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Sask. premier issues threat over equalization

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Date: Wednesday May. 10, 2006 11:27 PM ET

REGINA — Stephen Harper will pay a steep political price in western Canada if he reneges on an election promise to exclude provincial resource wealth from the equalization formula, warns Saskatchewan Premier Lorne Calvert.

In a letter after last week's budget and in a follow-up phone call this week, Calvert reminded the prime minister that he specifically promised during last winter's election to exclude non-renewable resource revenue from the formula for calculating equalization payments to have-not provinces.

Calvert expressed his disappointment that the promise was not reaffirmed in the budget. And he warned Harper there'll be a price to pay for reneging.

"Should this not become the reality over the course of the next several months, that will clearly be a betrayal of a commitment, a betrayal, I would argue, of the people of Saskatchewan who voted in significant number to support the new Conservative government,'' Calvert said in an interview, noting that Harper's Tories won 12 of Saskatchewan's 14 seats.

Alberta Premier Ralph Klein is equally adamant that resource revenue be excluded from the equalization formula. Indeed, last week, Klein suggested that failure to do so could reignite separatist sentiment in his province, which delivered all 28 seats to Harper.

"While it's not prevalent right now, you know as well as I do that there are some people out there who talk about separation,'' Klein said. "And I think it will be inflamed if we bring resource revenue into the equation.''

The western rumblings come amid increasing tension between Ontario and Quebec over how best to wrest more money out of the federal government.

Harper has pledged to fix the so-called fiscal imbalance between Ottawa and the provinces but there is no consensus among the premiers on how to do it.

Ontario's Dalton McGuinty argues his province can't afford to underwrite any more equalization payments to poor provinces.

Quebec's Jean Charest, however, supports a provincially commissioned report that called on Ottawa to pay an additional $4.7 billion a year in equalization payments to poor provinces, plus another $4.9 billion annually in cash transfers to all provinces. The report recommended inclusion of volatile resource revenues in the equalization formula, which would significantly boost payments.

Quebec is the biggest beneficiary of equalization. Only Ontario, Alberta and Saskatchewan do not receive equalization currently, although Saskatchewan teeters between have and have-not status.

With Harper intent on securing a majority in the next election by building on the Tories' modest gains in Quebec, officials in other provinces privately fear he will cater to Charest at the expense of other premiers.

Still, Harper can't afford to lose seats he currently holds in Ontario and the West if he wants to win a majority.

Calvert alluded to that reality, saying: "If the choice (on equalization) is made for political reasons in Quebec or Ontario or anywhere else and the stated position of the prime minister and all of his candidates in the West and in Saskatchewan is therefore sacrificed, that would be clearly seen by the people in Saskatchewan as a betrayal.'' Calvert said Harper assured him during a phone conversation Monday that he remains "philosophically committed'' to excluding resource revenue from the equalization formula. But that did not satisfy Calvert.

"While I appreciate philosophical commitment, that is not satisfactory from my point of view until we turn that philosophy into reality.''

Equalization is a constitutionally enshrined program aimed at reducing economic disparities across the country.

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