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Power plant at Churchill Falls
Photo by Paul Daly
‘Canada has been a drain on Newfoundland and Labrador'
Despite all that NL contributes to the country, there are still those who see only a welfare ghetto populated by beggars
By JOAN FORSEY
Saturday, April 05, 2008
Saturday, April 05, 2008
Hi. I’m a “Newf,” i.e., a “surly islander” from what “is probably the most vast and scenic welfare ghetto in the world.” My home province, Newfoundland and Labrador, is also “the biggest sinkhole in the country” where “beggars can be choosers.” Worse, we bite the hand that feeds us. Nevertheless, the government of this “welfare ghetto,” is richer than Ontario’s.
This is what we’ve been told in recent years by a columnist in a national newspaper (The Globe and Mail), another columnist in a nearly national paper (the nearly National Post) and one of Canada’s most successful businessmen.
And yet, oddly enough, Canadians look down on Americans because they seem to know so little about Canada. Remember when “surly islander” Rick Mercer went to the U.S. to interview passers-by in the street and the CBC gleefully aired his findings to illustrate the ignorance of Americans about their northern neighbour?
But Rick and the CBC could have saved taxpayers’ money and conducted the interviews in Toronto. And to find egregious examples of ignorance about Canada, they wouldn’t have had to take their chances questioning people in the street. They could have interviewed the presumably well-informed: for example, Margaret Wente of The Globe and Mail, Andrew Coyne of the National Post (now with Maclean’s) and Seymour Schulich, co-founder of Franco-Nevada Mining, philanthropist and entrepreneur.
Their statements represent some of the ill-informed views about Newfoundland and Labrador that are widely held throughout Canada — thanks in part to them.
However, even a cursory examination of a few facts will show that, far from being a drain on the rest of Canada, this province actually gives as much to the federation as it takes — and arguably even more. Quebec, in particular, is a major beneficiary.
Those who calculate the “cumulative net benefit” to the province and conclude, as Seymour Schulich once did, that Newfoundland and Labrador is a “sinkhole,” make the mistake of considering only two things: taxes paid and transfer payments received. They ignore the constant stream of benefits — financial and economic — that the province’s natural resources have bestowed and continue to bestow on the nation. For example:
• Thanks to hydroelectricity from Churchill Falls, Quebec is able to add about $1 billion to its revenues each year. Up to the end of last year, this resource had enriched Quebec by an estimated $19 billion.
• That $1 billion a year cuts the amount Quebec needs to receive in equalization payments, thus reducing the burden on Canadian taxpayers. In the fiscal year 2007-08, Quebec received $7.1 billion in equalization, more than half the equalization funds available. It could have been much higher.
• The plentiful supply of cheap electricity from Labrador also boosts the Quebec economy by stimulating the growth of manufacturing in that province.
• Newfoundland and Labrador gives the Quebec economy another major boost, thanks to its vast iron ore resources in western Labrador where more than 60 per cent of Canada’s iron ore is produced. The resource has created jobs in, and stimulated the economy of, the port of Sept-Iles, Que. since the 1960s. Sept-Iles is now second only to Vancouver in terms of annual tonnage. The Iron Ore Company of Canada’s recent announcement of a $500-million expansion will further benefit the region, including Sept-Iles.
As well, Wabush Mines’ processing plant is a source of employment and income in Pointe Noire, Que. (Quebec, which covets Labrador, doesn’t need to own the territory; it has most of the benefits of ownership and none of the responsibilities.)
• Labrador’s massive nickel, cobalt and copper deposits in Voisey’s Bay support jobs in Thompson, Man. and Sudbury, Ont. where the ore concentrate is processed (and will be processed until 2011 when a processing plant opens in Newfoundland).
• On top of all this, tens of millions of dollars in royalties pour in each year to the federal treasury thanks to Newfoundland and Labrador’s nickel, iron ore and oil and gas resources. The federal government gets about 90 per cent of the royalties from Voisey’s Bay. From three offshore oil projects, it has already taken in almost $6 billion. And during its 25-year life, the fourth project alone (Hebron) is expected to bring $7 billion to the federal government.
That’s not a bad contribution from a “welfare ghetto.”
In fact, it is clear that not only has Newfoundland and Labrador not been a drain on Canada. Quite the contrary — Canada has been a drain on Newfoundland and Labrador.
Consider:
Ottawa mismanaged this province’s once-lucrative cod fishery and other groundfish stocks to the point of commercial collapse. The 1992 moratorium led to the largest layoff in Canadian history (40,000 people, 30,000 of them in this province), forced tens of thousands of people to leave the province to find work and turned scores of communities into ghost towns. The loss to the provincial economy has been an estimated $600 million-$700 million a year.
• Ottawa stood idly by while Quebec cut off access to export markets for hydroelectricity from Churchill Falls, leading inevitably (since Quebec could be the only market) to a contract that enriches Quebec and tosses crumbs to the “welfare ghetto.” Newfoundland and Labrador’s loss is an estimated $1 billion a year.
• In 1984 Ottawa took possession of the continental shelf that Newfoundland brought with it into Confederation; and even though it signed the Atlantic Accord saying the province would be the “principal beneficiary” of oil and gas resources offshore, the principal beneficiary has been Ottawa.
In short, Canadian government policy (in one instance along with Quebec’s) has stripped Newfoundland and Labrador of most of the benefits of three of its major resource industries — the cod fishery, hydroelectricity and oil and gas.
So it’s hardly surprising that this province has the highest unemployment rate in the country, the highest net debt per capita (more than twice the national average) and the lowest per capita incomes.
What is surprising is that, despite all that Newfoundland and Labrador contributes to Canada, there are still those who see only a welfare ghetto or sinkhole populated by beggars.
And what is startling is that anyone — given the adverse effects of Canada’s policies on the provincial economy — could suggest, in a nearly national newspaper, that the province is richer than Ontario.
Joan Forsey, a Newfoundlander living in Toronto, has been researching and writing about Canadian economic and political affairs for more than 30 years, including seven years as a writer on the staff of the late prime minister Pierre Trudeau.
j_forsey@sympatico.ca
This is what we’ve been told in recent years by a columnist in a national newspaper (The Globe and Mail), another columnist in a nearly national paper (the nearly National Post) and one of Canada’s most successful businessmen.
And yet, oddly enough, Canadians look down on Americans because they seem to know so little about Canada. Remember when “surly islander” Rick Mercer went to the U.S. to interview passers-by in the street and the CBC gleefully aired his findings to illustrate the ignorance of Americans about their northern neighbour?
But Rick and the CBC could have saved taxpayers’ money and conducted the interviews in Toronto. And to find egregious examples of ignorance about Canada, they wouldn’t have had to take their chances questioning people in the street. They could have interviewed the presumably well-informed: for example, Margaret Wente of The Globe and Mail, Andrew Coyne of the National Post (now with Maclean’s) and Seymour Schulich, co-founder of Franco-Nevada Mining, philanthropist and entrepreneur.
Their statements represent some of the ill-informed views about Newfoundland and Labrador that are widely held throughout Canada — thanks in part to them.
However, even a cursory examination of a few facts will show that, far from being a drain on the rest of Canada, this province actually gives as much to the federation as it takes — and arguably even more. Quebec, in particular, is a major beneficiary.
Those who calculate the “cumulative net benefit” to the province and conclude, as Seymour Schulich once did, that Newfoundland and Labrador is a “sinkhole,” make the mistake of considering only two things: taxes paid and transfer payments received. They ignore the constant stream of benefits — financial and economic — that the province’s natural resources have bestowed and continue to bestow on the nation. For example:
• Thanks to hydroelectricity from Churchill Falls, Quebec is able to add about $1 billion to its revenues each year. Up to the end of last year, this resource had enriched Quebec by an estimated $19 billion.
• That $1 billion a year cuts the amount Quebec needs to receive in equalization payments, thus reducing the burden on Canadian taxpayers. In the fiscal year 2007-08, Quebec received $7.1 billion in equalization, more than half the equalization funds available. It could have been much higher.
• The plentiful supply of cheap electricity from Labrador also boosts the Quebec economy by stimulating the growth of manufacturing in that province.
• Newfoundland and Labrador gives the Quebec economy another major boost, thanks to its vast iron ore resources in western Labrador where more than 60 per cent of Canada’s iron ore is produced. The resource has created jobs in, and stimulated the economy of, the port of Sept-Iles, Que. since the 1960s. Sept-Iles is now second only to Vancouver in terms of annual tonnage. The Iron Ore Company of Canada’s recent announcement of a $500-million expansion will further benefit the region, including Sept-Iles.
As well, Wabush Mines’ processing plant is a source of employment and income in Pointe Noire, Que. (Quebec, which covets Labrador, doesn’t need to own the territory; it has most of the benefits of ownership and none of the responsibilities.)
• Labrador’s massive nickel, cobalt and copper deposits in Voisey’s Bay support jobs in Thompson, Man. and Sudbury, Ont. where the ore concentrate is processed (and will be processed until 2011 when a processing plant opens in Newfoundland).
• On top of all this, tens of millions of dollars in royalties pour in each year to the federal treasury thanks to Newfoundland and Labrador’s nickel, iron ore and oil and gas resources. The federal government gets about 90 per cent of the royalties from Voisey’s Bay. From three offshore oil projects, it has already taken in almost $6 billion. And during its 25-year life, the fourth project alone (Hebron) is expected to bring $7 billion to the federal government.
That’s not a bad contribution from a “welfare ghetto.”
In fact, it is clear that not only has Newfoundland and Labrador not been a drain on Canada. Quite the contrary — Canada has been a drain on Newfoundland and Labrador.
Consider:
Ottawa mismanaged this province’s once-lucrative cod fishery and other groundfish stocks to the point of commercial collapse. The 1992 moratorium led to the largest layoff in Canadian history (40,000 people, 30,000 of them in this province), forced tens of thousands of people to leave the province to find work and turned scores of communities into ghost towns. The loss to the provincial economy has been an estimated $600 million-$700 million a year.
• Ottawa stood idly by while Quebec cut off access to export markets for hydroelectricity from Churchill Falls, leading inevitably (since Quebec could be the only market) to a contract that enriches Quebec and tosses crumbs to the “welfare ghetto.” Newfoundland and Labrador’s loss is an estimated $1 billion a year.
• In 1984 Ottawa took possession of the continental shelf that Newfoundland brought with it into Confederation; and even though it signed the Atlantic Accord saying the province would be the “principal beneficiary” of oil and gas resources offshore, the principal beneficiary has been Ottawa.
In short, Canadian government policy (in one instance along with Quebec’s) has stripped Newfoundland and Labrador of most of the benefits of three of its major resource industries — the cod fishery, hydroelectricity and oil and gas.
So it’s hardly surprising that this province has the highest unemployment rate in the country, the highest net debt per capita (more than twice the national average) and the lowest per capita incomes.
What is surprising is that, despite all that Newfoundland and Labrador contributes to Canada, there are still those who see only a welfare ghetto or sinkhole populated by beggars.
And what is startling is that anyone — given the adverse effects of Canada’s policies on the provincial economy — could suggest, in a nearly national newspaper, that the province is richer than Ontario.
Joan Forsey, a Newfoundlander living in Toronto, has been researching and writing about Canadian economic and political affairs for more than 30 years, including seven years as a writer on the staff of the late prime minister Pierre Trudeau.
j_forsey@sympatico.ca
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