Premier Scott Moe calls for changes to equalization

June 20, 2018 10:39 am

Premier Scott Moe is calling for changes to Canada’s equalization program, which has seen Saskatchewan receive zero over the past 11 years while Quebec has received $100 billion.

“Equalization is an incredibly inequitable and flawed program, which has seen provinces like Saskatchewan, Alberta and Newfoundland receive zero year after year, even through the economic downturn in the resource sector,” Moe said. “Meanwhile, other provinces continue to receive billions every year. That means our taxpayers continue to pay for programs and services in other provinces, even when those other provinces’ economies are strong.”

Moe has written to Prime Minister Trudeau and the other nine provincial premiers to propose a simple change to the complicated equalization formula that would make equalization fairer.

Moe calls his proposal the 50-50 Formula. Under this formula, the overall amount of equalization and relative fiscal capacity of each province would continue to be calculated in the same manner it is now, using the same revenue sources. Half of the total equalization pool would be distributed on this basis.

The other half would be distributed on a per capita basis, based on the population of each province relative to the other provinces. This would ensure that all provinces receive some amount of funding from the equalization program, while continuing to ensure the “have not” provinces receive significantly more relative to their size, based on their relative fiscal capacity.

Even under this proposal, the benefit to Saskatchewan remains quite small. Saskatchewan would receive about $300 million, or about 1.6 per cent of the overall equalization amount.

“As Saskatchewan has not received one dollar of the $177 billion in equalization paid out over the past 11 years and is not expected to receive any equalization payments for the foreseeable future under the current formula, I would contend that this proposal is more than reasonable in terms of its benefit to our province,” Moe said.

Moe noted that while the Saskatchewan government does not pay money into the equalization program, Saskatchewan taxpayers do through their federal taxes like income tax and GST. On average, every Canadian contributes a little over $500 per year to the $19 billion equalization program, which means Saskatchewan taxpayers contribute about $600 million per year.

Moe is requesting that a discussion about equalization be added to the agenda of the upcoming meeting of Canada’s Premiers in July.