Province urging new tack on equalization payments

Moe to spell out plan that he calls ‘more fair and equitable’ for all

Saskatchewan is announcing Wednesday its proposal to change the federal equalization formula.

According to sources close to Premier Scott Moe, he will put forward a plan to make the formula “more fair and equitable for all provinces.”

All week, Moe has been telegraphing the announcement by sharing on social media political messaging related to the equalization formula, which gives cash to needy provinces.

His plan is presented as being fair for all provinces, but his messaging on the subject to this point has targeted a specific province: “Did you know that over past 11 years, Quebec has received nearly $100 BILLION in equalization payments while Saskatchewan has received zero? This has to change,” he tweeted Monday.

The equalization program is up for renewal in March 2019.

Moe is putting forward his proposal well ahead of that, a week before a gathering of the country’s finance ministers, possibly in an attempt to bring the issue to the forefront of those discussions.

Complicating any provincial-federal discussions about changes to the formula, which is complex but based on the basic premise of ensuring all Canadians have access to equitable services, is a recent levelling out of inequality amongst provincial economies.

In 2017, a combined $18 billion was distributed to Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba and Quebec — which was given $11 billion of that amount.

Strangely, a quirk in the formula allowed Ontario to graduate to a “have” province in 2018, but still receive an equalization “adjustment payment.”

Saskatchewan and Alberta, despite running deficits and having recent financial downturns, are still considered “have” provinces — which do not receive equalization payments.

Equalization has long been a source for populist ire in Western Canada, despite overall federal transfers to provinces generally equalling out on a per-person basis. (During the 2018-19 fiscal year, Saskatchewan will receive $1.7 billion from the federal government as a result of federal transfer programs, but none of that money is from equalization.)

Moe, like many a Saskatchewan premier before him, knows that picking a fight with Ottawa over the issue is generally a political win.

Former NDP premier Lorne Calvert did it — and was joined by the then-opposition Saskatchewan Party leader Brad Wall — in calls to have non-renewable resources removed from the formula.

The NDP even had a constitutional challenge working its way through the courts, but Wall’s government dropped it when they took over (Wall deemed the legal route as “unwinnable” and vowed to not reopen the debate).

Although the current version of the beef with Ottawa is likely based on the same old sentiment that Saskatchewan is getting a raw deal, sources close to Moe say Wednesday’s proposal will differ in how Saskatchewan goes about picking its fight.

Meaning it won’t involve a legal challenge or an attempt to have non-renewable resources removed from the equation.

Further details will be outlined in Saskatoon on Wednesday.