Chris Pecora

Equalization Rage

By Graham Thomson

It has been called the superglue of Canada’s Confederation. It is also, ironically, one of the things that keeps driving provinces apart. It is ridiculously complicated, made more so by politicians over the years. It could no doubt be improved. Say hello to federal equalization, a program that Alberta’s new premier, Jason Kenney, would like to say goodbye to. At least in its current form.

Kenney might be new, but his fight against equalization is not. The federal equalization program manages to create a stink about once a decade. Or, perhaps more to the point, it is politicians who create a stink about equalization every 10 years or so. Virtually every province at one time or another has had a problem with the federal program that is designed to make sure all Canadians enjoy the same basic level of government services. Over its 60 years the program has come under attack from various premiers, sometimes because they think their province isn’t getting enough money out, or more often because they think their province is putting too much money in.

In 2006 Alberta premier Ralph Klein famously threatened to opt out of the equalization program during a dispute with the federal government. Picking fights with Ottawa, no matter whether a Liberal or Conservative government were in power, was a favourite tactic of Klein’s, who, in the lead-up to the 2004 Alberta election harrumphed, “By God, Ottawa, keep your hands off.” Klein made it sound like Ottawa would make periodic raids into Alberta’s treasury to fund equalization.

The program is in fact funded via federal taxes, and we all pay the same income tax rate no matter which province we live in. Someone making $75,000 in Edmonton is taxed at the same level federally as a similar someone making $75,000 in Montreal. “Have” provinces such as Alberta do not send money to “have-not” provinces such as Quebec.

Opting out of equalization, as Klein suggested Alberta might do in 2006, would be like Alberta opting out of the armed forces. But nothing energizes Alberta’s sense of alienation like a good harrumph over equalization.

Now we have Alberta’s newest premier taking shots at the program. But he does at least bring a new twist to an old fight. Kenney says unless the federal government changes the equalization program to make it more favourable to Alberta, he will hold a referendum in this province to amend the Constitution for a “new deal” in Confederation.

Constitutional experts, including lawyer David Khan, who led the Liberals into Alberta’s 2019 election, say Kenney’s plan is so flawed as to be laughable. Provinces cannot unilaterally change the Constitution. And even if Kenney’s referendum result went his way, and he somehow managed to cobble together the requisite amending quorum—the House of Commons, the Senate and at least seven provinces representing at least 50 per cent of the population—the country would be opening a can of constitutional worms not seen since the Meech Lake Accord fiasco 30 years ago. Every province would want something different, and the “have-not” provinces might not be so keen to drastically amend equalization.

Kenney seems to understand this. During the election campaign he admitted the referendum is a bit like sending up an emergency flare to get Ottawa’s attention: “It wouldn’t guarantee a particular outcome, but what it would do is to elevate our fight for fairness to the top of the national agenda.” He’d get another sit-down meeting with the prime minister, perhaps, but that might very well be all he’d get.

Kenney says he’s merely tapping into a deep sense of anger and frustration felt by many Albertans that Canadians, happy to share in Alberta’s wealth during the good times, have “turned their backs on the province” during bad times by impeding Alberta’s ability to get more of its oil to the world market. But it’s worth pointing out that Kenney also helped stoke that anger and frustration, and used it to his own advantage during the election. That anger, meanwhile, isn’t exactly engendering much sympathy for Alberta in other provinces—notably in BC and Quebec—and could even hurt our bargaining position during any hypothetical equalization negotiations.

Also lost in Kenney’s narrative is the fact that he was part of the federal government under Stephen Harper that in 2007 set up the current equalization formula, which gives have-not provinces such as Quebec more equalization money. It wasn’t all bad news for Alberta at the time. Harper also tried to balance things by giving more per-capita money to provinces such as Alberta through transfer payments targeted at healthcare and post-secondary education. This year, for example, Alberta will receive $6.4-billion in health and social transfer payments from the federal government, compared to $3.4-billion a decade ago.

Statistics, of course, never won an election. But cynically inflaming public anger and fear certainly has.

Graham Thomson is a political analyst, member of the Legislature Press Gallery and former Edmonton Journal political columnist.

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