In one way, it’s a meaningless referendum. Even if Albertans vote to end equalization payments, it will have no effect. Alberta cannot amend the constitution on its own, and the five provinces that receive those payments are unlikely to approve such an amendment.
Federal equalization payments have long been a boogie man in Alberta politics, a supposed example of how the rest of Canada is putting the screws to defenceless Alberta. If Kenney gets his mandate to negotiate an end to equalization payments, he will be able to beat his chest and score political points.
Canada has enjoyed some form of transfer payments to poorer provinces since Confederation. It only makes sense. An essential part of being a nation is that the rich help the poor. People on the Prairies benefitted greatly from assistance from the rest of Canada during the Great Depression. The Dirty Thirties included a years-long drought on the Prairies which decimated the agricultural economy and left some on the brink of starvation.
In 1957, the federal government instituted a formal system of equalization payments to help the governments of poorer provinces provide a similar level of public services to that of wealthier provinces. Despite what some think, rich provinces do not pay into a pool of money to be divvied up among the poorer provinces. All the grants comes from federal government revenues.
The current formula for equalization payments was put in place by the Conservative government of Stephen Harper of which Jason Kenney was a minister. At the time, when he had a say in administering the program, the future Alberta premier made no public statements against equalization.
Over the years, the vast bulk of equalization payments have gone to the governments of Quebec, Manitoba and the three Maritime provinces. Quebec has received the lion’s share, not because of some nefarious plot, but because its population dwarfs that of other recipient provinces.
Alberta only pays into the program because people in Alberta are younger and have higher incomes than anywhere else in Canada. Although many low-income people live in Alberta, in 2017 the average income in Alberta was 30-per-cent higher than the national average. So, Albertans paid far more federal taxes than residents of any other province.
We also pay far less in provincial taxes than do others. There is no provincial sales tax and provincial income tax rates are the lowest in Canada. The Alberta government runs a deficit because it has chosen to keep taxes low and let the future look after itself. The federal equalization program has nothing to do with the Alberta provincial deficit.
Many Albertans were thrown into unemployment because of the collapse in oil prices which began in 2014. Despite the recession, Alberta still could eliminate its deficit if its tax rates were similar to those of other provinces. If oil and gas royalties were set at a reasonable level, the provincial government would have a huge surplus. That it doesn’t is a sign of how beholden the government is to the petroleum industry.
Alberta doesn’t need equalization payments. It has the financial resources to eliminate the deficit and still provide the highest level of public services in Canada.
What we do have is a widespread attitude of entitlement. We assume that because vast amounts of our oil and gas reserves have been developed, we are entitled to the petroleum revenue. Under Canadian law, resource revenue goes to the provinces. Under God’s law, that revenue is a gift which should be shared with the less fortunate.
The myth that Alberta is getting a raw deal from Confederation is deeply rooted in the provincial psyche. The mantra that Alberta is getting shafted is repeated so often that it is unquestioned among large segments of the population.
Our Thanksgiving celebration is a time when we remind ourselves how much God has gifted us. How dare we go to the polls a few days later and proclaim that our wealth is not a gift but an entitlement. Canada has given us much. It’s about time we said thank you in return.
(Argan writes from Edmonton.)