Push for Voisey's deal
Newfoundland pressures Ottawa for a more favorable revenue split as negotiations begin to unlock
the stalemate and resolve Inuit land claims
By ALAN TOULIN
Ottawa Bureau Chief The Financial Post
Negotiations aimed at a land claims settlement, one of the keys to unlocking the stalemate over the Voisey's Bay nickel
development in Labrador, are set to begin in Ottawa on Monday.
Representatives of the Labrador Inuit Association, and the federal and Newfoundland governments hope to negotiate the
broad elements of a land claims deal during the talks.
All are under pressure to build a framework that would give the Inuit association a financial settlement from both governments.
Negotiators have agreed to a news blackout until the talks are completed.
Newfoundland Premier Brian Tobin has told the Inuit if the land claims are not resolved -- a condition for negotiations between
Inco Ltd. and the Inuit association on industrial benefits from the project -- the province will take legal action. It will seek
authority from the courts to push the development ahead, sources said.
Tobin was not available for comment on Friday.
At the same time, Newfoundland is pressing its case in Ottawa for a bigger chunk of government revenue from the Voisey's
Bay project.
If it succeeds, Newfoundland would have more flexibility to strike financial arrangements with the aboriginal groups and Inco to
get the Voisey's Bay mine going. The mine in Labrador and a planned smelter in Argentia, Nfld., will create thousands of badly
needed jobs in the area.
Newfoundland's case for a new revenue-sharing deal is based on projections showing it will be a financial loser in the Voisey's
Bay project -- and the offshore oil and gas projects Hibernia, Terra Nova and Whiterose.
As tax and royalty revenue from these projects grows, Newfoundland's share of transfer payments from Ottawa under the
federal-provincial equalization program starts to decline.
Newfoundland argues that ,after the equalization clawback, 84% of the financial benefits of the projects will flow to Ottawa
while it will get only 16%.
Revenue from these megaprojects is expected to peak at $11 billion in 2008. At that point, the province would seem to be in
line for $7.6 billion in new revenue. But when equalization is calculated, the clawback is $5.6 billion, leaving it with $2 billion.
On the flip side of the equation, Ottawa would get $5.4 billion in resource revenue plus the $5.6 billion of clawback -- $11
billion in total.
Newfoundland, with the weakest economy in the country, claims it has already been hit harder by Ottawa's budget actions than
other provinces, specifically by Unemployment Insurance reforms and the end of financial support for the crippled groundfish
industry.
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