Equalization: From "Promise" to ComPromise

Alberta paid off its debt several years ago and hence does not receive equalization because it is a rich "have" province. The longer our provincial debt exists the more we pay out to service the interest on the debt. Conversely the quicker we get it paid off, the better the province and ultimately the country benefits. If Stephen Harper stuck to the "promise", or the idea that he supposedly inferred, that all (100%) non-renewable resource revenue would be exempt from the equalization formula, then that would mean billions more for the province. That scenario would be an excellent opportunity to pay down the province's debt more expediently, and get out of the equalization business, albeit still many years away.

Harper's Letter to Danny Williams - quote on non-renewables in the equalization formula:

We will remove non-renewable natural resource revenue from the equalization formula to encourage the development of economic growth in the non-renewable resource sectors across Canada. The Conservative government will ensure that no province is adversely affected from changes to the equalization formula. (Feb. 4, 2006)

That's what he told Williams in writing, it's pretty general and leaves the percentage of non-renewable removal wide open. It does not actually say 100%, but did he mean 100% by verbally expressing that to Danny Williams?

It would appear that Harper has gone from "promise" to compromise. As long as Harper looks pretty in the polls, then he probaly won't budge much from the much talked about, and seemingly expected, 50% of non-renewables, rather than 100%, excluded from the equalization formula. One argument for keeping 100% of non-renewable revenue is that it is a one time only opportunity for that particular resource, e.g., oil and gas. That type of income for the province is finite.

How will the Liberal or NDP's version of equalization compare to Harper's and to Danny Williams' vision of a fair formula? Even if Stéphane Dion made a "promise" to Premier Williams to totally clear non-renewables from equalization, or say 25% inclusion of non-renewables, offer to Danny Williams, which would sound better, then we will still have to ask, "what is a promise?" What does general wording really mean other than wishful thinking? On the other hand, even if we had more detail in writing up front, e.g., "100% of non-renewables will be removed ..", does that matter anyway?

If the province is ultimately stuck with some compromise on equalization, then how about a counter compromise offer? For example, if 50% is the amount, then what if 25% of that were to be mandatorily put towards our provincial debt. That is, in addition to what the province normally pays or should pay, according to income percentages (or at least an average of the last 10 payments, for example). The rule could be that the province has to make its payment towards the debt each year first, then the federally held in trust 25% portion can then be paid towards the debt also.

The net debt per capita for Newfoundland and Labrador, for 2005-06 was $22,733. The debt for the same year was $11.7 billion.