The deal is the out-of-court settlement between the feds and paper company over the Government of Newfoundland and Labrador’s expropriation of timber and water rights last year.
While it is a drop in the bucket compared to the half a billion Abitibi was looking for originally, the $130 million agreement means there will be roughly two toonies from every one of the country’s 33 million personal piggy banks going to keep the company afloat.
And there are people in the rest of Canada who are not happy with that.
They are not happy they have to help pay for a problem that was caused by a provincial government – and who can blame them.
While Prime Minister Stephen Harper has said this is the one and only time the federal government will pay for the actions of a province under the North American Free Trade Agreement, what makes this instance forgivable?
As Newfoundlanders and Labradorians, we should put the shoe on the other foot for a moment.
If the province of Saskatchewan decided after a few hours of debate in their legislature not to allow a cereal-maker to export wheat and a NAFTA challenge resulted, you could bank on the fact that people of this province would not be pleased if we had to help foot the resulting bill.
There is absolutely no way – as long as the federal Conservatives hold the power in Ottawa – that the people of Newfoundland and Labrador will not end up paying for this deal in some way, despite the PM’s claims that Newfoundland and Labrador won’t be penalized.
If any other business pulled $30 million a year out of the area like Nalcor is now, you can be sure the town council would be collecting taxes on it. -
Maybe that has already been worked out by our premier and the PM. After all, their strained relationship seems to have improved over the past several months.
The Abitibi closure has already cost the province a fortune. Our population of just over a half a million has paid severance to the laid off workers, will eventually pay for the environmental cleanup and the town of Grand Falls-Windsor is going without an annual grant-in-lieu of taxes once remitted by the paper company.
If any other business pulled $30 million a year out of the area like Nalcor is now, you can be sure the town council would be collecting taxes on it. Instead, the council has accepted a stipend from the government on a decreasing scale over the coming few years. It started at a little over $800,000 last year and will decrease annually by one-third until it reaches zero.
Nalcor, a Crown corporation that showed $569 million in revenues in its 2009 financial report, is exempt from taxes.
So at the end of the day, the power generated in our backyard will help pay for the associated costs of the expropriation, but the deed itself will be spread amongst Canadians.
In the end, though, surely that cost will come back to bite us in some way.
Because things that sound too good to be true usually are.
David Newell
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Remember that Abitibi was also exempt from paying municipal taxes. It was specifically exempted in its 1909 Charter which was renewable in perpetuity at the Charter holders (in this case Abitibi's) option. Abitibi willingly paid a "grant-in-lieu of tax" to GF-W, Bishop's Falls, Buchans and Botwood as it recognized that this was a good way to gain favour in the communities in which they operated. A grant-in-lieu is essentially a payment made willingly (as a result of negotiations with each of the municipalities) in place of taxes which cannot be legally levied on the Corporation. Speaking of the infamous Charter, did you know that it specifically stipulated that the water rights associated with the Exploits could only be enjoyed if the Charter holder (A.N.D. Corp or its successors, meaning of course Abitibi) were engaged in paper making? Without papermaking the Charter holder would lose its right to enjoy power production rights. The document is in fact very straightforward and spells this out quite nicely. Therefore expropriation of the hydro assets (except for the case of the much smaller Star Lake project which was developed outside the auspices of the Charter) was legally unnecessary. All the Province had to do was enforce the terms of the existing Charter. By linking papermaking and water rights in the 1909 Charter, the government of the day showed remarkable foresight. The agreement (Charter) they drafted would ensure that the people of Central NL would have a very valuable asset to attract industry. Too bad a new Government 100 years later by expropriating the hydro assets has severed the rights of enjoying the power resource from the responsibility of creating employment. Or has it??? With Nalcor being the new owner of both the Mill (accidentally of course) and the power assets (intentionally of course) isn't Nalcor the new "sucessor " to Abitibi? Is it then not bound by the terms of the 1909 Charter? Is it not then in violation of the "employment creation" provision in the Charter? Sounds like an interesting story doesn't it? Come on Central NL wake up!!! You have been robbed!!