The letters came slowly at first, then a few more, and soon Ryan Cleary's desk was overflowing with a stack of missives.
"I don't know where to put them all," said the managing editor of The Independent, a weekly newspaper in St. John's.
What inspired the torrent of correspondence was a balance sheet Mr. Cleary recently published. Accounting and statistics aren't popular hobbies in the rest of the country, but one particular balance sheet has gained such notoriety in Newfoundland these days that it needs no explanation. It's just "the balance sheet."
The phrase has become shorthand for measuring Newfoundland's place in Canada. Some Newfoundlanders are trying to calculate, in dollars and cents, whether they benefited from joining the country in 1949.
Mr. Cleary's staff at The Independent say they've solved the riddle, concluding after a three-month investigation that Newfoundland has gained only $8.9-billion from its relationship with Canada over the past half-century, while Canada reaped $53.5-billion.
Their methodology is faulty, economists say, but they raise an interesting question: Is it possible to gauge a province's value to a country, and vice versa?
Simply adding up everything the federal government does for Newfoundland, and everything Ottawa gets in return, reveals that billions of dollars have flowed into that province every year. Some argue that's the end of the story, but others suggest a broader balance sheet.
This broader ledger might include the value of electricity coming out of Labrador, or the future spoils of offshore oil, or countless other ways that Newfoundland helps the country.
Economists and statisticians say trying to reach a definitive conclusion to the question is a mug's game. But it's an increasingly popular sport in Newfoundland and Labrador, a pastime that has gained more urgency as the province's battle with Ottawa over energy revenues has escalated into a war over the symbolism of the Canadian flag.
The evidence seems clear to Mr. Cleary. Last year, a team of nine people at his newspaper tried to produce a complete version of the balance sheet, adding up the benefits and costs of Confederation: transfer payments, taxes, electricity deals, everything they could imagine.
"Newfoundlanders and Labradoreans have had this suspicion for years, that we're not a have-not province, that there's a reason why we're on our knees: Because we're kept there," Mr. Cleary said. "What our research has shown is that, to a certain extent, that's true."
Attempts to quantify that contribution have enjoyed little success.
Mr. Williams's predecessor, Roger Grimes, spent $3-million on a commission that many Newfoundlanders hoped would account for those "untold billions."
But those observers were disappointed when Victor Young, chairman of the Royal Commission on Renewing and Strengthening Our Place in Canada, released his report in 2003.
"People here want to see a solid number that any economist would agree [with,]that Newfoundland gives more to Canada," Mr. Young said in an interview. "Well, there isn't one."
Doug Brown, former director of research for Mr. Young's commission and an associate professor at Queen's University, said the experience taught him to stay away from the balance-sheet issue. "I wouldn't touch it with a barge pole," he said. "The Government of Canada is sending a fair bit of cash to Newfoundland, but the trouble is that you have to consider the value of Newfoundland to the union as a whole."
In fact, "a fair bit" is a sanguine way of describing the amount of cash that cascaded down from Ottawa into Newfoundland between 1961 and 2002, the years for which Statistics Canada keeps detailed records. When revenues are balanced against expenditures in that province, the federal government was giving Newfoundland hundreds of millions almost every year through the 1960s and 70s, and billions almost every year in the 1980s and 90s.
But those figures only reflect Newfoundland's fiscal relationship with the federal government, however, not the way the province interacts with the whole country.
The balance sheet could tilt more in Newfoundland's favour as more intangible factors are taken into consideration. How would the province have done with a better deal on Churchill Falls or on offshore energy? What's the value to Canada of all the Newfoundlanders who have migrated west to work?
In a paper co-authored for the royal commission, Robin Somerville, director of the Centre for Spatial Economics, considered the money that an underground power station at Churchill Falls, Labrador, could be pumping into the Newfoundland economy if it weren't for a controversial deal giving Quebec electricity at low prices.
Mr. Somerville used economic models produced by the Newfoundland government to estimate that a different deal on Churchill Falls could have increased Newfoundland's gross domestic product by $790-million to $1.6-billion a year throughout the 1990s. That would have made Newfoundland richer than Nova Scotia and New Brunswick.
Even less tangible items should be added to any accounting of Newfoundland's value, said Jim Stanford, economist for the Canadian Auto Workers. Mr. Stanford estimates that almost 60,000 workers left Newfoundland between 1992 and 2002. Most of them were young people fleeing hard times in that province, Mr. Stanford said, and their lifetime wages would be worth about $75-billion to the rest of Canada.
"The stereotype of Newfoundland as a welfare case is totally wrong," Mr. Stanford said.
Others scoff at the idea of putting migrating workers on a balance sheet.
"If Newfoundland wasn't part of Canada those people would have had to move anyway, with the economic situation as it was," said David Perry, senior research associate at the Canadian Tax Foundation.
In the final analysis, Mr. Perry said, the billions upon billions that Ottawa spends on Newfoundland every year far outweighs any other rational items on the balance sheet.
The sheer number of variables makes the exercise impossible, said James Feehan, an economist at Memorial University in St. John's. "It's really a black hole," he said.
None of that, however, has made The Independent's opinion on the matter any less popular. The paper crammed 100 stories and columns on the topic into six issues, generating urgent chatter on talk radio and television. The fledgling weekly normally stocks about 500 copies of back issues and nearly all of them have been snapped up.
"We wanted this to be a debate generator," said Mr. Cleary, the managing editor. "And we've done that."
A Mountain of Cash
Newfoundlanders have long debated the merits of their Canadian identity, pointing to the exploitation of their mineral and energy riches, and grievances over the ill-conceived Churchill Falls power project as evidence that they've gotten a raw deal. It's hard to measure the economic damage of those problems.
What's easier to see is the mountain of cash Ottawa has transferred to Newfoundland over the years. This graph shows the difference between federal funding flowing into the province and money coming back out. Every year going back as far as statistics have been kept, the province has been a net beneficiary, receiving substantially more cash from Ottawa in the form of equalization, subsidies and program spending, than Newfoundland is sending in the form of taxes, tariffs, and transfers.
| Year | Revenue returned to Ottawa by Nfld. In millions of dollars | Federal spending in Nfld. in millions of dollars |
| 1961 | 54 | 114 |
| 1962 | 57 | 132 |
| 1963 | 60 | 129 |
| 1964 | 67 | 131 |
| 1965 | 73 | 160 |
| 1966 | 81 | 174 |
| 1967 | 83 | 218 |
| 1968 | 100 | 229 |
| 1969 | 120 | 262 |
| 1970 | 130 | 293 |
| 1971 | 152 | 347 |
| 1972 | 180 | 395 |
| 1973 | 198 | 461 |
| 1974 | 257 | 639 |
| 1975 | 269 | 842 |
| 1976 | 331 | 811 |
| 1977 | 328 | 1,031 |
| 1978 | 333 | 1,222 |
| 1979 | 392 | 1,268 |
| 1980 | 436** | 1,478** |
| 1981 | 716** | 1,511** |
| 1982 | 710 | 1,866 |
| 1983 | 753 | 1,949 |
| 1984 | 799 | 2,190 |
| 1985 | 882 | 2,568 |
| 1986 | 1,013 | 2,514 |
| 1987 | 1,134 | 2,599 |
| 1988 | 1,223 | 2,858 |
| 1989 | 1,308 | 3,001 |
| 1990 | 1,422 | 3,368 |
| 1991 | 1,687 | 3,183 |
| 1992 | 1,707 | 3,471 |
| 1993 | 1,671 | 3,371 |
| 1994 | 1,678 | 3,341 |
| 1995 | 1,780 | 3,262 |
| 1996 | 1,767 | 3,292 |
| 1997 | 1,858 | 2,919 |
| 1998 | 1,904 | 3,256 |
| 1999 | 2,006 | 3,164 |
| 2000 | 2,175 | 2,707 |
| 2001 | 2,178 | 2,770 |
| 2002 | 2,187 | 2,485 |
The series
Newfoundland's anger over offshore oil and gas revenues has fuelled another round of arguments in the province about its place in Canada. Today, Graeme Smith and Roy MacGregor dissect the balance sheet. Next week, The Globe looks at the province's eternal lament for its lost independence, its "last great chance" at prosperity, and its battling Premier, Danny Williams.
