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Signalling a significant shift in tone, Alberta Finance Minister Lyle Oberg says he "won't object" to a controversial revamp the Harper government has planned for Canada's equalization formula -- a development that could reduce political friction for next week's federal budget.

Mr. Oberg, a member of new Alberta Premier Ed Stelmach's cabinet, said his province will not oppose the new formula, which takes into account resource revenues, as long as Ottawa pledges to fix per-capita transfer payments so that his province gets its fair share -- another move expected in the budget.

He says it doesn't make sense to oppose the new equalization formula when Alberta, as a wealthy province, neither gains nor loses from a payout system designed for poorer jurisdictions.

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"It doesn't matter to us," Mr. Oberg said, adding later: "We also recognize that there's certainly a high chance that this is going to come in whether we say anything or not."

Alberta, along with Newfoundland and Saskatchewan, has objected to a 2006 report recommending a new formula for Canada's equalization program: one that gives poorer provinces an extra $900-million a year, two-thirds of that going to Quebec.

The trio's beef was that the new formula -- expected to be adopted in the March 19 federal budget -- includes 50 per cent of provincial oil and gas revenues in calculations, leading to the hike in federal payouts.

Former Alberta premier Ralph Klein, and the province's current Intergovernmental Affairs Minister Guy Boutilier have joined petroleum-flush Newfoundland and Saskatchewan during the last year in condemning the inclusion of non-renewable resource revenues in equalization.

The formula -- proposed by the 2006 O'Brien report -- is even more troublesome for the Harper government because enacting it will also mean breaking an election promise. In the last campaign, the Conservatives pledged to exclude these same resource revenues from equalization formula calculations.

Mr. Oberg's comments were applauded by Ken Boessenkool, a friend and former close adviser of Prime Minister Stephen Harper who defended the O'Brien formula for handling resource revenue in a recent C. D. Howe Institute paper.

"It's not just a new tone, it's frankly a more sensible tone," Mr. Boessenkool said of the Alberta finance minister's position, contrasting it with that of Mr. Klein, who he said liked to "rattle the populist cage."

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Mr. Boessenkool, a Conservative who has written for years on equalization, said the program is not a transfer of money to provinces such as Quebec from Alberta because it's paid for from revenue that Ottawa collects from all Canadians.

Mr. Oberg said he expects the Harper government will embrace the O'Brien formula.

But he adds he also expects the Tory budget to pledge a return to full per-capita transfer payment funding for Alberta and Ontario.

No immediate action is expected on health transfers because the Tories won't reopen the 2004 health accord, but Mr. Oberg said he nevertheless anticipates action on social transfers.

Mr. Oberg said he expects the budget to ramp up the Canada Social Transfer for Alberta, starting at roughly $150-million a year and rising over time to $400-million.

Alberta's less antagonistic position may also help the Harper government ride a wave of anger from Newfoundland and Saskatchewan over breaking an election pledge to exclude resource revenues.

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If the Tories fulfilled their campaign pledge, it would yield $800-million in revenue for Saskatchewan, which today receives no money under equalization.

Harry Van Mulligen, Saskatchewan's Government Relations Minister, told The Canadian Press that Ottawa is looking for alternative ways to satisfy his province, and warned of an electoral price to pay for reneging on the promise.

"I don't think [Mr. Harper]can afford to write off Saskatchewan," he said, noting that the Tories' 12 seats in the province could make the difference between winning a minority or a majority.

Federal opposition parties suggested Alberta is hoping for something in return for helping ease political friction on equalization, such as less onerous burdens for petroleum companies under a pending climate-change plan.

Mr. Oberg rejected the notion, saying it just makes sense to lobby for Alberta's fair share of per-capita transfer payments rather than squabble about a formula that doesn't affect his province's fiscal situation.

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