Equalization plan unfair, MacDonald says

Premier Rodney MacDonald is lashing out at the federal government over its equalization plan, saying it amounts to an unwanted "roll of the dice" for Nova Scotia.

The federal Conservativeswantprovinces to receive payments based on a formula thatincludes 50 per cent of their resource revenue, or one that entirely excludes resource revenue — whichever results in the greater benefit. However,there isa cap on equalization payments.

Nova Scotia has the choice of opting into the new system or sticking with the existing equalization system untilthe expiration of its offshoreaccord,a dealthe province signed in 2005 allowing it to keep its offshore wealth.

"They've asked us essentially in making that choice to roll the dice, and that to me is not what the equalization formula is about," MacDonald said Monday after the federal budget was tabled.

"It's almost as if they want to continue giving handouts to Nova Scotians rather than us keeping our offshore accord, and that to me is fundamentally unfair."

The equalization program transfers money to provinces that are less wealthy. The federal government is required under the Constitution to make these payments so that all provinces can provideresidents with comparable levels of public services at comparable rates of taxation.

Until now, Nova Scotia's Progressive Conservative premier has been loath to criticize Prime Minister StephenHarper or his government. The two shared centre stage at a gathering of Conservatives in Halifax just weeks ago.

Tough budget decisions

MacDonald now says this federal budget will not help him in drafting the province's budget.

"We have some very difficult decisions to make because of this budget," he said. "It's unfortunate, but that's the reality."

Finance Minister Michael Baker said rather than get what the province thought was its fair share, the federal government is only offering the province a modest increase in equalization.

"$80 millionon a cash basis is the amount more that we would have received than last year," Baker said. "That in no way would represent a sufficient amount of money to fix our fiscal imbalance."

When asked if this is a sign the federal government appears to have written off the province because it does not have enough federal seats to matter, MacDonald replied: "It certainly seems that way."

The provincial budget is expected to be tabled by the end of the week.