Mr. Speaker, I will be sharing my time with the member for Fundy Royal.
Recently the Minister of Finance said he was not surprised to hear Saskatchewan politicians united in their demand that the province's non-renewable resource revenues be excluded from the equalization formula as has been granted other provinces. The Minister of Finance, a Saskatchewan native himself, said that this was an easy thing to do. I respectfully disagree.
Getting Saskatchewan's Conservative members of Parliament, the NDP premier of the province, along with the leaders of the provincial Liberal and Saskatchewan parties united in a common cause considering their significant ideological differences is anything but an easy thing to do. Even a brief examination of the facts would reveal that this is the right thing to do.
Representatives of the people of Saskatchewan are obliged to speak out against an equalization system that penalizes our province with an over-emphasis on non-renewable resources and a complete failure to accurately measure fiscal capacity. The detrimental effects of the present equalization formula should not be under-estimated. It has and continues to have a real effect on the prosperity of the residents of Saskatchewan, robbing them of economic benefits resulting from energy revenues.
Noted Queen's University economist, Thomas J. Courchene, has stated that Canada's equalization program represents a wholesale assault on the fiscal incentive and competitive environment of Saskatchewan's energy sector. It has obvious and dramatic spillovers to the province's entire budgetary environment.
From 1998-99 to 2000-01, energy revenues in Saskatchewan increased $668.3 million, yet simultaneously, the equalization offsets over the same period increased by $835.3 million. In effect, the province saw its energy revenues clawed back at a rate of 125%.
While the federal government has attempted to ameliorate the situation with back payments, it cannot turn back the clock and recover the lost economic opportunities because of this flawed equalization formula. Courchene declared that this clawback was a key factor leading to the province's relative decline in terms of the ranking of provincial disposable incomes.
Unfortunately, finding statistics to illustrate the financial difficulties facing Saskatchewan residents is an easy thing to do. We just have to look at statistics indicating private sector job growth in the province. It was a mere .3% in 2004. Its share of total employment in Saskatchewan is at its lowest level in more than a decade. We just have to look at the fact that between 2001-04, capital investment in Saskatchewan was the worst among all provinces with an average annual growth rate of 1.8% compared with the national average of 5.6%. Other figures have shown that Saskatchewan's families have saved nothing in the last four years, instead, going progressively deeper into debt.
Saskatchewan farmers consistently reap the worst net farm income in this country. Agriculture Canada reports that the net realized farm income in 2005 for Saskatchewan farmers will be a negative $486 million, significantly lower than the negative $166 million for 2004. All this while national farm income numbers are improving.
These numbers have real implications for people in my province. Good, hardworking people whose aspirations of building and sustaining a business in Saskatchewan are being impeded by a gloomy economic reality that is suffocating economic development and opportunity in the province.
This is especially true in the agriculture sector. Terry Hildebrandt, with the Agricultural Producers Association of Saskatchewan, recently spoke of good, stable farm operations throwing up an auction sale and getting out while they can while others not as fortunate, who have farmed 35 or 40 years, are re-mortgaging the farm to pay their input costs back.
For that reason, we should not be surprised that according to a recent survey conducted for the provincial government one out of every four young people in Saskatchewan is seriously considering moving to another province. One of the most frequent reasons given is to find better economic opportunities.
Those statistics and figures paint a stark picture of a province wrestling with widespread and troubling financial difficulties. However, under the present equalization formula, which overemphasizes non-renewable resources and fails to accurately measure fiscal capacity, Saskatchewan is classified as a have province, thus ensuring most of the province's non-renewable resource revenue will be clawed back.
We should consider that for a moment. What incentives are there to promote economic development and opportunities in the non-renewable resources sector when a provincial government knows that for every dollar it raises it effectively makes itself and its residents worse off financially? Answering that question is an easy thing to do. There are no incentives. There is a fundamental flaw in the formula.
The concept of equalization is to assist have not provinces. However, under this formula, we could conceivably cement the economic stagnation of some provinces, such as my own, for decades to come. The treatment of Saskatchewan's non-renewable resources under the equalization formula is, to quote Courchene, “not only inequitable, it is fiscally and economically immiserating”`. We cannot allow this situation to persist.
For that reason, I call on the government to extend the same provisions it has guaranteed other provinces in what has been dubbed the Atlantic accord and exclude the non-renewable resources of Saskatchewan and all other provinces from the equalization formula.