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Newfoundland vs. Canada: who gets the billions?

Brian Peckford, premier of Newfoundland and Labrador, was rocking back and forth on his heels and toes, gesticulating vigorously. "Destiny calls perhaps for the last time," he told Memorial University students here recently. "We have got one last chance to make our own way."

The subject of Mr. Peckford's rhetoric was Canada's current constitutional debate. Newfoundland politicians have a tradition of strong oratory. And Mr. Peckford soon warmed his audience to this emotion-rousing issue and received heavy applause.

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The September meeting between Canada's provincial premiers and Prime Minister Pierre Trudeau failed to reach agreement on terms for "patriating" Canada's constitution -- the British North America Act passed by Great Britain's Parliament in 1867. Since then Mr. Trudeau has proposed to bring the constitution to Canada unilaterally, without the consent of the provinces.

Mr. Peckford objects to provisions in the Trudeau proposal that, he says, will leave Newfoundland "permanently poor -- forevermore."

The argument between the federal government and most of Canada's 10 provinces is not just over a division of power; it is a battle over resources and money.

This is particularly so in Newfoundland, where the dispute centers on the benefits from oil, fish, and hydropower.

Oil: The Hibernia oil field discovered last year lies 192 miles southeast of St. John's. Its size is estimated from 500 million to 2 billion barrels of oil. Estimates of oil resources along the entire Newfoundland and Labrador coast have gone as high as 10 to 20 billion barrels, bringing the potential close to that of the North Sea.

Newfoundland claims ownership of any offshore minerals. So does the federal government.

Under the provincial proposal, Newfoundland would get 40 percent of any oil or gas revenues; the federal government, 25 percent; and the oil companies, 35 percent. Under the federal proposal, the shares would be 20, 45, and 35 percent , respectively. The difference between the two plans, if the oil fields prove as massive as the oil companies hope, could amount to billions of dollars in future years.

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Fish: Fishing is the province's most important industry, with as much as half of the population depending directly or indirectly on it for economic well-being. Since 1977, when Canada extended its coastal fisheries jurisdiction to 200 nautical miles, Newfoundland fishermen have enjoyed larger catches and greater prosperity.

For the moment the federal government has jurisdiction over the fisheries. Newfoundland wants the constitution to provide for a sharing of jurisdiction between the provinces and the federal government so it could manage its own fishery. The federal government would deal with interprovincial or international fishing issues.

Hydropower: Labrador has enormous undeveloped water power potential.A 5,255 megawatt generating station has been developed on the Churchill River. At Gull Island and Muskrat Falls, there is an additional 2,300 MW hydroelectric potential. There are also large potential hydropower sources farther north.

Much of this power will be sold as surplus to customers in Quebec or New york State. But at present, Churchill Falls' power is first sold to Hydro Quebec, which in turn sells much of the electricity to New York State at an enormous profit -- $600 million per year, according to Newfoundland and Labrador Hydro.

Mr. Peckford maintains that Newfoundland should have the right to push a power line across Quebec, much as Alberta can transport its oil through pipelines across other provinces to customers in Ontario.

There are other points at issue in the constitutional debate. Mr. Peckford holds, for instance, that the constitutional amending procedure suggested by Mr. Trudeau could be used to challenge and alter Labrador's controversial border with Quebec. The proposed bill of rights could interfere with Newfoundland's system of denominational schools, he adds. Ottawa denies these possibilities.

Nevertheless, the main constitutional issues are economic. Despite "equalization payments" from the federal government of $400 million per year, Newfoundland has Canada's lowest level of income, the nation's highest income tax, highest sales tax, highest unemployment, and highest cost of living.

According to Mr. Peckford, "We have nowhere to go unless we get more money."

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