Transfer deal a $50M loss for Nova Scotia: official

Nova Scotia stands to lose tens of millions of dollars more than first thought by accepting a new equalization formula, a senior Finance Department official said Wednesday.

That formula allows the federal government toclaw back offshore oil revenues.

When the provincial budget was tabled in March, finance officials estimated the province might lose just $7 million over the next four years.

But Vicki Harnish, deputy minister of finance, told an all-party committee of the legislature Wednesday that new forecasting shows the change will hurt the province starting in 2008.

"The new information shows Nova Scotia is going to be hit a lot harder and sooner than we had estimated on budget day," she told the public accounts committee.

For 2008-09, that amounts to a loss of more than $50 million in transfer payments because of offshore wealth,with even more lost in the years to come, Harnish said.

"It could be, depending on Ontario, maybe a couple of hundred million potentially, again depending on gas prices and how much revenue we actually capture."

Nova Scotia has agreed to temporarily accept the new formula in order to get more money in transfer payments now.The provincehas a year to lock in its choice.

Harnish said the province is still trying to convince the federal government to live up tothe offshore accord signed in 2005, which lets Nova Scotia keep 100 per cent of its offshore wealth without affecting equalization payments.

Shesaid the acting minister of finance, Angus MacIsaac, will meet with federal Finance Minister Jim Flaherty Wednesday afternoon at the Halifax airport.