Sask. premier proposes changes to Canada’s equalization payments

Premier calls for changes to equalization formula Saskatchewan's government wants a piece of the equalization pie, Laura Woodward explains.

Saskatchewan’s government wants to change the way provinces receive money through Canada’s equalization program.

Premier Scott Moe proposed Wednesday a “50-50 Formula” that would see half of the money in the equalization pool distributed under the federal government’s existing allocation method and half sent out on a per-capita basis.

“It’s a very simple proposal,” Moe said. “Fifty per cent of the funds stay under the existing program. Fifty per cent is based on: ‘How many people do you have in your province? You get this number of dollars.’”

The per-capita distribution would be based on the population of each province, relative to other provinces’ populations, according to the provincial government.

The equalization program aims to address fiscal disparities among provinces.

Historically, the program has been a source of conflict between governments within the federation. Six provinces received payments this year, with Quebec receiving the largest slice of the pie — $11 billion. Saskatchewan has not received any money from equalization payments over the past 11 years, according to Moe.

“It’s becoming increasingly apparent that equalization is an inequitable and flawed program,” the premier said. “Equalization, as it operates now, is not fair to Saskatchewan taxpayers and we believe there’s a better way.”

The existing formula measures each province’s ability to raise revenues, or their fiscal capacity, to determine whether a province qualifies for an equalization payment. Each province’s capacity is measured against the average fiscal capacity of all provinces.

Moe’s proposed change would mean Saskatchewan would receive $300 million, or about 1.6 per cent of the equalization pool, for the 2019-20 year.

Opposition Leader Ryan Meili questioned the proposal.

“This really isn’t a change in the formula. It’s just cutting the formula in half,” Meili said.

He cautioned: “Be careful what you wish for.”

“The reason I say, ‘Be careful what you wish for,’ is this is really an insurance program for those economies that are struggling more, and while we’ve been fortunate the last few years to not require that support, in the past we certainly have needed it.”

Saskatchewan’s government does not pay money into the federal program, but all Canadian taxpayers contribute through federal taxes. Saskatchewan taxpayers contribute about $600 million per year to the $19-billion pool, according to the provincial government.

The equalization program is due for a twice-a-decade update before the 2019-20 fiscal year.

The Canadian government did not directly address Moe’s proposal Wednesday, but noted in a statement to CTV News that finance ministers from the provinces and territories will be in Ottawa on June 26 to meet with the federal government.

--- with files from The Canadian Press