The economy, it seems, is in significantly worse shape than it was last November.
That's the same thing that Premier Dwight Ball is saying but we should note one very importance difference. Newfoundland and Labrador was already in a bad financial spot last spring. By the time Ball took office in the fall things were twice as bad as they had been when he'd promised to get rid of the teensy sales tax hike. So while the federal situation may now find itself well up the proverbial river of excrement, they are still looking at our backside as we blaze a trail to the headwaters.
The more important implication for Newfoundland and Labrador in all this would be the likelihood that the federal government won't have any massive amount of cash with which to bail out our troubled province. As it is, the best anyone has been able to talk about is something far less than $50 million in one-time cash.
Even if former finance minister Joe Oliver's musing comes true, the federal government would have a hard time making massive changes to Equalization to give cash to the provinces if it needed cash itself. Oliver wrote an opinion piece for the Financial Post a couple of weeks ago and argued that the Equalization program no longer works. As Oliver saw it, we could easily wind up in a situation in a couple of years' time in which all provinces were roughly equal in fiscal capacity and the Equalization program would have funds it couldn't distribute under the current rules.
One possible solution to that problem would be to change the rules of the program so that cash would go to all provinces, something Oliver says hasn't happened before. Well, sort of. The original program equalised provinces up to the top of the other provinces instead of to an average of some or all of the provinces.
What's more interesting about Oliver's piece is the prospect that the current financial problems across the country might lead to radical changes to Equalization. Our "our current economic challenges and shifting fortunes cry out for a major overhaul of a decades-old equalization [sic] program that is past its best-before date," Oliver wrote.
Just when you thought things couldn't get any more difficult you have folks talking about major changes to Equalization, the very sort of program the current provincial government would like to tap into again. Oliver makes some arguments that are quite stroking from the perspective of a province that is heavily dependent of resource extraction. Oliver has a problem with one provision that this province argued in favour of not so very long ago:
Another counterintuitive element of equalization [sic] is that fiscal capacity excludes either all of a province’s natural resource revenues or half of them, depending on which provides the largest per capita transfer payment.Some of you might wonder what Oliver is talking about. After all, people in this province have been told since 2007 that the Harper Conservatives broke their promise in 2007 about excluding non-renewable resource revenues from Equalization. Surprise! Some people have been telling fibs.
Well, forget that for a moment. What Oliver is talking about is the idea that provinces could decide not to develop resources and be rewarded for the decision by getting Equalization that is funded in some respects by revenues from provinces like Saskatchewan, Alberta, and Newfoundland and Labrador.
The latest news from Ottawa makes it all the more likely we might well wind up in another national row about Uncle Ottawa's cash. It's been less than a decade since the last racket. Do we really need that on top of everything else?