Equalization money helps 'bond' Canada: Goodale
CTV.ca News Staff
March 23, 2004 11:19 PM ET
It wasn't a word that came up in Finance Minister Ralph Goodale's March 23 budget speech, but equalization is an important issue to Canada's eight "have-not" provinces.
In an interview with CTV's Mike Duffy, Goodale admitted the equalization issue was of particular concern to the Atlantic premiers.
The country's equalization formula is to be renewed on April 1 for a five-year term, he said.
"We've gone through a period where because of the averaging process within equalization, the numbers in equalization for the current year took a sudden drop."
They are to rise for the next year, "and in our renewal package, we have increased the value of equalization over the next five years by $1.5 billion," he said. "There are also a number of other tweaks and adjustments (that will benefit those provinces)."
Without trying to be ironic, Goodale said, "Now I know it is never enough with respects to equalization."
That was Quebec Finance Minister Yves Seguin's main complaint: The budget didn't didn't boost equalization or other payments to his province.
Goodale likens the equalization payment system to an insurance program.
It is designed to ensure that all provinces have enough money to offer a comparable level of services regardless of their ability to generate taxation income. "For 2004-05, equalization ensures that all provinces have access to revenues of at least $6,126 per resident to fund public services," says the Finance Department's website.
The federal government will spend $9.5 billion on equalization in 2004-05. The four Atlantic provinces will receive a collective $3.3 billion, Quebec $3.7 billion, Manitoba and Saskatchewan a total of about $1.7 billion while B.C. will get about $780 million.
Only Alberta and Ontario do not get equalization payments.
If you're a high school student in New Brunswick, for example, your provincial government can theoretically afford to provide the same education as the Alberta or Ontario ones do for theirs.
In practice, there are no strings attached to equalization money.
Goodale said initiatives outside of equalization focused on economic diversification and transformation "in regions of the country that don't have those advantages today, I would be very anxious to have (that conversation) with my Atlantic counterparts," he said.
Duffy noted B.C. will get about $920 million last year. It used to be a "have" province like Alberta and Ontario, until its provincial fiscal situation deteriorated.
"I don't know how many people in B.C. know that they're going to get nearly a billion bucks from the rest of Canada. It should make them feel warm and fuzzy about being Canadian," he said to a laugh from Goodale.
"Equalization is something that helps bond the country together," Goodale said.
In B.C., Finance Minister Gary Collins told The Canadian Press the budget would provide his province with an extra $39 million which pleased him.
Goodale didn't really talk about clawbacks.
For example, Nova Scotia and Newfoundland have energy reserves off their coasts. For every dollar Nova Scotia earned in offshore royalties, Ottawa deducted 70 cents from equalization payments beginning in 1992.
Under changes announced in the budget, the date for equalization clawback will move to 2000, resulting in a one-time payment to Nova Scotia of up to $30 million in offshore royalties.
For Nova Scotia Premier John Hamm, that was the only good news in the federal budget.