‘Fair share’ a matter of negotiations: ex-premiers

Ashley Fitzpatrick
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Danny Williams, Brian Tobin say big deals are about balance

While serving as premier of Newfoundland and Labrador, both Liberal Brian Tobin and Tory Danny Williams had their moments of playing hard ball with big industry, pressing for more provincial benefits from natural resource developments.

Brian Tobin and Danny Williams at the 2014 NOIA conference on Friday.

And yet, sharing a stage at the St. John’s Convention Centre on Friday morning, both men said there are limits to how far leaders can go in those battles.  

The risk is driving away all investment by the same corporations — killing opportunities for capital investment and economic growth.

Addressing the 2014 Noia oil industry conference, Tobin said his administration tried to make responsible choices that would strengthen the provincial economy.

“Critical to our success was to try and create a balance where on the one hand we maximize the benefits from major projects, but at the same time we didn’t chase away investment dollars. We had to create a safe and sound climate which would encourage capital to flow into Newfoundland,” he said.

“And that is a delicate balancing act, making sure we get our fair share on the one hand — and every premier since Confederation has been charged with that role, that task — but on the other hand, recognizing we’re not alone in the world.”

He spoke about the future and major projects hoped for offshore Newfoundland and Labrador, tapping experience with developments such as Hibernia and Terra Nova.

In settling royalties and negotiating other benefits, he said, it must be remembered some 70 countries are in the business of developing offshore oil and gas fields worldwide.

“So we can hammer the table and say we want our fair share, but we have got to come to terms that reward risk, pay back early capital and allow those who put the money up to have a fair return on their investment.”

 

‘Not one spoonful’

It was Tobin who famously declared “not one spoonful” of unprocessed ore would be leaving the province, when negotiating with mining giant Vale on provincial benefits from a proposed nickel mine at Voisey’s Bay in Labrador.

Reflecting on the time, in September of 2013, Tobin’s successor Roger Grimes said the comment was a political misstep and killed any deal during Tobin’s time as premier.

“He made a really serious attempt to do a deal,” Grimes said.

But it was under Grimes, who presented a plan wherein the company could sell ore and reap returns before investing in a processing facility, that a deal was actually done in 2002, making the mine — with all of its associated jobs, supplier opportunities and royalties — a reality.

In sharing the stage with Tobin, Williams brought his now-trademark oratorial force and, at one point, referenced his famous, flag-lowering battle with the federal government over oil dollars.

In terms of private corporations, he pushed for more from natural resource projects, just as Tobin did.

He built upon a base offshore royalty regime laid out in Tobin’s time and, having established provincial Crown corporation Nalcor Energy, placed the province in a position to also call for an equity share in oil developments.

Williams told his audience — including in its count leaders from heavy hitters like Statoil, ExxonMobil, Suncor and Husky Energy — they should expect both current and future governments to press for what they consider to be a fair share of royalties and benefits.

 

What’s fair?

However, he acknowledged there is always a challenge in determining what constitutes that “fair share,” including how much of a major capital project gets built within the province.

Under the Atlantic Accord legislation, the province and provincial businesses are entitled to demand first crack at major project work, but essentially not at the expense of the project as a whole.

And so, more than how much the province “deserves,” the question regularly arises at the conference table as to how much the province’s businesses can afford to take on.

“You can never ask for enough. I can tell you right now, we should be getting anything we can handle, anything we can do, anything we can take. And that has been the position of every premier, I think, in this province, bar none. That should be the position on a go-forward basis, but we can only do what we can do. And once we get to the limit of our capacity, obviously it has to move on to somewhere else at some point,” he said.

“That’s the interesting part here,” Tobin added, “is that we can ask, we should ask, for every job we can get. But we shouldn’t ask for it if we don’t have the capacity to deliver the work in the province and if, as a consequence, we actually delay projects going ahead.

“So I think we both say, and every premier would say, give us every last job we can have, within our ability to deliver on those jobs.”

 

afitzpatrick@thetelegram.com

Organizations: Hibernia, Statoil, Husky Energy

Geographic location: Newfoundland and Labrador, Terra Nova

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  • Grow a Heart you who are politicians. The time is long over-due to make our politicians Accountable for the problems they have foisted upon us.
    June 25, 2014 - 08:31

    I, like many of the electorate of Newfoundland and Labrador, exulted our politicians until recent years since I and others have seen through the the murky light of the governance they were providing us. We have now seen that those who held the prime positions in our government have made themselves the one-percenters of the world's population base through the unsavoury development of our natural resource base for themselves and their corporate acquaintances. We are now experiencing the bottom of the barrel from this type of governance. The poorest amongst HAVE TO resort to the Social Welfare System since they find it more beneficial to stay on the Welfare System so as not to become poorer by taking a lower paying job in the Fast Food Industry that will create a situation where they will have to completly rely on food banks and alms for their family's sustenance. It is time to hold those former and present politicians accountable for the corrupt way they have handled our natural resources and great location. They led us into a situation where the people of Newfoundland and Labrador have become the poorerst people in the nation. You, who are elected to government, will have to fix this problem immediately, it is a sorryful state that needs your immediate attention because children's survival depend upon their parents getting a fairer salary for their work. The 1 percenters, politicians and corporates, here and around the world have set up a system that is designed to keep the 99 per centers in a state of poverty and stress. DESIGN THIS SYSTEM PLEASE SO THAT ALL CAN HAVE A BETTER LIFE WITH A WAGE THAT CAN SUSTAIN EVERY PERSON IN THE WORLD.

  • The province of Newfoundland and Labrador has the same economic problems as does Africa!
    June 23, 2014 - 21:53

    The province of Newfoundland and Labrador has the same problem as Africa regarding its economy, Africa the richest Continent in the World, according to a story I heard on Radio International last evening on CBC Radio, the article stated Africa's people are ignorant of how its Politicians and the International Corporations, the politicians deal with, are taking advantage of the ignorance of its people regarding the governance they are receiving on how their natural resources are squandered. The same story exists in Newfoundland and Labrador, as to the reason why our province's economy is at the tail end of the Canadian provinces, despite the fact the province of Newfoundland and Labrador has one of the richest natural resource bases in Canada, plus it has a geographic location that is second no none in Canada.

  • Fintip, a Great Response.
    June 23, 2014 - 15:10

    Fintip you are so accurate in saying that "it is almost amusing to hear two former premiers soft-pedal - one might say back-pedal - the notion of talking tough with industries that want to do business in the province. These two ex-premiers you say stand out because of the ease with which they have transited the political back room to the corporate back room. They come from opposite sides of the political aisle, but they are now singing from the same hymn book when it comes to cautioning their successors not to be too harsh on big corporations". AND I will say this type of control over our natural resources should never be held by a ruling Premier let alone two ex-Premiers. Is it little wonder we have never been able to get below a twelve and half per cent Unemployment rate statistic? The reason is the scoundrels gave away all of our natural resources in the raw state that have been developed to date. I think if an audit of what transpired during each Premier's reign was done, I am sure if the accounting was done accurately under their reign with accurate auditing, the answers will be revealed and they will tell the truth.

  • FINTIP
    June 22, 2014 - 09:03

    Almost amusing to hear two former premiers soft-pedal - one might say back-pedal - the notion of talking tough with industries that want to do business in the province. These two ex-premiers stand out because of the ease with which they have transited the political back room to the corporate back room. They come from opposite sides of the political aisle, but they are now singing from the same hymn book when it comes to cautioning their successors not to be too harsh on big corporations. It helps to do that, of course, when you're selling your services to big corporations who want someone to guide them around through the corridors of the Confederation Building. What Brian Williams and Danny Tobin are saying is - yeh, be tough, but not too tough - don't want to kill the goose...and all that. Tobin put off a good show during his time in office but achieved little of consequence. Williams bungled two major files, while at the same time locking horns with Ottawa. But he did succeed, in significant measure, on two fronts. The first was the $2 billion Atlantic Accord /Equalization payout. The second was the Hebron agreement - in which he hung tough against one of the most powerful and ruthless corporations in the world. He won a reasonable royalty regime with an equity stake. He settled for a lot less however on industrial benefits. The major work went to South Korea with a commitment that three smaller, less demanding modules would be built in NL. Exxon reneged on the third module - arguing there wasn't enough capacity in the province. It was, of course, under the less demanding, much less tough premiership of Kathy Dunderdale that Hebron's industrial benefits got watered down. Which brings me to the new standards of 'political toughness' now touted by these new titans of business. 'We should ask for every job we can get...but not if we lack the capacity to deliver.' Sounds almost reasonable. In reality however it is a recipe for disaster. It serves only to maintain the status quo and let big corporations off the hook. The correct policy is to demand that the industry wanting to develop our resources take steps to CREATE significant new elements of capacity that are needed to undertake the work locally. You force those companies to transfer technology, know-how and business acumen to local industry. That's how you achieve a measure of industrial competitiveness in the international market. Based on the leadership offerings on the table thus far for the disaster-ridden Tory party in this province - or for that matter the leadership of the prospective new Liberal government - I think companies like Exxon Mobil can expect an easy ride.

  • just wondering
    June 21, 2014 - 17:32

    didnt tobin add another 25 years to the upper churchill deal with quebec??

  • There should be No Sense of Entitlement just a fair Salary.
    June 21, 2014 - 12:08

    I'm wondering what was the "Share" negotiated by the politicians for themselves, who took on the development of one or other of our coveted natural resources over the past 65 years to satisfy their "Sense of Entitlement". I think if we had the accounting figures on the deals the politicians negotiated for themselves, you would find that the politicians' take was far greater than what the electorate and the province of Newfoundland and Labrador received to run the province's affairs. It appears to me that most of the upper crust politicians who ran our province seem to belong to the 1 per centers and are doing very well. I, personally, would like to have an audit done on all the transactions surrounding the development of Newfoundland and Labrador's natural resources right back to 1949. I think there are a lot of skeletons to be uncovered in that closet.