In Newfoundland and Labrador, the mood is brighter than it’s been in a while.
After five years of drowning in debt from the slide in oil prices, the federal government has thrown the province a lifeline.
The province will receive $2.5 billion from Ottawa over 38 years from the newly renewed Atlantic Accord agreement on offshore resource revenues. Ottawa is giving Newfoundland and Labrador revenue from its 8.5 per cent equity stake in the Hibernia oilfield.
Prior to the accord’s recent renewal, Newfoundland and Labrador’s deficit was significant.
Even after oil prices rebounded, a budget update by the provincial government last November pegged the deficit at $547 million.
The overall debt was $15.37 billion, the highest in Canada per capita.
But the new deal, announced on the 70th anniversary of Newfoundland and Labrador’s confederation with Canada, is being seen by many as a home run for first-term Liberal Premier Dwight Ball.
Ball suggested to a crowded news conference that he’s outdone former Progressive Conservative premier Danny Williams, who brought home $2 billion in 2005 following a confrontational series of negotiations with Ottawa.
“We got it right,” said Ball.
“This is a guaranteed revenue stream over many years. It’s front-end loaded: 60 per cent of it within the first year.”
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Ball has a ready-made platform item for a provincial election campaign that he’s hinted will happen in the next couple of months.
Analysts say the agreement could help the federal government keep Liberal seats in the Atlantic region heading into an October election.
Newfoundland and Labrador MP Seamus O’Regan, who was part of the negotiations, says it’s a fair deal.
“This is not bailout money. This is ensuring that that is the case, that this province is the principal beneficiary of its offshore (resource revenues). It is not bailout money,” O’Regan said.
The two governments say the renegotiated 1985 accord essentially reduces the net debt by $2.5 billion, or $5,000 per capita.
Another overwhelming financial mess is still in need of repair: the province’s Muskrat Falls hydro project, which is billions of dollars over budget and could double ratepayers’ electricity rates just to pay off the overrun.
Federal Finance Minister Bill Morneau is expected in St. John’s later this week to discuss possible remedies as both parties pursue more good news to take to the electorate.