House of Commons photoLost his last election, in 2019, with 34% of the vote.
Natural Resources November 5th, 2004
Mr. Speaker, I can tell the House that last evening I had a very lengthy conversation with Minister Sullivan from Newfoundland. Discussion between the governments is continuing. I think all of us want to achieve the very best possible result and we will work toward that in a very constructive frame of mind.
Supply November 4th, 2004
Mr. Speaker, in the give and take of the discussion, to get to the hon. gentleman's first question, it is unfortunate that the tenor of the discussion took on a rather sour overtone. I want to assure him that in everything I have done on this file, and I think this would be verified by Minister Sullivan and Minister Clarke, has been aimed toward arriving at a constructive solution. I will continue to work in that fashion.
Over these last number of days I had the opportunity to talk to my provincial counterparts. I know the Prime Minister has had conversations with the premiers. The dialogue is ongoing and I want it to be fruitful and successful.
With regard to the second part of my colleague's question on the issue of misunderstanding, in some of the dialogue it may not have been clear as to what exactly was referred to in this Ontario threshold. Some people had the impression that it referred to the combination of own source revenue, equalization and the existing 30%. It has no impact there whatsoever.
The reference to that threshold, in the discussion thus far, has applied only to that fourth and incremental stream. In the realm of $50 or $55 per barrel of oil, it is not beyond the realm of possibility that on the basis of own source revenue, equalization and the 30%, that the fiscal capacity of Ontario could be matched without the incremental stream.
Supply November 4th, 2004
Mr. Speaker, because of the advantages of resource development and production, I am very pleased that Saskatchewan is moving progressively these days toward that have status. It could be this fiscal year or next fiscal year, but Saskatchewan is right on the cusp of moving out of have not into that have category.
One of the things that will be there, however, if Saskatchewan has future difficulty, is the equalization formula that we are working very hard to ensure will treat all provinces equitably. I am sure my hon. friend would agree with me that we from Saskatchewan would by far prefer that we do not need that support system and that we would rather stand on our own economic strength. Like her, I want to see Saskatchewan not only become but stay a have province within Confederation.
Supply November 4th, 2004
Mr. Speaker, there is obviously no limitation on royalties or offshore revenues. Under the terms of the accord, those revenues are treated, with respect to Newfoundland and Nova Scotia, as if they are onshore resources.
I am glad the hon. gentleman clarified this point. He is not talking about offshore resources. He is talking about the impact on equalization. The impact on equalization is the misunderstood piece in this equation.
As I said in my remarks, there are four streams. The own source revenue is owned 100% by the province and equalization is on top of that. The two of those play off against each other. On top of that there is the 30% generic solution, which gives Newfoundland and Nova Scotia that extra bonus. What we are working on is the incremental 70% on top of all of that to reach the fiscal capacity of the second most wealthy province in the country.
Supply November 4th, 2004
Mr. Speaker, I will be splitting my time with the member for Dartmouth—Cole Harbour.
Let me begin by noting that I come from a province, Saskatchewan, that has historically been categorized as one of those have not provinces within Confederation. We are very likely emerging from that status perhaps this year, maybe next year. However, like the people of Newfoundland and Labrador and like the people of Nova Scotia, Saskatchewan people have always understood very clearly the fiscal disparities that fall unevenly among provinces. Some are clearly more wealthy and more fortunate than others.
We in Saskatchewan understand the frustration and the difficulty that result from not having the same ability as other provinces to raise our own provincial revenues to meet our own provincial priorities. Like Nova Scotians and Newfoundlanders, Saskatchewanians struggle against our historic fiscal limitations and we aspire to the day when we can match the prowess and the success of the more economically fortunate provinces.
In the meantime, we Canadians have, in our typically Canadian tradition of caring and sharing, invented a system to try to even up the economic strengths among the haves and the have nots. It is called equalization. It started in a modest manner back in 1957. It grew to such substantive and symbolic importance that in 1982 it was entrenched into the Canadian Constitution.
By having an equalization system, Canadians are essentially saying to each other that for those of us who live in provinces with such limited fiscal capacity that we cannot on our own reach a common standard of our own source provincial revenues, then in those circumstances the Government of Canada steps in to make up the difference.
Historically, the Government of Canada has been investing somewhere between $8 billion and $10 billion per year in equalization payments across the country. It is a matter of fairness and it is a matter of national cohesion.
However, we in the receiving provinces all aspire to graduate from that system, to be able to stand on our own like the more wealthy provinces do. To accelerate that day in relation to two of the least wealthy and most indebted provinces, namely Newfoundland and Labrador and Nova Scotia, which have come recently upon some new sources of wealth generation, namely offshore oil and gas, the Government of Canada has made some very special arrangements to help deal with the unique nature of those offshore resources and to help deal with the larger and very real socio-economic needs of these two provinces.
Normally, under equalization, when a province's internal fiscal capacity increases, its equalization allotment goes down and vice versa. It is like an insurance policy on provincial government revenues. If a province can raise more on its own, it needs equalization less. If it can raise less on its own, then it needs equalization more.
In the case of Nova Scotia and Newfoundland and Labrador and offshore resources, there is a special incremental arrangement to boost both of those elements. Here is how it works. Nova Scotia and Newfoundland and Labrador receive today 100% of the provincial revenues generated from their offshore activity; natural gas in the case of Nova Scotia, oil in the case of Newfoundland. The revenues flow directly into provincial treasuries and they add to each of those provinces internal fiscal capacity. Obviously, that is a very good thing, but not, unfortunately, good enough.
Even with this new revenue from oil and gas over the last several years, Newfoundland and Labrador and Nova Scotia still have remained below the national standard of fiscal capacity in the equalization formula. Therefore, Newfoundland and Labrador and Nova Scotia still require equalization to bring them up to that national standard.
As their own source revenues, including from the offshore go up, equalization payments go down, but equalization is still required nonetheless to meet the national standard. The special incremental arrangement is this. When equalization in Nova Scotia and Newfoundland drops due to better offshore revenues, the equalization reduction is not on a dollar for dollar basis. The province retains a bonus of 30¢ on the dollar.
Therefore, the existing arrangements today, for Newfoundland and Nova Scotia, consist of three revenue streams: first, of course, their own source offshore revenues, which they already earn and retain 100%; second, equalization, to take these provinces up to that national standard in the equalization formula; and third, that 30% added bonus to help offset equalization reductions.
The discussions in June between the Prime Minister of Canada and the Premier of Newfoundland and Labrador were all about adding more on top of own source revenues, on top of equalization, on top of that 30% extra. The objective was to add a fourth revenue stream, to take that 30% extra to a full 100% extra for a period of eight years, which roughly corresponds with the period of payments defined in the offshore accords, and with that fourth extra stream continue to boost Newfoundland and Nova Scotia up to match the fiscal capacity of the largest and second most wealthy province in the nation.
To the best of my knowledge and belief, the proposal that was put on the table by the Government of Canada is a faithful reflection of the understanding between the two premiers and the Prime Minister. It also reflects the essence of the position that I have taken with the minister of finance in Newfoundland and Labrador and the minister of energy in Nova Scotia.
There have been many conversations, discussions and meetings back and forth among us over the course of the last number of weeks and months. I think we have all been trying sincerely and honestly to arrive at the very best possible outcome, especially for Newfoundland and Labrador and Nova Scotia.
Given the complexity of the subject matter that we have been dealing with, the profound importance and the long history of this issue and the verbal nature of much of the give and take, it is only natural, to use the words of Premier Williams, for there to be some room for potential misunderstandings. There is also ample room on a topic like this for lots of emotion and sometimes some high rhetoric. However, I hope that we can all stay focused upon the real objective before us.
Our goal is to support Newfoundland and Labrador and Nova Scotia in their ambition to emerge from have not status, fulfilling very much what the Prime Minister had in mind this past summer and throughout this whole process.
I want to take this opportunity to thank Minister Clarke in Nova Scotia and Minister Sullivan in Newfoundland and Labrador for their constructive engagement with me in the search for precise and workable solutions. We have had some difficult matters to cope with together, but I believe that we have worked together honourably and in good faith and will continue to do so.
I also want to acknowledge and thank my colleagues, the Minister of Natural Resources, the Minister of Fisheries and Oceans, the Minister of Public Works and Government Services, together with all our MPs and Senators in Newfoundland and Labrador and Nova Scotia. They, too, are working very hard and faithfully for their home jurisdictions. We are all working hard for Canada.
Canada is far more than just a loose collection of provinces and territories. We reach out to each other and we try very hard to accommodate one another. We continue to build together the finest and fairest country on the face of the earth. Part of that effort is sharing our common risks and sharing our common advantages.
Indeed, since the Prime Minister and Premier Williams first spoke to each other on Newfoundland and Labrador's situation back in June, there has been a large material change. We now have a new equalization program, a new equalization formula and an incremental contribution by the Government of Canada to that formula of $33 billion over the next 10 years. We will continue to work hard on getting the right solution for these two very important provinces.
Taxation November 3rd, 2004
Mr. Speaker, I totally reject the politics of grievance and blame that are reflected on the floor of the House of Commons by the Bloc.
The fact of the matter is both Quebec and Saskatchewan benefit from the transitional arrangements. Quebec benefits under floor number one. Saskatchewan benefits under floor number two. Different provinces across the country benefit in different ways. The gross benefit to the province of Quebec is larger than the gross benefit to Saskatchewan.
Taxation November 3rd, 2004
Mr. Speaker, if the hon. gentleman is referring to two different situations in two different fiscal years, I am happy to tell him that as we move into the new regime for equalization, there are two years of transition. Over those two years of transition, Quebec will receive approximately $9 billion and Saskatchewan will receive some $600 million.
Natural Resources November 3rd, 2004
Mr. Speaker, I am very confident that we will ultimately arrive at a satisfactory conclusion for the provinces of Newfoundland and Nova Scotia.
I would point out to the hon. gentleman that what we are dealing with, at least in part, are the offshore accords that were signed by a previous Conservative government. Both of them were specifically limited in terms of time and in terms of dollar values. We are trying to improve on the previously flawed Conservative record.
Natural Resources November 3rd, 2004
Mr. Speaker, the work between the Government of Canada and the respective provinces continues to be ongoing.
I would like to point out to the gentleman that offshore resource revenues are today owned and received 100% by the relevant provincial governments. Equalization comes on top of that. On top of all that, the Government of Canada adds at least a further 30% bonus in offset reductions, and we are proposing to add a further 70% on top of that, for a total of not 100% but 200%.
Taxation November 2nd, 2004
Mr. Speaker, all provinces under the two floors are being treated in exactly the same way for fiscal year 2004-05. That was thoroughly discussed at the meeting on equalization not long ago.
I point out that as late as today I was in conversation with the Government of Quebec in terms of the arrangements it would like in terms of smoothing out the impact of equalization on that province. I believe we have arrived at a solution that is entirely satisfactory to the Government of Quebec.