The NDP is saying economic development that generates increased taxes for government is ‘revenue neutral’ in terms of the province’s fiscal situation because the feds just ratchet down Equalization as own source revenue goes up.
We have discussed this probably as much as any other theme on this blog. New Brunswick gets more money from the Feds as a reward when the economy weakens and less money when the economy strengthens.
That is why the longer term goal of bringing New Brunswick into better balance between own source revenue and expenditures should be a shared objective between the feds and the province.
In the mid to longer term, significant economic growth that fixed New Brunswick’s structural fiscal problem would be very beneficial to the feds. It would reduce their costs. It would start to address the concerns of the ‘rich’ provinces and it would generate a lot of goodwill in New Brunswick towards the feds.
The joint levels of government could set five, 10 and 20 year targets (just like the EU with Ireland) and set up a serious model to work towards those targets.
Barring this, however; Greg Byrne is right. We still need to focus on economic growth and the clawback is not one-to-one.