Equalization panel aims to find fairness for Alberta

Alberta's contribution to equalization payments has come under fire during the economic downturn and now the Wildrose party want a team of experts to come up with a way to fix it.

'We have to suffer here [for the] rest of Canada,' says Wildrose leader Brian Jean

Wildrose Party leader Brian Jean is asking a panel of economy experts to analyze whether Alberta's role in Canada's equalization program should kick-start a national conversation. (Colin Hall/CBC)

Alberta taxpayers' contributions to equalization payments have come under fire during the economic downturn, and now the Wildrose Party wants a team of experts to come up with a way to fix the program.

A panel of economists from Alberta, Ontario and Nova Scotia will analyze the equalization program and submit a report to the Alberta Legislature by Oct. 15.

"These are Albertans' hard earned dollars and we have to suffer here in Alberta as a result of what's provided to the rest of Canada," said Opposition leader Brian Jean.

Equalization was initially set up to ensure that Canadians are offered the same standard of living regardless of where they live.

Alberta's contributions to the program have exceeded the amounts transferred back since the 1960s, whereas other provinces have received more than they put in. 

"A recent estimate averaged it at $530 per person per year, so more than $2 billion comes from Albertans on that transfer alone every single year," Jean said. 

The province hasn't received  an equalization payment since 1963.

Now Alberta's ability to pay is hampered by an economic recession due to falling oil prices.

But Alberta panelist and economic expert Frank Atkins says looking into equalization right now is not due to the downturn.

"As a matter of fact, it's when Alberta is really booming and really paying into equalization that you can really see the fundamental flaws in the equalization system."

Waste of time

Ron Kneebone, economist at the University of Calgary's School of Public Policy, says he doesn't know what the Wildrose Party hopes to achieve with the panel.

"I think it's a waste of time quite frankly."

He says there's a misconception about how equalization works — that Alberta doesn't write a cheque and hand it directly to relatively poorer provinces like Quebec or Nova Scotia — because equalization comes from federally collected taxes and distributed after that.

"We are not paying these extra taxes because we are Albertans, we are paying because we have relatively high incomes," said Kneebone.

 He says sharing between the "have and have-not provinces" has not been a disadvantage to Albertans. 

"From my perspective there's nothing necessarily unfair of taking revenue from high income people and giving it to relatively low income people, if you believe in progressive taxation." 

Next steps

Frank Atkins says the panel is non-partisan, and aims to find a more fair formula for the whole country. They will be asking for public input.

The panel also includes David MacKinnon and Ben Eisen from Ontario, and Marco Navarro-Génie from Nova Scotia.
    
The current equalization agreement expires in 2019.

Corrections

  • A previous version of this story stated that on average, over the past 10 years, taxes from Alberta contributed between $15 billion to $20 billion a year in equalization payments to Ottawa. In fact, on average, that figure is $2 billion per year.
    Feb 18, 2016 9:43 PM MT

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