N.L. finance minister frustrated — but not surprised — equalization formula remains status quo
Newfoundland and Labrador's finance minister wants Ottawa's equalization formula to change, but says he's not surprised its been extended by the federal government for another five years.
The Globe and Mail first reported earlier this week that the Liberal government quietly renewed the equalization formula in its 2018 budget, so it will stay in its current form until 2024.
But Tom Osborne says it's frustrating N.L. is considered a "have" province under that formula — despite its current fiscal situation.
"We've got a very large geography, one of the most widely dispersed population in all of the country, we've got very rural areas. So this province is expensive to maintain," said the finance minister Friday.
"When you look at other provinces with smaller geographies and twice the population, that's not taken into account," he added.
Resource-based economy means N.L. doesn't qualify
Equalization provides $19-billion a year to provinces across the country that have below average fiscal capacity — or have-not provinces as they are often referred to — but that's determined by how much revenue a province earns per capita, and not by its geographical size or fiscal situation.
Osborne said the province loses out because it's heavily revenue-based, including income from natural resources.
He pointed to Nova Scotia as a province that still receives equalization, even though they have a larger population and are much closer to balancing their budgets than N.L.
In 2017-18, Nova Scotia received $1.8 billion in equalization payments, while N.L. received none.
Osborne said he plans to bring up revising the formula at a meeting next week between the provincial and federal finance ministers.
But he acknowledges that many provinces that receive equalization payments under the current formula have less of an interest in changing it.
"Obviously, we would like to see a greater understanding of the needs of each province when we look at the equalization formula, and that's something we strongly advocate for at the national level every time we get the opportunity."
"The new formula was just outlined for the next five years, and I'm anxious to get to work on resolving what's going to happen beyond that."
