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April 30, 2001

The following statement was issued today by Joan Marie Aylward, Minister of Finance. It was also read in the House of Assembly:

I rise today to give my honourable colleagues an update following my appearance before the House of Commons Standing Committee on Finance last week in Ottawa.

Along with my colleagues from Atlantic Canada, I was pleased to have had the opportunity to explain to the committee, Newfoundland and Labrador's concerns regarding Bill C-18. As my honourable colleagues may know, Bill C-18 is intended to amend the equalization program to lift the existing ceiling for one year, 1999-2000. In the province's view, the amendment does not go far enough. 

I explained to the committee that for the Government of Newfoundland and Labrador there are two overriding issues with respect to an equalization ceiling:
first, whether a ceiling provision should exist at all; and,
second, if a ceiling provision is imposed, ensuring it is fair and reasonable.

One the first issue, I informed the committee that the province is fundamentally opposed to the existence of a ceiling provision and believes it should be struck from the program. This is our longstanding view and is consistent with the views of other equalization recipient provinces.

What the ceiling does, in effect, is to first look at the normal level of equalization entitlements, which by federal definition is a fair average of the revenue generating potential of provinces and in keeping with the constitutional commitment. It then second guesses this entitlement to ascertain, by some arbitrary measure, whether this level is too much for the federal government to pay. The ceiling, if it reduces equalization entitlements, results in recipient provinces, like Newfoundland and Labrador, being underfunded and puts us in a position of not being able to maintain reasonably comparable services at reasonably comparable levels of taxation. The ceiling should not be a mechanism used by the federal government to constrain and suppress normal program growth.

On the second issue, I argued that, if the federal government is intent on having a ceiling, despite our protestations and advice, that the ceiling must allow for fair and reasonable growth within the program. Atlantic ministers and Atlantic premiers were united in their view that Bill C-18 must be amended to allow the equalization program to grow, at least at the rate of national GDP.

My appearance before the committee was a good opportunity to express the views of Newfoundland and Labrador of the importance of the equalization program and the impact a ceiling will have on this province. We will continue to press the federal government to strengthen the equalization program to better benefit the provinces who need it most.

2001 04 30                               1:40 p.m.

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