Mr. Speaker, I appreciate the question from my hon. colleague, although if I heard him right initially I thought he had also determined the answer. I hope that in fact is not the case, because as one who has visited Newfoundland and Labrador on at least seven occasions I think I can speak with some understanding of this, particularly of the communities in Newfoundland and Labrador.
First I certainly want to say that we are pleased that the province of Newfoundland and Labrador, INCO and aboriginal groups have in fact reached agreements that will make it possible for the Voisey's Bay project to proceed. The government certainly welcomes the jobs and prospects that major development offers the people of Newfoundland and Labrador.
In terms of the suggestion that equalization prevents provinces from benefiting from their resources, it does not reflect reality. The recent Voisey's Bay announcement is certainly evidence of that. The criticism of equalization is not merited when we consider the purpose of the program.
What is equalization? It is found in the constitution. It is to ensure that all provincial governments, all of them, have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation. I think all Canadians support that. As the member knows, there will be a review of this coming up in April 2004, I believe, when the federal government and the provinces will be discussing this.
In other words, equalization ensures that all provinces have access to a standard level of revenues.
With the development of Voisey's Bay, Newfoundland and Labrador revenues will grow due to royalties and increased personal and corporate taxes. The province will keep every penny of revenue it earns from the project. The federal government does not claw back any provincial revenues.
It is a fact, though, that as Newfoundland and Labrador get richer, lower equalization payments will be required to ensure that the province has access to the national standard level of revenues. That is the way the program is supposed to work. That is the way it was envisioned. The common standard ensures that all provinces are treated fairly.
We sometimes hear that equalization is a disincentive to development because it erodes benefits to provincial treasuries. This claim obviously, in the view of the government, does not stand up to scrutiny. First, it is the private sector that drives most economic activity. We have seen that in this situation. Equalization is not a factor in private sector decisions. Second, provincial governments, including the province of Newfoundland and Labrador, have strong incentives to encourage development. Economic growth creates jobs and higher incomes and lowers the cost of social programs. It allows provinces to replace federal transfers with own source revenues. Equalization receiving provinces themselves have consistently stated that equalization is not a disincentive to development.
Looking at creative solutions, when the federal and provincial governments come back every five years to review the situation, there will be an opportunity, and I have no instant answer for the member today, to put all of this on the table for what will be, I am sure, some very interesting and creative discussions.