Premier pleased with recommendations from Standing Committee on National Finance

Premier Roger Grimes today said he is pleased with the results of a report released yesterday by the Senate Standing Committee on National Finance titled The Effectiveness of and Possible Improvements to the Present Equalization Policy. Premier Grimes said the committee made eight recommendations to the federal government on changes to the current Equalization program.

"The recommendations in this report taken together represent good news for Newfoundland and Labrador," said Premier Grimes. "This province has been continually engaged in efforts aimed at the enhancement of the Equalization program and has made numerous representations to the federal government," said Premier Grimes. "In my presentation to the Standing Committee on Finance last October, I made a strong argument that the province should be the principal beneficiary of its offshore resource revenues as committed to under the Atlantic Accord. The recommendations in the report indicate the fact that the Senate Committee recognizes there are flaws in the current Equalization program that need to be fixed."

The recommendations in the report which are favourable for and supported by Newfoundland and Labrador include removing the ceiling on Equalization payments to the provinces, maintaining the floor provisions in the Equalization program, restoring the 10-province standard in determining provincial entitlements under the Equalization program, changing the Generic Solution so as to increase the share of the province�s entitlements that are protected when its non-renewable resource revenues increase, and undertaking an evaluation of the Equalization provisions of the Atlantic Accords to determine if they have met the intent for which they were designed.

Premier Grimes added that these recommendations take into account many of the arguments the province has been making to the federal government for the last number of years. In particular, the committee acknowledges the situation of provinces such as Newfoundland and Labrador and Nova Scotia where revenue gains from offshore petroleum resources are offset as a result of reductions in federal Equalization payments. The committee is recommending, as the two provinces have, that the problem must be addressed either inside or outside of the Equalization program.

"I am extremely pleased that the committee has come forward with these recommendations and recognize the need for changes in the current Equalization program," said Premier Grimes. "The question now is whether or not the federal government will move forward on these recommendations and do the right thing for this province and for the rest of Canada."

Media contact: Carl Cooper, Office of the Premier, (709) 729-3960.

2002 03 22             12:45 p.m.