Lost in the fog of federal-provincial war on the equalization issue are the facts, which have been sublimated to threats and bluster by both sides. From Ottawa's point of view that is particularly unfortunate, since the facts suggest that Nova Scotia's case is built on sand.

Under the newly enriched equalization formula proposed in the budget, Nova Scotia's fiscal capacity -- the ability of a province to raise its own revenues -- will rise above the national average. However, under the budget arrangement, a fiscal capacity cap kicks in to ensure that the province does not start raking in more cash than Ontario or Alberta, the two wealthiest provinces, neither of which receives equalization. What Nova Scotia wants is that this cap be removed -- a move that would see Nova Scotia's fiscal capacity rise above that of Ontario. Nova Scotia argues that its offshore revenues and the issue of equalization are separate and unrelated.

But this is ridiculous. No government could agree to such an arrangement from a simple fairness point of view, even if it made the extremely rash promise to do just that during the heat of a general election campaign. Source...