Wynne: Federal budget must ensure Ont. is 'made whole'

TORONTO -- The federal government has treated Ontario unfairly by slashing $641 million in equalization payments and should make that up in Tuesday's budget, Premier Kathleen Wynne said Monday.

"There is a real need for fairness in terms of those equalization payments," said Wynne. "They seem to be treating Ontario differently, and when the province is treated differently as compared to all of the other provinces, that doesn't seem right to me, and so I would expect an adjustment to that."

However, Finance Minister Jim Flaherty called Ontario's argument "absurd" and made it clear that the Tories won't be backing down in the dispute with the province over the payments.

While the equalization program rules have changed, the Conservatives have increased federal transfers to Ontario for social programs and health care by $8.3 billion to $19.1 billion since they came to power in 2006, Flaherty said in a statement issued Sunday.

"In an attempt to blame the federal government for their own fiscal troubles, the Wynne government is trying to argue that a $8.3-billion increase in federal transfers is somehow a decrease," he said. "It is not."

If any other province had faced such a cut in the past under the complicated formula used to determine equalization payments, Ottawa would have made sure that province was "made whole" and did not get any less money, insisted Wynne.

"Ontario is the only province to see that kind of cut and the Harper government really, I believe, needs to look at that and needs to understand that that will mean hardship for the people of this province," she said. "I don't think that balancing the federal budget on the backs of the people of Ontario is the way to go."

If the Conservatives felt the need to change the rules for equalization payments -- which are supposed to ensure an equal level of government services in all regions of Canada -- then they should have maintained the provision that made sure provinces didn't face big cuts, said Wynne.

"I think that if they're going to change the rules then there should be a discussion about that," she said. "There was no discussion."

However, Flaherty said Ontario's economy has been improving compared with the rest of Canada, so that's why it's equalization payments have gone down.

"The only thing that has changed for Ontario recently is their equalization entitlement," he said. "To claim this is politically motivated shows their lack of understanding of how equalization works."

Ontario also wants to see a well-funded federal infrastructure strategy in the budget to help the province expand its transportation network and help ease gridlock.

"We're doing our bit here, $35 billion over three years," said Wynne.

"I would expect to see in the federal budget an investment strategy that would allow Ontario to partner with the federal government, and with municipalities, to build the infrastructure -- roads, bridges and transit -- that are needed in this province."