20 March 2007

Harper signals side deal with Williams?

The Prime Minister issued a news release this evening that describes a letter to Premier Danny Williams about the federal budget.

In the release, there is an odd statement:
Newfoundland and Labrador will continue to receive the full benefits provided under its offshore Accord, without a cap, while keeping the Equalization regime it had when it signed those Accords.
The first part of that sentence is fine, since the federal budget does not alter the wording of the bilateral agreement signed in either 1985 or in 2005.


There is no way for Newfoundland and Labrador to keep the Equalization scheme that existed in 2005 without the current federal administration signing a side deal with Newfoundland and Labrador to make it happen or for the federal government to create an Equalization system that works one way for nine provinces and another way for Newfoundland and Labrador.

In other words, Harper's release would have Newfoundland and Labrador's Equalization entitlement calculated under a five province standard with 100% of resource revenues included. The offsets deals then cut in to figure out Equalization without oil revenues but based on a five province standard, not the 10 province one to be used under the Flaherty 2007 budget.

The 2005 agreement specifically states that the provincial Equalization offset will be calculated using the formula in existence at the time, i.e. the year of the Equalization payment, not the year the deal was signed.

Simply put: Harper can't reform Equalization as proposed in today's budget, i.e. create a formula driven system that is fair and equitable to all, and at the same time create what amounts to a side deal with one province.

Most likely answer: someone in the PMO comms office needs a quick lesson in the English language not to mention Equalization.

Outside possibility: Harper is really trying to jam Danny into a corner.