A simple way to make equalization more fair

‘50-50 formula’ would ensure that all provinces get funding, Scott Moe says.

As Canada Day approaches, all of us have reason to give thanks, living as we do in the greatest nation on Earth.

Canada is a country that works.

But like all countries, Canada is imperfect. And one of its enduring imperfections is the federal equalization program.

The objectives of equalization are laudable. No one should begrudge a program intended to ensure all Canadians have access to a comparable level of service. We are a compassionate, generous people.

But Canadians also have a sense of fair play.

Four years ago, when resource prices dropped sharply, the economies of Saskatchewan, Alberta and Newfoundland and Labrador were hit hard. Government revenues plunged, and thousands of people lost their jobs.

Despite this immense challenge, the three provinces were still considered “have” provinces under the equalization formula, and therefore, ineligible for equalization payments.

In fact, Saskatchewan has received no equalization for 11 years, and is not expected to receive equalization for the foreseeable future.

Over the same period, Quebec received $100 billion, including $11.7 billion this year alone.

The money continues to flow to Quebec, even as Premier Philippe Couillard declares that his province “has never been so well off as it is now.”

Equalization has allowed Quebec to pay for public services that in some areas far exceed what is typically provided by other provinces.

This is not fair to Saskatchewan taxpayers. Equalization, as it operates now, is not fair to Saskatchewan taxpayers.

We believe there’s a better way.

There is a simple change that could make the equalization formula fairer for all provinces. We call it “the 50-50 formula.”

Under this formula, the relative fiscal capacity of each province would continue to be calculated as it is now. Half of the total equalization pool would be distributed based on this calculation.

The other half of the pool would be dispensed on a per-capita basis. This would ensure all provinces receive some funding from the equalization program, while continuing to ensure the socalled “have not” provinces receive significantly more funding.

There would be no windfall for Saskatchewan under the “50-50 formula”. Our province would receive approximately $300 million, or about 1.6 per cent of the total equalization pool.

But we would receive something, and that would help us pay for important public services.

Some will note that Saskatchewan has received equalization in the past. While that’s true, we have received less than two per cent of the $430 billion paid out since the program began in 1957, while Quebec has collected $221 billion, more than 50 per cent of the total.

It is also true that provinces don’t pay directly into equalization.

However, Canadian taxpayers underwrite the program through the federal taxes they pay.

On average, each Canadian contributes about $500 per year to equalization. That amounts to about $600 million a year for Saskatchewan.

It is clear this program is flawed.

Saskatchewan is offering a simple solution in keeping with the spirit of fairness and generosity that has come to define our nation.

We can build a better equalization program.

And in doing so, we will build a better Canada.

The money continues to flow to Quebec, even as Premier Philippe Couillard declares that his province ‘has never been so well off as it is now.’