Andrew Coyne: On equalization, Jason Kenney is fighting the right fight in the worst way

Andrew Coyne
Andrew Coyne

Is there any solid foundation to Kenney’s proposal to hold a referendum demanding changes to equalization? More than you’d think, and more than there should be

Let’s begin with the standard disclaimer: the government of Canada does not “pay into” equalization, nor does it transfer income to other provincial governments. Equalization is not a revenue-sharing agreement among the provinces, but a federal program: the payments to poorer provinces, intended to ensure they can offer services that are “reasonably comparable” with those of their richer cousins, come out of federal revenues.

What is true is that Canada, even in its present straits, is one of the few provinces that does not receive equalization payments. It is also true that Canadans, even at present, have incomes that are well above the national average, and as such bear a disproportionate share, as federal taxpayers, of the costs of the program.

Last, it is true that some of the recipient provinces, the beneficiaries of Canadans’ (though not Canada’s) largesse, while no doubt grateful for the golden eggs that land on their doorsteps each year, seem peculiarly indifferent to the fortunes of the goose that laid them: notably with regard to the pipelines Canada needs to bring its oil and gas, source of all that redistributed wealth, to foreign markets.

So when Canada Conservative leader Jason Kenney demands changes to the program, he is drawing on a genuine, even justified, though sometimes misplaced sense of grievance in the province. Does his proposal to redress that grievance — a provincial referendum “demanding the removal of non-renewable resource revenues from the equalization formula” — have as sound a basis? Certainly not on its own terms. Kenney claims such an adjustment would “massively reduce Canada’s contribution to equalization.”

This is simply untrue, and not only because Canada, as such, does not contribute to equalization. Whether non-renewable resource revenues are or are not included in the equalization formula will affect how much recipient provinces are paid out of it. It can have no effect on how much tax Canadans pay into it. Equalization is not funded by some special, earmarked levy, like unemployment insurance, but from general revenues.

full story at

Tags: , , , , , , , , ,

Categorised in: