Minister Appears Before Senate Committee

Nova Scotia Finance Minister Neil LeBlanc appeared before the Standing Senate Committee on Equalization in Ottawa today, seeking support for changes and improvements to the federal equalization formula.

In his address to the committee, the minister said that federal cost-cutting measures to the equalization program over the past several years are compromising its constitutional commitment. The equalization program aims to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

"The financing of health care is a shared responsibility, but there is clearly an imbalance with respect to shouldering the burden," said Mr. LeBlanc. "While the standards are established by the federal government, we are the ones who must ensure we are providing quality service that is comparable to other jurisdictions in this country. Within the current equalization program, it is becoming ever more difficult to do that."

Equalization transfers are funded from taxes paid by all Canadians in all provinces. The federal government collects these taxes and redirects them to the receiving provinces. The equalization program was first introduced in the late 1950s as a way to raise the standard of living in provinces that didn't or couldn't pay for similar services available in wealthier provinces. The transfers also helped to ensure that provinces can provide these services and have competitive tax rates -- a key to stimulating economic development.

"Federal restraint measures on the equalization program are estimated to have cost Nova Scotia a staggering $2.6 billion in revenues over the past 20 years. In my mind, this is not how equalization is supposed to work," said Mr. LeBlanc. "Equalization holds the promise for all Canadians that they will have access to quality programs and services regardless of where they live. It carries with it a clear understanding that our nation can only be as strong as the sum of its parts."

Over the past two decades, federal restraint measures have limited the funds available to the less wealthy provinces and have severely challenged their ability to provide the same levels of services as wealthier provinces. These challenges have been made all the more difficult when combined with the pressure of offering competitive tax regimes. Nova Scotia needs additional revenue, first to meet a national standard, and second, to compete with other provinces in attracting people and investment. The senate committee is reviewing the equalization program.