Vancouver (Kris Sims, B.C. Director for the Canadian Taxpayers Federation) – Our neighbours are fighting back against Ottawa and we need to tag in.
Alberta Premier Jason Kenney is holding a referendum on Canada’s equalization formula. It’s a good bet Albertans will vote for equalization reform. And this will lead to a renegotiation of the program.
British Columbia needs to take on some leadership in equalization reform because the program takes a lot of money out of the province.
Equalization is wealth redistribution on a national government scale and costs Canadians more than $20 billion per year.
Divide the equalization bill by our population and every Canadian pays $541 per year into the program. That means a family of four pays more than $2,100 per year to Ottawa.
Folks living in British Columbia, Alberta, Saskatchewan, Newfoundland and Labrador and Ontario don’t get a dime back out of equalization funding this year. Zero.
Meanwhile, the government in Prince Edward Island collects $2,351 per capita more than Islanders pay into the program. In Quebec, it’s more than $1,000 and in Manitoba it’s $1,278.
Alberta and the rest of the West are usually the biggest givers while places such as Quebec and the Maritimes are the biggest takers. A 1915 political cartoon illustrates the situation with a cow being fed in the western provinces and getting milked back east.
People in Alberta, British Columbia and Saskatchewan are working hard, often in industries such as gas, oil and mining, while politicians back east strangle projects like the Energy East pipeline. In December 2018, Quebec Premier Francois Legault said he doesn’t want Alberta’s “dirty energy.”
But they still take so-called “dirty” money from the West.
It’s like working double shifts while your roommate rarely has a job, complains about your messy work boots, and never helps pay the bills.
This is why Albertans are holding a referendum: They want reform and respect. And B.C. should back them up.
The federal government started the equalization program in 1957 and it was put into the Constitution by former Prime Minister Pierre Trudeau in 1982. It was started with good intentions, but we know where that road leads.
Alberta has sent $661 billion more to Ottawa since 1961 than it has gotten back in transfer payments.
It’s a similar situation in B.C., where records dating back to 1980 show the province has received equalization five times, getting less than $800 million in equalization from Ottawa in the past 40 years. By comparison, B.C. contributed more than $2.7 billion to Ottawa in the year 2020.
While the intention of equalization sounds good — helping a province out when it’s having a tough time — this can lead to dependence. It’s like getting on Employment Insurance without needing to look for work and with no cut-off date in sight.
New Brunswick Premier Blaine Higgs was frank last year when he said equalization payments should be cut to push provinces to develop their natural resources.
We’ve seen this movie before. In 2006, then New Brunswick premier Shawn Graham set a goal to get off of the equalization dole by 2026. Nova Scotia signed a deal with the Paul Martin government back in 2005 saying that the province could keep resource revenues to wean off of equalization.
That was 15 years ago. Since then, the Nova Scotia government banned natural gas development and New Brunswick had an anti-fracking riot in 2013 that saw six police vehicles burned and protesters jailed. New Brunswick is set to be the poorest province in Canada this year.
There are success stories. Saskatchewan stopped getting equalization more than a decade ago when it finally tapped into treasures of oil, gas, potash and uranium to grow the province and to keep young workers home.
It’s high time that B.C. links arms with Alberta and Saskatchewan and demand reform to equalization in Canada.
The federation needs it.