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The problem with Danny Williams is that he just doesn't act like a Have-Not. Not when he's having an argument, not when he's playing hockey, not when he's disagreeing with one of his fellow Canadian politicians. Williams, ninth premier of Newfoundland and Labrador, was even publicly and calculatingly rude to the Prime Minister, dismissing Stephen Harper as a small man who preys on the weak.
And Williams certainly does not go cap in hand to the oil companies that will decide whether his province's future is prosperity or poverty. No, he talks sarcastically about Big Oil—a leftist label, not a Conservative one—and he singles out ExxonMobil, the biggest of the Big Oil fraternity, for the roughest body checks. He told them that if they did not want to play by Danny Williams's rules, they could take a hike.
As things turned out, ExxonMobil and the rest of Big Oil swallowed hard and agreed with most of Williams's terms. And the people of Newfoundland love him for it.
In the almost 60 years that Newfoundland has been part of Canada, a goodly proportion of the province's premiers have brought the province onto the national stage: Joey Smallwood, Brian Peckford, Clyde Wells, Brian Tobin. But none has been quite as combative as Williams, who got so mad at Ottawa several years ago that he ordered the Canadian flag removed from all provincial buildings.
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His critics will tell you that Williams, now into his third career, has always been a loose cannon. His admirers will counter that Williams represents nothing less than the new Newfoundland—the confident society that you see emerging in St. John's and environs. Cheek by jowl with the brightly painted clapboard houses of the old town is the evidence of a boom the likes of which nobody has ever seen. A businessman shook his head as he tried to explain to a visitor what had happened to his city. Do you realize, he said, that there are homes here that sell for more than a million dollars?
But St. John's is not Newfoundland, only part. Beyond the footprint of the capital and a few other centres, the old image of Newfoundland endures. Outports are empty or emptying, their inhabitants fleeing westward toward the jobs of Alberta and Ontario. Those who remain are waiting for the cod to come back or for the offshore oil boom to reach their doorstep. In some communities, 30% or 40% of the people have left, and among those who remain, the unemployment rate is 50%. These places recall the harsh judgment of Globe and Mail columnist Margaret Wente that rural Newfoundland "is probably the most vast and scenic welfare ghetto in the world."
For more than 40 years, the people of Newfoundland have conjured a dream of oil beneath the ocean floor that would make them rich. It was in 1966 that drilling began off the east coast of the island, but only in 1979 was oil discovered in the offshore basin, 315 kilometres out in the North Atlantic, at a spot that was dubbed Hibernia.
But, for a time, Hibernia seemed an uncertain bet. There were dizzying cost overruns and construction delays, and in 1992 Gulf Canada Resources abruptly withdrew from the consortium developing the site. If the federal government had not acquired an 8.5% ownership stake in 1993, Hibernia might have been dead.
Oil finally began to flow in 1997, but even then there were skeptics who believed the gigantic steel and concrete island in the ocean might prove to be a white elephant. Salvation lay in the arrival of higher oil prices. Oil at $70 or $80 or more a barrel makes possible what could not have been dreamed when oil was $20 or $30.
Hibernia's total net revenues to the end of 2006 were $14.8 billion. Of that, the oil companies claimed $8.8 billion, the government of Newfoundland $1.2 billion, and the government of Canada $4.8 billion. Counting production from the smaller fields at White Rose and Terra Nova, the total figure is $18 billion, and the respective shares of the companies, the feds and the province, $10 billion, $6 billion and $2 billion.
The success of the bet on offshore oil is clear enough, but for more than 20 years, Ottawa and St. John's have been at odds over how the revenue should be divided and taxed. Above all, how does oil fit in to the calculation of equalization—the federal program to ensure that all provinces can provide more or less the same level of public services?
