Now Brad Wall Wants Equalization Payments

Or it would, if Wall hadn’t already abandoned this fight in 2007.

“Equalization is for ‘have-not’ provinces and we’re a ‘have’ province,” Wall told the Canadian Press after defeating Calvert’s government and dropping its equalization challenge.

What do times and tunes have in common? They both change.

What is equalization and why does it matter to Saskatchewan?

Along with the Canada health and social transfers, equalization is one of three federal transfer payments to provinces. It’s calculated using five indicators — personal and business income taxes, consumption taxes, property taxes and natural resource revenue — that are supposed to provide a rough measure of provincial GDP.

Equalization’s goal — a valid one — is to help all provinces provide “reasonably comparable” levels of health care, education and welfare to their citizens regardless of their economic strength.

For most of its history, Saskatchewan has been a “have-not” province. But thanks to a commodity super-cycle fed by China, India and other emerging markets, we’ve been a “have” province for over 10 years.

But with oil and many other resource prices in the crapper, our much-vaunted Sask-A-Boom is sputtering — and for the first time since the Saskatchewan Party government was elected we’re facing economic hardship.

That’s bad news. But it gets worse.

To smooth out bumps in the program, equalization calculations have a three-year time lag. That means we’ll be classed as a “have” province for two more years before the current resource slump gets factored into the formula. And that means Saskatchewan, along with Alberta, Newfoundland and B.C., will transfer around $34 billion to the six remaining provinces in 2016-17.

Ouch. Maybe the old NDP government was right to fight for a better equalization formula after all?

When the Sask. Party government was elected in November 2007, the resource-fuelled boom was still gathering steam and Premier Brad Wall dropped the NDP lawsuit. Wall justified the move by saying he wanted harmonious relations with the federal Conservative government.

But Harper’s broken promise cost Saskatchewan over $800 million.

“They inherited a ‘have’ province, and I think they just believed we could never see the kind of decline in oil revenue that we’ve seen [today],” says Calvert. “We were used to $20-$30 a barrel oil, that was sort of the norm. When it got to $50 a barrel, I could hardly believe it. Saskatchewan’s been in good shape economically for a number of years, but we’re starting to see the pinch.”

And now we have the spectacle of Wall — who hasn’t missed a chance to potshot Justin Trudeau since the October federal election — going cap-in-hand to Trudeau’s Liberal government for equalization relief.

“It’s more disappointment than vindication that we didn’t get to this position earlier,” says Calvert, summing up his feelings on the situation. “But Mr. Wall is at the right position now.”

Equalization Returns | Prairie Dog (external - login to view)
F*ck equalization!! If a province with a population the size of Quebec or Ontario cannot generate enough revenue through taxes and fees to provide healthcare and education and a social safety net that is their issue. Maybe they need to look at the budget and start cutting anything not related to those things until they are properly funded. Going "cap-in-hand" to the west for funding is bullsh!t.

There should be a few requirements for any province to give/recieve equalization if we are to continue this farce.

First and foremost is that any province receiving funds MUST have a balanced budget. There is no reason at all for another province to subsidize frivolous and wasteful spending by another. If you cannot manage our own money you don't deserve ours.

Second should be that NO province should be required to go into debt to pay into the program. Not that I agree with Alberta's budget at this time but it contains a $10 billion deficit while making a $10 billion payment to equalization. That means we could theoretically have a balanced budget we were not forced into this program.

Of course much of this could be settled through various means like separation or revolution but I would first go with a constitutional amendment requiring ALL levels of government to have a balanced budget except for major disaster or lawfully declared state of war. The habit of deficit spending must be broken and broken soon.

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