Mr. Speaker, let me thank my colleague for sharing her time.
Equalization is just part of the story. Under the new budget, this government has invested more than $1.5 billion in Newfoundland and Labrador for such priorities as health care, the environment, infrastructure and education. However, today's story is about equalization. I want to do two things. First of all, I want to put some factual information on the record.
Newfoundland and Labrador is quickly becoming a have province, something we are very proud of. Just eight years ago, in 1999-2000, Newfoundland received $1.169 billion, almost $1.2 billion, in equalization payments. Since then there has been a steady and steep decline in equalization payments to the province: $861 million in 2005-06; $632 million this year; $477 million next year; and $197 million projected for 2008-09. That is an 85% drop in equalization payments.
The numbers tell a dramatic story of a long dependent province using its own resources to achieve self-reliance. It has not happened very often in this country, and it is usually the reverse, but it is happening right now in Canada's youngest province, my province, so far out on the eastern fringe of the country that most Canadians do not even notice us until we yell.
Taking an 85% cut in equalization payments in 10 years cold turkey can be difficult. The Atlantic accord offset payments were negotiated to cushion that effect and to smooth the transition from an equalization receiving province to a non-receiving province, which we have always striven for, which is what we want to be. The accord offset payments do just that.
While equalization payments dropped, as I mentioned, to $861 million last year, Newfoundland received $189 million in offset payments under the accord for a total of $1.05 billion. This year equalization and the accord offset payments totalled $961 million. Some of that is because of our population drop. Next year they will total $971 million. In the following year when equalization payments drop down to $197 million, the accord offset payments will rise to $757 million for a combined payment of $954 million.
The accord offset money is not taken from the pockets of other Canadians. It is revenue from the development of our own natural resources that Newfoundland can hold on to at least for a while to make adjustments to become a self-reliant province of Canada.
Newfoundlanders and Labradorians are understandably concerned that those transitional accord benefits will be lost, reduced or kept in the new equalization plan that the finance minister put forward in the budget. When Newfoundlanders are concerned, they let us know, as they are doing now. There are no back doors in my province. Everything is up front and very personal. We accept that.
However, Newfoundlanders need not worry about the accord offset payments. The payments remain intact just as they were negotiated by Premier Williams in 2005. They have not been changed. They have not been capped or mutilated in any way, not one tittle, not one jot, as former member John Crosbie would say.
Let me come back to that. Accord offset payments will not go on forever. When the accord offset agreement was negotiated, the province and the federal government agreed to an expiry date which could come as soon as 2012 or as late as 2020, depending on whether or not Newfoundland and Labrador is still entitled to receive equalization in 2011 or 2012.
In any case, accord offset payments will run out either in 2012 or 2020. If Newfoundland and Labrador is still entitled to equalization when that happens or at any earlier time, the province may want to choose those payments to come through the new equalization program delivered in the budget. Under the new plan, all provinces will be able to exclude 50% of all their natural resource revenues or just non-renewable resource revenues from the calculation of fiscal capacity, whichever exclusion rate delivers the greatest benefits to each province.
The new program gives much greater protection against declining resource prices and production levels and provides greater incentive for a resource rich province like mine to develop its resources. Simply put, the old formula penalized problems for developing resources. The new one rewards them.
Let me come back to something stated this morning by the member for Bonavista—Gander—Grand Falls—Windsor. He talked about promises. Yes, there were promises and they have been quoted correctly. During the campaign our party committed to take out 100% of the non-renewable resources from the formula. That commitment was made as he stated, by the way. He said that in response to Premier Williams the Prime Minister said that we would remove non-renewable resources from the formula. That is true. It is in writing not only to Premier Williams but to other premiers. That was a promise not to Newfoundland and Labrador but to the Canadian people.
There was one other promise and that occurred when the premiers themselves got together, when the finance ministers got together, when they met with federal officials and realized that the commitment would not be carried out simply because they could not agree. The premiers could not agree upon a common formula. They did not accept the 100% non-renewable resources out of the formula. The majority of them rejected it. They did not want it. A new formula had to be put in place.
Because equalization is a federal program, it was up to the federal government and the minister to find that compromise. The compromise was a report commissioned by the former government. It was a good report, supposedly a fair report that would put equalization on a fair and equitable base. However, it was evident that if that formula were accepted, as most premiers thought, at least one province that would lose, and maybe more, would be the province of Newfoundland and Labrador. Premier Williams, in his wisdom, asked for a second commitment and there was a second promise made.
The member for Bonavista—Gander—Grand Falls—Windsor said this morning that the Conservative Party would leave Newfoundland and Labrador with 100% of its oil and gas revenues and there would be no cap. He said it was a promise broken. That is totally incorrect. He either did not read the budget, does not understand it or does not understand our province.
Premier Williams asked if the government went with the O'Brien formula whether it would make sure that the Atlantic accord was not capped. The commitment from this government to Newfoundland and Labrador is that the Atlantic accord will continue as it has and it will not be capped. Our province has not lost one cent, not one.
Could we have benefited if the premiers and the provinces had agreed to a new formula? Perhaps. It depends on who is in, who is out and what is brought or taken. However, we have not lost one cent and the commitment to deliver the Atlantic accord without a cap is there and will always be there until the agreement runs out. That is well into the future and Newfoundland and Labrador will be, not just well on its way, but it will be a have province.
What would have happened if the leader of the Liberal Party had been in place? This is what he said. He stated, “Don't ask me to pretend there is a fiscal imbalance and elect me and hope I will fix it. I don't want to create these kinds of expectations”. We would have gotten nothing at all from the Liberals.
Let me say that the commitments to our province will be kept. We will not interfere with the Atlantic accord. There will not be any cap on our Atlantic accord. We have not lost one cent in the transition, not one cent. It is up to the premiers to start negotiating with governments again to try to improve upon their lot.
We are very lucky to have the resources we have. We are benefiting greatly from them. There is a very bright future, thanks to the provincial government and thanks to our efforts for the great province of Newfoundland and Labrador.