Equalization not working for Newfoundland and Labrador, says finance minister

Newfoundland and Labrador's finance minister says the province should get a better equalization deal from the federal government.

Revenue-based formula hurting Newfoundland, hampered by its size and demographics, says Tom Osborne

Newfoundland and Labrador Finance Minister Tom Osborne says the province deserves a better equalization deal from the federal government. (CBC)

Newfoundland and Labrador's finance minister says the province should get a better equalization deal from the federal government.

"When you see other provinces with a smaller geography and a much larger population and are receiving a large portion of equalization payments, I challenge anybody to explain to me how Newfoundland and Labrador is still considered a 'have' province," Tom Osborne told CBC's Here and Now on Tuesday evening.

Osborne said Newfoundland and Labrador loses out because it's heavily revenue-based, including income from natural resources.

Asked if provincial spending is a bigger issue affecting the province's economy, Osborne — who was a member of the former Progressive Conservative government before joining the Liberals in 2013 — said spending had to come up to bring programs and services to a national standard.

"We're now at a national standard," he said. "We've got an aging population, which makes it more expensive to service; as you get older, your health-care costs increase. We have areas of the province that the population is declining rapidly — we still have to maintain services in those areas, and with inflation, the cost of servicing the province and providing services continues to increase."

Overspending a problem, Osborne admits

It's difficult for the provincial government to cut too much without bringing services down below the national standard, said Osborne.

"Overspending is a problem, but we still need, and Newfoundlanders and Labradorians deserve, a comparable level of service," he said.

Osborne pointed to Nova Scotia, a province with twice the population in a province one-third the size of the island of Newfoundland, receiving $1.8 billion for 2017-18, while Newfoundland and Labrador does not qualify.

"The reality is the Constitution, we're not living up to, because that guarantees a comparable level of services at a comparable level of taxation," he said. "It's simply not the case in Newfoundland and Labrador."