Get set for a traumatic fight over equalization
The chances of serious reform coming to the program seem slim at best. Quebec isn’t about to willingly give up such a rich supply of easy money. But that doesn’t mean the issue will go away.
Saskatchewan Premier Brad Wall.
Brad Wall isn’t going quietly. The Saskatchewan Premier has just a few weeks left before he retires in favour of a less colourful figure. Yet, far from slipping off into the prairie sunset (which comes early this time of year), he’s still firing off tweets on one of his favourite topics: the absurdity of the federal equalization program.
“Quebec cuts income taxes, sends cheques to parents & balances their budget,” he wrote. Monday. “Next yr they get $11.7 BILLION in equalization, $650 MILLION more than last yr, as SK taxpayers pay in $580M, and get $0..while our finances hurt by stubborn low commodity prices. Something isn’t right.”
Appended was a map of the
equalization breakdown, with big fat zeroes on the three western-most provinces, rising to the gargantuan $11.7 billion Quebec will receive in testament to its evidently incurable status as a “have-not”province.
It’s far from the first time Wall has beefed about equalization, which is hard-wired into Canada’s constitution and treated as one of the many absolute rights Canadians now deem theirs by birth. Lately he’s been echoed by Jason Kenney, opposition leader in next-door Alberta, who has threatened to hold a referendum on the program should he become premier, though what that might accomplish isn’t clear.
The workings of the program are often misconstrued. “Have” provinces like Alberta and Saskatchewan don’t actually write up cheques and mail them off to Quebec and other equalization recipients. Ottawa sends the money based on a formula related to provincial prosperity. And Quebec isn’t the biggest recipient per capita (Price Edward Islanders get twice as much). But Quebec does soak up 60 per cent of the national total, and the notion that it’s a struggling province in need of help to keep up with the rest of the country is getting increasingly hard to swallow with each new pronouncement from Quebec Finance Minister Carlos Leitão about the wondrous economy the provincial government has wrought.
“The news is good,” Leitão proclaimed in unveiling a tax cut and other goodies in a pre-Christmas announcement. “If we are doing this now, it’s because we can do it now,” he said, claiming the sudden largesse has nothing to do with the approach of next year’s election.
Indeed. Compared to its long history of big spending and high taxes, Quebec is doing well. Very well, it must seem to other provinces struggling to make ends meet. University students in Quebec pay the lowest tuition in the country, thanks to heavy subsidies. Daycare costs are minimal:
a report released Tuesday found the median cost of daycare in Quebec, at $2,196 a year, is a tenth what a Torontonian would have to pay, thanks to government supports.
Quebec has the cash to offer an array of benefits: in boosting funds for anti-poverty programs, it plans to introduce a guaranteed basic income for people deemed unable to work. Quebec surgeons and anesthesiologists have received $86.1 million over the past three years as a reward for
showing up for work on time. While newspapers across the country are shutting down in the face of a changing market, Quebec will spend $36.4 million over five years to
support print publications struggling to make the transition. And while Quebec families receive the same federal tax breaks as other Canadians for the cost of raising children, Leitão said he’ll
kick in another $100 for every school-aged child. Just because he can.
It’s nice that Quebec is feeling flush, but it can’t help but rankle across the rest of the country, where $11 billion extra a year would solve a lot of problems. Quebec’s annual take almost exactly equals the interest costs Ontario spends on its debt, even as it continues to borrow heavily despite pretending to have a balanced budget. Wall’s perennial status as Canada’s most popular premier took a knock this year when he was forced to introduce an austerity budget that included higher taxes and some painful spending cuts. And Albertans can’t help but wonder how they can simultaneously count as the country’s fattest fat cats even as unemployment nudges eight per cent, office towers sit empty and the budget floats on a river of red ink.
The answer is in resources: the western provinces have resource wealth that makes them look well off even during hard times. Kenney’s referendum is
aimed at having resources removed from the formula for calculating equalization. If he succeeds, it might not mean a cent of extra money for Alberta, but could mean less for Quebec and wipe the smile off its face.
The chances of serious reform coming to the program seem slim at best. This is Canada, after all; we can’t even build a pipeline without triggering a national trauma. Quebec isn’t about to willingly give up such a rich supply of easy money, and is entirely capable of boasting of its vibrant economy while simultaneously crying poor to Ottawa.
That doesn’t mean the issue will go away. Equalization may be baked into the national pie, but nothing says every piece has to stay the same size forever, especially if one province appears to be seriously gaining weight.
http://nationalpost.com/opinion/kelly-mcparland-get-set-for-a-traumatic-fight-over-equalization
