MALCOLM: Equalization in Canada is fundamentally broken

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The Canadian system of fiscal federalism, in particular the equalization program which divides the country into “rich” and “poor” provinces and transfers revenues from the former to the latter, is fundamentally broken. And, for the first time in my life, some Canadians are finally getting the chance to do something about it.

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In next week’s municipal election, Albertans will have the rare opportunity to participate in direct democracy and vote on the fairness of Canada’s equalization program.

Specifically, they will be asked if equalization payments should be removed from the constitution.

A ‘yes’ vote will not change the program immediately, but it will send a strong message to the political class that people do not agree with a program designed to divert taxpayer dollars from provinces with diverse economies and channel them. to provinces which are chronically poorly managed and refuse to develop their natural resources.

Dr. Bill Bewick, who heads Fairness Alberta (Referendum on equalization.ca) tells me that a “yes” is the most powerful tool ever given to Albertans.

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“Albertans find it difficult to be heard in Canada. One big party takes us for granted, the other pushes us aside and sacrifices Alberta for the rest of the country. It’s hard for Albertans to be heard, ”said Bewick.

“So we have to be creative. It is much more powerful for people to express themselves. It is much more difficult to ignore the expressed will of the people, and we hope that this will elevate this issue to the top of the agenda in Ottawa.

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I couldn’t agree more.

I have been writing about the failed Equalization system in the pages of Sun newspapers for almost a decade. My first column on the subject dates back to 2013, when I wrote: “Equalization should not be a federal social assistance program. Rather, it should be a temporary tax relief program to help provinces make the transition and diversify their economies. Equalization should provide interim funding to “have-not” provinces provided they get their finances in order.

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In 2015, I wrote that provinces that refuse to develop their natural resources despite proven oil reserves – notably Prince Edward Island, New Brunswick, Nova Scotia and Quebec – are rewarded with equalization, while provinces with the initiative to develop their resources – namely Alberta, Saskatchewan, BC and Newfoundland – are punished.

A few years later, in 2016, I entered into a debate on these pages with former Finance Minister Joe Oliver. We both agreed that the system was outdated, that it punished “have” provinces and that it was time to overhaul the system.

The reason I say it was a “debate” is because I told Oliver he should have reformed the system when he had the chance.

“The flaws (of the equalization program) were as obvious when Oliver was finance minister as they are today. But when the old equalization deal expired in 2014 and was renegotiated by the federal government, Oliver and company shrank back to the recipient provinces. They quietly renewed the status quo rather than making the difficult but important changes that Oliver recognizes today. “

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Again on these pages in 2018, I wrote that even though Alberta was struggling and its economy was in decline, the punitive system was still taking money from Alberta and distributing it to other provinces.

“Unemployment levels in Alberta are the highest in decades, one of Calgary’s four offices is empty, Canadian investors and energy companies are fleeing the country and, meanwhile, Albertans are still being forced to pay taxes. equalization transfer payments to the rest of the country. “

I no longer live in Alberta and will therefore not have the opportunity to vote in the next referendum on October 18, but I hope that readers of this column in Alberta will send a message to the political class: the race is over. , Albertans (and indeed many Canadians) are no longer prepared to fund this fiscal malfunction.

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