Before he was hired away from Atlantic Institute for Market Studies to work for the Harper Conservatives, Brian Lee Crowley wrote a brief commentary that might serve as a clue to the federal government's Equalization plans.
Crowley argues - among other things - that removing non-renewable natural resources is possible provided that provincial governments commit to use the revenue for debt reduction. The other features of Crowley's proposal are similar to the O'Brien expert panel recommendations and produce approximately the same cuts to outlays the federal government is seeking.
The federal budget will likely feature a revamped Equalization program that excludes 50% of resource revenues for all provinces. For provinces that wish to take up the option, the federal government will offer removal of the other 50% of non-renewable resource revenues provided the province agrees to commit the cash to debt reduction or infrastructure development.
Crowley's analysis shows that over a 10 year period, Newfoundland and Labrador could reduce its debt by $2.4 billion or 26.7% of Crowley's total debt of $9.1 billion. That's based on including only 50% of revenues from non-renewable resources in the Equalization formula.
That figure is suspiciously close to Premier Danny Williams' recent comment that the provincial budget will include a $2.0 billion for a new capital works program.
The Crowley option may already have been discussed at the finance ministers' meeting before Christmas. Any possible arrangement along those lines would have been communicated to Premiers - including Danny Williams - before Williams ramped up his anti-Ottawa tirade. In other words, he may already know the likely outcome. Williams can run a political crusade largely designed to divert public attention from substantial problems in the province knowing that the "war" is - in effect - a sham.
According to Crowley's analysis, the Equalization entitlement for Newfoundland and Labrador under the O'Brien scenario, and under his version that completely excludes non-renewables, would come out to the same figure: slightly more than $900 per capita.
If asked about it by news media on Friday, Williams' response is predictable:
1. Williams will insist on the original Harper promise that is "in writing six times."
2. Williams will criticize AIMS as a right-wing thinktank and dismiss Crowley out of hand. He can do this reliably since most people won't take the time to read Crowley's report and there is little likelihood news media will report it.
Once the federal government announces the Crowley option, the Williams reaction is also predictable:
1. Williams will claim complete victory since the federal government has lived up to its commitment to remove 100% of non-renewable resources from the Equalization formula and trashed the O'Brien mess that would have resulted if the "Goodale-inspired" plan was put in place. [No media in Newfoundland and Labrador will report that Crowley's plan is a modified version of the O'Brien one.]
2. The Premier will not discuss the commitment on revenues, and the feds will likely keep that under wraps as well. Danny Williams will emphasise the removal of 100% of resource revenues and declare yet another victory over the federal government with a "We got it!" as dramatic as the declaration of victory in January 2005.
All the public will see is cash flowing everywhere less than six months before a provincial election and in the same year as a federal election.
3. Danny Williams will openly campaign for Stephen Harper in the next federal election in an effort to repair the relationship with Ottawa.
