Equalization an unfair program

In Canada we have a government program called equalization that in its simplest form was intended to transfer some tax revenue from well off provinces to the less well off provinces. The idea was this would allow all provinces to provide somewhat equal services to their residents.
It was intended that Medicare, education and various social services would be similar in every province. This is a program that was implemented 60 years ago and was enshrined in the Constitution since 1982.
In theory this would seem to be a fair program. In actual practice it has always been an unfair program for the people of Alberta. The last time that Alberta was a recipient of the program was in 1963. Alberta is the only province that has been a consistent contributor to that program since then.
Manitoba, Quebec and the three Maritime provinces are referred to as have-not provinces and have always been recipients of the transfers. BC, Saskatchewan, Ontario and NL have been contributors and recipients of the program at one time or another.
Ontario was a continuous contributor of the program since its inception. When premier Dalton McGinty implemented the Green Energy Act a large segment of Ontario’s manufacturing industry left the province due to high electricity prices. This caused a large enough decrease in their revenue for them to become a have-not province.
Between 2000 and 2014 on a net basis Alberta’s taxpayers have shipped an estimated $200 billion to the federal government. During the boom years of 2007 and 2008 the provinces taxpayers shipped more than $20 billion annually, on a net basis. Conversely Quebec receives almost $10 billion each and every year.
One program that Quebec is able to finance from their equalization wind fall is their day care program for $7 a day.
The author of one column I read suggested that there is an, ”overarching  policy question: is equalization doing to provinces what welfare programs have done to communities and individuals – foster dependency, undermine employment, reward profligacy and compromise growth.”
We know that Quebec and Nova Scotia have hydro carbon resources in shale that could be developed similar to what is done in western Canada. They refuse to develop this resource as it might make them ineligible for the equalization transfer. In fact Quebec does not have to include the revenue from its hydro electric industry as part of the equalization calculation.
In one editorial that I came across it stated that no other province including Ontario, with three times the population, comes close to matching Alberta’s contribution to the federation. It is remarkable that few Canadians seem to be aware of this. This writer wrote,  “I’ve never seen these numbers reported in the national media or disclosed by federal or provincial politicians.
He went on to say that he couldn’t find a single expert who had researched the data  or was willing to discuss it at any length. “
Brian Jean the leader of the official Opposition Wildrose party has announced that they have struck an expert panel, chaired by University of Calgary economist Frank Atkins, to propose changes around equalization.
“Alberta is still set to be one of the largest net contributors to equalization despite the enormous shock our energy sector has taken”,  he told reporters in Calgary. The panel will report back in October.
The Notley government does not appear to be impressed with the appointment of this panel. They said it won’t make a whit of difference today.
However they do seem to think that the $250 million that the federal government just awarded the province is a big deal. With a projected deficit in excess of $6 billion it won’t make much difference.

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