NATIONAL POLITICAL LEADERS SHOULD COMMIT TO REFORM FLAWED EQUALIZATION FORMULA IN 2024
EDMONTON, AB, July 7, 2022 – In advance of next week’s Council of the Federation, Fairness Alberta is sending letters to all Premiers to confirm their support for renegotiating the Equalization formula set to expire in 2024.
Fairness Alberta’s correspondence reminds the Premiers that distributing $22 billion in federal transfer payments to only 30% of the country is unfair, unnecessary, and unaffordable – and the current formula should not be renewed for a third time.
Similar letters with background information and request for a commitment to equalization reform are being sent to all Federal party leaders and leadership candidates for the Conservative Party of Canada and Alberta’s United Conservative Party.
“Only 30% of Canadians are enjoying the benefits of equalization while the other 70% are paying far more than ever before,” said Fairness Alberta Executive Director Dr. Bill Bewick.
“The data shows that in 2015, provinces started becoming much more equal, but record payments grew kept growing from $16 billion then, to $22 billion now, and $27 billion soon – clearly the formula is broken,” he added. “The GDP growth escalator, undervaluing Quebec Hydro, and making no adjustments for the lower costs for services in eastern Canada are three obvious shortcomings that must be addressed.”
Last year Dr. Bewick outlined these flaws in the National Post, and showed in another column how fixing them would reveal that Quebec is actually close to the average, virtually eliminating their $13 billion payment.
Fairness Alberta used the most recent Library of Parliament analysis of federal revenues by province to estimate the share of Equalization funding that comes from each province, and broke it down to a per capita basis.
Ontario and B.C. families are on the hook for about $2,400 in federal taxes each at a time when their provincial governments are under tremendous strain; a 50% reduction or rebate would be worth $4.5 billion to Ontarians and $1.5 to British Columbians.
“Equalization unfairness is not just an Alberta and Saskatchewan problem – provinces like Ontario, B.C., and Newfoundland were struggling to fund their own provincial services even before COVID-19,” said Dr. Bewick. “As provinces rebuild their economies at a time of severe inflation, it is important to keep as much money in the hands of taxpayers as possible, and certainly not to be sending $2400 per family to other provinces that don’t actually need it.”
Fairness Alberta is a grassroots, non-partisan, and non-separatist association of concerned citizens, aiming to increase awareness across the country related to Albertans’ major contributions to Canada, while also providing clear, factual information on unfair federal policies that are anticipated to undermine the prosperity of Alberta and other contributing provinces further.
For further information or to arrange interviews, please contact:
Bill Bewick, Ph.D.
Executive Director
Fairness Alberta
Cell: (780) 996-6019
Email: [email protected]
Background:
Ben Eisen and Milagros Palacios published a report showing the “Great Convergence” in provincial fortunes since the 2015 energy downturn. While the gap between the median ‘have’ and ‘have not’ fell from $5000 per person in 2015 to only $1600 in 2020, Equalization payments grew by 23%. This year’s $21.9 billion windfall to 5 provinces with one-third of the population is budgeted for $27.1 billion in 4 years.
From p. 232 of Federal Budget:
Using the contribution rates to federal revenues by province last updated here to estimate revenue share, we broke down Equalization funding per capita as follows:
