Post by kelvin on Dec 16, 2006 9:00:44 GMT -5
URL: www.theglobeandmail.com/servlet/story/LAC.20061216.FINANCE16/TPStory/National
Ministers fail to reach deal
No consensus on fiscal imbalance solution, but Ottawa getting 'more focused' picture
POSTED ON 16/12/06
STEVEN CHASE
VANCOUVER -- Canadian finance ministers failed to agree yesterday on how to enrich Ottawa's wealth-distribution programs, but the elements of a package that the Harper government might impose in its 2007 budget are nevertheless becoming clearer.
"Each time we meet the discussion becomes more focused," federal Finance Minister Jim Flaherty told reporters as a Vancouver meeting with his provincial counterparts wrapped up.
"It's quite clear there are a couple of differences of opinion that will not be capable of a consensus -- so a choice will have to be made," he said, referring to disputes over equalization calculations and transfer payments.
He said Ottawa will deliver solutions in the budget for revamping transfer payments and equalization, the $12-billion program that disburses cash to eight poorer provinces so they can provide programs comparable to their wealthier counterparts.
One of the key building blocks of a Tory deal will likely mean enriching equalization by more than $1-billion, along the lines of what was recommended by former Alberta deputy treasurer Al O'Brien.
Opposition at the meeting appeared to have abated in relation to the O'Brien report, which calls for a new formula that would enrich equalization by close to $1-billion for the provinces and $300-million for the territories.
It's expected Ottawa would tweak a recommended equalization cap to prevent it from effectively taxing back all non-renewable resource revenue from provinces.
"We believe that the O'Brien report, with some modifications, may provide the opportunity for a consensus," Nova Scotia Finance Minister Michael Baker said. "Whether it would be unanimity, I think that would be a bit much to stretch for, but I don't think the Government of Canada should require unanimity."
The Tories are also expected to adjust transfers so that all provinces receive their full per capita share -- a move that will greatly benefit Ontario, and somewhat help Alberta -- and cost close to $1-billion.
Ontario Finance Minister Greg Sorbara said he's hopeful that the Tories may move on this because Mr. Flaherty kicked off a discussion by quoting his Nov. 23 economic plan that said "per capita transfers are a much fairer way to proceed."
However, Mr. Sorbara said he'd wait until the federal budget early next year before celebrating.
"The proof is in the pudding."
Discord was noticeably less at this meeting than previous ones.
Quebec Finance Minister Michel Audet emerged from the meeting with a sunny outlook, saying: "There was a good openness from my colleague from Ontario . . . and we made progress. I must say that it has been a very good meeting."
Conservative political fortunes are riding on what Mr. Flaherty decides. The Tories made solving the "fiscal imbalance" -- sharing more of Ottawa's wealth -- a central pledge in the last election.
It's also expected Ottawa would pump $1-billion into the Canada Social Transfer and call this a postsecondary-education transfer.
Finally, the Tories are expected to package infrastructure cash already destined for provinces and cities -- including gas-tax revenue -- into a so-called infrastructure transfer.
Toronto-Dominion Bank chief economist Don Drummond, a former Finance official, predicted the Tory fiscal-imbalance solution will deliver something for all provinces but leave nobody entirely satisfied.
"Everybody will be somewhat better off but nobody will be entirely happy and we'll probably continue to discuss this issue as we always have," Mr. Drummond said.
Mr. Flaherty and his provincial counterparts agreed to meet again in June in Quebec City.
Ministers fail to reach deal
No consensus on fiscal imbalance solution, but Ottawa getting 'more focused' picture
POSTED ON 16/12/06
STEVEN CHASE
VANCOUVER -- Canadian finance ministers failed to agree yesterday on how to enrich Ottawa's wealth-distribution programs, but the elements of a package that the Harper government might impose in its 2007 budget are nevertheless becoming clearer.
"Each time we meet the discussion becomes more focused," federal Finance Minister Jim Flaherty told reporters as a Vancouver meeting with his provincial counterparts wrapped up.
"It's quite clear there are a couple of differences of opinion that will not be capable of a consensus -- so a choice will have to be made," he said, referring to disputes over equalization calculations and transfer payments.
He said Ottawa will deliver solutions in the budget for revamping transfer payments and equalization, the $12-billion program that disburses cash to eight poorer provinces so they can provide programs comparable to their wealthier counterparts.
One of the key building blocks of a Tory deal will likely mean enriching equalization by more than $1-billion, along the lines of what was recommended by former Alberta deputy treasurer Al O'Brien.
Opposition at the meeting appeared to have abated in relation to the O'Brien report, which calls for a new formula that would enrich equalization by close to $1-billion for the provinces and $300-million for the territories.
It's expected Ottawa would tweak a recommended equalization cap to prevent it from effectively taxing back all non-renewable resource revenue from provinces.
"We believe that the O'Brien report, with some modifications, may provide the opportunity for a consensus," Nova Scotia Finance Minister Michael Baker said. "Whether it would be unanimity, I think that would be a bit much to stretch for, but I don't think the Government of Canada should require unanimity."
The Tories are also expected to adjust transfers so that all provinces receive their full per capita share -- a move that will greatly benefit Ontario, and somewhat help Alberta -- and cost close to $1-billion.
Ontario Finance Minister Greg Sorbara said he's hopeful that the Tories may move on this because Mr. Flaherty kicked off a discussion by quoting his Nov. 23 economic plan that said "per capita transfers are a much fairer way to proceed."
However, Mr. Sorbara said he'd wait until the federal budget early next year before celebrating.
"The proof is in the pudding."
Discord was noticeably less at this meeting than previous ones.
Quebec Finance Minister Michel Audet emerged from the meeting with a sunny outlook, saying: "There was a good openness from my colleague from Ontario . . . and we made progress. I must say that it has been a very good meeting."
Conservative political fortunes are riding on what Mr. Flaherty decides. The Tories made solving the "fiscal imbalance" -- sharing more of Ottawa's wealth -- a central pledge in the last election.
It's also expected Ottawa would pump $1-billion into the Canada Social Transfer and call this a postsecondary-education transfer.
Finally, the Tories are expected to package infrastructure cash already destined for provinces and cities -- including gas-tax revenue -- into a so-called infrastructure transfer.
Toronto-Dominion Bank chief economist Don Drummond, a former Finance official, predicted the Tory fiscal-imbalance solution will deliver something for all provinces but leave nobody entirely satisfied.
"Everybody will be somewhat better off but nobody will be entirely happy and we'll probably continue to discuss this issue as we always have," Mr. Drummond said.
Mr. Flaherty and his provincial counterparts agreed to meet again in June in Quebec City.