A great man once said, "Politics is inherently stupid." That great man was me.

Tuesday, January 16, 2007

Harper and The Fiscal Imbalance

If Harper's new plan to solve the fiscal imbalance reneges on the Atlantic Accord, he can seriously expect to not win a single seat in Newfoundland and Labrador come the next election.

That's not a threat from Danny Williams, that's a political reality laid out by a Newfoundlander who supports the Conservative Party of Canada. There are many out there who think equalization should never have been put into effect. These people need to realize that without equalization, provinces like Newfoundland and Labrador would not be able to deliver basic services that are taken for granted in the rest of Canada.

Now I know there are those who will complain that, under our logic, Newfoundland just wants to 'have its cake and eat it too'. These people are mistaken. Equalization as it is set up now is a form of indentured slavery - what's the point of providing extra cash to help maintain a basic level of services if it all gets clawed back the next day? Realize that the oil and gas industry in Newfoundland is just now becoming profitable. These are resources that will not last forever. If all the money the province makes in this industry is clawed back under equalization, what will be left for us when the wells run dry? The answer: a continuing and never-ending cycle of more equalization payments, which neither Newfoundland nor Alberta or Ontario wants. The result is painfully obvious, and yet little see it.

It is therefore in the longterm economic interest of Canada to support Newfoundland and Saskatchewan in this matter. You can't expect a man to get back on his feet when you garnish his wages so as to leave him in debt all of the time. Believe me, no province wants equalization to end more than Newfoundland - but it has to be under the right circumstances, when the province is ready economically. Reneging on the Atlantic Accord will cost Alberta and Ontario far more in the long run than they will ever know.

Finally, if that argument doesn't sway you, then consider this: the Government of Canada made a signed-and-sealed promise to Newfoundland and Labrador that 100% of its oil and gas revenues would be exempt from clawbacks. They signed a Federal-Provincial deal to this effect. Regardless of which party was in power at the time, once the federal government signed that paper it has no choice but to honour the promise it made. In fact, during the 2004 election I seem to recall that Harper promising that it was his position that all non-renewable resources should be exempt from equalization clawbacks, in addition to any oil and gas revenues. Were he to change his position now, he would be making a liar out of himself. Stephen Harper is no liar. I sincerely hope he will not make a liar out of me for writing that.

My province is not a bargaining chip that can be traded away to appease Quebec for seats in the next election. I repeat, Harper will pay if he reneges on the Atlantic Accord. That's not a threat.


That's a cold, hard reality.


..."We will remove non-renewable natural resource revenue from the equalization formula to encourage the development of economic growth in the non-renewable resource sectors across Canada. The Conservative Party will ensure that no province is adversely affected from changes to the equalization formula."
-Section 22, CPC Policy Declaration, 2005

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