The Senate Committee is presently holding hearings on the Equalization program out of their concern with the general discontent of many provinces and various groups with the program.

Minister Mella said that she was pleased that at least one of the federal chambers in Ottawa has taken provincial concerns over the adequacy of Equalization seriously. Unfortunately, earlier in the year, the Commons Finance Committee ignored provincial pleas for improvement.

For Prince Edward Island, the program needs to be moved back to a national standard, to have comprehensive revenue coverage and to have the ceiling removed.

Further, the PEI Treasurer emphasized that the present formula could work well if it were not distorted by the various add ons that have produced complexity and resulted in serious inequities.

She also expressed concern over the attitude of the present Finance Department to the program, which has been to constrain growth of Equalization where possible. "Whereas the federal government has claimed that Equalization-receiving provinces have been treated favourably by pointing to recent growth in entitlements as proof, the truth is that Equalization was stagnant through most of the past decade. It has only expanded very recently, as the economy has grown. The program itself is more tightly restricted today than it ever has been," she said.

The Provincial Treasurer was encouraged by the Senate hearings, which are expected to conclude this December.

The text of the presentation is available on the PEI Government Website: http://www.gov.pe.ca/equalizationceiling/