HALIFAX (CP) - A Nova Scotia senator is calling on Prime Minister Stephen Harper to clarify his government's stance on Ottawa's offshore energy deals with Newfoundland and Nova Scotia.
Liberal Senator Terry Mercer raised concerns about the fate of the multibillion-dollar agreements after federal Finance Minister Jim Flaherty told a Toronto news conference that "certain deals" signed by the previous Liberal government have made the federal equalization formula "a mess."
Flaherty has since denied suggesting that the deals could be in jeopardy. He was unavailable for comment Monday, but he had issued a statement late Friday that said the Conservative government remained committed to the deals as it moves ahead with a plan to revamp the equalization program.
But Mercer said he's not buying it.
"Does this mean that they are going to try to claw this back when they strike a new deal on equalization formulas?" the senator said in an interview from his Ottawa office. "We need Stephen Harper to come out and very clearly state that this is not on."
But Mercer's concern isn't shared by the two provinces that fought a long and emotional battle with Ottawa to change the way it calculates equalization payments.
"I'm not a bit concerned at all," said Newfoundland Finance Minister Loyola Sullivan.
Sullivan said the offshore deals, promised during the 2004 election campaign and signed in early 2005, were negotiated outside of the existing equalization program.
"It does not affect the fixed pot of money that's put into equalization and this year it was $10.9 billion," said Sullivan.
Meanwhile, Nova Scotia Finance Minister Michael Baker also said he didn't think Flaherty's comments represented a change in policy. He said it's been clear for some time that Harper supports the offshore deals.
"When he was leader of the Opposition he endorsed and encouraged the deals," Baker said. "I have seen nothing to suggest that commitment isn't steadfast."
The equalization program was set up to ensure Canada's poorer provinces receive payments from Ottawa to ensure they can offer the same basic services as other provinces without having to raise their tax rates far above the national average.
But Nova Scotia and Newfoundland had long complained that they were being penalized under the program because the growth in their offshore energy sectors led to reduced equalization payments.
Both provinces argued that revenue they received from their offshore oil and natural gas industries should not be factored into the equalization formula. Such a change would make it easier for them to shed their 'have-not' status, they said.
In the final days of the 2004 federal election campaign, then prime minister Paul Martin agreed to remove offshore revenue from equalization calcuations. Newfoundland was expected to receive an additional $2.6 billion over eight years, while Nova Scotia was to get $1.1 billion.
The side deals were quickly deemed unfair by other provinces, including Ontario, Saskatchewan and New Brunswick. They have since demanded similar treatment from Ottawa.
On Monday, Newfoundland's Sullivan said he was confident the federal Conservatives would make good on a campaign promise to remove non-renewable resources from the equalization formula altogether.
"When you remove non-renewable resources, every province in the country gets their non-renewable resources moved out and they are all treated on the same footing."
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Liberal Senator Terry Mercer raised concerns about the fate of the multibillion-dollar agreements after federal Finance Minister Jim Flaherty told a Toronto news conference that "certain deals" signed by the previous Liberal government have made the federal equalization formula "a mess."
Flaherty has since denied suggesting that the deals could be in jeopardy. He was unavailable for comment Monday, but he had issued a statement late Friday that said the Conservative government remained committed to the deals as it moves ahead with a plan to revamp the equalization program.
But Mercer said he's not buying it.
"Does this mean that they are going to try to claw this back when they strike a new deal on equalization formulas?" the senator said in an interview from his Ottawa office. "We need Stephen Harper to come out and very clearly state that this is not on."
But Mercer's concern isn't shared by the two provinces that fought a long and emotional battle with Ottawa to change the way it calculates equalization payments.
"I'm not a bit concerned at all," said Newfoundland Finance Minister Loyola Sullivan.
Sullivan said the offshore deals, promised during the 2004 election campaign and signed in early 2005, were negotiated outside of the existing equalization program.
"It does not affect the fixed pot of money that's put into equalization and this year it was $10.9 billion," said Sullivan.
Meanwhile, Nova Scotia Finance Minister Michael Baker also said he didn't think Flaherty's comments represented a change in policy. He said it's been clear for some time that Harper supports the offshore deals.
"When he was leader of the Opposition he endorsed and encouraged the deals," Baker said. "I have seen nothing to suggest that commitment isn't steadfast."
The equalization program was set up to ensure Canada's poorer provinces receive payments from Ottawa to ensure they can offer the same basic services as other provinces without having to raise their tax rates far above the national average.
But Nova Scotia and Newfoundland had long complained that they were being penalized under the program because the growth in their offshore energy sectors led to reduced equalization payments.
Both provinces argued that revenue they received from their offshore oil and natural gas industries should not be factored into the equalization formula. Such a change would make it easier for them to shed their 'have-not' status, they said.
In the final days of the 2004 federal election campaign, then prime minister Paul Martin agreed to remove offshore revenue from equalization calcuations. Newfoundland was expected to receive an additional $2.6 billion over eight years, while Nova Scotia was to get $1.1 billion.
The side deals were quickly deemed unfair by other provinces, including Ontario, Saskatchewan and New Brunswick. They have since demanded similar treatment from Ottawa.
On Monday, Newfoundland's Sullivan said he was confident the federal Conservatives would make good on a campaign promise to remove non-renewable resources from the equalization formula altogether.
"When you remove non-renewable resources, every province in the country gets their non-renewable resources moved out and they are all treated on the same footing."
http://start.shaw.ca/start/enCA/News/NationalNewsArticle.htm?src=n031349A.xml