Breaking the Atlantic Accord

In 2005, Prime Minister Paul Martin signed the Offshore Agreements with Newfoundland & Labrador and Nova Scotia, guaranteeing that these provinces would receive 100 per cent protection from claw backs resulting from increased non-renewable resource revenue. The agreements were set to run from 2005 until 2020.

The Offshore Agreements are commonly referred to as the Atlantic Accord.

During the 2006 federal election campaign, Stephen Harper pledged, if elected, to uphold the accord.

In a letter to Premier Danny Williams of Newfoundland and Labrador dated January 4, 2006, Stephen Harper wrote:

“We will remove non-renewable natural resource revenue from the equalization formula to encourage the development of economic growth in the nonrenewable resource sectors across Canada. The Conservative government will ensure that no province is adversely affected from changes to the equalization formula.”

The Conservative MP from St. John’s East, Norman Doyle, in an interview with the CBC in October 2006, underscored that the Conservative government would honour the terms of the agreement, saying, “the Atlantic Accord will not be adjusted. It's written in stone.”

Mr. Doyle added, “…it's signed, sealed, delivered, and it's something that the province need not have any fear.”

A year after the Conservatives formed government, Finance Minister Jim Flaherty continued to assure the public that the agreements would be upheld in forthcoming federal budgets. Mr. Flaherty told reporters in St. John's, “I can say, as the prime minister has said, that we will respect the Atlantic Accords. That is firm; we'll continue to do that."

But in the 2007 federal budget, the Harper government introduced a fiscal cap that effectively eliminated the claw back protection negotiated in 2005.

It also required Newfoundland and Labrador and Nova Scotia to abandon the framework of the Atlantic Accord in order to benefit from 100 per cent exclusion of non-renewable resource revenue from the equalization formula.

Though the change in policy sparked outrage in Nova Scotia and Newfoundland and Labrador, the Harper government maintained that it would not fix its broken promise.

Nova Scotia Conservative MP Bill Casey refused to vote in favour the 2007 budget and was expelled from the Conservative Caucus as a result. Mr. Casey explained his action saying, “It was obvious to me that we weren't going to get the accord restored. I told the prime minister I was going to vote against it unless it was restored, and I did. I just think the government of Canada should honour a signed contract, and if they don't, we haven't got much to work with."

Among Conservatives, Mr. Casey was alone in his rebellion, but not in his views. An unnamed senior Conservative admitted that “dropping a sledgehammer on two of the provinces that endorsed you at the last election is not exactly the way to say 'thank you' on a file that clearly touches a chord in Atlantic Canada.”

Editorial opinion in the region was also damning. One writer said, “whatever else you say about the Harper Conservatives — whether you believe they have broken their election promise or whether you believe they are outright liars — you can certainly say one thing: they can’t seem to get their story straight when it comes to how the federal budget will affect this province, and just what it is they plan to do about that.”

The most outspoken opponent of the federal government has been Newfoundland and Labrador Premier Danny Williams. In a speech delivered on September 10, 2008, Premier Williams said:

“Stephen Harper's own campaign literature proclaimed, ‘There is no greater fraud than a promise not kept.’ He used these words as he successfully attempted to woo voters from this province to not vote for the opposing party. Naively we trusted him. He rewarded that trust with a broken promise. According to his own brochure, he is a fraud.”