Saskatchewan threatens to take Harper to court

June 12th 2007.

REGINA - With Prime Minister Stephen Harper daring provinces to take the federal government to court over its equalization policies, Saskatchewan Government Relations Minister Harry Van Mulligen said that just might happen.

Speaking to reporters at the provincial legislature on Monday, Van Mulligen said Premier Lorne Calvert will lay out the Saskatchewan government's equalization strategy within the next two weeks.

The premier recently mentioned the possibility of legal action, and Van Mulligen said that's one of the options on the table.

"I think that would be a primary consideration for us," he said.

Saskatchewan has called on Harper to live up to the Conservative campaign promise to exclude non-renewable resource revenues from the formula for equalization funding, which it says would mean an additional $800 million in federal cash for the province annually.

The Conservatives say they kept their promise because the March federal budget allows provinces to choose a formula that would pull non-renewable resource revenues from equalization. However, it also put an unforeseen cap on payments, meaning Saskatchewan gets $226 million this year and is slated to get no equalization funding in 2008-09.

Saskatchewan has been joined in its unhappiness over the Conservative budget by Newfoundland and Nova Scotia, which had signed the Atlantic Accord side deals with the previous Liberal government. Those agreements excluded offshore energy revenues from the equalization calculations for those provinces.

Nova Scotia's Progressive Conservative Premier Rodney MacDonald, who has called on all his province's MPs to vote against the budget, says the new equalization formulas violate the Atlantic Accord. But Harper said Monday if MacDonald believes that to be the case, the province should take the federal government to court.

"I am concerned about this allegation that we've broken the accords," Harper said at an Ottawa news conference.

"We've done no such thing. It's a contract. We don't break contracts. We respect contracts.

"Normally I expect that if somebody says you've broken a contract, they're going to follow that up by going to court to make you abide by the contract, but I don't see that happening. It's an allegation without substance."

Van Mulligen took exception to what he called the prime minister's "belligerent attitude."

"It's Mr. Harper's tone -- that 'If you don't like it, lump it' attitude and 'Take us to court' and so on. That's no way to run a country."

Van Mulligen said while Saskatchewan's strategy hasn't changed, the tough words from Newfoundland and Nova Scotia, and the possibility that a second Nova Scotia Tory MP will join MP Bill Casey in voting against the budget, undermine the Conservative argument about the budget's benefits.

The Saskatchewan government has been tight-lipped about a potential legal challenge since Calvert mentioned the possibility a month ago. Van Mulligen declined to provide further details Monday.