Editor's Note: As the Liberal Government readies for
their second budget, I would like to remind regular readers of the eight-part
"Budget Colloquy” posted by JM back in 2015. Although you can argue with some of JM’s
recommendations, this series was well-researched and offers a solid analysis of the state of the province’s finances. JM now returns with an introductory post on the equalization issue.
Guest Post by
"JM"
First,
I must disclose that I am not an expert on equalization. It is a complicated federal program, which
played a pivotal role in most of the history of the province. During
the 90’s, equalization provided nearly 30% of the total revenue to the provincial government. The highest
absolute contribution was $1.2 billion which occurred in 2001.
In
1999 NL received over 12% of the total federal equalization allocation, for about
2% of the population of the country.
By
comparison, in 2016 we received no equalization and the province's combined revenue
from other Federal sources ($702 Million) and from offshore royalties ($485
Million) was less than the 2001 equalization value alone, adjusted for
inflation.
As the second budget from the Ball government will likely attest, NL is in dire financial straits. After nearly a decade of hiatus, equalization is again back
in the news. Dwight Ball wants to get back at the negotiating table for the next round of negotiations which occurs every five years.
