Canada’s premiers tread over the ever-thorny territory of equalization payment fairness on their final day of meetings in Halifax on Wednesday.
For decades, the federal program has transferred money from some provinces to others to allow for a fair level of services across the country. Payment amounts are decided based on “fiscal capacity” or a province’s ability to generate tax revenue.
Provinces that do not receive equalization payments are often referred to as a “have province,” while those who do get transfers are called a “have-not province.”
But the provinces that don’t receive payments or feel like they don’t receive enough — Alberta, Saskatchewan, British Columbia and Newfoundland and Labrador — are increasingly vocal about their discontent.
B.C. Premier David Eby has teased that he’ll have more to say Wednesday morning about whether his province will support Newfoundland and Labrador’s court case against the federal government over equalization payments. The Atlantic province is taking Ottawa to court, arguing the province is being cut out of potentially billions of dollars in the long term.
“B.C. taxpayers are sending tax dollars to Ontario through equalization. That is completely absurd. Ontario is not struggling to provide schools or hospitals,” Eby said at the onset of the meetings.
Saskatchewan Premier Scott Moe, who also supports the court case, said he’s hoping to have a “grown up” conversation about changing the program, which was started more than half a century ago in an attempt to reduce wealth disparities across the country.
“It is a formula that is, I think, very flawed,” he said of the current framework.
Moe said he’d like to see a new program where 50 per cent of the equalization dollars are redistributed on a per capita basis and 50 per cent under the existing formula.
It’s a suggestion Alberta Premier Danielle Smith supports.
“We also have pressures associated with the high growth in education and healthcare as well. So I think that there needs to be a revamp of the equalization formula,” she said.
Smith said her government is assessing whether to intervene in the court challenge..
“What we don’t want to do is create a situation where Alberta is the only net payer into the equalization system because the rules have changed so that Newfoundland and Labrador receives payments. Then presumably everyone but Alberta will also receive payments. And we don’t think that that’s a very fair situation either,” she said.
Ontario says provinces should be ‘taken care of equally’
Nova Scotia Premier Tim Houston, who is chairing this year’s Council of the Federation, said he’ll review the proposals coming from his counterparts. His province will get $3.3 billion in equalization payments for the 2024-2025 fiscal year.
“My interest is always in Nova Scotians, but I believe in this country as well. So I have a view of what’s fair across the country,” he said.
Houston said despite disagreements around the table, the tone has been collegial.
“We certainly have a position on equalization. Others have their position and we’ll work through it,” he said.
“Everybody’s just trying to do the same thing, govern, do what’s best for, for their citizen.”
Ontario Premier Doug Ford, who gets $576 million in equalization for the 2024-2025 fiscal year, said he “just wants to make sure everyone’s taken care of equally right across the country and we work together.”
