Have-not is once again: N.L. to receive $218M equalization payment next fiscal year
CBC
For the first time since 2008, Newfoundland and Labrador will receive money from the federal government under the equalization program.
The province will take in $218 million from Ottawa in the 2024-2025 fiscal year, according to a letter sent from federal Finance Minister Chrystia Freeland to Newfoundland and Labrador Finance Minister Siobhan Coady last week.
Equalization is the federal government's transfer program for addressing "fiscal disparities among provinces" to provide reasonably comparable levels of public services.
Newfoundland and Labrador famously celebrated the end of equalization payments in 2008 when oil royalties were flowing and unemployment was low.
"This is a very proud day for Newfoundlanders and Labradorians, I can tell you," former premier Danny Williams told media and supporters on Nov. 3, 2008. "Effectively this year Newfoundland and Labrador is now a have province. That's a momentous day for the people of this province."
Williams echoed sentiments from another former premier, Brian Peckford, who made a prediction in his victory speech nearly 30 years earlier.
"One day the sun will shine and have-not will be no more," Peckford said in 1982.
The province's already fragile economy was dealt a massive blow in 1992 when the federal government announced a moratorium on the cod fishing industry that put 30,000 people out of work. In the years following, 10 per cent of the population moved away and the labour force shrunk drastically.
This history underpinned William's triumphant announcement in 2008.
"Over the years we have been ridiculed for that," he said. "At times times we've been presented as the poor cousins in Canada. Now we can hold our heads high and feel very good about it."
The province's financial fortunes have changed since 2008. Newfoundland and Labrador has a debt of $16 billion — about $30,000 per person in the province. The unemployment rate has nearly doubled since the province last saw an equalization payment, hovering around 10 per cent.
While Williams will be remembered for leading the province out of equalization payments, he'll also be remembered for the Muskrat Falls megaproject that helped lead the province back to the trough. Described as a "boondoggle" by Stan Marshall, the CEO who led the project, the cost of the hydroelectric dam has ballooned to $13.4 billion for a province of 521,000 people.
While other federal transfers, such as the Canada Health Transfer, are tied to population, equalization is determined by a formula.
Critics of the equalization formula have spent years arguing Newfoundland and Labrador should qualify for payments, often taking issue with the inclusion of the province's offshore oil royalties in the equation.
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