Wednesday, February 02, 2005

Martin's Federalism

Our constitution has long placed Canada in a unique position in the world. Federalism has been the modus operandi of the government and throughout the history of our nation a relative balance of powers has been achieved. Pierre Trudeau mastered the role of balancing Ottawa and the provinces. He won respect across the country for standing up to the provinces, fighting for what was best for the entire nation, for putting his country before his province. Now, the Liberal Party is taking a different path.

Less than a week ago, Paul Martin struck a deal with Newfoundland and Nova Scotia over offshore energy revenues. Initially, the Prime Minister claimed the deal was a great success, exclaiming:
"It is a great day for Canada," Martin said as he announced the deal last night. "There have been hard words spoken. ... There have been very, very difficult negotiations. ...We really all have come through something together."
Four days later, the deal is beginning to look like a catastrophe.

Newfoundland and Nova Scotia undoubtedly won themselves an incredible deal. The two provinces will receive billions of dollars which is in contravention of the equalization program's spirit. Newfoundland receives massive sums of money precisely because they are a poor province. If they stand to make a fortune in oil revenues, why should they continue to receive the same amount of money in equalization payments? As it currently stands, this deal appears to be blatant favouritism for a region the Liberals desperately need to hold. And the other provinces have noticed.

On Monday, Ontario Finance Minister Greg Sorbara insisted his province was entitled to $4.8B of the Federal government's projected $12 Billion surplus. Specifically citing the Offshore Energy deal, Sorbara noted that Ontario contributes $23B more than it receives from the Feds. Ontario is responsible for 40% of the nation's GDP, so they figure the province should get 40% of the surplus. Given the sweet deal Newfoundland got, Sorbara and McGuinty believe Ontario shouldn't be mired in a fiscal catastrophe while Ottawa piles up record surpluses.

Saskatchewan followed suit yesterday, as Premier Lorne Calvert announced that he would press Ottawa for a deal similar to that reached with the Atlantic provinces. Saskatchewan loses approximately 90% of its energy royalties to equalization cutbacks, and has just recently joined the ranks of the 'have' provinces -- largely due to high oil prices. Premier Calvert estimates that the province would have saved $4 Billion over the last decade if they'd had a deal similar to that recently reached with Newfoundland.

The Prime Minister's deal with the Atlantic provinces is rapidly becoming his albatross, as other provinces point to what Martin gave Danny Williams and ask for their share. How will Martin say no to Ontario given the fact that the province is the sole reason he is Prime Minister? How would saying no to Saskatchewan impact the party in the West? How will he continue to run a surplus when every province is holding out their hand waiting for their turn? Is Paul Martin even aware of what he has gotten himself in to?

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