Structural Flaws in Equalization Program Must be Addressed: Wildrose


EDMONTON, AB: Equalization reforms, including responsiveness to downturns in ‘have’ provinces, cost-of-living adjustments and removing non-renewable resources from the equation, must be part of the transfer payment discussions being held by Canada’s finance ministers, the Wildrose Official Opposition said.

The present equalization formula is based on a calculation that includes, among other things, non-renewable resources and a three-year moving average of GDP growth, meaning Alberta will still be paying a sizeable portion of the equalization tab for the foreseeable future despite the prolonged economic downturn it is facing. The equalization program aims to equalize public services across provinces, but does not take into account what those services cost to provide, meaning higher cost ‘have’ provinces like BC and Alberta cannot afford the same services as provinces where the cost of living is lower.

“Albertans want their government to be standing up for their interests at the federal table,” Wildrose Shadow Finance Minister Derek Fildebrandt said. “I was disappointed to see Finance Minister Joe Ceci state that he has no plans to lobby Ottawa for changes. If Alberta’s minister of finance won’t advocate for Alberta’s interests in these meetings, no one else will.”

In a move that shows how out of touch Minister Ceci is, Federal Finance Minister Bill Morneau stated that “we have to have an open mind about how we work together” on equalization payments.

The current equalization formula is designed in such a way that Alberta is a large net contributor of the equalization payments at a time when revenues have plummeted and unemployment is soaring.

“Alberta’s economic struggles in this price environment combined with NDP policies means we need to get more of the taxes we are paying to Ottawa flowing back here,” Fildebrandt said. “At the very least, there should be a conversation on reopening the present equalization formula to ensure that provinces aren’t being kicked when they are already down.”