MONCTON, N.B. — Finance Minister Jim Flaherty says the federal government still wants to come up with a new funding arrangement for the provinces, despite an impasse over fixing the so-called fiscal imbalance.

"We are the first federal government in Canada to acknowledge there is a fiscal imbalance between the governments in Canada, and that we need to redress that fiscal imbalance and make it a fiscal balance,'' Flaherty said Thursday in a speech to a business audience.

"The prime minister has been clear that we will move towards principled, long-term, predictable financing arrangements with the other orders of government in Canada ... including our provincial colleagues and our municipal colleagues.''

Flaherty spoke at length in his speech about the government's new economic plan released last week that promises debt reduction and tax cuts.

The plan would wipe out the government's net debt within 15 years and use the interest savings to finance tax cuts. Flaherty has also promised to cut total federal debt to 25 per cent of GDP by 2021.

After his speech on Thursday, Flaherty said he didn't want to interfere in the consultation process with the provinces on equalization and the fiscal imbalance.

"The finance ministers will meet in two weeks in Vancouver and there will be further discussion with the prime minister,'' said Flaherty.

So far, the provinces have been able to find a consensus on a new equalization system.

Newfoundland Premier Danny Williams has threatened to campaign across Canada against Prime Minister Stephen Harper if equalization reform hurts so-called have-not provinces like his.

Equalization is intended to help poorer provinces provide government services and programs to a national standard.

Bernard Lord, New Brunswick's Conservative leader, said Williams may be jumping the gun on the issue.

"He has made a career out of fighting every federal government, and that's his choice. This prime minister has made a commitment to fix the fiscal imbalance, which we did not have before,'' said Lord.

"This is really a fresh start from where we were before when the Liberals would not even acknowledge there was a fiscal imbalance.''