N.L., Ont. premiers differ on equalization

Newfoundland and Labrador Premier Danny Williams and Ontario Premier Dalton McGuinty will try to find common ground on the tricky issue of equalization during next week's premiers' conference in St. John's.

Both leaders criticized a report released in June that recommended the federal equalization program be increased by nearly $900 million annually through inclusion of at least some natural resource revenues in the way the program is calculated.

Although the two premiers agree that the program needs reform, the pair was unable to reach an agreement on how to change the equalization formula during a meeting in St. John's on Thursday.

McGuinty said he wants Ottawa to provide the provinces with more money directed to health and education instead of pouring money into the equalization program.

"For an Ontario perspective, one of the things that we have maintained is that we fail to see why we need to further enrich equalization at this point in time," McGuinty said Thursday.

Williams, on the other hand, believes the program needs more money to function properly. However, he said he would like to reach a solution that works for all of Canada.

Ready to compromise

"This is about better fiscal arrangements for all the provinces across the country," said Williams.

"From Newfoundland and Labrador's perspective, I am prepared to compromise in some areas to find a solution and I think every jurisdiction has to do that."

Williams said he is optimistic that a consensus can be reached when the premiers meet in St. John's next week.

However, McGuinty said if an agreement cannot be reached by the end of next week, the prime minister may impose changes on the provinces by the fall.

"I think he's eager to deal with this— certainly before the next election," said McGuinty.

"If we fail to emerge with a consensus, then he'll be called upon, understandably, to impose a solution."

Equalization payments are money the federal government gives to poorer provinces to help narrow the gap between have and have-not regions. The payments are intended to ensure Canadians pay pretty much the same amount of tax for the same quality of services.