Juno News - October 13, 2021Albertans will finally have a say on Canada’s equalization program
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Summary
In this episode, Candice talks to Bill Buick, the lead spokesman for the Yes campaign in Alberta's upcoming Equalization Referendum, about the Equalization Program and why it should be removed from the constitution.
Transcript
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Canada's system of fiscal federalism and equalization is fundamentally broken.
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And for the first time in my lifetime, some Canadians are finally going to be able to do something about it.
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I'm Candice Malcolm and this is the Candice Malcolm Show.
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Now, you probably know that next week there will be a municipal election in Alberta.
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True North is going to be covering it. We're going to be doing a live show.
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And alongside the regular municipal elections, Albertans will have a unique opportunity, a rare chance to participate in direct democracy.
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We don't have that many opportunities to vote in referendums and have a direct say in this country,
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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.
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Specifically, they will be asked a specific question of whether these equalization payments should be removed from our constitution.
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So a yes vote will not change the program immediately.
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It won't remove equalization from the constitution.
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Alberta doesn't have the power to do that.
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But what it will do is it will send a very strong message to the political class in this country,
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to the elites in Ottawa, to the Trudeau government,
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to know that people in this country are not on board with a program that's designed
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to siphon tax dollars away from provinces that are well managed,
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that provinces that have diversified economies,
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and funnel that money to provinces that refuse to develop their natural resources
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So it will send that message and it will get the conversation going.
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Now, I want to bring on my friend who is probably one of the most,
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the foremost experts in the country on this fiscal program, on the system of equalization.
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So today I'm joined by my friend, Dr. Bill Buick.
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So for anyone out there who's not familiar with Bill, he's a very strong voice for Alberta.
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He runs a group called Fairness Alberta, which is a citizen-led organization
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that's aimed to raise awareness at the unique challenges and contributions
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that Alberta offers within the Canadian framework.
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He's also the man behind equalizationreferendum.ca.
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And he is the lead spokesman for the Yes campaign in this referendum.
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He also teaches political science over at Athabasca University.
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So first, right off the bat, for people who may not pay close attention
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to all the fiscal schemes and frameworks in our country,
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can you just give us a very basic overview of what the equalization system does?
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Sure, back in the 50s and 70s, when the federal government started to get into the business
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of funding the provinces, they recognized that some provinces had a much easier time
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So they brought in various versions of something like equalization.
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Back then, of course, they were much less involved with so many areas of provincial jurisdiction.
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And so what's happened over the last 50 years is that equalization keeps growing,
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but the layers and layers of government involvement in provincial services has also grown.
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So that today, about 50% of the federal budget is going to provincial things that could just
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as straight by your province and taxed by your province.
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So equalization has, again, gotten bigger and bigger, even over the last six years,
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while the provinces, the gap between the wealthy and the have-not provinces has almost collapsed.
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And yet the equalization payments have grown to $21 billion.
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And all of those dollars go straight to the provincial governments of usually just Quebec,
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So it's 30% of the country collecting $21 billion from the rest of the country
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at a time when a lot of provincial governments are struggling.
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And I know people in Alberta want more of those dollars staying in Alberta to help our services.
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And I would expect that people, and we're starting to hear more and more from people in Ontario
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and British Columbia who are paying almost as much as Albertans into a program that shifts
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those dollars straight to provide provincial services in 30% of the country.
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It's really interesting because I know the fundamental concept is that every province
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can deliver roughly the same amount of services.
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But the fact that provinces have really open season on how they want to manage their economies,
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what resources they want to develop, I know the resource issue is particularly thorny
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because, for instance, back when the Quebec government was run by the Parti Quebecois
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and Pauline Morois, she specifically said that if Quebec ever did develop their natural resources
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and ever get oil, she would not let that resources go into the Canadian equalization program.
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So it's sort of a one-way street where Alberta, Saskatchewan, they have these reserves.
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And other provinces, you know, New Brunswick, Prince Edward Island, Nova Scotia, Quebec,
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They have their fracking bans and their bans on drilling.
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And yet they still expect the finances from Alberta.
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And yet when Alberta was going through their own recession and their own time of need,
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where the price of oil plummeted in 2015, the money didn't flow the other way.
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So how is it that the system is so stacked up against Alberta?
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Why doesn't Alberta get to collect money, you know, when they're having their own downturns?
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Yeah, there's something that's a sort of complementary program.
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The equalization one is sort of there as a, for better or worse, it's more of a chronic
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support system for the traditional have-not provinces.
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But there's a flip side of that, which is the fiscal stabilization program, which is supposed
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to help provinces like Alberta and Saskatchewan when energy prices, which usually have us above
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average, suddenly collapse and cause all kinds of turmoil.
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And when that happened in 2015, we had an $8 billion drop.
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So 3% of our losses were covered by this wonderful insurance program.
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And then when you talked about the program or the equalization formula, yes, there's disincentives
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to exploiting your natural resources in various ways, at least 50% of it's going to be clawed back
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So as the provincial government is deciding, do we really want to get into the trouble of
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all the folks that are going to be protesting this, especially when we're not even going
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to get to reap all the profits, it'll be clawed out of our equalization.
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And then the third problem with the formula is it's really stacked in Quebec's favor.
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People talk about Quebec being a have-not and lower incomes.
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If you just factor in the sort of consumer price index difference between Quebec and other
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provinces like Ontario and Alberta, you know, things cost much lower there.
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They don't need the same fiscal capacity to pay for them.
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And then if you just properly accounted for Quebec Hydro, suddenly Quebec is a very average
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And yet they collect 60% of the payments or $13 billion every year.
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And there's a bunch of other problems with this.
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And the only way I feel like the political class in Ottawa is going to address them is
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with something unique like this referendum to have the people speak up and make it really
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So let's go back to that part that you just mentioned about Hydro.
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So can you explain why is it that Quebec Hydro isn't included in the formula?
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It is included, but because they subsidize their rates so much, it looks like Quebec Hydro isn't
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an entity from which you could get much tax dollars.
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And so when they calculate fiscal capacity, it's sort of your capacity to raise taxes,
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Well, if you just put four cents more on Quebec's Hydro bills, which is about to make it equivalent
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to Montreal and Toronto and bring them even, suddenly Quebec's payment drops from $13 billion
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And if the formula just said, let's treat Quebec Hydro as if it were selling at market
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rates and take its capacity accordingly, which is obviously what the capacity should be, their
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And that $8 billion would come off basically the entire tab of equalization so that everybody
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The federal government wouldn't have as much debt.
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And there would just be less tax dollars going from places like Ontario and Alberta to
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And it's very clear that they don't deserve them and that they aren't nearly as poor as the
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I mean, it's wild that such a loophole would exist, that it would even be allowed.
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Let's try to understand a little bit more about the origins, because I understand that
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the equalization program that's currently written was devised by Albertans and that the idea
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was that they wanted to have full control over their natural resources in exchange.
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They were willing to put more money into the federal coffers to distribute to the other
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So can you walk us through that origin story and explain perhaps why it's no longer fair
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and it doesn't work anymore in today's context?
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When equalization first came in, because the federal government was giving back to provinces,
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however many tax points came from that province, from whatever they thought should go to social
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So in that case, Albertans would be getting more back because we're paying more in.
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And so to even that up, they put in equalization.
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But now Albertans obviously pay a lot more back and we pay a lot more in and we get far less
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And so the scope of government increasing as much as it has, has made equalization less
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And then the fact the provinces have collapsed to become almost all equal, except for perhaps
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New Brunswick and PEI, but they're so small that it's a ripple.
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We could give them the help they need and save up to 10 or $20 billion off the program if we just
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had somebody willing to address, make the hard decisions and tackle this thorny issue.
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Well, you say somebody willing, I remember a couple of years ago, so I write in the Toronto
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Sun and throughout the Sun network, Sun Media, Sun newspapers, including the Edmonton Sun and
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And yeah, a couple of years ago, Joe Oliver, who was the former finance minister of the Harper
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government, had an op-ed in there saying that, you know, now's the time, this system's
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And I said, well, wait a minute, Joe, you were the finance minister, you were in the
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Harper government, you had the opportunity to renegotiate in 2014, it came up, and you
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And I wrote a column to that effect, and then he wrote a column back saying that the situation
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So it seems like there's much agreement among some of the political class, at least conservatives,
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And yet, when they were in office and they had the opportunity to change it, they didn't really
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So why is it that even with a prime minister from Calgary and Stephen Harper, someone who
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was originally an author of that firewall letter, the famous Alberta firewall letter that talked
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about how Alberta could take more autonomy unilaterally without having to appeal to people in Ontario
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You know, when he was in charge, he didn't do much about it.
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So why isn't there a political will to fix this problem, Bill?
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It's a problem Albertans have in that often one party sort of takes us for granted and
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And I don't like to make this a partisan issue.
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It's more of a structural issue with the country.
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Alberta has 11.5% of the population and an even lower proportion of the seats in the House
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of Commons and an even fewer proportion of the target seats are in Alberta.
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And that's why I think it's so important that we don't just leave this to the political class
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and force the issue onto the table by having the people speak up and hopefully in a strong
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numbers and say, this isn't acceptable, you know, that this would be a way to sort of thrust the
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But also the Supreme Court said if there's a clear question on a constitutional issue with
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a majority, that triggers a duty to negotiate on the federal government.
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So there's common sense, some Supreme Court backing that this is a strategy in which we
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And then if you want to talk about the political considerations, you know, if people in Ontario
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and B.C. start realizing how much they're losing from this program, how much they would
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benefit from fixing it, then suddenly you've got, you know, most of the target seats are
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And then we can have it where no political party can afford to ignore this topic anymore.
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I was going to ask, you know, what happens if a clear majority vote yes in the referendum
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Because I don't think that he is, you know, interested in lifting a finger to help Alberta.
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So maybe, you know, what would this accomplish?
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It would create a very meaningful political fact on the ground, at least.
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And it would also, you know, raise some legal precedents from the Supreme Court.
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And so between the two of those, I feel like it's a much stronger place than to just be
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relying on a premier showing up at the next first minister's conference with a press release.
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This is, you know, the rest of the country will hopefully take a closer look at this problem.
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And when they do, as I said, it'll end up being a political solution.
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But if we have, you know, the people of Ontario and BC clamoring for this change, too, then
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In the meantime, you know, it's not just our premier squaring off against a rival prime
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Instead, it's the people of Alberta speaking up.
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And I think that'll be more effective in the for the short term and the long term.
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So it's so sad that so much of our government and political structures are about partisan,
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you know, games and, and, you know, that the kind of interpersonal dynamics there.
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Well, especially, I mean, so, so, you know, if you were to just listen to the legacy media
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and the news, you would think that Alberta was just in a catastrophic disaster in terms
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of COVID and the dealing of the, of the government, you know, especially at a time like this, it's
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like, of course, you want more tax dollars to stay in your own province so that you can
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Do you think that COVID and sort of all of the politicization around it, the sort of
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over the top sensationalism and fear that's driven by the media and the political experts?
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Do you think that this will, will play a factor at all in the way that people choose to vote
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I've kind of described it as, as one of your legs to spite your face, if that's the way
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people decide to go on this, because this is a meaningful chance for Albertans to speak
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And if, and if the vote comes back, no, then that's a huge missed opportunity and something,
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no doubt our, our opponents or the people indifferent to our concerns will use to, to beat us over
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But I, I also think at the same time, the, the, the opportunity it's been harder to get
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through with, you know, people don't have the bandwidth for some of these topics I've found
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But at the same time, when you start talking about provincial services, people have never
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valued them more than they do right now, I think.
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And so the idea that people in BC and Ontario, Saskatchewan's already on board, would be more
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open to hearing about how this makes a difference to the bottom line of their provinces.
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And if they look over at Quebec and see that it's got a bunch of things it can offer its
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people that they can't in Ontario, instead of, you know, getting mad at your provincial
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government, maybe ask the federal government, why more of your dollars that you're paying
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aren't coming back to your province to help you deliver equal services to Quebec and even
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And something that I hope is part of the message that that's getting out there.
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I want to ask you sort of more broadly to step back away from just talking about fiscal
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federalism and equalization, and to ask you about your vision, you know, you're a thoughtful
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guy, you spend a lot of time thinking about Alberta and the role that it should play in
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What does a thriving and respected Alberta look like?
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Does it have to go it alone, perhaps, to have the sort of autonomy that it needs?
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And we have a five-year plan to try and change, meaningfully change the way that the federal
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government treats Alberta, meaningfully change some of the economic and fiscal policies that
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are holding us back from achieving our potential.
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And so that's, we're one year into that, and it's been going pretty well.
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But we're going to need to see some meaningful results over the next little while.
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And, you know, if this referendum gets ignored, if some of the legitimate concerns about
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obviously unfair economic policies that are threatening to kind of shut in our precious
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resource sector, if those don't get addressed, I don't know where we go in the future, because
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it was one thing, and you know, mentioned 2014, and for the record, Stephen Harbour did get,
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there was two really big unfairnesses in the equalization program, and then there was an
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equalization program in the health transfer system.
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He decided for whatever calculations that getting the health transfer one was something he could do
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quietly, and then the trade-off was letting that go.
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But, you know, just the fact that we have to strategically and quietly even just get basic injustices fixed
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is not okay, but at least then the money was coming in pretty well in Alberta.
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We felt like, while the government too much and not sending enough back, at least they were letting us
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And now it looks more and more like we can't, not only are we expected to pay too much, not getting enough back,
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but now they're sort of strangling the goose that's been laying these eggs.
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And these eggs aren't just things that Albertans reap.
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We, you know, everybody gets a piece, you know, every, every road and bridge and hospital and school
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and the rest of Canada has had a few bucks thrown in by Albertans.
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And if the rest of the country doesn't, I think most of the country does realize how essential that is.
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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.
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Well, that's, that's putting it lightly or that's a bit of an understatement.
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I can't imagine how frustrating it would be to not only be taken advantage of in terms of your tax dollars,
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but then to be so disrespected and such a lack of gratitude from key parts of the country.
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Thanks for coming and dumbing it down for us and explaining it to us in easy to understand terms.
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And we'll be following the vote very closely on Monday.
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We're going to have a live program, a live broadcast here at True North.
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So don't forget to tune in on YouTube, Facebook, or over at TNC.News.
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Yeah. And I encourage everyone in Alberta, especially to go to equalizationreferendum.ca.
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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.
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I'm Kenis Malcolm and this is The Kenis Malcolm Show.