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Originally Posted by Snakeeye
As he mentioned, Oil exists in provinces other than Alberta as well.
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http://www.cbc.ca/news/background/cd...alization.html
Offshore revenue and the Atlantic Accords
Then there's the question of offshore oil and gas reserves. In 1964, changes were made so that the resources a province had were added to the equation. As a result, Alberta's oil and gas bumped up the province's revenues enough that it no longer qualified for payments.
Before 1964, Alberta collected equalization for seven years, giving the province's oil and gas industries a chance to grow. Newfoundland and Nova Scotia want the same opportunity.
Normally, under the equalization scheme, for every dollar increase in a province's treasury, its equalization payments go down a dollar. However, if a province loses a dollar for every dollar it makes from the sale of its energy reserves, there's no incentive to develop them at all.
That's why, in 1994, the federal government implemented the "generic solution" under which Ottawa takes back 70 cents in equalization for every dollar in energy royalties. The deal applies only to Newfoundland and Labrador, Nova Scotia, Quebec and Saskatchewan.
But besides the generic solution, Ottawa has other deals with Nova Scotia, and Newfoundland and Labrador, known informally as the Atlantic Accords to protect them from the loss of equalization payments while their petroleum industries developed:
- The Canada-Newfoundland Atlantic Accord, signed in 1985.
- The Canada-Nova Scotia Offshore Petroleum Resources Accord, signed in 1986.
Both agreements state that the province may tax the offshore resources as if they were on land and the provinces owned them outright. Because the resources are offshore, they legally belong to the federal government. By contrast, Alberta owns its oil reserves outright because they are on land and under provincial jurisdiction.
The Nova Scotia deal offers 10 years of protection from reduction in equalization payments. The deal initially began in 1993-94, but the protection start date was later changed to 2000-01, giving Nova Scotia protection until the 2010-11 fiscal year.