Prime Minister Stephen Harper says the national equalization program falls under Ottawa's jurisdiction and none of the provinces can dictate how the money collected from taxpayers gets divvied up among poorer regions.
His comments yesterday were made a day after Alberta Premier Ralph Klein threatened to pull the province out of the program if its vast natural-resources wealth is included in the equalization formula.
"I think we need to be clear. Equalization is not an Alberta program or an Ontario program," Mr. Harper said in response to questions from reporters in Vancouver.
"Equalization is a strictly federal program. And, obviously, while I would like to see a consensus of the provinces on this, I think it is becoming increasingly obvious there won't be one."
As a result, he said, the federal government will determine the formula for calculating equalization payments to less-prosperous regions after examining the findings of a number of reports into the matter.
"We know the provinces are very divided on this," Mr. Harper said. But he made it clear that he was not going to be dictated to by Mr. Klein or any other provincial politician.
Mr. Klein vowed this week to fight "tooth and nail" to protect his province's natural-resource wealth, including possibly dropping out of the equalization program. He told reporters Alberta will seek a legal opinion on whether it can pull out of the program.
In Ontario, Premier Dalton McGuinty declined to comment, even though he has been waging a very public campaign for a fairer deal from Ottawa for more than a year. But a senior government official said Mr. McGuinty welcomed Mr. Klein's comments because they show that he is not alone in fighting efforts to enrich the equalization program.
"Ralph's position is certainly similar to ours," said the official, who asked not to be named. As to the idea that there are nine provinces and the federal government against Ontario, "that narrative is rapidly crumbling," he said. "Ontario is not isolated on this."
Quebec Premier Jean Charest refused to say yesterday whether Quebec would support a scenario that would see Alberta exclude part of its oil and gas royalties from a new equalization formula.
Negotiations will be tough, Mr. Charest acknowledged, but he insisted it is still possible to strike a deal despite Ontario's and Alberta's strong objections. "We are at the beginning of this process."
Mr. Klein made his comments this week shortly after learning that several premiers from Eastern Canada, including Mr. McGuinty and Mr. Charest, have asked to attend a meeting of western premiers in Gimli, Man., next week. Although equalization is not officially on the agenda, it is highly likely that it will come up.
Mr. Klein and Mr. McGuinty are natural allies in opposing any enrichment to the program because Alberta and Ontario are the only two provinces that don't receive equalization payments.
A federal preliminary report has recommended the equalization program be enriched by moving it to a 10-province standard, including half of their resource revenues. Such a change would have meant a $2.8-billion increase in the program, which paid out $10.9-billion last year.
Equalization is one of several federal programs under which Ottawa collects tax revenue from the provinces and redistributes the cash. As a result, it is impossible for a province to pull out of equalization.
"This is not asking the province of Alberta or the province of Ontario or any other province to make special payments," Mr. Harper said. "It's strictly a federal program."
In recent years, he added, the federal government has arbitrarily assigned a number. "That doesn't seem to us to be fair. We'll try and, after listening to all of these reports, to come up with what we think is the most principled and defensible way of proceeding."
With reports from Rhéal Séguin and Katherine Harding