Province, business and labour join forces to urge federal reform of equalization program

The provincial government and organized business and labour have jointly endorsed the Senate Report on Equalization and are presenting a united, common front in calling upon the federal government to strengthen and reform the national equalization program.

Premier Roger Grimes, Elaine Price, spokesperson for organized labour, and Martin Lockyer, spokesperson for business organizations, announced their position today on the equalization issue following a meeting of the Strategic Partnership Forum. This was the second forum meeting held since the new strategic partnership initiative was announced in January.

"We all agree that the federal equalization program is not working as well as it could to help advance Newfoundland and Labrador�s interests and the province�s ability to contribute more effectively to Canada," said Premier Grimes, who chaired the forum.

"The socio-economic well-being of our province is of concern to all of us and must be a shared responsibility. Equalization is a good program, but one that needs improvement," said Ms. Price.

Mr. Lockyer said: "The equalization program is important to all Newfoundlanders and Labradorians and has a direct impact on the province. Business leaders at this forum are committed to moving a united message on equalization forward at the national level."

The forum agreed that, in addition to publicly endorsing the Senate Report, it would develop and deliver common messages to raise awareness of equalization issues provincially and nationally. The forum�s communications strategy will seek to dispel a number of misconceptions and myths surrounding the equalization program, such as the notion that the program cannot be changed without the consent of all provinces. Business and labour leaders will use the communications strategy to build support for reform to the program among their provincial and national bodies and networks across the country. The forum also agreed that, in addition to equalization reform, there is merit in examining other opportunities to strengthen the province�s overall fiscal capacity to support its economic and social development goals, such as improving the Atlantic Accord.

The forum agreed that equalization is an issue which strikes at the heart of the province�s capacity to improve its economic and social future. It affects not only the services that government can provide to its citizens, but the tax environment in which business and labour must compete in order to advance the economy. Forum members emphasized that equalization is a national entitlement under the Constitution and the federal government must have the will and the vision to fulfill its duty and constitutional responsibility to all Canadians, including Newfoundlanders and Labradorians.

Recommendations of the Senate Report on Equalization support those made by the Government of Newfoundland and Labrador and the other seven recipient provinces. The recommendations include the removal of the ceiling on equalization payments which hinders the advancement of those provinces that receive equalization benefits. The report also recommends returning to a ten-province national standard for the calculation of equalization entitlements to replace the present five-province standard. The five-province standard excludes Alberta and the Atlantic provinces, and this fundamentally distorts the equitable sharing of the nation�s wealth among provinces. The report also calls for changes to increase protection for a province�s equalization entitlement when there is an increase in its revenues from non-renewable natural resources, such as offshore oil and gas resources.

The Senate Report also calls for a review of the Atlantic Accords to determine if they are meeting their primary purpose of ensuring that the relevant provinces are the principal beneficiaries of their offshore oil and gas resources.

The Strategic Partnership Forum is also exploring some of the issues and potential impacts of the demographic changes that are occurring in Newfoundland and Labrador, with a view to determining how business, labour and government can work together to help minimize the negative effects and look at proactive measures for improving the province�s economy. Some of these demographic changes include an aging population, the movement of people from rural to more urban areas, and outmigration, particularly of the province�s youth. The forum recognized that these are significant challenges, and also agreed that they need to be confronted directly and together.

Further dialogue on demographic issues, as well as specific issues related to competitiveness and productivity within the provincial economy, are expected to be held over the next several months and brought to the next meeting of the forum in the Fall of 2002.

Media contact:

Carl Cooper, Office of the Premier (709) 729-3960
Josephine Cheeseman, Industry, Trade and Rural Development (709) 729-4570;
Lana Payne, communications contact for labour (709) 576-7276;
Richard Alexander, communications contact for business (709) 368-6576

Photo#1: Elaine Price, Premier Roger Grimes, and Martin Lockyer at a news conference following a meeting of the Strategic Partnership Forum.

In January 2002, government, business and labour announced a strategic partnership initiative that evolved from almost two years of intense study and research. The initiative is designed to foster a collaborative, consensus building approach to advancing the socio-economic interests of Newfoundland and Labrador.

The Strategic Partnership Forum is the core of the new partnership initiative. The forum is a semi-annual meeting among labour, business and government leaders that is chaired by Premier Roger Grimes. The forums are designed to improve communication among major players in the economy. They will also serve as a vehicle for sharing and developing common perspectives on the performance of the economy, and for identifying key areas where business, labour and government need to work together more effectively to address specific opportunities and challenges in the economy.

Earlier collaborative approaches to economic challenges have resulted in joint solutions on key issues. The Strategic Partnership Forum builds on the encouraging results of the Workers� Compensation Task Force and the review of the Labour Standards Act.

The concept of a government-business-labour partnership to advance the economy was raised during government�s public consultations on the Renewal Strategy for Jobs and Growth. Business and labour leaders across the province consistently advised government of their interest in exploring a more cooperative approach on economic issues. In response, government brought together a team of senior business, labour and government leaders to explore new models of cooperation. The group reviewed partnership models in several countries, including Iceland, Ireland and the Netherlands to see how this challenge has been successfully approached in these jurisdictions. The strategic partnership initiative agreed to by the three parties and announced in January has the benefit of experience and lessons learned in these other jurisdictions, but is a made in Newfoundland and Labrador initiative to suit the province�s particular needs.

2002 06 04                           4:20 p.m.