Juno News - Albertans will finally have a say on Canada’s equalization program

00:00:00.440 Canada's system of fiscal federalism and equalization is fundamentally broken.

00:00:04.940 And for the first time in my lifetime, some Canadians are finally going to be able to do something about it.

00:00:09.540 I'm Candice Malcolm and this is the Candice Malcolm Show.

00:00:16.300 Hi everyone, thank you so much for tuning in.

00:00:19.060 Now, you probably know that next week there will be a municipal election in Alberta.

00:00:24.300 True North is going to be covering it. We're going to be doing a live show.

00:00:27.140 And alongside the regular municipal elections, Albertans will have a unique opportunity, a rare chance to participate in direct democracy.

00:00:35.600 We don't have that many opportunities to vote in referendums and have a direct say in this country,

00:00:39.960 but Albertans will have one of those rare chances to have a direct say on the system of fairness and fiscal federalism in Canada's equalization program.

00:00:49.120 Specifically, they will be asked a specific question of whether these equalization payments should be removed from our constitution.

00:00:56.060 So a yes vote will not change the program immediately.

00:00:59.540 It won't remove equalization from the constitution.

00:01:03.180 Alberta doesn't have the power to do that. 1.00

00:01:05.620 But what it will do is it will send a very strong message to the political class in this country,

00:01:10.620 to the elites in Ottawa, to the Trudeau government,

00:01:13.360 to know that people in this country are not on board with a program that's designed

00:01:18.700 to siphon tax dollars away from provinces that are well managed,

00:01:23.260 that provinces that have diversified economies,

00:01:25.560 and funnel that money to provinces that refuse to develop their natural resources

00:01:29.460 and provinces that are chronically mismanaged.

00:01:33.040 So it will send that message and it will get the conversation going.

00:01:36.680 Now, I want to bring on my friend who is probably one of the most,

00:01:40.680 the foremost experts in the country on this fiscal program, on the system of equalization.

00:01:45.580 So today I'm joined by my friend, Dr. Bill Buick.

00:01:49.180 Bill, thanks for joining the program.

00:01:51.220 My pleasure.

00:01:52.300 So for anyone out there who's not familiar with Bill, he's a very strong voice for Alberta.

00:01:58.820 He runs a group called Fairness Alberta, which is a citizen-led organization

00:02:02.340 that's aimed to raise awareness at the unique challenges and contributions

00:02:06.460 that Alberta offers within the Canadian framework.

00:02:09.180 He's also the man behind equalizationreferendum.ca.

00:02:12.220 It's a great website.

00:02:12.920 I encourage you to go check it out.

00:02:14.980 And he is the lead spokesman for the Yes campaign in this referendum.

00:02:19.120 He also teaches political science over at Athabasca University.

00:02:23.080 So Bill, we really appreciate your time today.

00:02:25.440 So first, right off the bat, for people who may not pay close attention

00:02:29.560 to all the fiscal schemes and frameworks in our country,

00:02:33.780 can you just give us a very basic overview of what the equalization system does?

00:02:39.300 Sure, back in the 50s and 70s, when the federal government started to get into the business

00:02:46.920 of funding the provinces, they recognized that some provinces had a much easier time

00:02:51.840 funding these core services than others.

00:02:54.140 So they brought in various versions of something like equalization.

00:02:58.340 Back then, of course, they were much less involved with so many areas of provincial jurisdiction.

00:03:03.460 And so what's happened over the last 50 years is that equalization keeps growing,

00:03:08.380 but the layers and layers of government involvement in provincial services has also grown.

00:03:13.880 So that today, about 50% of the federal budget is going to provincial things that could just

00:03:19.240 as straight by your province and taxed by your province.

00:03:22.640 So equalization has, again, gotten bigger and bigger, even over the last six years,

00:03:27.720 while the provinces, the gap between the wealthy and the have-not provinces has almost collapsed.

00:03:34.300 And yet the equalization payments have grown to $21 billion.

00:03:37.200 They're going to be $25 billion in four years.

00:03:39.700 And all of those dollars go straight to the provincial governments of usually just Quebec,

00:03:45.580 the Maritimes, and Manitoba.

00:03:46.960 So it's 30% of the country collecting $21 billion from the rest of the country

00:03:52.180 at a time when a lot of provincial governments are struggling.

00:03:55.440 And I know people in Alberta want more of those dollars staying in Alberta to help our services.

00:04:00.440 And I would expect that people, and we're starting to hear more and more from people in Ontario

00:04:04.420 and British Columbia who are paying almost as much as Albertans into a program that shifts

00:04:09.040 those dollars straight to provide provincial services in 30% of the country.

00:04:13.680 It's really interesting because I know the fundamental concept is that every province

00:04:19.180 can deliver roughly the same amount of services.

00:04:22.000 But the fact that provinces have really open season on how they want to manage their economies,

00:04:29.460 what resources they want to develop, I know the resource issue is particularly thorny

00:04:34.900 because, for instance, back when the Quebec government was run by the Parti Quebecois

00:04:41.520 and Pauline Morois, she specifically said that if Quebec ever did develop their natural resources

00:04:47.580 and ever get oil, she would not let that resources go into the Canadian equalization program.

00:04:54.500 So it's sort of a one-way street where Alberta, Saskatchewan, they have these reserves.

00:04:59.560 They took the initiative to develop them.

00:05:01.920 And other provinces, you know, New Brunswick, Prince Edward Island, Nova Scotia, Quebec,

00:05:07.160 they all have proven reserves of energy.

00:05:08.760 They don't want to develop them.

00:05:10.140 They have their fracking bans and their bans on drilling.

00:05:13.280 And yet they still expect the finances from Alberta.

00:05:18.420 And yet when Alberta was going through their own recession and their own time of need,

00:05:22.740 where the price of oil plummeted in 2015, the money didn't flow the other way.

00:05:27.220 So how is it that the system is so stacked up against Alberta?

00:05:30.760 Why doesn't Alberta get to collect money, you know, when they're having their own downturns? 1.00

00:05:34.820 Yeah, there's something that's a sort of complementary program.

00:05:38.580 The equalization one is sort of there as a, for better or worse, it's more of a chronic

00:05:43.700 support system for the traditional have-not provinces.

00:05:47.780 But there's a flip side of that, which is the fiscal stabilization program, which is supposed

00:05:51.580 to help provinces like Alberta and Saskatchewan when energy prices, which usually have us above

00:05:56.520 average, suddenly collapse and cause all kinds of turmoil.

00:05:59.320 And when that happened in 2015, we had an $8 billion drop.

00:06:03.640 We got a $250 million payment.

00:06:05.800 So 3% of our losses were covered by this wonderful insurance program.

00:06:10.180 So it isn't fair.

00:06:11.380 And then when you talked about the program or the equalization formula, yes, there's disincentives

00:06:17.680 to exploiting your natural resources in various ways, at least 50% of it's going to be clawed back

00:06:23.440 in your equalization payments.

00:06:24.640 So as the provincial government is deciding, do we really want to get into the trouble of

00:06:29.140 all the folks that are going to be protesting this, especially when we're not even going

00:06:33.220 to get to reap all the profits, it'll be clawed out of our equalization. 0.96

00:06:36.780 The answer seems to be increasingly no.

00:06:39.160 And then the third problem with the formula is it's really stacked in Quebec's favor.

00:06:44.120 People talk about Quebec being a have-not and lower incomes.

00:06:47.140 If you just factor in the sort of consumer price index difference between Quebec and other

00:06:52.000 provinces like Ontario and Alberta, you know, things cost much lower there.

00:06:55.740 They don't need the same fiscal capacity to pay for them.

00:06:58.040 And then if you just properly accounted for Quebec Hydro, suddenly Quebec is a very average

00:07:03.300 province and is not a have-not.

00:07:05.420 And yet they collect 60% of the payments or $13 billion every year.

00:07:10.060 So it's especially stacked in Quebec's favor.

00:07:13.640 And there's a bunch of other problems with this.

00:07:15.800 And the only way I feel like the political class in Ottawa is going to address them is

00:07:20.640 with something unique like this referendum to have the people speak up and make it really

00:07:24.680 hard to ignore it.

00:07:26.020 So let's go back to that part that you just mentioned about Hydro.

00:07:29.580 So can you explain why is it that Quebec Hydro isn't included in the formula?

00:07:34.960 It is included, but because they subsidize their rates so much, it looks like Quebec Hydro isn't

00:07:41.260 an entity from which you could get much tax dollars.

00:07:44.480 And so when they calculate fiscal capacity, it's sort of your capacity to raise taxes,

00:07:49.860 everything else being equal.

00:07:51.720 Well, if you just put four cents more on Quebec's Hydro bills, which is about to make it equivalent

00:07:57.740 to Montreal and Toronto and bring them even, suddenly Quebec's payment drops from $13 billion

00:08:03.060 to $5 billion.

00:08:04.780 So the Quebec Hydro is a massive entity.

00:08:07.160 And if the formula just said, let's treat Quebec Hydro as if it were selling at market

00:08:11.060 rates and take its capacity accordingly, which is obviously what the capacity should be, their

00:08:17.200 payments would drop $8 billion.

00:08:18.840 And that $8 billion would come off basically the entire tab of equalization so that everybody

00:08:23.080 would save money.

00:08:24.240 The federal government wouldn't have as much debt.

00:08:26.700 And there would just be less tax dollars going from places like Ontario and Alberta to

00:08:30.740 the Quebec government.

00:08:32.100 And it's very clear that they don't deserve them and that they aren't nearly as poor as the

00:08:36.340 formula makes them look.

00:08:38.080 Right.

00:08:38.300 I mean, it's wild that such a loophole would exist, that it would even be allowed.

00:08:41.940 Let's try to understand a little bit more about the origins, because I understand that

00:08:46.280 the equalization program that's currently written was devised by Albertans and that the idea

00:08:53.460 was that they wanted to have full control over their natural resources in exchange.

00:08:58.500 They were willing to put more money into the federal coffers to distribute to the other

00:09:02.240 provinces.

00:09:03.360 So can you walk us through that origin story and explain perhaps why it's no longer fair

00:09:09.460 and it doesn't work anymore in today's context?

00:09:12.100 Yeah, I've heard that origin story.

00:09:13.820 I don't know.

00:09:14.320 I wasn't in the 1982 negotiations.

00:09:17.140 But things have changed a lot.

00:09:18.620 When equalization first came in, because the federal government was giving back to provinces,

00:09:25.700 however many tax points came from that province, from whatever they thought should go to social

00:09:30.340 services.

00:09:30.980 So in that case, Albertans would be getting more back because we're paying more in.

00:09:35.340 And so to even that up, they put in equalization.

00:09:38.760 But now Albertans obviously pay a lot more back and we pay a lot more in and we get far less

00:09:44.420 back and it's the same in Ontario and BC.

00:09:47.520 And so the scope of government increasing as much as it has, has made equalization less

00:09:53.360 necessary than ever.

00:09:54.580 And then the fact the provinces have collapsed to become almost all equal, except for perhaps

00:09:58.960 New Brunswick and PEI, but they're so small that it's a ripple.

00:10:03.280 We could give them the help they need and save up to 10 or $20 billion off the program if we just

00:10:09.660 had somebody willing to address, make the hard decisions and tackle this thorny issue.

00:10:15.600 Well, you say somebody willing, I remember a couple of years ago, so I write in the Toronto

00:10:20.100 Sun and throughout the Sun network, Sun Media, Sun newspapers, including the Edmonton Sun and

00:10:26.500 Calgary Sun occasionally.

00:10:28.240 And yeah, a couple of years ago, Joe Oliver, who was the former finance minister of the Harper

00:10:32.760 government, had an op-ed in there saying that, you know, now's the time, this system's

00:10:37.360 broken, we've got to reform equalization.

00:10:39.320 And I said, well, wait a minute, Joe, you were the finance minister, you were in the

00:10:43.320 Harper government, you had the opportunity to renegotiate in 2014, it came up, and you

00:10:47.680 didn't, you kept the status quo.

00:10:49.380 And I wrote a column to that effect, and then he wrote a column back saying that the situation

00:10:54.260 had changed, that he agreed it was broken.

00:10:56.320 So it seems like there's much agreement among some of the political class, at least conservatives,

00:11:01.080 that it's broken.

00:11:02.020 And yet, when they were in office and they had the opportunity to change it, they didn't really

00:11:06.240 put their money where their mouth is.

00:11:07.660 So why is it that even with a prime minister from Calgary and Stephen Harper, someone who

00:11:14.060 was originally an author of that firewall letter, the famous Alberta firewall letter that talked

00:11:19.740 about how Alberta could take more autonomy unilaterally without having to appeal to people in Ontario

00:11:27.980 and Quebec to change the constitution.

00:11:29.940 You know, when he was in charge, he didn't do much about it.

00:11:32.300 So why isn't there a political will to fix this problem, Bill?

00:11:37.640 It's a problem Albertans have in that often one party sort of takes us for granted and

00:11:43.480 the other one sort of writes us off.

00:11:45.600 It's, I think, political calculations.

00:11:47.940 And I don't like to make this a partisan issue.

00:11:51.800 It really isn't.

00:11:52.540 It's more of a structural issue with the country.

00:11:55.180 Alberta has 11.5% of the population and an even lower proportion of the seats in the House

00:11:59.840 of Commons and an even fewer proportion of the target seats are in Alberta.

00:12:05.920 So it comes down to kind of raw politics.

00:12:08.880 And that's why I think it's so important that we don't just leave this to the political class

00:12:12.640 and force the issue onto the table by having the people speak up and hopefully in a strong

00:12:18.620 numbers and say, this isn't acceptable, you know, that this would be a way to sort of thrust the

00:12:25.700 issue under the national spotlight.

00:12:27.060 I think it is that.

00:12:28.480 And then that's just by common sense.

00:12:30.240 But also the Supreme Court said if there's a clear question on a constitutional issue with

00:12:34.440 a majority, that triggers a duty to negotiate on the federal government.

00:12:38.000 So there's common sense, some Supreme Court backing that this is a strategy in which we

00:12:44.200 can get this finally a hard look at it.

00:12:47.720 And then if you want to talk about the political considerations, you know, if people in Ontario

00:12:51.700 and B.C. start realizing how much they're losing from this program, how much they would

00:12:56.220 benefit from fixing it, then suddenly you've got, you know, most of the target seats are

00:13:01.860 involved in those two provinces.

00:13:03.540 And then we can have it where no political party can afford to ignore this topic anymore.

00:13:08.860 So that's sort of the endgame here.

00:13:10.700 I was going to ask, you know, what happens if a clear majority vote yes in the referendum

00:13:15.140 next Monday?

00:13:17.980 Would it go to Dustin Trudeau at that point?

00:13:20.580 Would the onus be on him?

00:13:21.360 Because I don't think that he is, you know, interested in lifting a finger to help Alberta.

00:13:27.220 So maybe, you know, what would this accomplish?

00:13:31.340 What would a win on this accomplish?

00:13:33.520 It would create a very meaningful political fact on the ground, at least.

00:13:38.000 And it would also, you know, raise some legal precedents from the Supreme Court.

00:13:42.680 And so between the two of those, I feel like it's a much stronger place than to just be

00:13:47.860 relying on a premier showing up at the next first minister's conference with a press release.

00:13:52.960 This is, you know, the rest of the country will hopefully take a closer look at this problem.

00:13:57.000 And when they do, as I said, it'll end up being a political solution.

00:14:01.680 But if we have, you know, the people of Ontario and BC clamoring for this change, too, then

00:14:07.200 I guarantee it will happen.

00:14:08.640 And so that, to me, is the end goal.

00:14:10.700 In the meantime, you know, it's not just our premier squaring off against a rival prime

00:14:15.800 minister.

00:14:16.180 Instead, it's the people of Alberta speaking up.

00:14:19.120 And I think that'll be more effective in the for the short term and the long term.

00:14:23.520 Yeah, absolutely.

00:14:24.320 So it's so sad that so much of our government and political structures are about partisan,

00:14:30.480 you know, games and, and, you know, that the kind of interpersonal dynamics there.

00:14:38.740 Well, especially, I mean, so, so, you know, if you were to just listen to the legacy media

00:14:42.920 and the news, you would think that Alberta was just in a catastrophic disaster in terms

00:14:50.340 of COVID and the dealing of the, of the government, you know, especially at a time like this, it's

00:14:56.540 like, of course, you want more tax dollars to stay in your own province so that you can

00:14:59.840 take care of your own health care.

00:15:02.920 Do you think that COVID and sort of all of the politicization around it, the sort of

00:15:08.720 over the top sensationalism and fear that's driven by the media and the political experts?

00:15:13.840 Do you think that this will, will play a factor at all in the way that people choose to vote

00:15:17.540 on Monday, Bill?

00:15:19.160 I, I fear it will.

00:15:21.320 I've kind of described it as, as one of your legs to spite your face, if that's the way

00:15:26.760 people decide to go on this, because this is a meaningful chance for Albertans to speak

00:15:30.820 up.

00:15:31.240 And if, and if the vote comes back, no, then that's a huge missed opportunity and something,

00:15:36.120 no doubt our, our opponents or the people indifferent to our concerns will use to, to beat us over

00:15:41.440 the head with.

00:15:42.000 But I, I also think at the same time, the, the, the opportunity it's been harder to get

00:15:48.460 through with, you know, people don't have the bandwidth for some of these topics I've found

00:15:52.380 over the last year.

00:15:53.120 But at the same time, when you start talking about provincial services, people have never

00:15:57.520 valued them more than they do right now, I think.

00:16:00.440 And so the idea that people in BC and Ontario, Saskatchewan's already on board, would be more

00:16:06.940 open to hearing about how this makes a difference to the bottom line of their provinces.

00:16:12.240 And if they look over at Quebec and see that it's got a bunch of things it can offer its

00:16:16.520 people that they can't in Ontario, instead of, you know, getting mad at your provincial

00:16:21.280 government, maybe ask the federal government, why more of your dollars that you're paying

00:16:25.420 aren't coming back to your province to help you deliver equal services to Quebec and even

00:16:29.800 some of the maritime provinces.

00:16:31.580 Such a good point.

00:16:32.420 And something that I hope is part of the message that that's getting out there.

00:16:36.280 Bill, final question.

00:16:37.340 I want to ask you sort of more broadly to step back away from just talking about fiscal

00:16:41.860 federalism and equalization, and to ask you about your vision, you know, you're a thoughtful

00:16:46.540 guy, you spend a lot of time thinking about Alberta and the role that it should play in

00:16:50.360 Canada.

00:16:51.480 What is your vision for Alberta?

00:16:53.720 What does a thriving and respected Alberta look like?

00:16:59.000 Is it within the Canadian system?

00:17:01.420 Does it have to go it alone, perhaps, to have the sort of autonomy that it needs?

00:17:05.860 What do you think the future of Alberta holds?

00:17:08.800 Well, we're Fairness Alberta. 0.94

00:17:10.480 We have a five-year plan.

00:17:12.360 We're proudly Canadian, but fiercely Albertan.

00:17:14.620 And we have a five-year plan to try and change, meaningfully change the way that the federal

00:17:19.460 government treats Alberta, meaningfully change some of the economic and fiscal policies that

00:17:23.540 are holding us back from achieving our potential.

00:17:25.980 And so that's, we're one year into that, and it's been going pretty well.

00:17:29.320 But we're going to need to see some meaningful results over the next little while.

00:17:33.000 And, you know, if this referendum gets ignored, if some of the legitimate concerns about

00:17:39.260 obviously unfair economic policies that are threatening to kind of shut in our precious

00:17:44.260 resource sector, if those don't get addressed, I don't know where we go in the future, because

00:17:50.640 it was one thing, and you know, mentioned 2014, and for the record, Stephen Harbour did get,

00:17:55.400 there was two really big unfairnesses in the equalization program, and then there was an

00:17:59.300 equalization program in the health transfer system.

00:18:02.240 He decided for whatever calculations that getting the health transfer one was something he could do

00:18:07.260 quietly, and then the trade-off was letting that go.

00:18:10.400 But, you know, just the fact that we have to strategically and quietly even just get basic injustices fixed

00:18:18.000 is not okay, but at least then the money was coming in pretty well in Alberta.

00:18:22.000 We felt like, while the government too much and not sending enough back, at least they were letting us

00:18:27.000 do our thing here.

00:18:29.000 And now it looks more and more like we can't, not only are we expected to pay too much, not getting enough back,

00:18:34.000 but now they're sort of strangling the goose that's been laying these eggs.

00:18:37.000 And these eggs aren't just things that Albertans reap.

00:18:40.000 We, you know, everybody gets a piece, you know, every, every road and bridge and hospital and school

00:18:47.000 and the rest of Canada has had a few bucks thrown in by Albertans.

00:18:50.000 And if the rest of the country doesn't, I think most of the country does realize how essential that is.

00:18:56.000 If the decision makers and the elites and the folks are not getting that, then it's going to spell trouble for Canada and Alberta.

00:19:04.000 Well, that's, that's putting it lightly or that's a bit of an understatement.

00:19:09.000 I can't imagine how frustrating it would be to not only be taken advantage of in terms of your tax dollars,

00:19:15.000 but then to be so disrespected and such a lack of gratitude from key parts of the country.

00:19:20.000 Well, Bill, thanks for the work you do.

00:19:22.000 Thanks for coming and dumbing it down for us and explaining it to us in easy to understand terms.

00:19:27.000 And we'll be following the vote very closely on Monday.

00:19:30.000 We're going to have a live program, a live broadcast here at True North.

00:19:33.000 So don't forget to tune in on YouTube, Facebook, or over at TNC.News.

00:19:38.000 Thanks so much for joining us, Bill.

00:19:40.000 Yeah. And I encourage everyone in Alberta, especially to go to equalizationreferendum.ca.

00:19:44.000 Please don't just look for yourself.

00:19:46.000 Get as many of your friends that aren't sure about this equalization referendum to go have a look, get informed and vote yes on October 18th.

00:19:53.000 Great. Thank you so much, Bill.

00:19:55.000 Thank you so much for tuning in.

00:19:57.000 I'm Kenis Malcolm and this is The Kenis Malcolm Show.

00:19:59.000 Thank you.

00:20:00.000 Thank you.

00:20:01.000 You

Juno News - October 13, 2021

Albertans will finally have a say on Canada’s equalization program

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