Equalization formula is patently unfair and must be changed
The federal Equalization program has always been a misnomer in Canada. To be accurate, it should be called the Some Are More Equal than Others (SAMEO) program, at least for Quebec and the Maritimes.
That truth was bolstered Monday when it was revealed that the province of Quebec — which ran a $3 billion budget surplus last fiscal year — will be getting an extra $1.4 billion from the federal government next year for a total of $13.1 billion!
Meanwhile, Alberta, which has the highest unemployment rate in the country and is running an $8 billion deficit, just keeps getting kicked when it’s down.
And those kicks hurt even more since they are consistently delivered right after Alberta picked up the others’ tabs for champagne and filet mignon, while it sipped on a Diet Coke and nibbled on the free bread.
Last week, New Brunswick Premier Blaine Higgs revealed that he talked to Quebec Premier Francois Legault regarding an attempt to revive discussions about TransCanada’s Energy East, which would ship Alberta bitumen to New Brunswick for upgrading.
“Alberta has been feeding our kids for a long time with the royalties, with the money that has come from oil,” Higgs said, acknowledging that his province’s budget derives 30 per cent of its budget from equalization payments.
Somehow, just getting acknowledged by Higgs takes some of the sting out.
But Legault’s comments represent a nest of angry wasps. “There is no social acceptability for a pipeline that would pass through Quebec territory,” said Legault.
He adds that Quebecers prefer Saudi Arabian oil tankers to fuel those Bombardier planes, trains and Ski-Doos.
As UCP leader Jason Kenney said Monday, while it’s true Quebec has a lot of hydroelectricity, that doesn’t displace the province’s dependency on petroleum products.
“In fact Quebecers, (the) last year for which we have numbers, in 2016 they consumed 355,000 barrels per day of gasoline and diesel,” said Kenney.
So, it’s past time to re-examine just what the rest of Canada gets from Alberta, owing to Canada’s SAMEO program, as I call it.
Just last month, Statistics Canada data on provincial expenditures and federal revenues was released for 2017.
It includes a great many numbers but it paints an incredible picture, so keep reading.
In 2017, Albertans paid the federal government $50.3 billion in taxes. Albertans received $28.5 billion back in federal spending. In other words, Alberta’s net contribution to Confederation was $21.8 billion during a year of incredible hardship and runaway provincial deficits.
There are only three other provinces contributing to federal coffers in this country — Ontario, B.C. and Saskatchewan. On a percapita basis, no other province comes close to Alberta in its giving.
Every Alberta man, woman and child contributed $5,147 to the rest of Canada. Ontarians each contributed $1,179; British Columbians, $1,162; and the good folk from Saskatchewan each gave $323.
The rest of the provinces are net recipients from federal largesse, a.k.a. SAMEO.
Every person in P.E.I. receives the equivalent of $8,747. Nova Scotians each get $7,162 and those from New Brunswick receive $6,442, on a per-capita basis.
Manitobans each get $3,242; Newfoundlanders, $2,925; and each and every Quebecker — all 8.4 million of them — received the equivalent of $1,981, making Quebec the overall largest provincial recipient of equalization.
It’s important for all Albertans — and Canadians — to understand that Alberta Premier Rachel Notley doesn’t sit at her desk in the Edmonton legislature and write out a cheque for $21.8 billion. Albertans pay taxes the same way all other Canadians do. However, Albertans pay more per person because of higher average incomes and spending.
Since Alberta’s population is younger than many of the other provinces, less of our own money comes back here in the form of Old Age Security or health transfers.
Nevertheless, year after year Albertans keep paying the tab and get kicked for their generosity.
In 2014, when our economy was roaring along, Alberta contributed $27.1 billion to the rest of Canada. In 2016, Alberta’s contribution plummeted by almost $7 billion, to $20.4 billion.
That’s what happens when pipelines can’t get built. Investors are spooked by the fed’s looming Bill C-69 — the Never Build Anything Again Act, as it should be called — and 160,000 Albertans are out of work. The rest of Canada gets less money and future generations get stuck with the bill as federal deficits and debt continue to balloon.
Alberta’s debt sits at $43 billion. The cost of carrying that debt is $1.42 billion annually. That’s a lot of hip replacements and new schools.
So what’s being done about this outrage?
Last year, the Alberta NDP government defeated a United Conservative Party motion in the Legislature that called on the province to initiate equalization renegotiations with the Trudeau Liberals in Ottawa. It was revealed earlier this year that the provincial government knew the feds would renew the existing unfair formula, but publicly stayed silent for more than a month.
“After Justin Trudeau rammed his equalization plan through parliament last June … it is clear that he does not intend to address this imbalance, that will see Quebec receive an additional $1.4 billion in equalization funding this year,” said Drew Barnes, the UCP’s finance critic.
Barnes said Quebec is projected to continue to receive more than half of the total of equalization through 2019-2020, after it is projected to have run successive surplus budgets.
“As Canada’s finance ministers meet, they must immediately address the deeply flawed system that continues to subsidize Quebec at the expense of Albertans, who are facing a time of real economic challenge and unemployment,” said Barnes. “Since equalization was created, Alberta has received 0.02 per cent of all payments, the last of which was in 1964-1965. In contrast, Quebec has received equalization money every year of the program, totalling $221 billion dollars, or 51 per cent of all payments.”
UCP leader Jason Kenney has vowed that if elected premier, he is prepared to hold a referendum on equalization to force the feds into binding negotiations so that Alberta can get a fair deal.
“SAMEO” has got to go. A fair equalization formula must be developed. It’s only fair.