Taking aim at equalization
The idea behind Canada’s equalization program is simple — to ensure that every province is able to provide comparable levels of public services to its citizens at comparable levels of taxation.
The concept is written into the Canadian Constitution, so it’s a guaranteed right for all Canadians. What is harder to understand, or agree on, is the formula used to determine which province receives benefits and which do not.
And equalization is under attack once again. The topic drew heated discussion when provincial and territorial finance ministers met in June, and the issue was recently discussed in advance of the recent meeting of premiers in New Brunswick. Right-wing groups are firing broadsides at the equalization program, demanding changes in the formula which would hurt poorer provinces and benefit wealthier ones.
Sorry, but that’s not how Canada works. When Ottawa announced it was renewing the current equalization program into 2024, it sent off a wave of criticism from some Western provinces that don’t receive benefits, and from various politicians trying to score cheap points. Those attacks prompted P.E.I. Premier Wade MacLauchlan to write a spirited defence of the program as an opinion piece. The premier framed the importance of Atlantic Canada to the rest of the country, noting that the manpower and ingenuity supplied by hundreds of thousands of Atlantic Canadians helped develop Alberta’s oil sands and Ontario’s heavy industry. We helped build this country and deserve to share in its great wealth.
It’s unfortunate that some politicians resort to petty attacks that hurt the concept of Canada-first. For example, the loudest critic of the current equalization formula is Alberta’s opposition leader, Jason Kenney. He seems to conveniently forget that he helped develop the current program when he was a powerful minister in the Stephen Harper government.
Newfoundland and Labrador doesn’t receive equalization payments, even though the province has been battered by the slump in oil prices and is struggling with huge deficit budgets. (That’s because the province’s per capita revenues are high.) Citizens there look at neighbouring Quebec and see a province receiving almost $12 billion in equalization, and feel it doesn’t seem fair.
And without equalization, the other three Atlantic provinces would be struggling, too. New Brunswick collects $1.874 billion, Nova Scotia $1.933 billion and P.E.I. $419 million. In a small province like P.E.I., with very limited natural resources, those payments are crucial.
As MacLauchlan noted, the federal equalization program is part of the glue that keeps Canada together, economically and politically. Equalization allows provinces like P.E.I. and N.S. to balance their budgets, build up their economies and boost their prosperity — and lessens the need for help in the future.
Why do some provinces and politicians think there is something wrong with a program designed to build a stronger and more prosperous Canada?