues from its offshore resources. I want to go on the record at the outset as saying that I support the province of Newfoundland and Labrador receiving 100% from its offshore resources.
I remember very well the days of discussion and negotiation when it became apparent that there was a need for an Atlantic accord. Some of my colleagues on the other side were in provincial politics with me at the time. We remember it very well. It was emotional, it was heated and there was a lot of debate. Eventually the Atlantic accord was signed.
The principle of the Atlantic accord was that Newfoundland and Labrador and Nova Scotia would be the primary beneficiaries of their offshore resources. They would be the primary beneficiaries. That is the principle on which the Atlantic accord was negotiated, discussed and signed.
There are a couple of reasons. One is the location of our resources. They are offshore, under water. This morning someone referenced the cost of extraction which is true. The other very important point that has to be remembered is that the provinces of Newfoundland and Labrador and Nova Scotia have not been as well off economically, from a wealth point of view, as some other provinces in Canada. We have an enormous debt. In the past we have not benefited the way we should have benefited from our resources.
The Atlantic accord was supposed to correct that. That is what the debate is about today. Newfoundlanders and Labradorians feel very strongly that they are not the primary beneficiaries of their offshore resources. They feel strongly that the Government of Canada benefits from its offshore resources more than they do and they find that to be totally unacceptable.
Since this whole issue blew up a couple of weeks ago I have been preoccupied with trying to understand the problem. In order to solve any problem we have to understand what it is.
The Prime Minister is very committed and is very convinced that he has offered Premier Williams and the province of Newfoundland and Labrador 100% of its offshore resources. Premier Williams is just as committed and determined that the Prime Minister has not delivered the 100%. We have a basic, fundamental misunderstanding. I have been trying to understand where the problem lies.
There are a couple of issues that have created this problem. In Premier Williams' correspondence to the federal government, he consistently talked about a timeframe which would cover the petroleum production period. That really means that while oil flowed from the wells off our coast, this agreement would apply to it.
In the letter of the Minister of Finance back to finance minister Sullivan and the province a few Fridays ago, the federal finance minister referenced an eight year agreement. There is a big difference between eight years and the petroleum production period which is unknown. I guess we could project how long oil will flow from some wells; there is a certain amount of uncertainty, but the production span certainly would be more than eight years. That is a problem.
Another problem is when it comes to fiscal capacity. Newfoundland's fiscal capacity from own source resources is currently $4,900 per capita. When we add the equalization payments to that $4,900 it brings Newfoundland's fiscal capacity to $6,200. Of course, in his letter the Minister of Finance referenced the Ontario threshold which is between $6,600 and $6,700.
If we calculate the equalization payments that Newfoundland receives through its own source revenues, it does not give it a lot of room before the flow of revenue from the offshore revenues closes that gap. There will not be a significant amount of revenue flowing to the province before we reach the Ontario threshold. That is another fundamental problem that the province of Newfoundland and Labrador has with this.
The province contends that the equalization payments, which bring that gap up to $6,200, should not be calculated and included in its fiscal capacity. It is contending that its fiscal capacity from own source revenues, which is $4,900, should stay there, let the revenues from oil flow in and reach the Ontario threshold. It is not going to take the province long at $50 or $55 U.S. a barrel, if we put the equalization payments in with it, before the Ontario threshold is reached.
That is a fundamental problem which has to be addressed if we are going to reach an agreement on this.