Mr. Speaker, it is a privilege to participate in the debate on Bill C-65 regarding equalization. This is the essence of what makes Canada Canada.
Earlier today on this main motion the House heard from the NDP finance critic, the hon. member for Kamloops, Thompson and Highland Valleys. He is a very hardworking MP who had requested, in preparation for this debate, to hear from provinces as to their views and comments on the new equalization formula. I do not believe that in his remarks this morning the hon. member had time to refer to that except in passing. I would like to speak about how Saskatchewan sees this proposed reform on equalization.
The formula is that a maximum of $5,431 per resident to fund public service is the essence of the equalization formula. From Saskatchewan's perspective, the net effect will not be terribly significant. Saskatchewan wins in some areas and loses in others or, as an acquaintance from Australia once said, what they win on the merry-go-round they lose on the ferris wheel.
However, on the whole the revision is seen to be positive. For example, for the year 1999-2000 the province of Saskatchewan's entitlement may increase by about $3 million. This of course depends on the range of economic variables, particularly the price of oil futures.
Just as an aside, the World Bank outlook for commodity prices is not very encouraging for the next decade or so, and Saskatchewan is a resource based province that depends largely on the export of primary resources as are a number of other provinces. This impacts very significantly on whether Saskatchewan is a recipient province or indeed a have province. It has been in both categories from time to time.
The Minister of Natural Resources had suggested that Saskatchewan would be receiving a significant upturn in equalization and offset the 40% share of the province's entry into the agriculture income disaster assistance program. This is simply not true. I have mentioned $3 million for 1999-2000. The maximum calculation by the province's minister of finance would be $45 million over five years as a result of this new formula. It would barely cover the proposed cost for Saskatchewan for the agriculture income disaster assistance program for one year.
As a second aside, I want to again be on the record to talk about the basic unfairness in the AIDA program. Provinces are being asked, requested, forced to pay up to 40% for this income assistance when at the same time states such as North and South Dakota, Minnesota and Montana are not asked to pay any sort of money to help farmers on that side of the 49th parallel because their contributions are being paid by the national government in the United States. Here the provinces are requested to kick in 40%.
It is simply not fair to expect a small province like Saskatchewan, or Manitoba for that matter, both of which have high proportion percentage of the arable land base and a relatively small percentage of the population, to fund that kind of program.
On the equalization program itself, as I have indicated, Saskatchewan is in favour and is also in favour of moving to a ten province standard rather than the current five province standard. We believe this would advance the goal of providing quality programs at reasonable costs. We also favour a shorter transition period of probably two years rather than the current five years.
It is important for all of us to keep in mind that equalization is to maintain a relatively level playing field in terms of ability to provide programs and services. Generally speaking the payments go up to an individual province when its revenues are experiencing a decline.
As I have indicated, Saskatchewan has a particular interest in the work done on resource bases and takes the position that recognition of the higher cost of producing so-called new oil would represent an improvement. It is important for Saskatchewan and it is also important for provinces such as Nova Scotia and Newfoundland. A move away from the volume of production to the value on for example forestry would not represent a step backward in any way.
Overall the objective of equalization is not to get every last cent out of each of the have provinces. As I have said before, it is to ensure that all provinces offer a reasonably comparable level of services at roughly comparable levels of taxation.
The program has to be equitable and fair in order to function effectively which means it has to work both ways. Saskatchewan's position is that a change to a value based measurement on forestry does represent an overall improvement.
There is one thing in particular that some provinces such as Manitoba and Saskatchewan are opposed to. That is the changes to the equalization formula for the lottery base. The proposed changes would unilaterally impact on provincial policy decisions. To expand on that, I would use this argument. The choice not to introduce VLTs, which will have a large impact on entitlements, is a policy decision which therefore should not impact on the determination of fiscal capacity.
The government I believe has taken a different approach to this. It has included the new gaming as another new tax base. The argument is that this approach will increase Ontario's fiscal capacity and therefore benefit equalization payments to recipient provinces. A discussion at the finance committee did focus on the fact that Manitoba's population is one of the lowest participants in lotteries and gaming and how this particular low revenue source may be a factor in lower equalization payments for Manitoba. We would question the inclusion of VLTs in the new formula.
However, overall and in conclusion, the NDP caucus members present support Bill C-65 on third reading. It is a step in the right direction, but the important thing is to recognize and realize that it is certainly no windfall for the seven recipient provinces.