Equalization referendum a crucial step in fight for fairness

A `yes' vote would force Ottawa to negotiate in good faith, says Travis Toews.

Oct. 18 is approaching, and with it, the referendum question on equalization being put forward by the Government of Alberta. There are a few reasons why I believe it is critically important to put this question forward to our fellow Albertans.

First, a short history. The program was created in 1957 to “equalize” provincial fiscal disparities. In 1982, this commitment to equalization was enshrined in the Constitution and Alberta has been a net contributor ever since.

In fact, the last time Alberta qualified for equalization was 1965 and has since contributed hundreds of billions more to the country than we have received back in federal spending and transfers. Since 2007, Alberta has contributed net $240 billion to the rest of Canada — or about $20 billion annually, despite our economy struggling under the weight of low commodity prices and poor economic policies under the previous government. This is $20 billion each year that is not available to Albertans to pay for health, education or debt reduction.

Albertans are frustrated and there is a growing perception that the equalization system is broken and fundamentally unfair to Alberta, pulling billions of dollars out of our province — even during times of economic recession. This frustration is also directed at provinces that benefit from Alberta's generosity while attacking our economic interests and implementing policies detrimental to our energy industry, our province, and our people. Since 2015, for example, Quebec has collected over $70 billion in equalization payments, while opposing critical energy infrastructure projects like the Energy East pipeline, and more recently, an LNG project in Saguenay, Que., that would have shipped Alberta's natural gas to markets overseas.

Moreover, Alberta has often put forward reforms that would help address the current inequities of the program, including the irrational requirement that the program must grow with Canada's economy, even as fiscal disparities across the country narrow. This requirement inflates payments beyond what provinces merit per the formula and is clearly unfair and unaffordable.

The integrity of the equalization formula is further eroded by the fact that non-renewable resource revenue is included in the calculation. Inclusion of this type of revenue provides a disincentive for provinces to develop their resource industries, support national economic recovery and, over time, reduce reliance on equalization payments among recipient provinces.

The inequity is compounded by the fact that state-owned natural resource revenue is not included, giving Quebec preferential treatment on their hydro revenue.

Over the years, these obvious reforms that would have made Canada's economic and fiscal engine run more smoothly and sustainably have gone unaddressed and ignored. After years of trying to collaboratively fix the program, it is clear that there is little interest in co-operation. With no one else willing to defend Alberta's interests, we have no choice but to elevate our concerns this October.

The referendum question is simple: “Should section 36(2) of the Constitution Act, 1982 — Parliament and the government of Canada's commitment to the principle of making equalization payments — be removed from the Constitution?”

A “yes” vote to this question would push Alberta's fight for fairness onto the national agenda. And, based on a Supreme Court ruling tied to Quebec's separation referendum, it would force the federal government to negotiate in good faith.

Albertans are proud of their significant contributions to the country and are proud to be the wealth-creation engine of the nation, but many are feeling frustrated with their place in the federation. The lack of fairness in our federal fiscal programs leaves Alberta families paying too much to subsidize the provincial services of others, and it has never been more unfair than in 2021 when our own provincial services are so strained. While there is still a lot more work to do, this equalization referendum is a crucial step in Alberta's ongoing fight for fairness in the federation.

It is time for Albertans' voices to be heard.