Calling it a “last option,” Newfoundland and Labrador is taking the federal government to court over what it insists is a flawed equalization formula.
Documents will be filed in the Newfoundland and Labrador Supreme Court in the coming weeks, and formal notice will be given to all other provinces and territories who may also want to make submissions.
Despite numerous attempts over a succession of provincial administrations, the province says its concerns over the “flawed” formula have not been addressed, and in fact have been dismissed.
“Equalization was intended to ensure that provincial governments have sufficient revenues to provide comparable levels of public services at comparable levels of taxation,” said Deputy Premier Siobhan Coady, asserting that the formula doesn’t do that.
The argument is that the cost of providing services to more than 500 communities over a vast geographic area is not factored-in, and that the province is penalized for its resource revenue because it must still pay the costs of development, regulation and management of the resource sector.
Justice Minister and Attorney General John Hogan says the legal route is a last resort.
“When the federal government recently extended the equalization formula until 2029, and did not take our province’s position into account, we realized that the last option, the court option, was now our only option,” he said.