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Newfoundland and Labrador launching court case against federal equalization program

ST. JOHN’S, N.L. — The government of Newfoundland and Labrador says it plans to take Ottawa to court over the federal equalization program.

The province announced today that its constitutional challenge of the program will argue that the current program disadvantages Newfoundland and Labrador.

It says the formula used to determine which jurisdictions get equalization payments does not account for the high cost of providing services to the country’s most sparsely populated and most rapidly aging province.

The government also contests the cap imposed on equalization payments, since it is determined by factoring in 100 per cent of what Newfoundland and Labrador makes from its natural resources but does not consider costs borne by the province to develop them.

The province says in a news release that without the cap, it would have received between $450 million and $1.2 billion in equalization payments in each of the last five years instead of receiving nothing.

Finance Minister Siobhan Coady and Attorney General John Hogan told reporters today that they intend to file the constitutional challenge in court in the coming weeks.

André Lecours, a professor of political studies at the University of Ottawa, says the province’s challenge is unlikely to be successful, but it could prompt discussions with the federal government that lead to favourable change.

“I think the best strategy would be to get some kind of support from like-minded provinces,” Lecours said in an interview, pointing to Alberta and Saskatchewan, both of which have argued that revenue from natural resources should be excluded from the cap determination.

Lecours says the Canadian Constitution enshrines the federal government’s commitment to making equalization payments, which are aimed at allowing the provinces to provide comparable levels of services, such as health care, at comparable levels of taxation.

He says the terminology is very broad, which will make it difficult to contest in court.

This report by The Canadian Press was first published May 30, 2024.

The Canadian Press

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