Mr. Speaker, before I start my remarks, I will be splitting my time with the member for Random--Burin--St. George's.
We are having what I consider a very interesting discussion on the motion, and it is a very important issue. I sense that we are somehow hearing a lot more about the politics of the issue rather than the real issue itself.
As everyone in the House is aware, equalization has been part of our economic and political fabric in the country for quite some time now. We are talking about a matter of principle that all Canadians, wherever they live from coast to coast to coast, ought to be treated equally. They ought to receive comparable levels of service at reasonably comparable levels of taxation. As everyone knows, we will never to get the system perfect. Also, as things have developed over the last number of years, it seems to be that the greater challenge going forward may be the discrepancies which exist between rural Canada and urban Canada. This is something perhaps that will be subject to another debate in the House of Commons.
From the comments from all parties in the House, the principle of equalization is certainly supported by everyone in the House and across Canada, and it is embodied in our Constitution. There have been problems with the equalization formula over the last number of years. I certainly had a lot of problems with it myself. I am very pleased about the agreement that was reached on equalization by the Prime Minister of Canada, the 10 provincial premiers and the three territory leaders on October 26.
One of the biggest problems was predictability. I had a lot of sympathy with the individual provincial ministers of finance, because they really did not know what their equalization funding would be for that year. I believe most provinces deal with a March 31 year end. They present their budgets late January, February or March of each and every year. They would be given a figure from the federal government and that would be the figure would be included in their provincial budgets. However, every provincial finance minister, present and previous, realized that this figure would change at least once, if not twice or three times during the year. Sometimes, and relatively speaking, these adjustments would be rather dramatic.
It was grossly unfair for a provincial minister of finance to receive a call at 3:30 or 4:00 on a Friday afternoon and be told by officials in Ottawa that his or her province's equalization funding would be reduced dramatically. As everyone in the House and people watching this on CPAC can understand, that caused a lot of problems in provincial finances and how provinces were operating. It may come as some surprise to hear this, but it also caused problems when the same finance ministers received a call on Friday afternoon indicating that they were getting considerably more than what they expected. The principles of caution and prudence would be thrown to the wind, some of the money perhaps would not be spent as wisely as it ought to have been, it would end up in the A-base funding of the province and it may not be there next year. We can see the problems that would be created. That was a problem that needed rectification, and it was rectified.
We also had the cap on equalization which again was a problem. That was remedied a couple of years ago. It was not dealt with in the last agreement that the first ministers made.
Another contentious issue, which has always been on the table and is very much a part of the debate today, was the whole issue of non-renewable resources. It had been the position of a lot of provinces, and we certainly have to agree with this to a certain extent, that a non-renewable resource, whether it be a gold mine, an oil well or a potash mine, was a finite resource. Once that mine was depleted or that oil well is dug dry, there was no future revenue source. At some point in time every mine or oil well would come to an end.
This was different in each and every province. It certainly was not the issue in Alberta because it was not an equalization receiving province. However, it certainly was a major issue in the provinces of Nova Scotia and Newfoundland and Labrador because they were dealing with a non-renewable resource, and it has caused problems.
Some of the developments in Newfoundland and Labrador which dealt with Voisey's Bay skewed decisions. The royalties that came from Voisey's Bay immediately provided the province with resource royalty revenue. In the long term the resource royalty revenue was deducted from Newfoundland and Labrador's equalization entitlements and there was really nothing at the end of the day. I think that was the real reason behind the substantial delay in that project going forward.
We are dealing with a relatively contentious issue. I have listened to the debate that has taken place. I believe everyone is on the same page. We all want the province of Newfoundland and Labrador to prosper. We all want the people who live in that province to prosper. Going back years ago, there were situations in the province that were mishandled, such as Churchill Falls. There are still repercussions from that today. There was also the situation with the collapse of the groundfish, which has caused tremendous problems for the people of Newfoundland and Labrador especially, but also for the people who live in Atlantic Canada. It still causes problems.
I sympathize with the comments that have been made today with respect to the oil and gas revenue in Newfoundland and Labrador and in the province of Nova Scotia. It is important that the Government of Canada, in dealing with the provinces, especially those two provinces, get it right and ensure that it is in the best interests of the people who live in those two provinces.
If I had given this speech eight months ago, I would have stated that both provinces deserved a better deal. That is why I supported the agreement that was reached between the Prime Minister and Premier Hamm and the Prime Minister and Premier Williams in June of this year. The funding would be increased dramatically and they would be entitled to receive 100% of their royalty revenues. I was also pleased with the agreement reached on October 26 which dealt with, to a certain extent, the issue of predictability. Whatever an equalization receiving province was told it was entitled to receive early in that year would not be decreased no matter what happened. That provides a lot of certainty to the financial projections of each province.
I was also pleased that the level of funding for equalization would go up from $8.9 billion to $12.5 billion over the next five years, which will add, I believe, $33 million to the equalization funding over the next five years.
The election commitments made by the Conservative Party in May and June of last year concern me. They also trouble the people who live in New Brunswick, Prince Edward Island and Manitoba. Its document states:
We will move towards a ten-province standard that excludes non-renewable resource revenues from the equalization formula...and do so in a manner that ensures no provinces receiving equalization will receive less money during the transition to the new formula than the current formula provides
If one does the calculations, it is extremely troubling. It would freeze those provinces forever and a day on the equalization formula. I am glad that has not happened. If there is anyone out there from Prince Edward Island, anyone out there from New Brunswick and anyone out there from Manitoba, I am glad we followed this formula and not the formula advocated--