It is hard to say just what the damage to government of Canada will be since the rhetoric over the Atlantic Accord hit the boiling point this week. Bill Casey’s lonely stand against his government has quickly became a heroic and principled stand, at least out east.

Just what is at stake regarding the Atlantic Accord? Most regular citizens are unlikely to jump into the actual bills and acts to see precisely what was agreed to in 2004, what is being unilaterally imposed by the Canadian government in the 2007 budget.

The agreement and the budget that amends it are both complex documents, and the confusion is further compounded by a terrific lack of actual facts and analysis of the actual changes the budget will make to the accord.

It seems the media is content to provide a play by play on the name calling, but is unable to tell us the simple fact: is the accord being changed?

Based on what the Newfoundland and Nova Scotia governments have released, the answer is: a lot. Forgive me while we explore some of the ins and outs of the Accord.

Equalization is a constitutional fact. That every province deserves the same equalization is guaranteed under Section 36(2) of the Constitution.

The Accord exempted offshore revenues from calculating equalization. The exemption for offshore resources was agreed to in 1986, in part to bribe Newfoundland and Nova Scotia into set aside their claims to jurisdiction in the offshore, which the Conservative government of Brian Mulroney thought was a good deal at the time.

In a statement issued last month, Newfoundland Premier Danny Williams said “While the federal government gives the illusion of allowing provinces to opt for a 100 per cent exclusion of natural resource revenue-based formula, they shrewdly immediately apply a fiscal capacity cap on that formula. This negates the benefits of using the 100 per cent removal formula.”

The government of Nova Scotia has stated that “The 2005 Agreement states that this offset payment calculation is to be based on the equalization formula “as it exists at the time”. Forcing Nova Scotia to choose an obsolete equalization formula clearly contravenes this provision.”

The budget creates a two tiered system, tying Nova Scotia to the equalization formula as it existed when the Accord was struck, denying it the increases in funding that are available to other provinces unless Nova Scotia walks away from the accord, while also refusing to pay any compensation unilaterally changing the Accord.

Nova Scotia goes on to say “The new equalization formula under the 2007 Federal Budget introduces a cap on Nova Scotia’s equalization entitlement. The cap is measured based on fiscal capacity alone and ignores Nova Scotia’s debt position. The receipt of its offshore revenues is projected to cause Nova Scotia to exceed the cap and thereby reduce Nova Scotia’s equalization entitlement. The 2005 Agreement protects Nova Scotia from such a reduction by requiring that Ottawa make payments to offset any such reduction.”

Monday morning, Herald reporter Stephen Maher told the CBC that talk of uncertainty and even a summer election has returned to Ottawa with a vengeance. It appears the thin veneer of Mr Harper’s government’s control of the situation has been shattered by the actions of one of its own.

Mr. Casey’s stand stirred the pot. Finance Minister Flaherty made the incredible decision to announce in a letter the Herald that no deals would be signed, and no negotiations would be undertaken.

This has finally moved Premier MacDonald to join Saskatchewan and Newfoundland at the barricades. His sudden and unexpected jump into the fight with Ottawa has further unbalanced Mr Harpers government, leading to the speculation outlined by Mr Maher. A government, rudderless, losing ground in the polls. Mr Kenny is on the fence. Peter MacKay is reported to be on the fence. Will it fall?

Harper thought he could write off Atlantic Canada and come out ahead in the rest of Canada. His government is now in the balance, and Atlantic Canada may not have been so easy to write off, after all.

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Waye Mason is music and festival promoter, business consultant and education activist in Halifax, Nova Scotia

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