By Kate Wright
As appeared on page A1

Finance Minister Victor Boudreau is dismissing a report by an Atlantic think-tank that says the region will lose billions of dollars in equalization payments under the federal government’s tweaked transfer formula.

The report, released yesterday by the Atlantic Provinces Economic Council, shows the drastic differences in equalization transfers between the previous equalization formula and the Conservatives’ new spending equation.

APEC said New Brunswick will see a $68-million increase in revenues for the first two years under the new equalization program, and reduced revenues in each year thereafter.
The province will receive a total of $1.477 billion from the federal government this fiscal year, compared to the $1.435 billion Boudreau included in his provincial budget.

Last year, the province received $1.451 billion in funding from Ottawa.

While APEC’s findings have been largely toted by past finance ministers, Boudreau dismissed the calculations as “the point of view of one organization.” He said his department has its own economists and its own agenda.

While careful not to call it a side-deal, Boudreau said the province is still working to convince the federal government to fatten the province’s equalization purse.

The province is hoping the federal government will contribute to the province’s self-sufficiency agenda by chipping in to wean New Brunswick off the federal dime by 2026.
“Instead of worrying about what other provinces are getting or what APEC says, we’re going to focus on building our relationship and our partnership with the federal government,” Boudreau said.

Earlier this week, Prime Minister Stephen Harper said his government wouldn’t be crafting any side-deals with any province.

In Question Period yesterday, Harper said the new equalization formula gives more money to every province receiving the transfers and that no one should be unhappy.
“There is a difference between getting less money than they wanted and actually getting less money,” he told the House of Commons.

“The only thing that can really change that in the future is if the economic circumstances of those provinces improves such that they move closer to the national average. That would be a good thing for all Canadians.”

Premier Shawn Graham criticized the federal Tories in March when the budget was tabled, saying the province received less than what it should have.

The Conservative premiers of Nova Scotia and Newfoundland have both openly criticized the federal government for changes it made to equalization transfer in the budget.

Boudreau said you won’t see Graham doing the same.

“It’s not our style; I’ve heard the premier say you can’t shake hands with clenched fists.”
Paul Hobson, co-author of the APEC report, said convincing the federal government to temporarily increase equalization payments so the province won’t have to rely on Ottawa in 20 years will be a hard sell.

“I cannot imagine a scenario in which New Brunswick is able to successfully grow its way out of equalization,” he said.

“There is nothing wrong with being an equalization recipient “” this is not welfare for the province. It’s a perfectly coherent part of public policy in a highly decentralized federal system like ours.”

But Charles Cirtwill, acting president of the Atlantic Institute for Market Studies, said New Brunswick needs to look at everything the federal budget offers and stop focusing solely on equalization transfers.

He said there is money in the budget for infrastructure and child care and the province should be “reasonably well satisfied.”

He said there are also a number of pools containing billions in untouched federal funds that the provincial government should focus on.

“We should be looking at the bigger picture — the big win isn’t in equalization, it’s in all other transfers that are coming through,” he said. “The federal government has thrown some sweeteners in the deal to keep them quiet and so far. It’s worked it seems.”

New Brunswick’s regional minister Greg Thompson said the APEC study doesn’t factor in future economic growth in the province and doesn’t reflect other transfers the federal government is sending.

“(Graham) is not arguing very hard because the premier knows he’s been treated fairly,” he said.