News Release Archive

Premiers bashing the federal government's billion dollar tax
harmonization compensation package for the Atlantic Provinces are
"not being helpful to the cause of federalism in Canada," Premier
John Savage said today.

Looking ahead to this week's First Ministers conference in
Ottawa, Premier Savage said western premiers in particular are
being selective in their comments.

"Federalism recognizes that the different provinces and
territories are different and have unique needs, though all form
part of Canada. The Fathers of Confederation recognized this in
the Canadian constitution. Since 1867 all provinces received
special transition terms upon entering Confederation."

Premier Savage said the harmonization funds are likewise intended
to ease the transition, which is more difficult in Atlantic
Canada than elsewhere in the country.

"The Atlantic Provinces currently have the highest rate of sales
tax in Canada ... all over 10 per cent. So taking their
provincial sales taxes down to a harmonized rate of 15 per cent
requires considerable adjustments."

Adjustment payments have always been tailored to the needs of the
different regions of the country, the premier said. For example,
$1.9 billion in transition payments went to Prairie farmers when
federal rail subsidies were eliminated in 1995.

Premier Savage said he was "dismayed" by suggestions from western
provinces that the tax harmonization subsidy paid to Atlantic
Canada was discriminatory.

"You didn't hear Atlantic Canada complain when the federal
government recently put $5 billion into the Alberta tar sands

"Atlantic Canada doesn't complain about money allocated under the
Western Diversification Agreement, or the $445 million western
farmers receive from the federal government on agricultural
support programs."

Premier Savage said it may surprise most Canadians to discover
that Atlantic Canada's reliance on federal spending is declining

"Through reductions in regional development subsidies,
restrictions in the growth of transfers and massive cutbacks in
expenditures, the federal government presence in the Atlantic
provinces has decreased at a much faster pace than elsewhere in

While dependence on federal government spending has declined,
federal revenues collected in Atlantic Canada have increased
significantly. The three Maritime Provinces, more than any other
region of the country, pay the highest portion of gross domestic
product (GDP) to the federal government.

Looking at the overall agenda for this week's gathering of first
ministers, Premier Savage said he is seeking a constructive
meeting which enables the different needs of all the provinces
addressed in the spirit of federalism.

The premier said he is interested in discussing federal proposals
for a new infrastructure agreement. In the area of job creation,
the premier will focus on youth employment. Nova Scotia currently
has a youth unemployment rate of about 25 per cent.

Nova Scotia also endorses the report of the Ministerial Council
on Social Policy Reform. Nova Scotia will focus on the welfare of
the child and will support social and economic steps to better
children's lives.


Contact: David Harrigan  902-424-6600

trp                        June 19, 1996 - 11:20 a.m.