The provincial government in Saskatchewan continues its public relations battle with the federal government over the issue of equalization payments. NDP Premier Lorne Calvert does not want resource revenue used in the formula to calculate how much money Ottawa sends a province. Prime Minister Paul Martin set such a precedent with his so-called asymetric federalism approach of one-off deals with Nova Scotia and Newfoundland that excluded or partially excluded resource revenue.
Calvert has been asking for the same thing and he says Prime Minister Harper has indicated to him that he shouldn’t necessarily count on a similar deal. (Adding in resource revenue to a province’s financial situation makes a province look wealthier and, generally speaking, transfer payments to a province shrink as they get wealthier. It is in a province’s best interest to make itself look as poor as possible in order to maximize transfer payments from Ottawa). The Prime Minister has been asked about this here in Ottawa but has been rather equivocal on the subject.
Today, the finance minister of Saskatchewan, Andrew Thomson, releases a letter he received today from his federal counterpart Jim Flaherty. In the letter, Flaherty provides “for budget certainty” the amount of “equalization floor payments” provinces can expect in 2007–08. In other words, Flaherty is setting out the minimum he expects each province to receive. Saskatchewan joins B.C., Alberta and Ontario as the only provinces for which there is no guaranteed funding. Alberta, Ontario and B.C. will almost certainly get nothing because they are the ‘have’ provinces in Confederation. Calvert would like to argue that Saskatchewan is still a ‘have-not’ province and needs federal transfer money. In fact, Saskatchewan’s government was counting on $800–million from Ottawa. Today, it learned that it shouldn’t count on anything from Ottawa.
“[Ottawa is] guaranteeing $11.7 billion in total, including $1.7 billion to Manitoba,” said Saskatchewan Finance Minister Andrew Thomson in a press release. “They are honouring the Atlantic Accords for Newfoundland Labrador and Nova Scotia, yet they will not guarantee that they will meet their commitment for $800 million to Saskatchewan.”
Payments to the various provinces range from $291 million to Prince Edward Island up to $6.5 billion to Quebec.
“There is no certainty for Saskatchewan here,” Thomson said. “Following our meeting in Vancouver last month, I asked Minister Flaherty to honour his government's commitment to Saskatchewan. As recently as this morning, we heard members of his government reassure us that they would do just that. Yet the letter today has left the people of this province without any guarantee of retaining our natural resource revenues.”
And to make matters more interesting, 12 of the 14 federal ridings in Saskatchewan are held by Conservatives — some of whom have been privately worried that this issue could come back to bite them at the next election.