'We're not going cap in hand': Sask. seeks equalization change

Saskatchewan premier Scott Moe says each province deserves a share of equalization money based on its population.

Premier Scott Moe calls federal formula 'flawed,' says all provinces deserve a cut

'This is obviously a flawed program,' said Scott Moe, Saskatchewan's premier. (CBC/Chanss Lagaden)

Saskatchewan Premier Scott Moe says Canada's equalization formula is "flawed."

On Wednesday he proposed a solution: Take half of the roughly $19 billion doled out by the federal government to so-called "have-not" provinces and split it among all provinces, based on population.

P&P Explainer: How do equalization payments work?

5 years ago
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As Saskatchewan's premier calls Canada's equalization formula 'flawed', P&P looks at the federal program.

"Our proposal, we believe, is simple, fair and equitable to all Canadians," Moe said at a news conference in Saskatoon.

Moe said the other half of the money would continue to be sent to the five provinces with poorer economies. He noted Saskatchewan would gain $300 million per year right now under his plan.

Quebec receives highest amount under current equalization

Moe has repeatedly singled out Quebec as the single biggest beneficiary of equalization payments, saying the province has received more than $100 billion over the past decade alone.

His proposal would effectively take millions of dollars from Quebec and send them to Ontario instead.

This is obviously a flawed program.- Scott Moe, premier of Saskatchewan

Saskatchewan has not seen a dollar in equalization payments in 11 years.

Moe said he plans to raise his idea at the Council of the Federation meetings in New Brunswick next month.

Plan likely 'dead on arrival': economist

"For Premier Moe to come out with a specific policy proposal is quite laudable," said Trevor Tombe, an associate professor of economics at the University of Calgary. "It is certainly a contentious topic."

Economist Trevor Tombe called Moe's idea 'laudable,' but said it will be a tough sell federally. (Monty Kruger/CBC)

Tombe said the federal government also sends health and social transfers to each province based on population, and said Saskatchewan currently receives $2.5 billion as a result.

He said cutting equalization transfers to Quebec would "present a considerable political challenge" for any federal government.

"I think federally it's dead on arrival," said Tombe.

In a written statement Wednesday, federal Finance Minister Bill Morneau echoed that sentiment, noting his government renewed equalization for a five-year term in this spring's budget. 

Morneau made no mention of revisiting the formula.

"The formula is based on each province's ability to raise revenue, and total funding for equalization grows in line with the economy to provide stable and sustainable funding," said Morneau.

"The Fiscal Stabilization Program is designed to kick in in times of sudden and significant declines in revenue," Morneau continued.

"The provinces of Alberta and Newfoundland and Labrador have applied for and received advance stabilization payments in recent years.

"Saskatchewan has not."

Moe defends choice to drop challenge

Saskatchewan's NDP criticized Moe's party when it chose to drop a legal challenge to equalization in 2008. 

Had Saskatchewan won, the province could have gained at least $9 billion in federal transfers over the past decade.

Currently, hydroelectricity in Manitoba and British Columbia does not count as "natural resource revenue" in equalization calculations. Saskatchewan's oil, gas, potash and uranium do.
'Be careful what you wish for,' said NDP Leader Ryan Meili, noting Saskatchewan could lose equalization money should its economy weaken in the future. (CBC)

"Provinces are using up something they won't have forever and aren't able to save the way they should out of the use of those resources," said Saskatchewan NDP Leader Ryan Meili.

"This is something we New Democrats wanted to take to the courts."

He said Moe "should be careful what you wish for" with the 50-50 plan, as this province would receive less in future equalization payments if its economy weakens.

"We are not going cap in hand to the nation of Canada now," Moe told reporters. "Our economy in this province is operating under a very different environment today than we were 10 short years ago."

The premier cited Saskatchewan's status as a "have" province several times, and said his goal was fairness for every province.

"Under this program we'd remain a 'have' province," Moe said. "We contribute about double what this proposal would provide to the province."

In 2006, Saskatchewan tried to get natural resource revenue removed from equalization calculations. (Troy Fleece/Canadian Press)

Moe said Ontario, Alberta, Newfoundland and Labrador, British Columbia and New Brunswick were open to his idea.

"There are provinces across the nation looking to have this discussion," Moe said. "This is obviously a flawed program."