B.C. supporting N.L.'s lawsuit against federal government equalization program

British Columbia is supporting Newfoundland and Labrador's lawsuit against the federal government over its equalization program, which provides recipient provinces with cash to allow for a fair level of services across the country.

Payment amounts are decided based on "fiscal capacity" — a province's ability to generate tax revenue, including the role of oil in gross domestic product.

Newfoundland and Labrador is nearing two decades without receiving funds from the federal program.

The end of equalization payments for the province was initially celebrated. It was 2008, oil royalties were flowing, and unemployment was low.

But 16 years later, officials are arguing that the province is being cut out of potentially billions of dollars in the long term.

"There should be protection of equivalence of services across the country. But there is no proxy for that in the current contemplation," Premier Andrew Furey said in a news conference with B.C. Premier David Eby on Wednesday.

N.L. Finance Minister Siobhan Coady and Justice Minister John Hogan announced in May that the province will take the federal government to court to try to push a change in the equalization formula — which the federal government extended to 2029 in April 2023.

Eby told reporters his province will act as an intervenor throughout N.L.'s court case.

"As our legal teams discuss, we'll share all information with them to support their claim at the trial level. We'll coordinate with them on legal strategy," Eby said.

Despite the two provinces' differences in geography and political colour, Eby and Furey believe the federal government's current equalization formula is built on unfairness.

For example, if Newfoundland and Labrador received equalization payments like Ontario, healthcare throughout the province might be better.

"If you look at healthcare, the sector that I come from, there's no way you can tell me there's the same cost per unit to do a hip replacement in downtown Toronto, not to pick on Ontario by any stretch, as it is in St. Anthony," Furey said.

Eby said he might even take a page from Furey's playbook.

"British Columbia will look at whether we should be filing our own litigation," Eby said, adding that B.C.'s Attorney General would file a lawsuit that reflects their province's specific interests.