Equalization changes in summary
The federal budget contains few, if any, surprises when it comes to dealing with the so-called fiscal imbalance.
The Flaherty budget will make the following changes to Equalization:
- Reintroduce a formula based on all 10 provinces. That will have the effect of raising the amount of money in the system overall. The current system, in place since 1982 uses five provinces to determine the standard.
- Reduce the formula from 33 bases to a mere five. That will make the system much easier to figure out.
- Exclude 50% of resource revenues from the calculations. That's not what Harper promised for two elections in a row but it is exactly what an expert panel recommended. Right now 100% of all resource revenues are included in calculating Equalization entitlements. That's the system Danny Williams wanted to continue when he wrote his letter to the federal party leaders during the last election.
- Provinces can opt to take whichever is greater of the 50% exclusion or the 100% exclusion of non-renewable revenues only. Again, that isn't what they promised but that option is specifically designed to deal with Nova Scotia and Newfoundland and Labrador. Note the last sentence in the paragraph below. It is clearly designed to have the provinces opt into Equalization and abandon the offshore deals.
Fulfilling the Commitment to Respect the Offshore Accords- Cap transfers such that no province can have a fiscal capacity in excess of Ontario. Equalization is intended to give all provinces in the country comparable fiscal capacity and thereby ensure that all Canadians have access to similar levels of service no matter where they live. One of the complaints from non-recipient provinces has been that the combination of federal transfers can actually produce a situation where recipient provinces - like Newfoundland and Labrador - have a greater capacity than most non-recipient provinces.
To respect the Offshore Accords, Nova Scotia and Newfoundland and Labrador may continue to operate under the previous Equalization system until their existing offshore agreements expire. This fulfills and builds upon the Government’s commitment to respect the Offshore Accords and ensures that these provinces will continue to receive the full benefit that they are entitled to under the previous system. These provinces can permanently opt into the new Equalization system at any point in the future. [Emphasis added]
The combination of all federal transfers - Equalization, health, post-secondary, social transfer and infrastructure - will give Newfoundland and Labrador about $1.5 billion in federal transfers over four years. Specifically, the amounts are as follows:
2005: $1.554 billion
2006: $1.453 billion
2007: $1.529 billion
2008: $1.554 billion
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9 comments:
Is it just me or was some of what you just summarized left out by both williams and Cochrane on tonight's Here & Now?
Who knows? I had more time.
All i know is that I didn't crap on O'brien last year and now post a cheer as Flaherty implements something I said he wouldn't do.
Is it just me or was some of what you just summarized left out by both williams and Cochrane on tonight's Here & Now?
Danny Williams?
Omit important facts about equalization?
Say it's not so.
If you'd stop for a minute to consider specifically what I didn't like about the O'Brien report instead of doing your usual binary Ed bit and just summing that chapter up as "Liam craps on O'Brien Report," you'd have realized that the very concerns and issues I had have been pretty well addressed. The O'Brien report did not recomend the option that this budget allows for NL on 100% re resource revenue.
I guess it's easier for you to ignore that and keep the brush strokes so big you could make them with an elephant's arse.
Liam, the very big elephant you seem intent on ignoring arse and all is that the O'Brien report included a cap.
Under the Flaherty approach, there is a cap whether a province opts for the 100% exclusion of non-renewables or takes the 50% of all resource revenues approach.
The cap is one of the things Williams rejected in 2004/05 and which he has consistently rejected since, as he contends, it limits the amount of money available to the province.
If Williams were to opt for the 100% non-renewables exclusion with a cap, he will be walking away from the existing deal he signed in 2005 in favour of a deal he rejected.
But no matter how you slice it up, this isn't what was promised in 2004 and 2005 by the federal conservatives vis a vis Newfoundland and Labrador and it is very much in line with the O'Brien report that you said ought to be rejected flatly since it had "Ralph Goodale' fingerprints all over it."
The fingerprints refered to the cap, most obviously.
Of course Liam would condemn the O'Brien report as having "Ralph Goodale's fingerprints all over it."
That's what Danny said, too, and what he told his stooges to repeat as often, and in as many places, as possible.
In the paragraph Exclude 50% ..., you mean "100% of all resource revenues are" excluded .
Equalization is provincial welfare. Setting aside past promises made, what government would say to individual welfare recipients that any (or 50% of) income earned working in the resource industry does not count in determining whether a person is eligible for welfare payments. 100% of resource revenue should be in the calculation.
AltInd:
Under the system announced by Flaherty, 50% of all resource revenues will be excluded from the calculations for all provinces.
Provinces can also opt for exclusion of 100% of non-renewable resources, in lieu of the 50% of all resource revenues. They can take whichever gives more cash.
For NL and NS, those provinces continue with the old Equalization system and the offshore deals with the option of accepting one or the other of the new approaches.
Interestingly enough, Williams original proposal was for 100% inclusion of all resource revenues.
Ed - this is not a point of argument, you're right about there being differences here. . . just trying to get some verification. . .
would you describe the cap as exists in the 2007 budget as identical to that proposed by govt of Canada during the 2004/2005 Canada/Nl discussions?
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