Press Release

Press release
Cabinet du ministre
FOR IMMEDIATE RELEASE
CNW CODE 01
O’Brien Report on Equalization: “a Positive and Substantial
Contribution to the Upcoming Discussions”
─ Michel Audet
Québec, June 5, 2006 – The Minister of Finance of Québec, Michel Audet, described the
report of the federal government’s expert panel on equalization as a “positive and substantial
contribution”. The panel was chaired by Al O’Brien, former Deputy Minister of Finance of
Alberta. “This is the second report by independent experts in two months to recommend that
the federal government bolster the equalization program,” Mr. Audet observed.
From many standpoints, the approach recommended by the O’Brien Report ties in closely
with the recommendations made by Québec over the past year to committees that have
examined the issue of the fiscal imbalance and equalization. “As I indicated to the Commons
Committee on the Fiscal Imbalance, the Committee of the Council of the Federation on the
Fiscal Imbalance and the expert panel chaired by Mr. O’Brien, the equalization program must
be based on clear principles of general application, which implies using a standard that
corresponds to the average of the ten provinces and a formula that is fair to all the provinces,”
the Minister noted.
On the question of natural resources, the O’Brien Report recommends including, in the
calculations, 50% of the revenues the provinces obtain from both renewable and non-
renewable natural resources. This formula would thus apply to oil and natural gas, but also to
hydro-electricity. “I note once again that this is the second report in two months to indicate
that it would be a mistake to completely exclude natural resources from equalization,” Mr.
Audet indicated, noting that on this issue, Québec maintains its position: all provincial
revenues must be included.
The O’Brien Report also proposes a major simplification of the program, recommending that
the number of tax bases be reduced from 33 to 5 in addition to a streamlined mechanism.
“We are at the beginning of extremely important discussions with the federal government and
the other provinces that will cover all the mechanisms to correct the vertical and horizontal
fiscal imbalance. It is obviously too early to tell, today, how successful the exercise will be.
However, we are confident that we will reach a solution that is advantageous for Québec,” the
Minister concluded.
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Source: Michel Rochette
Press Relations Officer
Office of the Minister of Finance
[phone]