Flaherty also indicated that his negotiations with the provinces will be a two-way street. They want more money from the federal government but he wants agreement on a common securities regulator, removal of interprovincial trade and labour mobility barriers and harmonization of provincial sales taxes with the federal GST.Now, it's possible that other, less harmful agreements (such as the labour mobility agreement already in the works) could also meet Flaherty's terms. But if Flaherty plans to impose the elimination of barriers as a precondition to funding which is expected to flow by February, then it doesn't seem likely that all provinces would be able to agree on a different structure in time - leading to the danger that the Cons could make TILMA their standard out of convenience rather than on merit.
"So, this isn't just a discussion about money flowing from Ottawa to the provinces. It's also a discussion about our obligation together to create a strong economic union in Canada."
As an inducement, Flaherty has promised to drastically limit the use of the federal spending power to intrude on areas of provincial jurisdiction. He brushed off reports that Harper is willing to enshrine such limits in the Constitution.
Which would presumably be a rather happy result for Flaherty, who seems eager to make sure that other levels of government are just as unresponsive as his own. But even if many provinces want to see the federal government avoid their jurisdiction entirely (which itself seems a dubious claim given that many of the "intrusions" involved a province's agreement), it's doubtful that any of them who haven't yet signed onto the TILMA want to see the federal government tell them to avoid exercising their own jurisdiction. And it doesn't appear the least bit unlikely that some provinces, and indeed many Canadians, would ultimately reject what looks to be an ever-decreasing equalization fix, preferring a small fiscal imbalance to a Con-imposed power vacuum.
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