THE provincial governments are under pressure to free up resources from their share of transfers under the NFC award to help meet defence and debt servicing requirements of the federal government. Conversations with those in the provincial governments who are familiar with these developments suggest they are preparing to accommodate this pressure, but in a way that does not require amending the constitutional clause which guarantees that the provincial share in the NFC award will not be reduced.
It is hard to make a case for sharing the costs of debt servicing with the provinces. Unless the centre is willing to agree that it will only take on additional debt with the approval of the provincial governments, it cannot ask them to share in the cost of servicing this debt. But defence expenditure is different.
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