Equalization sans oil and gas?

I know that some folks get apoplectic when this issue is raised but I had an interesting conversation yesterday with an economist who is quite worried that within a short period of time, the impact of the oil and gas industry will be removed from the calculation of Equalization payments.

His logic, of which I have written before, is as follows.  Quebec and Nova Scotia have issued moratoriums on the development of their natural gas resources and two of the main opposition parties are saying they will do the same in New Brunswick if elected in the fall.   The oil and gas producing provinces are depleting their natural gas and oil reserves and bearing the environmental costs and then some of that wealth is transferred to Quebec, New Brunswick and Nova Scotia to ensure those provinces can offer good quality public services.

His view is that the oil and gas provinces will demand the removal of the oil and gas industry as part of the Equalization formula – particularly relating to those jurisdictions that refuse to develop their own oil and gas resources.

I think this is could be a dark horse public policy issue in the coming years.  Saskatchewan has already been calling for it and apparently Stephen Harper liked the idea before he become Prime Minister.

It’s hard to say what the impact would be but it’s easy to say it could be substantial.

I don’t recall seeing anything from the big think tanks on this at least recently but if Fraser or Canada West or others start getting on the bandwagon, it could get dicey.

This entry was posted in Uncategorized. Bookmark the permalink.

3 Responses to Equalization sans oil and gas?

  1. mikel says:

    Think tanks and even provinces dont’ really matter. For those who missed it, Harper received a blow today that he can’t unilaterally reform the senate which he wanted to do on his own because he hates talking to the provinces so much. He doesn’t even send representatives to Premier’s meetings anymore.

    Harper barely squeeked out of a minority government. He’ll no doubt retain his western base because the guy could club baby seals and he’d still get western support. But he needs at least a good part of ontario, and while he’s been bribing some minorities, that doesn’t last indefinitely and as people may have noticed, Ontario is a have not province.

    Ontario isn’t exactly tearing up southern ontario developing gas either. More importantly, everyplace east of Saskatchewan is now an economic basket case and the feds are now sitting on tons of dough. The west is already rich, so if Harper is dumb enough to touch that with a ten foot pole, then he’ll be back leading a minority government. And harper needs a majority government to maintain the status quo on the most important things-keeping the oil sands chugging and building pipelines.

  2. Mark says:

    I don’t really see how Harper has anything to do with it. If I was a hard working tax payer or politician in one of the provinces that are actively developing their natural resources, I’d be livid at the political pandering and dithering happening in provinces like NB. It’s hypocritical that we get massive equalization payments from these resources but refuse to develop our own. We also get a ton of other economic benefits by our people working in those provinces but coming home and spending their earnings here.

  3. mikel says:

    Except that a good percentage of the work being done where the work is most dangerous is being done by New Brunswickers and others. New Brunswick brought up those people and educated them enough so that Alberta didn’t have to.

    Harper has EVERYTHING to do with it, because in case you were unsure, its not hardworking taxpayers who have anything to do with equalization. As a hardworking taxpayer I’ve got LOTS of complaints that go far beyond the tiny amount which goes to equalization.

    I’ve posted before that when you add in retirement costs of those returning to the province and the educational costs of those going west, New Brunswick should be getting MUCH more money in equalization. And if anybody actually thinks services are ‘equal’, then the haven’t been further west than Edmunston. Albertans get government services that Nbers can only DREAM about.

    In either case, natural gas is already being pumped out of Penobsquis, and SWN says it is only doing more research this year, even though nothing is stopping them. The government has been going full speed ahead, even refusing to bring in legislation to regulate the industry. So its interesting that lots of people talk about being angry at New Brunswick, when New Brunswick IS developing this industry.

    But again, equalization is pretty much in the control of federal government, which right now is Stephen Harper, so if you don’t see how he has anything to do with it there really isn’t much to debate. Chances are good if it were up to taxpayers, there would be no equalization program at all-no matter what provincial resource policies were.

Comments are closed.