There was little or no progress on equalization payments for the provinces when Ontario Premier Dalton McGuinty met with Premier Pat Binns in P.E.I. on Wednesday.

The two premiers have some fundamental disagreements on how Canada should work, but they do agree on one basic principle.

"We've agreed that [the federal government's] got more money than responsibilities; we've got more responsibilities than we have money," McGuinty told reporters after the meeting.

But how to address that perceived inequity is a stickier question. Binns wants to improve P.E.I.'s bottom line through increased equalization payments. McGuinty wants to put the brakes on equalization payments, saying Ontario already pays too much.

"We do have philosophical differences here about the country's financial needs," Binns told reporters.
 
Equalization payments are a pillar of the Island economy, providing 25 cents of every dollar the provincial government spends, and Binns believes changes to equalization are the best way to deal with the difficulties of running a relatively resource-poor province.

"We don't have oil and gas, we don't have uranium, we don't have huge timber resources, we don't have a lot of minerals," said Binns.

"Those are the things that are driving the economies of other provinces. So we are making great strides in things like aerospace and biotechnology and IT, but we're not there yet."

McGuinty wants transfers based on population

But McGuinty worries the changes proposed by Binns will lead to less money for Ontario. He would prefer to leave the idea of resources out of it, and increase transfers through program payments based on population.

"It seems to me that one of the fairest ways to address that would be to say, well, if there's $30 million, for example, then we'll give a dollar to every Canadian," said McGuinty.

"Everybody gets a buck."

Little progress was made on equalization when the premiers met in Montreal in April, and not much more is expected when the premiers meet next week in St. John's.

Binns has been taking his fight in a new direction. He's sent a letter explaining his position to the editorial boards of Canada's major newspapers. He's trying to convince other Canadians that equalization is a federal responsibility, and improvements won't require additional payments from the richer provinces.

If the deadlock among the premiers remains, it will be up to the prime minister to decide the future of the equalization program.