Progressive Conservative Leader Ches Crosbie says he hopes the public gets on board with his call for a referendum on equalization in the province.
Crosbie held a news conference Tuesday morning stating his belief that a referendum would put Newfoundland and Labrador in a better position to negotiate with the federal government.
“It converts what might be a consultation, if the federal government feels in the mood, into a negotiation where they must talk to us,” said Crosbie.
“I said that the government of the province has a duty to us as residents of this province to stand up for us. We’re a small place, we’re not that important. We have a sliver of the Canadian population — 1.4 per cent — and we’re losing people. It’s a crisis.”
Crosbie says a referendum that wins a clear majority would force the federal government into negotiations with the provincial government and potentially lead to this province getting a slice of the equalization money paid out to other provinces. Crosbie referenced a decision by the Supreme Court of Canada related to the Quebec succession referendum, which suggests the federal government would have to negotiate with a province that gets a clear majority on a referendum.
The referendum idea was first pitched by Alberta Premier Jason Kenney, and Crosbie says he’s following suit.
Finance Minister Tom Osborne says if a provincial election costs the province about $6 million, a referendum would cost between $2 million and $3 million. He says the Liberals have no intention of holding a referendum on equalization.
“We all want to see changes to the equalization formula. We don’t need a political stunt to tell us that. We know the answer,” said Osborne.
“It doesn’t change the fact that the formula is unfair to this province. We need changes to the formula. Mr. Crosbie and I agree on that point.”
Osborne says he doesn’t believe a referendum would do anything to force negotiations.
New Democratic Party Leader Alison Coffin sides with Osborne on the question, saying she’s unsure what the benefit would be.
“It’s not a particularly timely or prudent idea right now. Certainly, there are lots of better ways to spend money than on a referendum on equalization. We’ve seen the parliamentary budget officer report that talks about changing the equalization formula, and many of the recommendations were favourable to Newfoundland and Labrador,” she said.
“But wouldn’t it make better sense to use that as a starting point rather than something as divisive as a referendum in Newfoundland and Labrador alone on equalization, which is a national issue? This is Crosbie jumping on the bandwagon for Jason Kenney.”
Equalization is referenced in the Canadian constitution, but the formula used to calculate payments to each province is not enshrined in the constitution. The formula comes up for debate between the provinces and the federal government every five years, with the last adjustment to the formula in April. The changes this year were minor and didn’t mean any money coming to this province. It means Newfoundland and Labrador is a “have” province, despite its fiscal woes.
Of the $19.6 billion of equalization, $13.1 billion currently goes to Quebec, with the remaining money spread between Manitoba ($2.2 billion), Nova Scotia ($2 billion), New Brunswick ($2 billion) and Prince Edward Island ($429 million). This province currently receives no equalization money.
The equation considers the fiscal capacity of each province, meaning how much money a provincial government can raise from four kinds of taxation (personal income tax, business income tax, consumption tax and property tax) and natural resource revenues.
Newfoundland and Labrador has the highest revenue per capita in the country, which disqualifies it from receiving equalization.
A 2018 parliamentary budget officer report suggested that changes to the equalization formula, specifically by either reducing the amount of non-renewable natural resource revenue or discounting non-renewable resources altogether, would mean equalization payments for this province.