Is PM reneging on Ontario deal?
Election promise to honour $7B McGuinty-Martin agreement seems to be disintegrating
May 11, 2006. 05:23 AM
QUEEN'S PARK COLUMNIST
Get ready for another front to open up in the war between the Queen's Park Liberals and the Ottawa Conservatives.
A year ago, Premier Dalton McGuinty and then-prime minister Paul Martin signed a deal that was supposed to bring an additional $7 billion in federal funding to Ontario.
In January, during the federal election campaign, Stephen Harper wrote a letter to McGuinty pledging to uphold the deal if he became prime minister.
"We will be fully funding this agreement," Harper said in the letter, a copy of which has been obtained by the Star.
Harper helpfully attached to the letter a spreadsheet setting out the details of the funding agreement, adding up to $7 billion over six years.
Now it appears the Harper government is reneging.
Ontario was counting on the money to help convert coal-fired power plants to natural gas, to expand public transit, to augment funding for universities and community colleges, and to bring the province up to the same level as the rest of the country in federal spending on immigration settlement and job training programs.
In a letter last week to Ontario Finance Minister Dwight Duncan, federal Finance Minister Jim Flaherty repeats Harper's assurances that the Conservative government "is committed to delivering on the financial commitments" in the McGuinty-Martin deal.
But the rest of Flaherty's letter is densely ambiguous and suggests some of the funding is contingent on "discussions with all provinces and territories on restoring fiscal balance in Canada." (Harper's January letter contained no such qualification.)
The spreadsheet attached to Flaherty's letter does not remotely resemble Harper's. Flaherty's firm numbers add up to just $4 billion. The remainder (almost $3 billion) is consigned to a column ambiguously entitled, "further amounts allocated," with a footnote that says "pending the outcome of discussions." As well, the $4 billion includes almost $1 billion in tax credits from Flaherty's budget last week.
This is not what McGuinty and Martin agreed to, say provincial finance officials. The agreement a year ago called for increases in either federal transfers to the provincial treasury or direct federal spending in Ontario, they say.
"The deeper I dig the more concerned I become," Duncan said this week when asked about Flaherty's letter.
In an interview yesterday, Flaherty dismissed Duncan's concerns. "Every nickel (of the McGuinty-Martin deal) will go to the province of Ontario," said Flaherty. "Anyone who makes a suggestion to the contrary is wrong.
"The province has nothing to complain about."
Flaherty, himself a former provincial finance minister, noted that his officials met Duncan's officials this week to explain the details of his letter. "They (Duncan's officials) were satisfied (with the explanations)," said Flaherty.
But provincial finance officials put a different spin on that meeting yesterday. They said the two sides basically "agreed to disagree."
Duncan is expected to make this clear with a letter to Flaherty later this week.
This dispute could escalate and drive another wedge between the two governments, already feuding over Harper's apparent slighting of McGuinty.
Meanwhile, McGuinty is reaching out to other premiers in a bid to prevent Ottawa from enriching the federal equalization program. In this fiscal year, Ontarians will pay $4.9 billion into the $11.5 billion equalization pool. Ottawa disperses that money to eight "have-not" provinces. Only Ontario and Alberta, as "have" provinces, do not receive equalization payments.
McGuinty fears that Harper will redress the fiscal imbalance by improving equalization. McGuinty said this would be "unfair to Ontarians."
That's a message he has delivered this week to B.C. Premier Gordon Campbell, Quebec's Jean Charest, Newfoundland's Danny Williams, Manitoba's Gary Doer, Saskatchewan's Lorne Calvert and Alberta's Ralph Klein.