Does Prime Minister Justin Trudeau’s Liberal government really dislike Alberta and the West or is this just a convenient narrative, peddled by conservative politicians who have nothing but their own self-interest in mind?
The question is asked again in the wake of last week’s revelation that the federal government quietly renewed, for another five years, the country’s contentious equalization program. I say contentious, that is, among those “have” provinces that pay to help deprived “have not” counterparts like, ahem, Quebec. And among the complainers, there is no voice louder than Alberta’s, whose politicians have, for years now, railed against what they perceive is a fundamental inequity in the system.
Ottawa’s decision certainly gave Jason Kenney, the Leader of the United Conservative Party and Alberta’s would-be premier-in-waiting, a catapult from which to launch fresh verbal grenades against not only Mr. Trudeau, but also Rachel Notley’s NDP government, for not protesting the move vigorously enough. Saskatchewan Premier Scott Moe also took umbrage. There were similar complaints emanating from British Columbia.
Most Canadians could not care less about equalization. That is not the case in Alberta, where its complexity has been reduced to its simplest form, thanks to the sloganeering of people such as Mr. Kenney. The most common lament goes something like this: Albertans pay billions in transfer payments to Quebec, so it can balance its budget and inveigh against the evils of the oil sands.
Simple but effective.
There have been many who have tried to disabuse Albertans of the notion they are being ripped off through equalization. That includes smart people such as University of Calgary economist Trevor Tombe, who has patiently tried to explain how the system works. Ottawa uses money collected from federal taxes to help out provinces with less fiscal capacity than some of their peers. (Even though Alberta has recently endured a nasty recession, its economic strength still led the country, which is why it was still sending money out through equalization during the worst of times, rather than taking any in.) Equalization is designed to ensure Canadians receive comparable levels of public services no matter where they live.
The program has been endorsed and renewed by Liberal and Conservative governments in Ottawa. In fact, the current formula was approved by the cabinet of Conservative prime minister Stephen Harper, of which Mr. Kenney was a prominent member at the time. Back then, Mr. Kenney had to be concerned about the health of the country, as well as the health of his party in the province of Quebec. He no longer has those concerns. He only cares about Alberta and taking down NDP Premier Rachel Notley next year. And fair enough.
But to dismiss equalization critics from Alberta as myopic crybabies would be unfair. At its core, equalization is an extremely emotional issue. Imagine you had lost your job in the oil rigs and you’re reading a story about how Quebec effectively put a dagger in the Energy East pipeline project – the same Quebec to whom you and your fellow Albertans contributed roughly $3.5 billion of the $11-billion in transfer payments that province received the previous year. You’d be incensed.
And here’s another point, raised recently by former Saskatchewan premier Brad Wall: Provinces that develop their own natural resources get penalized through equalization. For each dollar provinces receive in resource revenue, their equalization falls. Quebec, for instance, would lose 67 cents for each buck it raised in this manner, according to Mr. Tombe. This is a built-in disincentive. So the Quebec government can, with one hand, impose a ban on fracking for shale gas and inflict stricter rules on fossil-fuel exploration and stick out the other hand to accept money largely derived from the oil and gas industry in Alberta.
Think about how that may look if you’re sitting in Western Canada.
It’s also difficult for Albertans to see Quebec balancing its budgets on the back of equalization, while their own province racks up debt at unparalleled rates. Although we have less sympathy for this argument given the fact that if Alberta imposed a sales tax, as most provinces do, it could fix its debt problem overnight. But that’s another story.
Bottom line is that Mr. Trudeau’s decision on equalization only adds to his woes in Alberta and the West. People are unhappy about pipelines. People are unhappy about the carbon tax. Now, people are going to be displeased about the Prime Minister’s decision to perpetuate a system that sees a province ideologically opposed to much of what Alberta stands for continuing to benefit from its largesse.
Some may say that’s a bogus argument. But injustice is in the eye of the beholder.