Developments in mining, energy, telecoms and hi-tech make Newfoundland and Labrador upbeat about the future
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he
island of Newfoundland and the mainland peninsula of Labrador comprise
Canada’s eastern-most province, which is one and three-quarters
the size of Great Britain.
Only last year, the province changed its name from Newfoundland to include
the whole of its territory. “I am proud to call myself the first
premier of Newfoundland and Labrador,” says Roger Grimes,
a former maths and science teacher and enthusiastic hockey and softball
player. He is the eighth premier since confederation in 1949.
During his premiership, Premier Grimes has signed two deals that are
set to be important for the future of the province. Development is already
well advanced at the White Rose oil field, potentially a huge offshore
hydrocarbon resource. And a multi-million pound investment by Canadian
firm Inco is also under way at the Voisey’s Bay nickel, cobalt
and copper mine.
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The Voisey’s Bay project, located in the territory of Labrador, was a landmark not only for the province but for Canada as a whole. A crucial agreement on land rights was reached with the Labrador Inuit Association and the Innu Nations.
“The
real key to this was the aboriginal people from Labrador deciding for
themselves – they now have the will, the ability, the leadership
and the desire to move forwards and develop this great land for themselves
and their people, and for the rest of us to share it,” says Premier
Grimes.
“That was the most gratifying thing I have experienced in my 13
years of political life. Their votes were absolutely significant and
truly historic. This was one of the greatest steps forward in the entire
history of the province.”
The
agreement is also a major step towards sustainable, long-term diversification
away from the fish industry, which has traditionally been the mainstay
of the economy. Premier Grimes predicts that this move will continue.
“There is still a perception, both nationally and internationally,
that this is a fish place. In five years’ time you will see a stronger
and more diversified economy. You may see the oil and gas sector move
ahead of fisheries. You will see small manufacturing and hi-tech business
stand out, and that will spread outside the main cities. It is going
to continue to be a stable place.
“Our relationship with Canada will change fundamentally in terms
of equalisation payments. We will be receiving less and less each year,
but a growth cycle is predicted for the next decade,” he adds.
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This
prediction is supported by Mary Webb, senior economist at Scotiabank.
“With oil production starting at Terra Nova, development proceeding
at White Rose, and activity beginning at Voisey’s Bay, Newfoundland
and Labrador is
forecast to be on the top rungs of the provincial growth ladder,”
she says.
Forecasts show that the economy, which grew by a quarter in real terms
in 1997-2001, will expand by a further 3.7 per cent in 2002-03. This
will be the third time in five years that the province has led the country
in terms of GDP growth.
Exports, which account for the largest portion of GDP, have almost doubled
to £5.16 billion per year, against £2.77 billion five years
ago. Last year exports to the UK totalled over £47 million. The
USA imports 54 per cent of the province’s produce, mainly crude
and refined oil, iron ore, fish products, newsprint and electricity.
The
energy sector is showing strong growth. The two main oil fields, Hibernia
and Terra Nova, are expected to output a combined total of 87 million
barrels of oil this year, resulting in a 60 per cent rise in production
levels. A combined £322 million will be spent on capital expenditure
at the two fields. The Hebron-Ben Nevis field, not currently under development,
has resources of 400-700 million barrels.
At the same time, the governments of Quebec and Newfoundland and Labrador
are looking for investors to support the construction of a 2000MW power
project near Gull Island in Labrador. The estimated cost of a dam and
transmission in Labrador is £1.65 billion.
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In
2001, the employment rate reached a record high, indicating that the
province was weathering the difficult problems encountered during the
1990s. Output per person, relative to Canada, has risen in recent years.
The main cause of the earlier downturn was the moratorium on catching
fish such as cod between 1993 and 1997.
Acting minister of industry, trade and rural development, Kelvin Parsons,
says: “It was a big challenge. We went from about 210 fish plants
in the province, and thousands and thousands of people working, to a
moratorium whereby the fisheries were closed.
“But the industry learned to adapt. Production has shifted to a
more capital-intensive shellfish fishery, focused on crab and shrimp,
which account for about a half of landed volume. The province is now
the largest producer of cold-water cooked and peeled shrimp in the world.”
Mr Parsons says that Canadians no longer conform to the traditional image of “hewers of wood and drawers of water”. He sees great potential for foreign investors in the new technology sectors. “We have significant strengths in the marine industry, offshore technology and cold-ocean research. These are the kinds of things that should attract investment. We are well placed to work with the UK. We have tried to increase awareness of our business capabilities through memoranda of understanding, and to build on a business-to-business relationships. The memoranda we have reached provide a much better understanding of the marketplace.”
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To
encourage business investment the Economic Diversification and Growth
Enterprises (EDGE) programme provides a competitive framework that makes
Newfoundland and Labrador one of the most attractive locations to set
up in North America. Under the programme substantial tax incentives,
Crown land for a nominal fee, and services to assist businesses wanting
to invest in Newfoundland and Labrador are available.
Finance minister and president of the treasury board, Joan Marie Aylward,
says: “Foreign investment has a huge role to play. It is certainly
one of our solutions for the future. Under the EDGE programme we offer
investors a 10-year tax holiday and other incentives. And they get even
greater tax reductions if they set up outside the greater Avalon area.
“If you want to put your money in a place that has the most beautiful,
pristine, eco-tourism in Canada, where you have more land per capita
than anywhere else, and where there are isolated ponds and rivers that
have never been fished, then this is the place.”
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