Friday, October 08, 2021

Alberta whining about equalization again

Alberta is whining again. Well, what's new? How many times have I written those, or very similar, words?

This time, the provimce has decided to add in a referendum question to the upcoming municipal election ballots, asking for Albertans' views on equalization. The question asks: "Should section 36(2) of the Constitution Act, 1982 - Parliament and the government of Canada’s commitment to the principle of making equalization payments - be removed from the constitution?” 

Equalization - established back in the 1950s, and enshrined in the Canadian Constitution in 1982 - is part of a system of provincial transfer payments, along with the Canada Health Transfer and the Canada Social Transfer. It is a system of wealth redistribution, based on the putative "fiscal capacity" of the various provinces. The "have" provinces effectively pay tax funds into a pot to be shared among the "have-not" provinces, in the aspirational belief that Canada is a country, not just a collection of private fiefdoms. 

Quebec is by far the largest recipient of equalization payments (although PEI receives the most per capita), and Manitoba and the Maritime provinces also benefit. However, it is not the case that the "have" provinces contribute these funds directly: as the Library of Parliament explains, "Equalization is financed entirely from government of Canada general revenues", i.e. it is raised through federal taxes on all Canadians.

Many in Alberta, though, want to keep all the fortuitous advantages of its natural resources, particularly after a couple of (relatively) lean years in the province. This is a selfish, dog-eat-dog, deeply conservative attitude, profoundly uninterested in the common good. It's not even that they want to conserve the fruits of their honest labour; they just happen to live in a place that has a bunch of lucrative fossil fuels. But, hey, that's Alberta.

The people of Alberta have been force-fed the idea that the province is being unfairly treated by the country by their Conservative government for years, and specifically the idea that the equalization formula is unfair to Alberta. So, it is more than likely that the referendum will return the response the current government wants. Not that this will have any actual practical effect, of course - ending equalization payments is not within provincial jurisdiction - it's all about political optics. And the foundering Kenney government needs all the help it can get right now.

But the reality is that Alberta is still by far the richest province in Canada, and is in no position to complain. According to StatsCan, Alberta had a median family income of $101,780 in 2018 (not sure why 2018 should be the latest figures available), way ahead of Saskatchewan ($89,760) and Ontatio ($89,270), not to mention lowly New Brunswick ($77,020) and Nova Scotia ($78,920).  The territories of Yukon and Northwest Territories had even higher median incomes than Alberta, but they are tiny economies and populations which have to deal with an extremely high cost of living.

Just for good measure, the Canadian Income Survey for 2019 shows that the median after-tax income for families and unattached individuals in Alberta was $72,500, compared to $66,600 in Ontario and $65,700 in British Columbia (and $53,300 in Nova Scotia and $55,600 in Quebec, at the other end of the scale).

So, don't cry for Alberta. Despite decades of mismanagement and short-sighted investment decisions, it's doing alright thank you. Of course, the oil nd gas won't last forever, so it does need to get its act together soon. But for now, it remains a "have" province, and it owes it to the less fortunate parts of the country to contribute its dues. That's the Canadian way.

Just so you know, the other referendum question onnthe upcoming ballot is "Do you want Alberta to adopt year-round Daylight Saving Time, which is summer hours, eliminating the need to change our clocks twice a year?” Heady stuff!

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