Premiers to discuss fiscal imbalance

There are high hopes that the first ministers' meeting in St. John's on Wednesday will produce an agreement on how to fix the so-called fiscal imbalance between what Ottawa collects in taxes and what it returns to the provinces in equalization payments.

However, Alberta Premier Ralph Klein said it may be difficult for the premiers to agree on a single solution.

"I doubt very much if any consensus will be achieved," said Klein.

It is expected the Harper government will soon announce a package to resolve ongoing complaints that Ottawa continues to run huge budget surpluses, while provinces say they are struggling to maintain services.

Some premiers see enriching the $11-billion equalization program as a means of evening the fiscal imbalance.

Ontario premier on other side

However, Ontario Premier Dalton McGuinty is opposed to that view.

Ontario has never qualified for equalization, and McGuinty said Ottawa's surplus should be spent on health and education instead of the equalization program. He plans to deliver that argument on Wednesday.

"It turns out that a Canadian in Ontario receives $86 less— to the provincial government from the federal government— than Canadians living in other provinces," said McGuinty.

In the days leading up to these discussions, McGuinty has been talking to some premiers individually, seeking support for his position.

B.C. Premier Gordon Campbell said he is listening to all sides, but maintains the simplest way to return a federal surplus to Canadians is to give them a tax cut.

Wednesday's meeting will kick off the first ministers' three-day conference in St. John's.