I know that some folks get apoplectic when this issue is raised but I had an interesting conversation yesterday with an economist who is quite worried that within a short period of time, the impact of the oil and gas industry will be removed from the calculation of Equalization payments.
His logic, of which I have written before, is as follows. Quebec and Nova Scotia have issued moratoriums on the development of their natural gas resources and two of the main opposition parties are saying they will do the same in New Brunswick if elected in the fall. The oil and gas producing provinces are depleting their natural gas and oil reserves and bearing the environmental costs and then some of that wealth is transferred to Quebec, New Brunswick and Nova Scotia to ensure those provinces can offer good quality public services.
His view is that the oil and gas provinces will demand the removal of the oil and gas industry as part of the Equalization formula – particularly relating to those jurisdictions that refuse to develop their own oil and gas resources.
I think this is could be a dark horse public policy issue in the coming years. Saskatchewan has already been calling for it and apparently Stephen Harper liked the idea before he become Prime Minister.
It’s hard to say what the impact would be but it’s easy to say it could be substantial.
I don’t recall seeing anything from the big think tanks on this at least recently but if Fraser or Canada West or others start getting on the bandwagon, it could get dicey.