Thank you very much.
I am in fact very, very pleased to be sharing this panel, if not with my colleagues from the provincial governments, with representatives of child care and early childhood education in our province and representative working people. I'm pleased to appear before the committee today to discuss the equalization reforms that are contained in the most recent federal budget and what they mean, not to the Government of Saskatchewan but to the people of Saskatchewan.
I'd like to begin by reminding committee members of commitments that were made to the people of Saskatchewan regarding proposed changes to equalization, in a letter delivered to myself from the now Prime Minister of Canada, Mr. Stephen Harper. He said to me, “The Conservative Party of Canada will alter the equalization program to remove all non-renewable resources from the formula, as well as move the program to a ten-province standard.” That was in 2004.
From the Conservative Party platform in 2006, the Conservative Party will “Work to achieve with the provinces permanent changes to the equalization formula which would ensure that non-renewable natural resource revenue is removed from the equalization formula to encourage economic growth. We will ensure that no province is adversely affected from changes to the equalization formula.” That was the promise made to Canadians.
And repeated, of course, in a publication that was delivered to residents of Atlantic Canada, but I assume intended for all Canadians, which I read, is “That is why we would leave you with 100 per cent of your oil and gas revenues, no small print, no excuses, no caps.”
As I think we're all aware, the equalization program is one that is constitutionally mandated to achieve a simple basic federal commitment: to ensure that all provinces and their people have reasonably comparable levels of public services that are supported by reasonably comparable taxation. This federal commitment is based on the principle of fairness and equity, fairness and equity throughout Canada. It requires, therefore, that equalization be applied fairly to all provinces for the benefit of their people.
We believe that the reforms put forward in the recent federal budget do not achieve these fundamental principles of fairness and equity. In particular, the proposed new equalization system perpetuates the untenable situation of the excessive clawback rates on Saskatchewan's non-renewable resource revenues.
The reforms that are part of this budget, as committee members will know, reflect two separate calculations in determining equalization entitlement. The first is the formula-based determination of entitlement, and the second is an ad hoc application of a fiscal capacity cap.
The first is now a principle-based calculation that will permit full exclusion of resource revenues, which recognizes the unique characteristics of resource revenues, including that they're owned by the province and their benefits are one time only. That's exactly what we and other resource-producing provinces have been advocating. But the fiscal capacity cap is not. This provision in the budget takes 100% of a province's resource revenues into account, which has the effect of a 100% clawback of Saskatchewan's resource revenues. In other words, it leaves Saskatchewan people without any financial benefit from incremental resource development but with all the expense of managing and regulating the resource sector.
While this cap provides benefits to Saskatchewan in the current fiscal year, it's only because this current fiscal year is based on old data. Therefore, there will be no equalization for Saskatchewan after, for the foreseeable future.
I recognize that my time is short and I'm running out, so let me conclude with the hope that we can have a discussion between us, the hope that I can return to the people of Saskatchewan with a clear answer: one, where did the cap come from, because we never heard of a cap before any elections; and two, why has this promise to the people of Saskatchewan been broken?
Thank you very much.