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Alberta, Saskatchewan to push for equalization changes despite unexpected federal renewal in current form

Alberta and Saskatchewan plan to fight Ottawa for a new equalization deal, even though a five-year renewal of the current formula was passed into law this week.

Alberta Finance Minister Joe Ceci said Friday he was informed in a letter in May of Ottawa’s plan to renew the current formula. But he said he intends to keep pushing for changes that would provide more benefits to provinces rich in oil and gas such as his, which have seen their economic might wane in recent years.

“It is to our collective benefit that we fix things that aren’t right,” Mr. Ceci said, arguing Ottawa provided Alberta with little support when its economy was in trouble, following the oil price drop in 2014.

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But the NDP Finance Minister wouldn’t say whether he expects to win over the federal Liberals and other provinces for reforms to equalization. He and other provincial and territorial finance ministers will meet with federal Finance Minister Bill Morneau in Ottawa next week.

“It is not up to me alone. It is up to people at the table to listen and to understand that they might, similarly, be in the same position in the future,” Mr. Ceci said.

On Thursday, the Budget Implementation Act received royal assent, meaning the current form of equalization will be renewed for the five-year period from 2019-2024. The federal government said it clearly communicated its intentions to keep the status quo to the provinces and territories, and had long consulted with the provinces.

However, both Alberta and Saskatchewan had proposed changes to equalization this week, saying the current arrangement is unfair. Saskatchewan said it was unaware the renewal was a done deal. The fact that Ottawa moved ahead with the renewal without more consultation with the provinces has angered many Westerners.

Jason Kenney, the leader of Alberta’s United Conservative Party and the NDP’s chief rival, called Ottawa’s move “a slap in the face to Alberta.”

“It means that we’ll continue to be forced – even when times are bad in Alberta – to subsidize public services in other parts of the country,” he said, mentioning Quebec specifically.

Saskatchewan Premier Scott Moe had also received a letter about the federal government’s equalization intentions, although it was not worded as definitively as the one sent to Alberta. In the letter to the Saskatchewan government, the federal Finance Department wrote that it “proposes to maintain the main program parameters,” while the Alberta letter notes the equalization program “has been renewed.” Both letters said Ottawa would consult with the provinces for the “next renewal.”

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Mr. Moe said this week he had intended to speak to other premiers at a meeting in New Brunswick next month about his plans for revamping equalization.

Later, Mr. Moe said despite Ottawa’s position that equalization is decided to 2024, he will not back down.

“This conversation about equalization isn’t over,” he said on Twitter on Friday. “The program is not equitable or fair to all provinces in Canada.”

Equalization is a $19-billion federal program that distributes federal cash to provinces and territories with below-average fiscal capacity, to make sure Canadians across the country have access to a similar level of public services. Provincial governments do not pay into the program – only federal taxpayers do.

Ontario will collect $963-million in transfer payments this fiscal year and Quebec will receive $11.7-billion, according to Trevor Tombe, an economics professor at the University of Calgary who closely tracks the equalization debate. These figures, Mr. Tombe noted, do not capture the entire picture. For example, Quebec will receive less money per capita than Prince Edward Island, he said.

The “have” provinces that receive no equalization payments are British Columbia, Alberta, Saskatchewan and Newfoundland and Labrador.

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While there is much political hay to be made from equalization, there’s a reason why provinces such as Alberta don’t get payments. While the province was weakened by lower oil and gas prices, and a drop in investment during the past three years, Alberta’s economy over all remained the strongest in Canada, Mr. Tombe noted.

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