1 Comment

Calgary Sun: All Quiet on the Western Front as Redford Capitulates on Equalization

In war, when one side is clearly beat, they will sometimes put up a token fight before surrendering: A small battle to show that you don’t enjoy being beaten and perhaps to encourage a degree respect from the victors.

No such token resistance was given by Premier Alison Redford as she unconditionally capitulated to the status quo or worse on the federal Equalization program.

In early June, the Canadian Taxpayers Federation (CTF) wrote an open letter to Premier Redford, calling on her to lead the charge to reform the $16 billion a year provincial welfare program.

With Alberta sending $18.9 billion more to the federal government every year than it receives back in services and transfers, one would think that demanding at least some accountability in how that money is spent would be a no-brainer.

Not so it seems. In response to the CTF, Alberta Premier Redford gave a defense of the Equalization program more vigorous than would be expected from the Premier of Quebec.

In an interview with the CBC, Redford told reporters, “Equalization payments are, real important.”

The Premier continued, “One of the challenges we face is not to get in what is a pretty simplistic description by the CTF.”

Nothing about Equalization is simple. It’s an arcane formula drawn up in 1957 and amended countless times, mostly due to political lobbying. It uses an army of bureaucrats in Ottawa to calculate the ‘fiscal capacity’ of a province, and has politically motivated side-deals written into it at every turn.

It’s generally suggested that you don’t need all the fingers on one hand to count the number of people in Canada who truly understand the formula.

But you need not understand the intricacies of the formula if you understand the outcomes.

For example, Quebec Premier Pauline Marois recently stated in a video on the Parti Québécois’s website, “If one day, we produce oil and gas in Quebec, why would we let half of this wealth go down the road to Ottawa?” (translated)

Quebec’s government believes that it is better off not developing its natural gas and oil industry because it would mean a claw-back in Equalization payments. Why not just leave the stuff in the ground until Quebec is independent, and take a cut from Alberta in the meantime?

The CTF didn’t call for Quebec to be cut off of Equalization cold turkey, but that the formula be revised so that the ‘fiscal capacity’ of each province be calculated as if they had developed their natural resources, the way Alberta and Saskatchewan have.

Not radical stuff.

In her ‘Stand Up for Equalization’ spiel, Premier Redford stated, “See Saskatchewan is successful now. One of the reasons is because of provincial partnership.” Read: Equalization.

It’s likely Saskatchewan Premier Brad Wall would take exception to attributing their emergence as a powerhouse to federal welfare. A fierce debate raged in Saskatchewan for years over whether they should continue on the Equalization dole, or develop their resources and become more business friendly, and as a result give Equalization payments up.

Saskatchewan made the right choice and cast off its economic shackle. Few of our neighbors have looked back.

Redford even played the “Pay Them Or They’ll Separate” card.

“The worst thing we can do is listen to specific lobby groups that are trying to create divisions among provinces.”

While “Equalization” is a rather flowerily word, it already pits provinces against each other. With a limited pot of money ($16 billion), when one province gets poorer and therefore receives a larger payout, other provinces get less. As Ontario continues to go to the dogs and gets a bigger cut of Equalization, New Brunswick gets a smaller cut.

The CTF expected Premier Redford to remain silent on the issue if she wasn’t feeling the ‘Captain Alberta’ vibe. It was unexpected that she would become the most vocal defender of a system that does little to help givers and takers alike.

With our premier out of the war, it’s up to our federal MPs to stand up and be counted. Do any dare?

Other than Premier Brad Wall, it’s all quiet on the Western front.

SociBook del.icio.us Digg Facebook Google Yahoo Buzz StumbleUpon