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The Government of Saskatchewan is joining Newfoundland and Labrador in its legal challenge against the federal equalization formula.

A government news release confirmed Saskatchewan’s Ministry of Justice applied to intervene, with a court date set for October 20.

Tim McLeod, Saskatchewan’s justice minister, said the current formula “has consistently failed” in its intended goal of creating fairness across Canada, a sentiment expressed by other provinces, reported CJME News.

The suit calls into question whether the formula violates the constitution by interfering in Saskatchewan’s ability to develop its non-renewable resources.

The Government of Saskatchewan claims the inclusion of resource revenues makes the formula unfair, given Québec does not include energy exports in calculating its fiscal capacity.

According to a Government of Canada chart, if “natural resource fiscal capacity” was not taken into account, Saskatchewan would have fallen below the average fiscal capacity used to determine who gets equalization money.

“Like Newfoundland and Labrador, we have serious concerns with the current formula, which has repeatedly punished provinces with strong natural resource sectors like Saskatchewan,” said McLeod, who notes the province has not received a dime in 18 years.

Newfoundland Premier Andrew Furey concurs the transfer formula is “fundamentally broken,” adding that Ottawa has shortchanged them $1.2 billion in each of the last five years. 

Each province has griped about equalization transfers in recent months, with a growing number of premiers calling for reform.

Western premiers OUTRAGED as equalization payments hit record $26.2 billion

Western Canada won't see a single penny from record-setting equalization payments that have angered the region.

MORE by @WestCdnFirst: https://t.co/WRXkjC70gT

— Rebel News (@RebelNewsOnline) January 3, 2025

“Four other provinces will receive nearly $3,000 per resident in 2025-26, while Saskatchewan, Alberta and British Columbia receive nothing. This hardly seems equitable, even by the most basic standards,” writes McLeod.

An omnibus parliamentary motion in 2023 quietly amended the formula through 2029, drawing criticism over no consultations. Premier Scott Moe said the formula is “very flawed” and hopes to have “grown-up” conversations moving forward. 

It earmarks $26.2 billion for “have-not” provinces next fiscal year 2025/26 — a new record, and climbing. Québec will receive $13.6 billion, followed by Atlantic Canada, excluding Newfoundland and Labrador, at a combined $7.3 billion, then Manitoba ($4.7 billion), and Ontario ($546 million).

According to the province of Saskatchewan, the average Canadian pays $634 annually into the $26 billion program, with its taxpayers on the hook for $786 million.

The Trudeau Liberals have announced equalization payments to Newfoundland and Labrador for the first time in 15 years.

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— Rebel News (@RebelNewsOnline) December 20, 2023

The formula ensures comparable levels of public service across the country at similar levels of taxation, according to the Government of Canada website, though that doesn’t appear to be the case.

Both Saskatchewan and Newfoundland say it “fails to take into account the structural costs of delivering public services.” The federal government says transfer amounts fluctuate based on a province’s fiscal capacity.

Though Newfoundland joined the equalization frenzy this fiscal year for the first time in 15 years, it will not be a recipient in 2025/26. They took home $218 million this fiscal year, ending on March 31.

The most recent significant change came after the 2008 financial crisis, when Ontario started qualifying for payments. Since then, there have been only minor technical changes.