HALIFAX - Premier Darrell Dexter deflected opposition criticism Monday that a five-year $50-million deal aimed at saving the Bowater Mersey paper mill is too rich, saying it's the right thing to do for the province.
Both the Liberals and Conservatives questioned why the government chose to spend millions on the Brooklyn, N.S., mill without a long-term guarantee of its survival from mill owner Resolute Forest Products (TSX:ABH).
Dexter said the government had to act to preserve 2,000 direct and indirect jobs on the province's South Shore and to stave off the loss of between $6 million and $10 million a year in tax revenues.
"This is a carefully considered strategic investment in a facility that will allow the people in southwest Nova Scotia to continue to have a key part of their economic architecture," said Dexter.
Dexter said the province is doing its part after unionized workers agreed to concessions that would see 110 full- and part-time jobs cut and the local municipality approving a 15 per cent property tax reduction for the mill, worth $135,000.
Under the agreement announced Friday, the province agreed to give a $25-million forgivable loan provided Resolute keeps the two paper machines operating and makes efficiency improvements and upgrades to its power-producing plant. An additional $1.5 million would go toward training workers.
The province has also agreed to spend $23.75 million to buy woodland from the company.
Dexter said Monday that Resolute has also indicated it will spend up to $6 million to dredge Liverpool harbour in order to cut its transportation costs.
Both opposition leaders expressed concern that a clause in the agreement could leave taxpayers on the hook for an additional $2.5 million or more.
The clause commits the province to pick up the cost if expected contributions to the deal by the Port of Halifax, the Municipality of Queens and Nova Scotia Power aren't made.
The Nova Scotia Power part of the deal calls on the utility to reduce the mill's electrical bill by up to $500,000 a year through measures such as off-peak use of power.
"The province seems to have underwritten every other participant in this," said Liberal Leader Stephen McNeil.
Meanwhile, Conservative Leader Jamie Baillie called the provision "more than generous."
But Dexter said he's comfortable the agreements are in place and will not bring additional liability to the province.
"What we've done is we've backstopped them so that the company will be assured that they are going to have them because they need to have some cost certainty," he said.
Dexter said most elements of the agreement would be incorporated into legislation expected to be tabled in the legislature Wednesday.
