October 27, 2016
Fixing equalization: Wildrose releases Equalization Fairness Report Recommendations
Today, the Wildrose Official Opposition released the Equalization Fairness Panel report, which presents six new recommendations that can be used as a basis for getting a more fair and equitable equalization system for Alberta in the negotiations leading up to 2019.
The report was submitted by a pan-Canadian set of independent experts appointed to the Equalization Fairness Panel convened by the Wildrose Caucus last February. It found Alberta has sent between $20 billion to $28 billion more to Ottawa every year over the past decade than it received back in transfers, benefits or other spending. Between the years 2007 to 2014, Alberta made a staggering $190 billion net contribution to the federal government.
Recommendations from the panel include re-evaluating what exactly the constitutional obligations are under the current equalization system, fundamentally restructuring how the equalization formula is measured and spent, fixing regional imbalances in the current Employment Insurance program and calling on the Alberta government to establish a special commission to examine the finances of the federation that includes comparisons of our equalization system to other countries of scale such as Australia.
The report can be read in full here.
Wildrose Leader Brian Jean said he accepts the panel’s findings and that they should be used to prepare for the next round of equalization negotiations in 2019.
“I believe in Alberta being a fair neighbour and friend to all of Canada, but that doesn’t mean continuing to put up with a fundamentally unfair equalization system,” Jean said. “I want to thank the panel members for their important work including highlighting the incredible contributions Albertans makes to Canada; it should be clear to all Canadians that we must fix the current imbalances that exist within the equalization formula and other transfer programs.”
Jean is anticipated to introduce Motion 509 to the Legislature later this fall calling on the government to conduct its own review into the equalization system and make clear to Albertans the government’s plan to negotiate a better deal for Alberta in 2019.
Co-Chair Dr. Frank Atkins said that Canada cannot continue to postpone reforms to equalization and these recommendations form a solid foundation for the whole country to work from.
“Updating and modernizing fiscal arrangements that have been in place for nearly half a century would be an important step to improving the lives of Albertans and the entire Canadian economy,” Dr. Atkins said. “It will prepare our country for the challenges we face in the twenty-first century.”
- The equalization program began in 1957 and was enshrined in Section 36(2) of the Constitution Act 1982
- The equalization formula is solely based on “fiscal capacity” which is defined as the potential a province has to raise taxes from its citizens
- The calculation is not based on the population’s actual needs as it is in Australia
- The current equalization system fails to calculate the amount certain recipient provinces subsidize hydro-electric utilities
- Over 90% of the unemployed in Newfoundland, PEI and New Brunswick receive EI benefits compared with 38% for Ontario and Alberta
- While equalization recipients enjoy payments based in significant measure on the productivity of Alberta’s energy industry, recipient provinces have taken steps to ban development of local energy industries
The Equalization Fairness Panel was convened by the Wildrose Official Opposition to serve as an independent panel of experts on the topic of equalization. The intent of the Panel was for the volunteer members to draw on their academic expertise and objectivity to provide recommendations to the Alberta government and begin a national conversation ahead of the next round of federal equalization negotiations in 2019.
Biographies of the panel members can be found here.
Their mandate letter can be read here.
The report in full can be read here.