History of Newfoundland and Labrador - Since 1989

Since 1989

In 1989, Clyde Wells and the Liberal Party returned to power ending 17 years of Conservative government.

In 1992, the federal government declared a moratorium on the Atlantic cod fishery, because of severely declining catches in the late 1980s. The consequences of this decision reverberated throughout the provincial economy of Newfoundland in the 1990s, particularly as once-vibrant rural communities faced a sudden exodus. The economic impact of the closure of the Atlantic cod fishery on Newfoundland has been compared to the effect of closing every manufacturing plant in Ontario. The cod fishery which had provided Newfoundlanders on the south and east coasts with a livelihood for over 200 years was gone, although the federal government helped fishermen and fish plant workers make the adjustment with a multi-billion dollar program named "The Atlantic Groundfish Strategy" (TAGS).

In the late 1980s, the federal government, along with its Crown corporation Petro-Canada and other private sector petroleum exploration companies, committed to developing the oil and gas resources of the Hibernia oil field on the northeast portion of the Grand Banks. Throughout the mid-1990s, thousands of Newfoundlanders were employed on offshore exploration platforms, as well as in the construction of the Hibernia Gravity Base Structure (GBS) and Hibernia topsides.

In 1996, the former federal minister of fisheries, Brian Tobin, was successful in winning the leadership of the provincial Liberal Party following the retirement of premier Clyde Wells. Tobin rode the waves of economic good fortune as the downtrodden provincial economy was undergoing a fundamental shift, largely as a result of the oil and gas industry's financial stimulus, although the effects of this were mainly felt only in communities on the Avalon Peninsula.

Good fortune also fell on Tobin following the discovery of a world class nickel deposit at Voisey's Bay, Labrador. Tobin committed to negotiating a better royalty deal for the province with private sector mining interests than previous governments had done with the Churchill Falls hydroelectric development deal in the 1970s. Following Tobin's return to federal politics in 2000, the provincial Liberal Party devolved into internal battling for the leadership, leaving its new leader, Roger Grimes, in a weakened position as premier.

The pressure of the oil and gas industry to explore offshore in Atlantic Canada saw Newfoundland and Nova Scotia submit to a federal arbitration to decide on a disputed offshore boundary between the two provinces in the Laurentian Basin. The 2003 settlement rewrote an existing boundary in Newfoundland's favour, opening this area up to energy exploration.

In 2003, the federal government declared a moratorium on the last remaining cod fishery in Atlantic Canada, in the Gulf of St. Lawrence. While Newfoundland was again the most directly affected province by this decision, communities on Quebec's North Shore and in other parts of Atlantic Canada also faced difficulties. Premier Grimes, facing a pending election that fall, used the Gulf cod decision and perceived federal bias against the province as a catalyst to try to rally citizens around his administration. Grimes called for a review of the Act of Union by which the province had become a part of Canada. On July 2, 2003, the findings of the Royal Commission on Renewing and Strengthening Our Place in Canada, which Grimes had created in 2002, were released. It noted the following stressors in the relationship between the province and Canada:

• the huge impact of the destruction of resources of cod
• development of hydroelectricity resources of Labrador by Quebec, primarily to their benefit
• chronically high unemployment
• lowest per-capita income in Canada
• the highest tax rates
• the highest emigration

The report called for the following:

• more collaborative federalism
• an action team to deal with the fishery
• collaboration between Canada, Quebec, and Newfoundland and Labrador on the development of the Gull Island hydro site
• revision of the Atlantic Accord so that offshore oil and gas reserves primarily benefit the province
• immediate and realistic negotiations on joint management of the fishery

In October 2003, the Liberals lost the provincial election to the Progressive Conservative Party, led by Danny Williams.