Flaherty sympathetic to concerns on debt burden

Energy-producing provinces will have to wait for the March 19 federal budget for answers on possible changes to the equalization formula, Finance Minister Jim Flaherty says.

Flaherty met with his Newfoundland and Labrador counterpart, Tom Marshall, and Premier Danny Williams during a visit to St. John's Wednesday.

Flaherty told CBC News he appreciates the concerns Newfoundland and Labrador and other provinces have expressed about including natural resources revenues in the equalization formula.

"[There was] lots of debate about that. The budget is on March 19," Flaherty said.

Flaherty said the federal government will respect the revised Atlantic Accord, the 2005 agreement between the federal government and Newfoundland and Labrador and Nova Scotia.

However, Flaherty said he could not answer any questions about other changes to equalization, the federal program that transfers billions to so-called have-not provinces and is intended to provide a consistent standard of public services across the country.

Williams has said he is worried the federal government is planning changes that will eradicate gains made in the Atlantic Accord, which protects offshore oil revenues from federal clawback.

Flaherty told CBC News he appreciates Williams's use of an Atlantic Accord advance worth $2 billion to pay down public-sector debt.

Meeting described as cordial

But with a per capita debt around $23,000, Newfoundland and Labrador says it needs revenues from non-renewable resources to pay down its overall debt.

"I understand the pressures that provinces face with respect to public debt," said Flaherty, a former Ontario finance minister. "It's comparable to paying down a mortgage on one's home and it gives you more disposable income for more important things.

"The concerns [that Marshall] expressed to me about rising costs about health care and social services are also very legitimate."

The premier's office and Flaherty both described Wednesday's meetingas very cordial.

Last fall, Williams told a convention of provincial Progressive Conservatives the federal Conservatives should expect "a big goose egg" in Newfoundland and Labrador seats if Prime Minister Stephen Harper did not stick to a written pledge to exclude non-renewable resources from equalization.