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Ottawa, January 29, 1997
1997-004

Finance Minister Releases Transcript of Remarks

Finance Minister Paul Martin today released the transcript of his remarks in a media scrum yesterday which were inaccurately reported in a Halifax Daily News article today.

"It is quite clear I was referring neither to Premier John Savage nor to any specific resource development project in my remarks. A transcript of my remarks shows that I said the following:

Question one: The Premiers of Nova Scotia and Newfoundland were on their trip with the Prime Minister and they were discussing the Equalization program and the theory here is that, with the resource developments that are going on, these Premiers are concerned that it will impact on the transfers they receive under this program. So they're hoping to convince the government to modify it to their benefit, obviously. I'm wondering if this may be in the cards?

Paul Martin: Well, one of the first things that we did when we came into office was to sign an Equalization agreement with the provinces. It's a five-year agreement. It still has a couple of years to run. I think that, very clearly, we will stay with that. The other thing that one has to recognize in terms of Equalization is that the purpose of Equalization is to help provinces when their potential for tax revenue is less than other provinces. Now, if people say that when that potential for tax revenue increases, that we should change the Equalization formula, that's equivalent to saying what we should in fact do is not compensate provinces when the revenues are down, but when the revenues are up, and I suppose take money away when the revenues are down. And that simply wouldn't make any sense at all. The formula works very very well as it is.

Question two: So if I remember correctly the dates it was re-negotiated, or not re-negotiated, it was simply re-set I guess, in 1994?

Paul Martin: There were some changes, but basically that's right.

Question three: And has this argument come up in the past, this resource impact?

Paul Martin: Oh sure.

Question four: And it's been rejected in the past?

Paul Martin: Well it's been a traditional argument that certainly has been around almost as long as Equalization has been there. It was certainly one that, when I took office, I was made very much aware of.

Question five: So it's unlikely that you'll change your mind on this one?

Paul Martin: Look, we're always prepared to sit down with the provinces and discuss any matter of concern, certainly including Equalization. We'll be certainly prepared to sit down and talk with them, but I think that we've got to understand that the purpose of Equalization is to help provinces where in fact their tax revenues, relative to other provinces, are down and that it would be somewhat perverse if in fact when those revenues start of go up, we change the formula. In fact that would not be fair to other provinces who don't have the benefits of some of those increasing resources. That being said, we're certainly open to discuss with the provinces".

Nathalie Gauthier
Press secretary
(613) 996-7861