20 March 2007

Harper jams Williams

Forget what you heard Jim Flaherty say yesterday about a revised Equalization system that was formula-based and fair and really forget the criticisms the federal Conservatives made of Equalization side deals and caps.

Prime Minister Stephen Harper did all that yesterday.

Overnight, it's been confirmed that Newfoundland and Labrador and Nova Scotia will be getting an Equalization side deal. Both provinces will have the choice of contuing under the old Equalization program - five provinces, 100% resource revenues plus the offshore deals on oil and gas royalties - or opt into a system they have rejected.

Either way, there is a functional limit on how much cash they get through Equalization.

Under the side deal, the cap consists of the limited number of provinces used to calculate the average plus the offshore offsets deals only cover royalties, not all revenues from the source.

Under the new version of Equalization, the cap is explicitly in place.

This approach is mentioned in the background document issued yesterday but until the PM's letter, it wasn't something that leaped out.
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.

Turns out Danny is screwed and blued. The only thing left is to get out the ink and needles.