Wednesday, June 13, 2007

Calvert to Drop the Gloves in Court

Saskatchewan premier pushes the envelope of credibility for political gain

In the most recent twist in the ongoing drama over federal equalization payments, Saskatchewan New Democrat premier Lorne Calvert launched a new attack against the Conservative federal government, asking his provincial Justice Department to launch legal action against Ottawa.

At the heart of the issue is the equalization scheme, particularly in relation to non-renewable resources. Calvert insists that Prime Minister Stephen Harper promised to remove non-renewable resources (such as oil, gas, and potash) from the equalization formula. Harper insists he made no such promise, and merely capped the amount that can be collected from such resources under equalization.

In order to try and resolve the dispute to his liking, Calvert has resorted to precisely the tactic that his party's federal leader, Jack Layton, lampooned Harper for: "I'll sue ya!"

Yet, Calvert has a relatively more private taxation-related embarrassment brewing in his own province.

Under the NDP, the government of Saskatchewan has taken to claiming all of the property taxes collected in its various municipalties. Essentially, every year all of the property taxes collected by the municipalities are sent to Regina. There, Calvert's treasury redistributes the funds amongst the municipalties as it sees fit -- something of a intra-province equalization program.

Through this practice, Calvert ensures that municipalities with little or no industrial activity -- particularly related to the oil and gas sector -- recieve funds for needs such as road maintenance.

Unfortunately, many municipalties with the aforementioned oil and gas activity occuring within their boundaries aren't recieving enough of their own property taxes (which they themselves collect) to maintain their roads. Oil and gas activity in these municipalities means that an exponentially larger portion of traffic is active on their roads compared to municipalities that aren't blessed with the revenue that these activities should bring to the municipality.

This sad state of affairs has progressed to the point where many municipalities have been forced to use their road ban powers as weapons against the oil companies that make such stringent use of their roads. In many cases, oil companies have struck deals with the municipalities wherein the oil companies contribute a portion of funding toward road maintenance.

On one hand, it's wrong that the municipalities use their road ban powers in such a way. On the other hand, however, they have to do what they have to do -- and it's wrong that they should have to do it at all.

Consider that oil and gas companies already pay property taxes on their leases, and this becomes a case of these companies paying extra funds to cover government responsibilities that they already pay taxes for.

Given the level of profit earned by oil and gas companies recently, there's little reason that anyone should be shedding crocodile tears for them. For the municipalities, however, the situation is very different. They are essentially caught between the raiding of their property taxes by the provincial government and the generosity of the oil and gas industry. Caught between a proverbial rock and a hard place, indeed.

So, while premier Calvert is threatening legal action against the federal government over alleged broken promises over equalization, Calvert's own centralizing tendencies within his own province are leaving Saskatchewan's oil- and gas-producing municipalities stretched to the point of desperation, with too many road maintenance expenses, and not enough funds to meet them.

Meanwhile, Calvert has taken the liberty of declaring his 2007 budget a surplus, despite the fact that various analysts have joined the Saskatchewan party in pointing out that it is, in fact, a deficit. All this while Calvert and his lapdogs insist that the 2007 budget is a surplus despite the need to draw on government savings in order to have more funds on hand than it is spending.

In the end, it all comes across as rather absurd. Consider all this in concert with the fact that Calvert is facing an upcoming election (all he has to do is call it) and that many of his MLAs are resigning from what many observers opine to be a sinking ship, and Calvert seems to be reduced to a desperate politician, trying to score some quick political capital by shaking his fists at the "big, bad Conservatives" in Ottawa. Ralph Goodale's constant pouting (essentially about the injustice of being relegated to Opposition) can't hurt Calvert's cause either.

In the meantime, the citizens of Saskatchewan seem to know the score. In the 2005/06 federal election, Saskatchewan sent 12 Conservative MPs to the House of Commons, along with 2 Liberal MPs (including Goodale), and...

...Zero NDPers. In a province governed by the NDP, not a single riding in Saskatchewan elected an NDP candidate federally.

That could turn out to be big trouble for Calvert, and he likely knows it. Given that his primary opposition, the Saskatchewan party, is closely aligned with the Conservatives, Calvert could be forgiven if the premier of the NDP's heartland is sweating bullets looking toward the oncoming election.

Whether or not his gambit succeeds has yet to be seen.

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