“Strengthening the Equalization Program by adopting a ten-province standard and comprehensive revenue coverage with 100 percent of natural resource revenues is essential to correct the fiscal imbalance among provinces,” said Minister Murphy.

The Federal Government is considering recommendations by the Federal Expert Panel Report to remove 50 percent of the natural resources and all user-fee revenues from the formula.

“The Federal Government and the Senate need to be informed that these recommendations will seriously impair the ability of provinces like PEI to provide reasonably comparable levels of public services to their citizens at reasonably comparable levels of taxation,” stated Murphy. “Once provinces are properly and adequately equalized, we can begin to address the fiscal imbalance between the federal and provincial governments with new long-term funding agreements for post secondary education, skills training and infrastructure.

The Senate Committee is to examine and report on issues relating to the vertical and horizontal fiscal balances among the various orders of government.

The Federal Government intends to bring forward its proposals to address fiscal balance in the Fall of 2006.