In the budget implementation bill of 2018, the federal government renewed the existing equalization formula through to the year 2024. Not surprisingly, this elicited an immediate outcry from conservatives in Alberta and Saskatchewan, who claim that equalization is an unfair program designed to take hard-earned dollars from their provinces and give them to an undeserving Quebec. Alberta Premier Jason Kenney went so far as to give equalization a place of prominence in his party’s 2019 provincial election platform, alleging that the federal government gave Quebec “a veto over New Brunswick’s effort to revive the Energy East [pipeline] project while providing Quebec a $1.3 billion increase in equalization.”
What Kenney failed to mention was that the increase in Quebec’s share of equalization funding was actually a direct result of the changes to the formula that he signed off on as a cabinet minister from Alberta in the Harper government. Undaunted by the facts, Kenney’s platform went on to promise that a United Conservative Party government would “hold a referendum on removing equalization from the Constitution Act on October 18, 2021 if substantial progress is not made on construction of a coastal pipeline, and if Trudeau’s Bill C-69 is not repealed.”
Saskatchewan Premier Scott Moe also insists that equalization is fundamentally unfair to his province. Moe’s government has proposed a new formula whereby half of all equalization dollars would simply be handed out on a per capita basis to every province in the country regardless of their fiscal capacity or need. When asked recently if Saskatchewan would follow Kenney’s lead with a referendum of its own, Moe responded that he “would not rule it out,” adding, “if there is an opportunity for that to actually force the federal government into an equalization conversation, I think we would be in favour of that.”
The reality, however, is that these assertions by premiers Kenney and Moe have nothing to do with equalization itself and everything to do with political posturing designed to achieve partisan political outcomes. Equalization is a federal government program designed to fulfil the requirement, entrenched in the Constitution, that Ottawa make “payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services and reasonably comparable levels of taxation.” The formula is based on each province’s “fiscal capacity”—how much revenue it would raise if it taxed at the average level of all provinces combined. Those provinces that fall below the national average receive equalization payments to bring them up to the average. Those whose capacity is above the average receive nothing. Because of their natural resource wealth, neither Alberta nor Saskatchewan currently receives equalization payments. This has always made the program an easy target for channelling anti-Ottawa anger on the prairies.
In 2007, Saskatchewan’s NDP government of the day launched a lawsuit over the equalization formula. It did so with unanimous support from the Saskatchewan legislature. A few months later, after Brad Wall became premier, Saskatchewan dropped the suit. When asked why in the legislature, Wall responded that Stephen Harper, then prime minister, had asked him to. Harper was clear that even though “fixing” equalization had been part of his platform in 2006, actually making the changes that Saskatchewan was looking for at the time would have been political suicide.
Current federal Conservative leader Andrew Scheer, like Moe and Kenney, knows this is still the case. Although ranting about equalization plays extremely well in Alberta and Saskatchewan, any actual change to the formula would necessarily hurt Quebec, Atlantic Canada and Manitoba—all areas where the Conservatives need to make gains if they are to have any chance of forming the next government. That means Scheer will not talk about equalization during the federal election, and both Kenney and Moe will certainly follow his lead.
If Scheer and his Conservative Party are asked to form a government in October, all talk of referendums and the unfairness of equalization from Alberta and Saskatchewan will quickly disappear. We can be certain of that, especially given that Scheer has already promised to repeal bills C-48 (the West Coast tanker ban) and C-69 (creating a new impact assessment process for major resource projects) should he win, which is what all the equalization bluster from Kenney and Moe is actually about.
If, however, Justin Trudeau’s Liberal government is re-elected, Kenney will likely proceed with his referendum in 2021 as an expensive piece of political theater, since the likelihood of getting seven out of 10 provinces to sign off on taking equalization out of the Constitution is exactly zero. And with the current formula now in place until 2024, no sitting prime minister is likely to even want to talk about it, much less make moves to change it.
Of course Kenney and Moe know all of this. But they also know that nothing props up conservative political fortunes on the prairies like playing the victim and picking fights in Ottawa and Quebec, and that is ultimately what this is all about.
Ricardo Acuña is Executive Director of the Parkland Institute out of the University of Alberta’s Faculty of Arts.