Moe proposes 50-50 equalization formula

Saskatchewan Premier Scott Moe is resurrecting the equalization debate by proposing a new, “fairer” formula for the $18-billion federal program.

Moe’s plan, thought by some to be a long shot because it would strip billions from Quebec, equalization’s largest beneficiary, involves splitting half of the total equalization pot among all 10 provinces.

While equalization has long been a source of frustration among some provinces, it’s not clear if any will endorse the plan.

Speaking with reporters in Saskatoon, he said New Brunswick Premier Brian Gallant, who chairs the Council of the Federation, is open to adding it to the agenda when all 10 premiers convene in St. Andrews, N.B., next month.

“These are very sensitive and challenging discussions, but that does not mean we should avoid them, or not have these discussions,” Moe said at a news conference Wednesday morning.

“We should most certainly have these discussions … and the place to start those discussions, in my view, is the Council of (the) Federation meeting and that’s my request here today.”

Last year, equalization paid about $18 billion in federal tax revenue to six “have not” provinces: Manitoba, Ontario, Quebec, Nova Scotia, New Brunswick and Prince Edward Island. Quebec received $11.7 billion of that total.

Under the current formula, which is aimed at ensuring all Canadians have access to the same level of public services, payments are calculated based on each province’s fiscal capacity.

Moe’s “simple change” involves paying out half the total — almost $19 billion next year — using the existing formula and distributing the remaining $9.5 billion to all 10 provinces on a per-capita basis.

Moe signalled that the Alberta, British Columbia and Newfoundland and Labrador governments have been “receptive” to his proposal. He said the federal government’s position is unclear.