Government introduces legislation for one-time extension of the Arrangement on Offshore Revenues with Nova Scotia

News release

February 3, 2021 - Ottawa, Ontario - Department of Finance Canada

Today, the Government of Canada introduced legislation to amend the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act, following a multi-year dialogue with the province about offshore revenues. This Act would extend the Minister of Finance’s authority to make these additional fiscal equalization offset payments to Nova Scotia until March 31, 2023.

In 2018, Nova Scotia received a one-time settlement payment from an arbitration process concerning how transportation costs were factored into royalty calculations for the Sable Offshore Energy Project. Due to Equalization payments being on a two-year lag, and three-year moving average, this meant that the one-time settlement payment will reduce the province’s Equalization payments from 2020-21 to 2022-23 and would not benefit from protection under Nova Scotia’s 2005 Arrangement on Offshore Revenues which expired on March 30, 2020. As a result, the province would be unintentionally financially penalized due to the timing of the arbitration settlement.

To address this, and ensure Nova Scotia receives the full support it was entitled to under the terms of the previous agreement, this one-time extension of the Minister of Finance’s authority would allow for offset payments of $86 million to Nova Scotia for 2020-21 and $44 million for 2021-22. Estimates for 2022-23 will be calculated in December 2021.

This legislative amendment would ensure that the 2005 Arrangement on Offshore Revenues, to provide time-limited protection from the impact of offshore revenues on Nova Scotia’s Equalization payments, is respected.

Quick facts

  • By addressing fiscal disparities amongst jurisdictions, federal Equalization payments ensure that all provinces are able to provide their residents with public services that are reasonably comparable to those in other provinces, at reasonably comparable levels of taxation.

  • In 2021-22, the Government of Nova Scotia will receive over $2.3 billion in federal Equalization payments, as well as over $1.1 billion through the Canada Health Transfer and $398 million through the Canada Social Transfer.

  • In addition to the over $81.6 billion in federal transfers to provinces and territories in 2020-21, the federal government has provided provinces and territories with over $24 billion over the past year to fight the COVID-19 pandemic, so they can increase testing and tracing, support municipalities, protect Canadians’ health and safety and safely restart their economies.

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