Newfoundland Premier Danny Williams says he isn't ruling out the possibility of joining his Saskatchewan counterpart in a lawsuit against the federal government over changes to the equalization formula.
Speaking in St. John's, N.L., Williams told CTV's Canada AM he is waiting to see what Premier Lorne Calvert comes up with before he jumps on the bandwagon.
Calvert said on Wednesday he had authorized his provincial Justice Department to pursue legal action against the feds over the changes to equalization contained in Budget 2007. The fiscal plan passed in the House of Commons on Tuesday and must now pass the Senate.
Williams himself has been waging a months-long battle against the Conservatives, claiming Prime Minister Stephen Harper broke a promise to exclude non-renewable natural resources from the formula used to calculate equalization payments.
Williams is demanding a 5 per cent cut from the offshore oil companies for future developments, with those funds going into a new energy company that would pursue exploration and development projects.
He told Canada AM he will be watching Calvert closely.
"If there's a point where Premier Calvert wanted us to tag along or add on to give strength to his application that's something we'd seriously consider," Williams said.
"I'll just have to wait and see what the gist of the argument is. It may be a Saskatchewan-unique argument that he presents, but if it's not, if it's a general argument, it may not be too late for us to participate if that makes sense."
Though Harper earlier this week dared the provinces to pursue legal action if they were unhappy with the deal, Williams said he has not seriously considered the option until now.
"All along I felt the proper place to have this communicated was in the court of public opinion -- have the people decide whether this was fair, whether breaking a promise was a good thing to do or not a good thing to do," Williams said.
Calvert, meanwhile, said he is taking legal action against Ottawa because he feels his province is being singled out and treated unfairly under equalization.
He said Harper promised to remove non-renewable natural resource revenues from the equalization formula, but instead capped the amount of funding a province can receive under the program.
Nova Scotia's Premier Rodney MacDonald also accuses Harper of breaking promises on equalization.
During period in the House of Commons on Wednesday, Harper seemed to mock Calvert's action.
"I think this debate is getting a bit to the level of the absurd. We're being accused of breaking the contract of the Atlantic Accord. Now the premier of Saskatchewan, who has no accord, is going to sue us for breaking his accord. Mr. Speaker, I don't even understand what they are saying anymore," he said.
Calvert responded angrily on CTV's Mike Duffy Live, saying the prime minister "fully understands what I'm saying -- you can be sure of that."
He said, "Here's a prime minister who came from the West. Here's a prime minister who came directly out of that non-renewable resource sector -- the oil patch. Here's a prime minister who made a promise to the people of Saskatchewan, in fact the people across Canada, including our good friends in Atlantic Canada ... knowing full well what this promise means. He knows full well that he has betrayed the promise. He also knows we don't have an accord -- he wouldn't offer us one."
Calvert has said the court action will take a constitutional approach because the Constitution recognizes that resources belong to the province and that equalization is a constitutional provision. Fairness must be a part of any equalization policy change, and Saskatchewan has clearly been singled out, he said.
Finance Minister Jim Flaherty said he was "surprised" by Calvert's announcement.
"Saskatchewan gets the best results out of the new (equalization) formula: $878 million for Saskatchewan. It's the highest per capita attribution under the new formula," he told Mike Duffy Live Wednesday in a separate interview.
He added that if the province opted for the previous funding formula, it wouldn't qualify for an equalization payment in this fiscal year.
Flaherty repeated earlier comments, saying he asked Calvert and the other premiers to come up with an equalization solution that worked for everyone, but they couldn't do it, so it's no surprise not everyone agrees with the current deal.
He said the government established a predictable, reliable formula for the provinces, and the deal has the support of the majority of the provinces and territories.
Flaherty has hinted that a solution with Nova Scotia over offshore revenue may be in the works.
The feds restructured equalization in their new Budget 2007. Under the new fiscal plan Nova Scotia and Newfoundland have the option of keeping the old equalization formula and the Atlantic Accords, or opting for the new, enriched, so-called O'Brien formula -- at the price of clawbacks of offshore revenues and a fiscal cap.
Saskatchewan, though it has no accord, can also choose to stay with the status quo or move to the new formula.
Meanwhile, a study released Wednesday predicted the new formula could cost the Atlantic provinces $4 billion in payments over the next 13 years.
The Atlantic Provinces Economic Council, a Halifax-based think-tank, concluded that Nova Scotia, New Brunswick and Prince Edward Island will receive additional money early on but will lose out in the long run.
The budget passed 157-103 on Tuesday. The Conservatives and Bloc Quebecois voted for the budget while the Liberals and NDP opposed it.
With the vote complete, the federal government insists the budget must be given final passage by the Liberal-dominated Senate by the end of the month for a host of programs to take effect. Liberal Leader Stephane Dion said the Senate would not kill the budget but might delay it, a claim that has been backed up by at least one senator.
