This summer, the Calgary Stampede won’t be the only thing back on the menu in Alberta.
With his approval ratings plummeting to the low 30s and facing growing dissent from within his own party, Premier Jason Kenney has rekindled a debate that’s served as an Alberta rallying cry for decades.
Last week, Kenney announced that he plans to let Albertans have their say on equalization when they vote in municipal elections this fall. And if he succeeds in getting the legislature to add a question on equalization to the ballot, it may be Canada’s most consequential provincial referendum since Quebec’s in 1995.
What is Equalization?
Unfortunately, not all of Canada’s provinces were created equal. Some, like Alberta, are rich in natural resources such as oil and gas. Others have been less fortunate when it comes to the geographic lottery. That’s where the need for transfer payments comes from. In the most basic of terms, the federal government collects revenues from all ten provinces and then reallocates some of that money to the ones who need it most.
The idea of equalization has been around in some form since confederation, starting with a number of statutes of the Constitution Act, 1867. The current program, however, was only formalized in 1957 when the St. Laurent government mandated that all provincial taxes match those of the two wealthiest provinces.
Since 1967, most provincial revenues have been equalized to meet the national average. The equalization formula has been amended a number of times in the decades since, but its overarching goal has remained the same: to put Canada’s provinces on a somewhat level playing field when it comes to providing government services.
“Parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services and reasonably comparable levels of taxation.” —The Constitution Act, 1982
So What’s the Problem?
In 2021-22, five provinces — Prince Edward Island, Nova Scotia, New Brunswick, Quebec, and Manitoba — are slated to receive equalization payments totalling $20.5 billion, while five others — Alberta included — will not. Understandably, many Albertans have come to feel that they’ve received the short end of the stick. Despite the fact that their GDP and per-capita income are the highest in Canada, Albertans are feeling the economic pinch— particularly in the face of repeated financial downturns and uncertainty regarding the future of their main industry.
In Premier Kenney’s own words, “equalization has become the most powerful symbol of unfairness for Alberta’s deal in confederation — and for good reason.”
Whether that’s true or not, a referendum on the issue appears to be good politics. Legal experts, however, have already said that a popular vote in favour of scrapping equalization would have no bearing on the Canadian constitution and that the federal government would have no obligation to heed the results. As one of Canada’s savviest political minds, Jason Kenney likely knows that full-well.
Why, then, is Alberta’s renewed equalization debate worth keeping an eye on?
After the Liberals suffered devastating results in the prairies during the 2019 federal election, Prime Minister Justin Trudeau was forced to reckon with the harsh reality of western alienation. He promised to take the prairie provinces’ growing frustrations more seriously. Trudeau appointed Chrystia Freeland — his most capable cabinet minister and herself a daughter of the west — to initially lead the charge. But with the COVID-19 pandemic taking over all aspects of Canadian politics, the file hasn’t received as much attention as some may have hoped.
The rest of the country, then, should pay attention to this potential referendum on equalization. Because when it comes to politics, what happens in Alberta typically doesn’t stay in Alberta. While Jason Kenney may well be engaging in a bit of political theatre, the Prime Minister would be wise to make good on his past promise to take Albertans more seriously.
Yes, Alberta needs Canada. But Canada needs Alberta, too.
