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Thursday, July 27, 2006 

Will Harper Continue Fiscal Inequity?

Canada's 10 provincial Premiers are meeting with Stephen Harper at the Council of the Federation summer meeting in St. John's, Newfoundland and Labrador, July 26th-28th. The main topic is the ongoing inequity in the calculation of 'equalization'.

To make it simple, here is the main issue: Former Liberal Prime Minister Paul Martin created a massive imbalace in the time honoured method of calculating the amount of federal tax money that goes to each province. In his desperation to try and win re-election, two ATlantic provinces, Newfoundland and Labrador as well as Nova Scotia were allowed to REMOVE the revenues they receive from natural resources (oil, gas, coal) when their entitlements are calculated. The inequity is that the Western provinces of Saskatchewan and Alberta are required to INCLUDE the revenues they receive from natural resources when their entitlements are calculated.

During the recent federal election, Stephen Harper and his Conservatives promised that they inequity would be corrected. Harper is now reneging on that promise. His 12 Saskatchewan MP's have gone silent on the issue and are ducking all questions and enquiries on their election promise.

You see, Harper believes that he has Alberta and Saskatchewan federal constituencies in the bag, so no action is politically necessary. However, his record in the Atlantic region is not as good, so politically he is now prepared to make the inequity status quo.

It can be argued that the current price of oil is bringing new found wealth to the province of Saskatchewan. It can also be argued that Saskatchewan is still paying for and recovering from nine years of conservative rule in the 1980's and 1990's that virtually bankrupted the province when the provincial conservatives left a $14 Billion provincial debt. Debt repayment costs Saskatchewan hundreds of millions every year.

So, here is the big question. Is Stephen Harper a man of his word who keeps his promises, (OR) is his political agenda such that equity amongst the provinces is the last thing on his mind. We shall see.

There is only one thing that matters here: which province would lose the most if the formula is changed to a 10-province standard that excludes non-renewable resources? Quebec. Which province would gain the most if the formula is changed to a 10-province standard that includes non-renewable resources? Quebec.

There's your answer.

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