N.L. reluctantly signs on to equalization deal

The Newfoundland and Labrador government has quietly implemented Ottawa's new equalization formula after spending months blasting it publicly.

"We're going to do what's best for the province," Finance Minister Tom Marshall said Monday while announcing the government will opt in to a side deal that Nova Scotia cut this fall with Prime Minister Stephen Harper's Conservatives.

Marshall said the government still does not like the new equalization program which takes non-renewable resources, including offshore oilinto account for the first time.

However, Marshall said for this fiscal year, the changed program delivers more cash than the old.

"There's the extra $66 million that we can take advantage of, and we're going to take advantage of it," Marshall told reporters.

Premier Danny Williams has expressed outrage over the new equalization formula. In the spring, he vowed to campaign against the Harper Conservatives over the plan, which he says will mean a loss of almost$11 billion over time to Newfoundland and Labrador.

This fall, he described Nova Scotia Premier Rodney MacDonald as a sellout for negotiating alone on a side deal.

But Fisheries Minister Loyola Hearn, Newfoundland and Labrador's federal cabinet representative, said the fact that Williams's government has now signed on is significant.

"That's a fair chunk of change to pick up under the new formula," he said.

"The proof of the pudding is in the eating, and Minister Marshall put the pudding in the middle of the table for everybody to see."

Hearn said there is now little reason for Williams to complain and suggested politics may be at the root of the premier's testy relations with the federal Tories.

'Great thing to do'

"You know, whenever you want to fatten up your polls, you take on Ottawa. It's a great thing to do," Hearn said.

Equalization is expected to become a moot point by the 2009 fiscal year in Newfoundland and Labrador, which is reaping windfall revenues from high oil prices.

On Monday, the province revealed it is expecting to finish the current fiscal year with a record-smashing $881-million surplus.

Within two years, the province says, it is not expecting to qualify for any equalization payments at all.

Marshall, though, said the government is still aiming for long-term changes to equalization and for Harper to honour a pledge he made leading up to the 2006 federal election to protect oil revenues from being included in the equalization formula.