Albertans voice their opinion on federal equalization payments
TORONTO -- As polls in the Alberta municipal elections are set to close, voters in the province have also been given the chance to voice their opinions on federal equalization payments.
As part of a referendum in the province, Monday’s ballot includes the question: “Should section 36(2) of the Constitution Act, 1982 -- Parliament and the government of Canada’s commitment to the principle of making equalization payments -- be removed from the constitution?"
Albertans are also asked their opinion on daylight savings time, while a plebiscite in Calgary asks voters whether the city should re-introduce fluoride into the water supply.
Equalization payments, an often controversial topic in Alberta, refers to tax money the federal government redistributes to lower-income provinces, based on per-capita income, so all provinces can provide a similar level of public services.
Some Albertan political leaders, such as Premier Jason Kenney, have long contested that these payments take money out of their pockets and gives it to Quebec as that province objects to pipeline development.
In a public letter issued last week, Alberta Finance Minister Travis Toews estimated the provincial contribution at $20 billion per year.
While this referendum will not eliminate these payments – that would require a constitutional change -- politicians in favour of the “Yes” vote believe strong enough support will force the federal government to renegotiate equalization.
“(This) is not about partisan politics,” Kenney has told reporters several times in past few days. “This is about whether or not Alberta should push hard to get a fair deal.”
“The point of it is to get leverage for constitutional negotiations with the federal government about reform of the entire system of fiscal federalism, which treats Alberta so unfairly.”
Outgoing Calgary Mayor Naheed Nenshi, who is not running for re-election, urged Albertans to vote against Kenny’s “ridiculous” referendums, “on principle if nothing else.”
Jared Wesley, a political scientist at the University of Alberta, told The Canadian Press that recent polling suggests the “Yes” side is in the lead, though many Albertans don’t understand how equalization works and believe many of the misconceptions surrounding the program.
“I don't blame Albertans for being confused,” he said. “They've been fed a lot of misinformation by governments in this province for a lot of decades, and that's showing up in our research.”
He noted that the federal government has spent a great deal of money to help Alberta’s economy by purchasing the Trans Mountain pipeline, and more recently by sending military assistance as the province’s health care system cracked under the strain of COVID-19.
The results of the referendum vote won't be known until at least Oct. 26.
With files from The Canadian Press
ANALYSIS: THE EQUALIZATION QUESTION
by Bill Fortier
Alberta bureau chief, CTV National News
When Albertans headed to their voting stations today, they voted on a lot more than just mayors, councillors and school trustees.
The ballot was spread out over two pages. Along with the usual boxes to check, voters were asked to weigh in on several issues. One big one was equalization, in a so-called referendum question:
Should section 36(2) of the Constitution Act, 1982 – Parliament and the government of Canada’s commitment to the principle of making equalization payments – be removed from the constitution?
If you’re confused by that question, you’re not alone.
In fact, a recent poll by Common Ground, a group from the University of Alberta, found very few Albertans actually understand the federal program. It included eight true-or-false questions, designed to test basic knowledge of the equalization program. The average respondent scored 3.1 out of eight.
Equalization has been vilified by Alberta’s UCP Government, led by Premier Jason Kenney. It’s often boiled down to an oversimplified understanding that Alberta gives money to the so-called “have-not” provinces. But that’s not quite accurate.
This is my attempt to explain equalization:
The federal government makes money off of the federal taxes paid by all Canadians. That’s income tax, corporate tax and GST. A portion of those taxes goes into a fund, and is given to provincial governments that are unable to provide a basic level of services, for an average level of taxation. Those are the “have-not” provinces. A person making $100,000 per year in Ontario pays the same federal taxes as a person making $100,000 in Alberta, and therefore, contributes the same amount to the program.
The argument for Alberta paying more, is that on average, Albertans make more money and therefore pay more taxes. So the average Albertan would pay slightly more than the average Canadian into the program. Of course, you could say the same for any federal program that’s supported by federal taxes.
However, federal taxes from Alberta only account for about 15 per cent of the total cash haul Ottawa takes in every year. So in effect, federal taxes paid by Canadians outside Alberta are actually funding 85 per cent of the program.
Alberta critics of equalization have lamented that even when times are bad, Alberta doesn’t get equalization payments. It’s true that Alberta hasn’t been on the have-not end of the equation since the mid ‘60s. Of course, this is because even when Alberta’s economy has cooled down, it’s still one of the hottest provincial economies in the country. So essentially, a weak Alberta economy still makes more money per capita, at very low taxation rates, than most Canadian provinces.
Most importantly, the results of the referendum question will have no direct or immediate impact. Put simply, Alberta doesn’t have the power to scrap a federal program.
Premier Kenney has suggested a “yes” result could help him pressure Ottawa to give Alberta a better deal in the equalization formula, perhaps even some form of rebate when times are bad here. And maybe it will. But odds of the federal government getting rid of a constitutionally-protected program that has existed since the late ‘50s, are low, to say the least.