New Brunswick

Stand up for equalization in face of mounting criticism, says prof

On Monday, People's Party of Canada head Maxime Bernier called for a "less generous' equalization program during the federal leaders’ debate, a position that has been gaining traction in western Canada in recent months.

Alberta, Saskatchewan premiers have been critical of federal transfer program

People's Party of Canada Leader Maxime Bernier called for a 'less generous' federal equalization program that would be 'fair for every province' during a nationally televised debate Monday night. (Justin Tang/The Canadian Press)

Provinces that gain from federal equalization, like New Brunswick, should consider speaking out in favour of its benefits, according to one of the country's leading experts on the program.

"Should premiers of recipient provinces engage in the political debate about whether equalization should exist or not? I'd say yes," said Trevor Tombe, an economics professor at the University of Calgary who has written and lectured extensively about the issue.

On Monday, People's Party of Canada head Maxime Bernier called for a "less generous' equalization program during the federal leaders' debate, a position that has been gaining traction in western Canada in recent months.

Both Alberta Premier Jason Kenney and Saskatchewan Premier Scott Moe have criticized equalization as being unfair to their provinces and are advocating for changes in the funding formula that would shift some money flowing to poorer jurisdictions, like New Brunswick, to their own provinces. 

Alberta Premier Jason Kenney has discussed the possibility of a referendum on equalization in his province. (Ivanoh Demers/Radio-Canada)

Kenney has promised a referendum on equalization in Alberta in 2021 if a new oil pipeline to the Pacific coast remains stalled.  

Last year, a poll of 1,200 Albertans conducted for CBC News showed 70 per cent felt equalization is unfair to the province. This past spring in Alberta's general election, 57 per cent told the Vote Compass app they supported a provincial referendum on making changes to the program.

Tombe said in the face of that growing negative sentiment about equalization, which is also percolating during the federal election, it would be useful for defenders of the program to show themselves.

"It is a common issue that is raised by the political leadership here," said Tombe.  

"I would like to see other premiers engage in a more constructive way to counterbalance what is currently a pretty unproductive conversation."

Parliament has sent New Brunswick $16.8 billion in equalization grants over the last 10 years to fund basic services. The amount is unconditional and meant to allow poor provinces to provide similar services at similar costs to rich provinces. (Sean Kilpatrick/The Canadian Press)

This year, New Brunswick will receive a record $2.02 billion in equalization funding from Ottawa to pay for basic provincial services. It's $149 million more than New Brunswick received last year and is a central reason the province is planning for a third straight budget surplus instead of a deficit. 

Although Quebec is often cited as the largest recipient of equalization, New Brunswick receives nearly 70 per cent more from the program per capita than Quebec does, second only to Prince Edward Island.

Despite that, the province has had a long and complicated relationship with equalization — needing the money but uneasy taking it.

Former premier Shawn Graham developed a failed self-sufficiency agenda in 2006 aimed at getting New Brunswick free of equalization by 2026. Last year, Premier Blaine Higgs criticized equalization as being too generous, suggesting provinces that refuse to develop their own natural resources or stand in the way of federal infrastructure projects should forfeit some of their payments.

But it remains the most important source of federal transfers to New Brunswick, providing more than double the amount of federal health-care money, and defending it against outside attack has traditionally been a non-partisan necessity in the province.  

New Brunswick Finance Minister Ernie Steeves was able to present a balanced budget last March thanks to a record $2.02 billion in equalization grants. The amount was $149 million more than a year earlier. New Brunswick is one of five have-not provinces to qualify for the money. (Catherine Allard/Radio-Canada)

Former Progressive Conservative premier Richard Hatfield was instrumental in having equalization enshrined in the constitution in 1982 and, in the mid 2000s,then PC premier Bernard Lord fought western premiers over proposals to change the funding formula to steer more money to western provinces.

None of the eastern premiers have injected themselves into the current national equalization debate with the exception of Quebec Premier Francois Legault, who defended the program against attacks by Kenney in August.

Premier Higgs's office did not return messages Monday asking about the province's current position on the program.

Equalization is a $19.8-billion national program., but this year only the three Maritime provinces, Quebec and Manitoba qualified for funding.

University of Calgary economics professor Trevor Tombe writes and lectures on the subject of Canada's equalization system. He believes vocal opponents of the current program should cause supporters to come forward and engage in the debate. (Colin Hall/CBC)

Tombe said there are reasonable arguments to be made for and against that distribution and all sides should be contributing to the discussion.

"This program, like every transfer program, is subject to change over time," said Tombe.

"I don't think we should be resisting the conversation around whether or not there should be changes to the program."    

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