Crosbie promises referendum on equalization, Ball says province can't change it

It's like Newfoundland and Labrador's version ofBeauty and the Beast's a "Tale as Old as Time."

"Certain as the sun, rising in the east," as the lyrics go, equalization payments with Ottawa are a topic on the provincial campaign trail.

Progressive Conservative Leader Ches Crosbie vowed Wednesday to hold a referendum on equalization if he is elected premier. He says that couldforce the federal government back to the negotiating table.

He told reporters during a campaign stop in Clarenvillethat complex changes to the federal government's equalization formula in 2007 hurt the provincial government's bottom line.

In terms of what exactly the referendum question would be, Crosbie said it would require "folks with sharp legal pens" to draft, but "it would be a vote on whether we're getting fair treatment under equalization."

A spokesperson for the Progressive Conservative campaign later said thechanges at issue include the introduction of a "fiscal capacity cap," that affects the calculation of a province's fiscal capacity for the program.

According to a 2008 report from the Parliamentary Budget Officer, the cap"most likely affects provinces with large natural resource revenues, which are partially excluded from equalization but contribute to overall fiscal capacity."

• READ:Federal Financial Support to Provinces and Territories: A Long-term Scenario Analysis

That report estimated Newfoundland and Labrador would receive equalization payments for decades if the cap was removed. Right now, the province receives none.

"We need to have a serious discussion with the federal government about offsetting the inclusion of our offshore resource revenues in the equalization formula," he said. "I want to return to that discussion, with, in my hand, the weapon of a referendum on our side that forces them to talk about it."

Crosbie is relying on a 1998 Supreme Court of Canada opinion. Thedecision lays out what conditions a secession referendum would need to meet before it could compel any federal government and other provincial governments to begin negotiations.

The PC leader says the same standard would apply to other referendums even if the subject matter itself is different.

• Trail Mix: Sign up for our election newsletter, coming soon to an inbox near you

"A clear question with a clear majority vote in response, the federal government has the obligation to negotiate with the province where that vote happened," he said. "It is [different] but it's still a constitutional right."

Popular topic, coast to coast

Alberta premier-designate Jason Kenney, leader of the United Conservative Party, pledged to hold a referendum on equalization payments as well,if oil pipelines are not built to move his province's product to the country's west coast.

But Crosbie said his issues with the formula are different than Kenney's he's concerned with particular changes, and their impact on the Atlantic Accord provisions.

Equalization provides $19-billion a yearto provinces across the country that havebelow average "fiscal capacity"or "have-not" provinces as they are often referred to.The fiscal capacity isdetermined by how much revenue a province earns, and could earn,per capita. It is not determined by its geographical size or budget deficits and surpluses.

The money comes from the federal government, and is distributed in an attempt to provide provinces with similar levels of government services.

Finance Minister Tom Osborne has said it's frustrating Newfoundland and Labrador is considered a "have" province under the current formula, given the fiscal situation.

Equalization 'is a federal program'

When asked about Crosbie's promise at a campaign stop in Happy Valley-Goose Bay on Wednesday, Liberal Leader Dwight Ball said Crosbie a lawyeris rather litigious, threatening to sue Ottawa for Bill C-69, for example.

"It seems to be what he wants to do is sue everybody, take everybody to court, do a referendum on everything," Ball said.

"Matter of fact, he also wants to let an outside, independent group make decisions on health care. We're not going to tolerate that, people of Newfoundland and Labrador won't tolerate that."

• For more N.L. election coverage, click here

Not that the Liberal leader is in favour of the current equalization arrangement, either.

"I would vote right now for changes to equalization as I'm sure everyone in this province would, but it is a federal program that we have no jurisdiction to actually influence," Ball told reporters.

"They make that call on equalization."

Ball proceeded to describe how he believes it's important to work on finding a consensus before legal action, andthinkshis government has "been very successful" in finding other revenue streams from the federal government.

Read more articles fromCBC Newfoundland and Labrador