Mr. Speaker, I am very pleased today to say a few words on a very important bill not only for the province of Newfoundland and Labrador but for all provinces that receive equalization payments. I believe there are seven provinces in Canada that receive them.
The provinces are very highly dependent on equalization to better their economic situation within the country. It is very important to have the bill fully debated today by all members, if for no other reason than to make the federal government fully aware of the impact of equalization payments on the seven provinces of Canada that are recipients of the equalization formula.
I was told that before the bill came before the House of Commons the province of Newfoundland requested some significant changes to the way the formula treats offshore resources, especially offshore oil and gas. The government, I am told, rejected that request by Premier Tobin and the Government of Newfoundland and Labrador. There really will not be any substantive changes made in the bill, probably a few minor housekeeping changes.
Once again the poorest province in Canada, the province of Newfoundland, will be penalized by the current equalization formula before it is given the chance to actually catch up to the rest of the country and to become equal to other Canadians.
This is what we are talking about today. We are talking about the opportunity that should be given to the have not provinces to catch up to other Canadian provinces that consider themselves to be have provinces. There cannot be any chance of a catch-up for Atlantic Canadians or for that matter western Canadians in provinces like Manitoba and Saskatchewan that also receive equalization payments as. There cannot be any opportunity given to these provinces to catch up.
There cannot be a chance for equality in the provinces unless there is some recognition given to the fact that the pool of money that will keep a province from starving is the same pool of money that will keep it permanently poor. Newfoundland has been in Confederation for approximately 50 years. In a couple of weeks Newfoundland will have been in this great country for 50 years and there is still no recognition of the one basic fact that the pool of money that will keep a province from starving is the same pool of money that will keep it permanently poor. That is the unfairness and the injustice associated with the way the equalization formula is written.
There will never be an opportunity for the provinces that receive equalization payments to be brought up to the same quality of life and the same standard of living that other Canadians enjoy. They will never have the opportunity under the current formula to reduce the horrendous unemployment problem in Newfoundland, which has an official unemployment rate of about 19.7%. That is a very serious situation indeed.
I am not saying that we should change the formula forever and a day. I am saying there should be some kind of arrangement worked out with the have not provinces which will see resource revenues clawed back on a more gradual basis. It is not to have the federal government take up all of the problems but to have these resource revenues clawed back on a more gradual basis.
Right now there is a 100% clawback on resource revenues produced by any given province. That is the basic unfairness for the poorer provinces. If the federal government wanted, it could change that to make it a bit easier for those provinces, especially in the Atlantic area, to become equal to the rest of Canada.
For instance, a Voisey's Bay development in Newfoundland could have its resource revenues clawed back on a 50% basis. The Sable Island gas field in Nova Scotia could be clawed back on a 50% basis to give Nova Scotia the opportunity to become a little affluent and raise its standard and quality of life. The federal government has within its power the ability to do that, but I do not believe that is going to be done.
In that way there would be an opportunity to bring some fairness to the current equalization formula and to bring the unemployment rate and quality of life to the receiving provinces up to acceptable standards.
A few months ago my private member's bill on Newfoundland's unemployment problem was selected and debated here in the House of Commons. The point was made by someone speaking in that debate that if we had a fairer equalization formula applied to Newfoundland as it relates to our offshore revenues, not only would the province of Newfoundland be better off but Canada as a country would be better off as well.
We have to consider the fact that we are members of this nation. Any province that becomes better off is a net contributor to our country. It makes it a bit easier to live within this country and makes it easier on the taxpayers within this country who would not have to continually be injecting funds into the have not provinces.
In the long run there is every reason for the federal government to want the provinces that receive equalization payments to be brought up to an acceptable standard. The federal government could rest a bit easier and would not have that kind of burden placed upon it.
We are all very much aware that the Canadian equalization program redistributes the wealth of this nation. Last year the province of Newfoundland received $975 million in equalization payments. This year she is going to receive approximately $925 million in equalization payments. It will be a reduction.
One of the reasons we are going to take a reduction in equalization payments this year is the population factor, the fact that so many people are leaving our province on an annual basis. It is of great concern to the province of Newfoundland that we have a tremendous out-migration every year.
One thing that determines the rate of equalization payments to a province is the population factor. The population of Newfoundland has gone down significantly over the last number of years. Over the past six or seven years we have been losing people at the rate of between 7,000 and 10,000 per year. That is quite a decrease in population for a small province like Newfoundland and Labrador.
If that kind of population decrease occurred in Ontario or B.C., it would not be a great big deal but it is devastating for a province like Newfoundland with a population of half a million to lose anywhere between 7,000 and 10,000 people a year. It is devastating not only in terms of losing some very good young educated people but because of that out-migration the province is losing equalization payments as well. That is a very big and important factor for the province of Newfoundland.
The one overriding concern is that the federal government will deduct dollar for dollar the resource revenues that a province receives. This will have the devastating effect of keeping that province permanently poor.