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Ontario Premier Dalton McGuinty

Fiscal imbalance tops McGuinty-Harper meeting

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Date: Thu. May. 4 2006 11:49 PM ET

Ontario Premier Dalton McGuinty said his first official meeting with Prime Minister Stephen Harper went well, and the two laid the groundwork for future talks on the fiscal imbalance between Ottawa and McGuinty's debt-ridden province.

The two met for 45 minutes Thursday in a Toronto hotel, and the main topic of discussion was the fiscal framework between the federal government and the provinces, McGuinty told the media.

"I conveyed to him personally and directly Ontario's concerns in that regard, and he indicated that he was considering where he's going to come down on this," the premier said.

"I didn't expect him to tell me at this point in time the federal government's position."

Harper, however, refused to answer reporters' questions and avoided the cameras. He was in Toronto to attend a fundraising dinner for the provincial Tories.

McGuinty said Harper wants a national consensus on fixing the imbalance, and both leaders are waiting for a federal panel to report on equalization.

McGuinty, however, said his government doesn't think putting more money into equalization would solve the fiscal imbalance.

"If we use some or all of the federal surplus to enrich equalization, that is something that benefits half of Canadians at the expense of the other half," he said.

"We are funding higher levels of expenditures in other provinces and territories."

McGuinty didn't say the relationship between the two leaders was strained, despite Harper's meetings with other premiers since his election win -- including Quebec's Jean Charest and Prince Edward Island's Pat Binns.

Ontario says it is trying to close a $23-billion fiscal gap between what the province pays Ottawa in taxes compared with what it gets back through transfer payments.

"We believe that a strong Ontario is only going to serve the benefit of all Canadians, no matter where we live in this great country of ours," McGuinty said in the Ontario legislature before his meeting with Harper.

"We will not walk away from our responsibility as representatives of the people of Ontario to ensure that we get our fair shake."

The Conservatives became the first federal government to officially recognize the framework problems when it announced its maiden budget Tuesday.

That recognition is key to solving some of Ontario's "major problems," said Ontario Intergovernmental Affairs Minister Marie Bountrogianni.

"That's a major first step and it's something that we can all agree upon," she told Mike Duffy Live from Toronto.

Bountrogianni said Ontario pays almost $5 billion into the equalization of $11 billion for the rest of the country.

"We have our own challenges in areas like health care, education, where we get less per capita than any other province from the federal government," she said.

Bountrogianni said Ottawa has neglected to properly fund Ontario because the province is considered rich and prosperous.

While delivering the federal budget on Tuesday, Finance Minister Jim Flaherty announced that a spring meeting of provincial finance ministers would be held before further discussions occur in the fall on the issue.

While the budget outlined increases in farm aid and money for infrastructure, McGuinty will press for more Ontario-specific details.

McGuinty said he and Harper also discussed public transit in the Toronto area and ways of fast-tracking border improvements at the busy Windsor-Detroit crossing.

With files from The Canadian Press

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