The Liberal-dominated Senate will almost certainly challenge Prime Minister Stephen Harper's budget over its handling of the Atlantic accords issue, Liberal senators said Wednesday.

Liberal Senator George Baker says he will do what he can to delay the budget bill.
(CBC)

The House of Commons passed a federal budget bill Tuesday, amid criticism from Nova Scotia and Newfoundland and Labrador that the new equalization formula will wipe out gains made in the 2005 offshore oil and gas deals the provinces made with the former Liberal government.

The bill will be sent to Senate for review next week. Liberal Senator George Baker says the bill will be in for a rough ride.

"Normally the Senate does not interfere … with something [like] a money bill passed by the House of Commons," Baker, a former Newfoundland MP, told CBC News.

"But when something is extraordinary as this is … I would say I'm duty-bound not just to interfere with it but to vote against it and do whatever I could to delay it."

Leading up to the 2006 federal election, Harper committed in writing to exclude non-renewable resources from the equalization formula.

The new formula contained in the budget, however, includes half of those revenues, which Nova Scotia and Newfoundland and Labrador say will mean losses of hundreds of millions of dollars.

Nova Scotia Premier Rodney MacDonald has asked the Senate to derail the budget, while Newfoundland and Labrador Premier Danny Williams has campaigned hard against it and Saskatchewan Premier Lorne Calvert is threatening to sue over the issue.

Senate has responsibility to pass bill: Dion

Liberal Leader Stéphane Dion said Wednesday that senators have no choice but to accept the budget bill.

He said if the Liberal-dominated Senate amends the bill, it will only go back to the House of Commons, where Liberals don't hold a majority.

"We have no possibility to impose any amendment in the House and everybody knows that because we don't have the numbers," Dion said.

"At the end of the day, the budget will be the budget that the House has voted yesterday, despite the fact that it's a bad budget."

But Liberal Senator Céline Hervieux-Payette said there is no law, or even convention, that requires senators to approve budget implementation bills. The Quebec senator said such bills have been amended and defeated in the past.

In 1993, a Tory-dominated Senate defeated a budget implementation bill created by then prime minister Brian Mulroney's government.

Hervieux-Payette said if anything, senators have a duty to respond to the concerns of provinces.

"We have a special mandate to represent a region and represent minorities and this is what we're going to do," she said. "It's really within our mandate."

Nova Scotia Senator Terry Mercer said he'll vote against the bill and expects other Atlantic and Saskatchewan senators will too.

"If we care to mount a full-fledged campaign with our colleagues, I think we can defeat this bill," he said.

"I can't walk down the streets of north-end Halifax where I grew up and look people in the eye if I support this."

The bill will head to the Senate's finance committee for examination next week. The premiers of Nova Scotia and Newfoundland and Labrador have already asked to testify.

PM reassures Atlantic MPs

St. John's East MP Norm Doyle says Prime Minister Stephen Harper told Atlantic Tory MPs that revenues from the Atlantic accords would be protected.
(CBC)

Meanwhile, Atlantic MPs in the Conservative caucus say they have received assurances that there will be no net loss to Nova Scotia and Newfoundland and Labrador because of changes in equalization.

"We met with the prime minister and he's given us certain guarantees," said St. John's East MP Norm Doyle.

Nova Scotia and Newfoundland and Labrador have the option of moving from the Atlantic accords to the new equalization formula.

"If you move to the [new] formula, they will make up, I guess by cutting a cheque to the province [of] what you would have lost in these areas," Doyle said. "That seems to me to be a sizable step forward."

Williams has said the option is unacceptable and MacDonald says he would not accept it without guarantees.

Vote 'made my skin crawl': Williams

Williams, a Progressive Conservative, has been encouraging voters to boycott Conservative candidates in the next federal election.

On Wednesday, he told reporters his resolve has not softened since Tuesday night's budget vote.

"Just watching it last night just made my skin crawl, to see three of our own plus Nova Scotia MPs vote against their provinces and their constituents," Williams said. 

"It was hard to believe. It was hard to watch."