Released on February 20, 2004
The Saskatchewan Government is disappointed that reforms to the federal equalization program failed to address the equitable treatment of resource revenues.Emerging from meetings in Ottawa where the federal government presented its package of Equalization reforms, Finance Minister Harry Van Mulligen said he and his provincial counterparts were hoping to see a more adequate, responsive equalization program.
"The provinces rely on federal transfer payments to finance key public services such as health care," Van Mulligen said. "Saskatchewan's loss of federal transfer payments and the program's treatment of mining activity creates a significant challenge when we are already facing fiscal difficulties, due to escalating costs in health care, agricultural support and education."
Van Mulligen pointed out that health care costs currently account for 42 per cent of the province's operating costs.
"There has been a substantial reduction in federal equalization payments in the current fiscal year that we believe will be larger than the $2 billion one-time health care supplement from the federal government," Van Mulligen added.
A key issue for Saskatchewan is strengthening the Equalization program through measures that improve the adequacy of federal transfers to finance key provincial services. Saskatchewan's Finance Minister also specifically raised the issue of the current treatment of the resource sector under Equalization.
"Achieving higher resource royalties can result in a loss in Equalization payment of over 100 per cent," Van Mulligen said. "In the area of mining royalties, the current federal determination of equalization is unpredictable and very damaging to Saskatchewan's fiscal situation. The reform didn't adequately address this, so our province will have to continue to push the federal government for meaningful reform to the Equalization program."
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For More Information, Contact:
| Debbie Clark Finance Regina Phone: (306)787-6605 Email: dclark@finance.gov.sk.ca |