To have and have not: Saskatchewan and equalization
Saskatchewan Premier Scott Moe is calling for the federal equalization program to be made fairer to the “have” provinces. Well, that’s not news, and on its own it doesn’t belong in a newspaper, since the story is about a week old. But let me tell you how an older Albertan reads this sentence. In his head, it sounds more like this:
“SASKATCHEWAN premier Scott Moe … (long pause) is calling for the federal equalization program to be made fairer — to the ‘have’ provinces!”
The statement acquires … well, let’s call it what it is: a punchline! It becomes something out of a Jerry Seinfeld set! “Saskatchewan complaining about equalization! What’s the deal with that?”
Fiscal equalization between provinces is a cherished object of resentment in Alberta because Alberta, to a decent approximation, has never qualified for equalization. The first payments under equalization were made in fiscal 1957-58, and at that time Alberta was a mildly “have-not” province: over the first eight years of the program the province received a total of $92 million in Fifties dollars. (Adjusted for inflation, this comes to less than half what Manitoba now gets in a typical year.)
Alberta became a “have” in 1965-66 and has never again been eligible for payments. Even in the teeth of the oil-driven 2015 recession that blew up Alberta businesses, turned engineers into bartenders, and spread leprosy throughout the provincial budget, there was never the dimmest prospect of Alberta losing enough relative “fiscal capacity” to become a have-not.
I put “fiscal capacity” in scornful quotation marks, but fiscal capacity as the feds calculate it is a close simple proxy for per-capita GDP. Alberta’s economic strength, and I say this with particular emphasis to the Alberta part of my audience, is a real thing. Our incomes remain high and our economy is more diverse than we are habituated to think. An engineer who loses an insanely high-paying job here during an oil slump still has better second-best options than someone, maybe almost anyone, who lives in a theme-park economy dominated by seasonal and government-sown work. Hell, even his prospects as a bartender are probably better.
This, as you might expect, is cold comfort when you’re using a STEM degree to wipe shot glasses. Colder still to a working man who spent $10,000 on tools no one needs him to use right now. But it is what lies behind a great deal of Albertan annoyance with equalization. And it leads to the wider questions about the program that are usually dealt with by handwaving. Is it a sort of insurance scheme? If so, is it at all possible for Alberta to collect? The identities of the “havenot” provinces have hardly changed over a half-century: is this a possible signature of moral hazard?
But then there’s Saskatchewan, the one province where equalization vaguely resembles insurance — the only province, in fact, that can be reasonably described over the whole life of the program as “sometimes a ‘have’, sometimes a ‘havenot’.” It was a modest “havenot” until 1980-81, leaping briefly to “have” status in ’75-’76; after a few more years of “have” it reverted to “have-not” in ’86-’87, but took its last equalization payment in 2007-08. If you are 40 years of age, Saskatchewan has been a havenot province for more than half that time — 26 years of the 40.
So is it strange that a Saskatchewan premier is leading the crusade for the “haves”? Yes. But there’s a reason for it. In Alberta the two major political parties are in complete agreement about equalization: they think it’s a ripoff. My national audience may not know this, because opposition leader Jason Kenney has been extremely belligerent on the subject and wants you to notice the belligerence. But our NDP finance minister, Joe Ceci, has endorsed Moe’s view. Equalization, Ceci complains, “has not worked for Alberta, even during the depths of our recession.”
In Saskatchewan the political situation is different. The Saskatchewan Party Premier Moe mounts his high horse: the NDP leader, Ryan Meili, recalls history and says, whoa, hold up. Equalization “is really an insurance program for those economies that are struggling more,” Meili told a scrum last week. “While we’ve been fortunate the last few years to not require that support, in the past we certainly have needed it.”
Meili’s description of equalization as “insurance” should be convincing in Saskatchewan, where it is meaningfully applicable. But consider the psychology of Saskatchewan — the identity issues involved with living halfway between have and have-not. During a long period of New Democratic hegemony in Saskatchewan, lasting from 1944 to 2007, the province’s “havenot” situation seemed to be quite chronic. The election of the Saskatchewan Party coincided with economic improvement, an end to population hemorrhaging in the direction of Alberta, and a return to “have” status, only intermittently glimpsed before.
Scott Moe would characterize this as an SP achievement, one to which he is heir. Meili would insist that “coincided” is the right verb — that this history is a sort of fluke, and that Saskatchewan must have federal malaise insurance. I won’t presume to declare which view is correct. But Premier Moe does seem to think, in emphasizing the outrageous unmeritocratic aspects of fiscal equalization, that there is credit to be earned among voters by reminding them of Saskatchewan’s rise to “have” status.