Western premiers OUTRAGED as equalization payments hit record $26.2 billion
'The current equalization system isn't fair or sustainable,' Alberta Premier Smith said on social media. 'It's time for a better deal that doesn't put all the weight on a few provinces.'
Western Canada won't see a single penny from record-setting equalization payments that have angered the region.
British Columbia, Alberta and Saskatchewan are beside themselves after the current formula earmarked $26.2 billion for the rest of Canada.
Alberta Premier Danielle Smith, in particular, criticized equalization for promoting "dysfunctional policies that stifle growth in other provinces."
During the Council of the Federation meetings in Halifax last summer, Premier François Legault justified the program to ensure "have-not" provinces receive equivalent services. He pledged to weam off payments by creating wealth.
Renaud Brossard, the vice president of communications at the Montreal Economic Institute, said the program promotes anti-growth policies in Quebec, such as keeping consumer electricity prices artificially low and banning oil and gas development.
He notes Premier Legault has already forgotten his promise. "It is a complex formula to apply," Legault said at the time. "There are 34 criteria that are used."
Smith previously tabled a paper critical of overcompensating provinces that "under-report certain sources of revenue." It proposed redistributing excess GDP to all provinces on a per capita basis, as of 2029.
Provinces qualify for payments based on their "fiscal capacity" or their ability to generate revenue.
"The federal government has announced equalization payments for 2025 and once again, SK, AB and BC will be helping support the rest of Canada," said Premier Scott Moe on Thursday.
Québec raked in the most at $13.6 billion, up a quarter billion from fiscal year 2024/25. That follows Atlantic Canada, excluding Newfoundland and Labrador, at a combined $7.3 billion, then Manitoba ($4.7 billion), and Ontario ($546 million).
Meanwhile, Newfoundland will receive $113 million. The province launched a suit last May 30 against the payment scheme. B.C. joined soon after, citing calculation problems.
"It's not OK," said Premier Eby, who condemned the "special treatment" of Québec and Ontario.
Premiers Smith and Scott Moe also backed the action, with a majority (61.7%) of Albertans wanting to strike equalization from Canada's constitution.
Eby expressed prior frustration with taxpayer money flowing to Laurentian Canada, amid their cost-of-living crisis, housing shortages and lengthening queues for essential services.
"The current equalization system isn’t fair or sustainable," Smith said on Thursday. "It's time for a better deal that doesn't put all the weight on a few provinces."
A 2024 Fraser Institute study calculated Alberta’s net contribution to federal coffers at $244.6 billion between 2007 and 2022. In a distant second place is British Columbia, at $46.9 billion.
Québec received $327.7 billion more than it contributed to the rest of the Federation during that period.
Federalist scholars and economists criticized the record equalization payments en masse, reported the National Post.
"Equalization funds keep growing every year … based on the nominal national growth rate," said Haizhen Mou, a fiscal federalism scholar at the University of Saskatchewan.
Meanwhile the fiscal gap between "have" and "have-not" provinces has narrowed from 27% in fiscal year 2014/15 to 6% in fiscal year 2018/19. In 2009, Prime Minister Stephen Harper said equalization payments would grow annually, regardless of the wealth gap.
Colleen Collins, head of the Canada West Foundation, claims the program reinforces a vast regional imbalance amid calls for a fair deal.
"The fundamental question of the West is that, financially, we punch above our weight, yet we’re largely underrepresented when it comes to influencing federal policy," she said.
"We felt the same way under Harper."
Alex Dhaliwal
Calgary Based Journalist
Alex Dhaliwal is a Political Science graduate from the University of Calgary. He has actively written on relevant Canadian issues with several prominent interviews under his belt.
COMMENTS
-
Bernhard Jatzeck commented 2025-01-04 01:29:40 -0500Don’t forget which “have-not” province benefits the most from “equalization”. -
Bruce Atchison commented 2025-01-03 18:15:00 -0500Equalization always was unfair. It’s a Marxist scheme to prop up lazy provinces and keep them dependant. It penalizes prosperous provinces. Imagine a teacher taking the average mark of an entire class and giving all students that mark. Lazy kids would benefit and brilliant students would suffer. Euthanize that dinosaur and lazy provinces will have to develop their resources. It’s time to stop rewarding tardiness and stop penalizing industriousness.
