Equalization deal of 'no value' to N.L., economist says

A Newfoundland and Labrador economist says the province has nothing to gain by agreeing to an equalization deal like the one signed Wednesday between Nova Scotia and Ottawa.

Economist Wade Locke, of Memorial University, said the deal is a good one for Nova Scotia, giving it a top-up cheque for its losses under the new equalization formula. But Locke said such a deal would have no meaningful effect for Newfoundland and Labrador.

"This is of no value and no benefit and doesn't address the problems in Newfoundland," Locke told CBC News. "The difference between Nova Scotia and Newfoundland, is Newfoundland will be outside equalization in 2009. Nova Scotia will never be outside equalization, not in this time period anyway."

Nova Scotia Premier Rodney MacDonald said Wednesday his province expects to gain hundreds of millions of dollars through equalization payments and offshore oil and gas royalties. But it will take years before Nova Scotia makes as much as it would have under the original offshore accord signed in 2005.

Both Nova Scotia and Newfoundland and Labrador had been fighting Ottawa over the Conservative government's new equalization formula, whichN.L. Premier Danny Williams said violated written campaign pledges Prime Minister Stephen Harper made before the last federal election. That pledge was to exclude non-renewable resources from the formula.

After the announcement Wednesday, Williams criticized the deal, saying Harper had taken advantage of a politically weak Nova Scotia.

"The bottom line is that Nova Scotians have basically said yes to less," Williams told reporters Wednesday. "[The feds] haven't lived up to the promise. In fact, they've gotten Rodney MacDonald to take less, and, you know, Stephen Harper has a way of preying on the weak."

On Wednesday, Harper said the deal with Nova Scotia resolves the dispute over the Atlantic accord.

"You know, it's up to Premier Williams whether he accepts that reconciliation or not," Harper said.

Locke said Harper's election promise, to exclude non-renewable resources from the equalization formula, would have offered more financial benefits than Wednesday's proposal. He said the difference in the two arrangements ranges in the billions.

"That wasn't done, and that cost the province between five and six billion dollars. In addition to that, there were changes to how the accord was calculated, and when you qualified for it, in the latest budget, which also cost us between five and six billion dollars," Locke said. "None of those things are going to be altered if we bought into this kind of approach that Nova Scotia bought."

The Newfoundland and Labrador government says it is still analyzing the equalization offer from the federal government.