National Post (National Edition)
Kenney off kilter with referendum
On equalization, the right fight the wrong way
Let’s begin with the standard disclaimer: the government of Alberta does not “pay into” equalization, nor does it transfer income to other provincial governments. Equalization is not a revenue-sharing agreement among the provinces, but a federal program: the payments to poorer provinces, intended to ensure they can offer services that are “reasonably comparable” with those of their richer cousins, come out of federal revenues.
What is true is that Alberta, even in its present straits, is one of the few provinces that does not receive equalization payments. It is also true that Albertans, even at present, have incomes that are well above the national average, and as such bear a disproportionate share, as federal taxpayers, of the costs of the program.
Last, it is true that some of the recipient provinces, the beneficiaries of Albertans’ (though not Alberta’s) largesse, while no doubt grateful for the golden eggs that land on their doorsteps each year, seem peculiarly indifferent to the fortunes of the goose that laid them: notably with regard to the pipelines Alberta needs to bring its oil and gas, source of all that redistributed wealth, to foreign markets.
So when Alberta Conservative leader Jason Kenney demands changes to the program, he is drawing on a genuine, even justified, though sometimes misplaced sense of grievance in the province. Does his proposal to redress that grievance — a provincial referendum “demanding the removal of nonrenewable resource revenues from the equalization formula” — have as sound a basis? Certainly not on its own terms. Kenney claims such an adjustment would “massively reduce Alberta’s contribution to equalization.”
This is simply untrue, and not only because Alberta, as such, does not contribute to equalization. Whether nonrenewable resource revenues are or are not included in the equalization formula will affect how much recipient provinces are paid out of it. It can have no effect on how much tax Albertans pay into it. Equalization is not funded by some special, earmarked levy, like unemployment insurance, but from general revenues. OK. But what about the idea of a referendum demanding changes to equalization? Is that as nutty as it sounds? How can a province expect to alter the terms of a federal program, simply by holding a vote on it? Is there any solid foundation to Kenney’s proposal?
More than you’d think, and more than there should be. The idea, first propounded earlier this year by political science professor and former Alberta cabinet minister Ted Morton, takes its inspiration from a 1998 ruling by the Supreme Court with regard to Quebec’s claimed right to secede unilaterally: the famous “secession reference.”
Most people remember the ruling for having established that Quebec could not lawfully secede unilaterally, but only by negotiation with the rest of Canada, in as much as secession would require substantial amendments to the Constitution.
But the ruling also imposed a reciprocal obligation on the rest of Canada: the same “clear majority” on a “clear question” that the Court ruled would be required for Quebec to demand negotiations would entail a “duty to negotiate” on the part of their partners.
Again, most people think this applies only to the particular issue of Quebec, and secession. But it’s quite clear from the ruling that the Court had a more general proposition in mind, what it called “the democratic principle,” that applies to all constitutional change. The Constitution Act 1982, it notes, “confers a right to initiate constitutional change on each participant in Confederation.” It goes on: “In our view, the existence of this right imposes a corresponding duty on the participants in Confederation to engage in constitutional discussions…”
The “duty to negotiate” in the case of Quebec’s secession is essentially treated as a subset of the general duty that applies to any constitutional amendment, and any province. “An expression of the democratic will of the people of a province carries weight,” the Court ruled, “in that it would confer legitimacy on the efforts of the government of Quebec to initiate the Constitution’s amendment process in order to secede by constitutional means.”
And again: “The corollary of a legitimate attempt by one participant in Confederation to seek an amendment to the Constitution is an obligation on all parties to come to the negotiating table.”
Now, there’s a lot to disagree with in the Court’s ruling. The duty to negotiate on the part of any province seeking to amend the constitution is obvious enough, as a practical reality if nothing else: it can’t do so unilaterally. But the duty to negotiate on the rest was something the court made up, at least as a matter of law.
Still, that’s what the Court ruled. And so far as the ruling applies — so far as it could be enforced — it clearly applies not just to secession but to a constitutional amendment.
Would it apply to equalization? Only so far as it involved a constitutional amendment. “The principle of making equalization payments” is entrenched in the Constitution. The particular details of its design are not.
In the original Morton version, the referendum was “to remove the equalization program from the Constitution.” That would seem to invoke the Court’s “duty to negotiate.” But Kenney’s proposal is simply to remove non-renewable resource revenues from the equalization formula.
It’s a stretch to see how that would require a constitutional amendment. It’s probably clear that I don’t think the rest of Canada has a duty to negotiate even if it did. But it would certainly be under no obligation to respond to any demand for non-constitutional change, referendum or no.
Indeed, it would be almost obliged not to — otherwise every Tom, Dick and P.E.I. would be holding referendums to back its demands in every one of our endless intramural squabbles.
Equalization is a program sorely in need of reform. But the very worst way to go about it is with the kind of pressure tactic Kenney is proposing.
EVERY TOM, DICK AND P.E.I. WOULD BE HOLDING REFERENDUMS.