Oil-producing provinces call for a review of equalization, while Quebec's share rises to two-thirds



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Canada's oil-producing provinces are calling for a reformulation of the federal equalization program after more recent figures show that Quebec's participation in the $ 19.8 billion program will rise to two-thirds from next year.

Quebec gets the boost in part because the total cost of the program increases in line with economic growth, and Ontario will not qualify further next year, leaving Québec with a larger share of the federal transfer program.

Paying $ 13.1 billion next year to Quebec – an increase of $ 1.4 billion – will account for 66 percent of the total equalization program, up from 61.9 percent when Ontario was still receiving the federal program, which aims to help the poorest. provinces provide similar levels of government services to those found in the rest of the country.

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The Federal Finance Department released details of transfer amounts for next year late Sunday, just before Finance Minister Bill Morneau received provincial and territorial counterparts to dinner in Ottawa. These meetings were concluded on Monday afternoon.

Saskatchewan Prime Minister Scott Moe said the results of the current formula were "problematic" and underscored his call for change, which he will bring to the federal government.

"I do not think that equalization is a program designed to disburse 66% of its profits to a province," he said.

Alberta Finance Minister Joe Ceci and Newfoundland and Labrador Finance Minister Tom Osborne also called for changes to the program on Monday.

Although the results of the current equalization formula are not well for these provinces, Quebec premier François Legault caused even more irritation last week when he defended Quebec's opposition to the Energy East pipeline that would bring Canadian crude through its province for refining in Atlantic Canada. .

"I am not ashamed to refuse dirty energy while we are delivering clean energy at a very competitive price," Legault said.

When asked about Premier Quebec's statements, Ceci told reporters, "He clearly does not understand what's happening in the energy sector in Alberta at this time."

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The Saskatchewan premier expressed a similar opinion.

"It's that same energy product – which is sustainable, I might add, among the most sustainable in the world … which is to allow equalization in its current form," Moe said. we support the sharing of our wealth, then we also need to support, together, as Canadians, the advancement and expansion of that wealth. "

In a budget proposal this year, Mr. Morneau renewed for another five years the formula used to calculate how funds are allocated, even though some provinces have called for significant changes. He kept that decision on Monday while responding to critics of the program.

"Equalization may well be a possibility the next time it is renewed, which will be in four years," he said. Morneau said there are other programs to help provinces facing short-term challenges and that equalization is not "The way we intended to work was to ensure that Canadians who moved from one province to another could achieve an approximately equal level of service in different parts of the country. "

The leveling program, launched in 1957 and enshrined in the Constitution in 1982, is based on the calculation of a national average of fiscal capacity – essentially the capacity of governments to increase revenue – and then compensate for the below-average provinces.

However, the details of how this average is calculated are the subject of perpetual dispute, especially on the inclusion of natural resource revenue and to what degree. Eligible provinces are currently receiving a payment based on the inclusion of 50% of natural resource revenue or total exemption, which will result in a larger payment. The program had already included all natural resource revenues. Alberta opposition leader Jason Kenney urged that natural resource revenue be removed from the formula and on Monday repeated his call for a provincial referendum on equalization.

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While payments are a federal tax revenue allocation, Alberta politicians have complained that their province contributes disproportionately to equalization.

An annual report from the Parliamentary Budget, which examined the options for reform, concluded that neither full inclusion nor total exemption from natural resource revenues would make Alberta a recipient of equalization.

Quebec's Finance Minister Eric Girard said he wants to bring Québec's fiscal capacity closer to the national average, which would reduce its share of equalization. However, he also said that the fact that Albertans go to the polls in May could be injecting more emotion than necessary in the debate over Quebec's participation.

"The fact that Alberta is in an election may be increasing the volume of equalization payments," he said.

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