The federal budget, which was intentionally designed to single out Newfoundland and Labrador in retaliation for not electing any Conservatives in the last election, will be passed in the Commons this evening with the support of the Liberal Party.
In a move that can only be seen as an attack by Stephen Harper, new measures will be introduced to remove $1.6 Billion in offshore oil transfers to Newfoundland and Labrador. This has been estimated as an amount equivalent to the Province of Ontario suddenly being stripped of $22 Billion dollars a year.
The move comes at a time when the economy is staggering, unemployment in Newfoundland and Labrador is over 13% and is part of a so called “fiscal stimulus” budget.
When challenged over the issue Finance Minister, Jim Flaherty said in the House of Commons recently that, “…one of the principles involved in equalization is that all provinces should be treated equally."
He used that argument as the reason he does not intend to change the legislation for Newfoundland and Labrador.
What he didn’t say was that this has nothing to do with equalization and is not directly impacted by the new cap being introduced.
Newfoundland and Labrador no longer receives equalization payments, however the formula used to calculate equalization itself is also a determining factor in calculating offshore oil revenue transfers which are intended to ensure that the province is the primary beneficiary of its offshore oil production rather than Ottawa.
Mr. Flaherty’s position that “…all provinces should be treated equally” has since been shown to have no merit.
On Tuesday, Finance officials confirmed that Newfoundland and Labrador will be the only Province in the federation to lose revenue because of the specific changes that will be put in place.
It was also confirmed that two other provinces, specifically Nova Scotia and Manitoba, would also have been affected by the change, however the Harper government has decided to provide those provinces with one-time payments to shelter them from the economic impact.
No such arrangement was put in place, or even offered, to Newfoundland and Labrador leaving it the only jurisdiction in Canada to be impacted.
This “poison pill” for Newfoundland and Labrador may have been an intentional act of the Conservative government but it is being abetted and supported in its implementation by the Liberal Party.
In his post budget address to the media Liberal leader, Michael Ignatieff, said that one of the “tests” he will be conducting in order to permit the Conservatives to remain in power is ensuring that the budget “addresses the needs of all regions of Canada”.
Since the financial attack on Newfoundland and Labrador was identified Mr. Ignatieff has lobbied the Prime Minister over the issue but is not willing to take away his support of the budget regardless of the damage it will cause.
The fact that the Liberal party intends to pass the budget and allow the Conservatives to remain in power even after failing on a Liberal imposed test calls into question the ethics of the Liberal leader himself and whether he is truly acting in the best interests of “…all regions of Canada” or simply serving his own political ambitions.
The singling out of Newfoundland and Labrador for punitive actions by the Harper government, with the support of the Liberal caucus, has resulted in an internal challenge to Mr. Ignatieff’s leadership abilities.
Confidence votes, such as this budget vote is, are generally considered a “Party” rather than a “free” vote in the Commons. This means the entire party is expected to vote in unison at the direction of their leader. In this case however 5 of the 6 Liberal MPs from Newfoundland and Labrador have decided they will defy their leader, refuse to toe the party line, and instead support their constituents by voting against the budget.
The only hold out is Liberal MP Todd Russell, from the Labrador riding, who, in spite of the serious impact to his province, has been quoted as saying he will “…vote for the budget to promote party unity”.
It’s a move that may ingratiate him to his Mr. Ignatieff but will almost surely make it impossible for him to gain re-election in the future.
A similar situation occurred a few years ago when Newfoundland and Labrador Conservative MP Fabian Manning supported his party over his constituents.
Manning was defeated by Liberal Scott Andrews in the most recent election however he was given a special thank-you gift for his actions by Stephen Harper this past Christmas. In return for supporting the Conservative party Mr. Manning was gifted with a Senate seat.
It's likely Mr. Russell, a career politician, arrived at his decision with the Manning experience in mind and that he is also expecting a senate pay off should the Liberals form the government during the next election.
