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Dave Jeffers: The inequities of equalization

The legality of opting out of equalization will surely be brought forward by the largest benefactor — Quebec
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DaveJeffersMaverick20,900,000,000.00 is a very large number — that is how much is going into the “equalization” package this year; $20.9 billion.

Here in northeast B.C., we are similar to Alberta in many ways, perhaps more so than the rest of our province. We have more high-paying jobs per capita, abundant natural resource development, and high property and business taxation that all contribute to the formula. This formula was last revamped by the Conservative party in 2007 through the budget and implemented in 2009 by none other than Jason Kenney and Stephen Harper. In order to gain favour with Quebec, the revamp of the formula increased Quebec’s take by another 50%. 

More recently, the Conservatives have been forced to address the key points presented by the new Maverick Party as they continue to outperform the expectations in Western Canada. One of these points is the equalization issue. Erin O’Toole has failed so miserably in the East and Central Canada that the party has attempted to regain the hold it once had in the West that has been plummeting since he took the reins. O’Toole suggested they would try to give back $4 billion to Alberta if elected. Even if all of the $4 billion was taken from Quebec, that still leaves Quebec receiving $9.3 billion. No mention of altering the formula that decides who gets and who receives.

As part of that formula, Quebec also benefits from the Quebec Abatement Program, which reduces their federal income tax contribution to the federal level by 16.5%. They pay a very similar amount of tax, but their tax revenues stay in the province, they do not get added to the federal coffers as ours do. That adjustment of funds in the equalization program is one of the key pieces of input to the federal program.

Payments are made to “have not” provinces through two primary avenues. The Canada Health Transfer or the Canada Social Transfer are grants meant to bolster healthcare and social programs but provinces are free to spend the monies at their discretion. The point of the equalization transfer payments is to provide equality in care and services across the country, but unfortunately, the program is a spectacular fail. Quebec, for example, can afford to subsidize a lot of programs to a large extent thanks to our equalization payments.

In fact, if you look at all of the major federal support programs, there is a wide spread and it is anything but equal. 

Since the inception of the equalization program, Quebec has received $221 billion. This is more than half of the total as compared what B.C. has received since the start of the program, at 0.6% or $3 billion. This annual round of payouts will see the Maritimes get approximately $5 billion, Manitoba get $2.5 billion, and Quebec will receive a whopping $13.3 billion. All the rest get nothing. Alberta contributes 18% of federal tax revenues although they only have 12% of the population. Northeast B.C. contributes to the coffers in a very similar fashion.

I think one of the benefits of this discussion on equalization is the reopening of the amendments to the constitution by way of challenge. This fits well with the Maverick Party twin track approach, seeking independence and simultaneously seeking constitutional reforms. The legality of opting out of equalization will surely be brought forward by the largest benefactor, Quebec.

In 1998, the ruling regarding separation as a province by Quebec went to the Supreme Court. In the Quebec Secession Reference, the ruling states:

“The Constitution Act, 1982 gives expression to this principle [democratic discussion], by conferring a right to initiate constitutional change on each participant in Confederation [the provinces]. In our view, the existence of this right imposes a corresponding duty on the participants in Confederation to engage in constitutional discussions in order to acknowledge and address democratic expressions of a desire for change in other provinces. This duty is inherent in the democratic principle which is a fundamental predicate of our system of governance.”

What that means is that if a united group of provinces wanted to discuss constitutional changes, all other governments would be obliged to come to the table.

A helpful precedent has just been set with a constitutional challenge to Section 45 of the Canadian Constitution 1982, which Quebec didn’t even sign, that was swept through with 281-2 vote in favour of Quebec becoming a nation and having French as its only official language. This is in direct conflict with the British North American Act from 1867, the founding document the country was built on. All Conservative MPs in the house, including our own from northeast B.C., capitulated to the whims of Quebec in order to try and gain votes there, while dismissing the needs and wants of Western Canadians.

It’s time for the West to renegotiate equalization payments, and that is non-negotiable!


Dave Jeffers lives and works in Fort St. John and the North Peace, and is the Maverick Party candidate for Prince George-Peace River-Northern Rockies.