Premiers fail to reach consensus on fiscal imbalance

Fixing the country's fiscal imbalance is now in the hands of Prime Minister Stephen Harper after provincial and territorial leaders failed to reach a consensus in St. John's Thursday.

Newfoundland and Labrador Premier Danny Williams walked into the meeting with his counterparts Thursday hoping to see some movement any movement on equalization.

However, he emerged Thursday night to report there was no unity on the issue.

"I guess the conclusion is that we can't reconcile the irreconcilable," said Williams.

"The conclusion today is that we've agreed to disagree on these issues."

Williams wants resource revenues excluded from the equalization formula, but other premiers, including Quebec's Jean Charest, do not.

Williams said it was one of the issues that led to the breakdown.

"We have people at both ends of the spectrum," said Williams. "There's absolutely no way to rationalize that or bring it together the positions are firm."

Some concessions offered

Although the premiers have been bitterly divided over the issue of fiscal imbalance in recent months, Williams said some leaders were willing to make concessions Thursday but those concessions were often conditional on getting something back.

Ontario Premier Dalton McGuinty, for example, was willing to listen to provinces that wanted an increase in equalization payments which Ontario does not receive but in return, McGuinty wanted the premiers to consider putting some of Ottawa's surplus towards health and education.

"One of the things is, we would love to have recognition of the fact that we don't have equitable treatments when it comes to our financing for health care and our education," said McGuinty.

However, Ontario officials said McGuinty's request was rejected by Charest, who argued equalization increases for have-not provinces are long overdue and should be considered before anything else.

"Fixing the fiscal imbalance for Quebec means fixing equalization, and reinforcing and strengthening equalization," said Charest.

Ontario officials said they believe Quebec never wanted a deal at the premiers conference in St. John's. Instead, they suspect Charest feels he can receive more from Prime Minister Harper at the expected first ministers conference in the fall.

Provinces will negotiate individually

During a break from meetings Thursday, Charest said he has faith that Ottawa will deliver on previous promises made to Quebec to fix the fiscal imbalance.

"The federal government made a very clear commitment during the federal election campaign," said Charest.

"Stephen Harper came to Quebec and delivered a speech on the 19th of December where he said this: 'I will fix the fiscal imbalance.'"

Williams, meanwhile, acknowledged that without a consensus among the premiers, it is up to every province to negotiate individual deals with Ottawa.

"To be quite blunt with you, yes, every province will state its case," said Williams

"They all have unique circumstances, they all have different issues and everybody has agreed that they are quite free to obviously go and state their own case."

As the Harper government decides how to distribute its budget surplus, all eyes will be on which provinces benefit and which do not.