That is oversimplification.
It's the same thing. It's exactly like understanding how a car works, without knowing all the specifics. There's a million situations in life just like this. Where I work, not one person could tell you all the specifics about how the vaccine we are making works. Yet we all know how it works, even if I don't know how the antigen is separated from the cell culture before final blend.
None of the discussions on this forum are about the specifics of the equalization formula, it's all high level stuff. Like this one for instance:
That said, they are conditional.
The incentive is to ride a fine line between the definition of qualifying as a have-not, yet still being able to collect... Nfld is/was in that position and Danny Williams insisted that he need the payments to build the infrastructure to service the offshore oil/gas... I can actually appreciate that logic as it will speed-up the process of moving forward.
Department of Finance says otherwise:Equalization payments are unconditional – receiving provinces are free to spend the funds according to their own priorities.How is that an incentive? The equalization payments are the result of a formula. Straddling close to being a have province means less payments from the equalization program. If someone were gaming that system, how would being close to the line be a preferable position to being farther below the cut-off value?
To use your example of Danny Williams in Newoundland and Labrador, there is no incentive to be close to the line. The farther away from a have province, the more funds from equalization, which would have allowed Newfoundland to make even larger investments in off-shore infrastructure.
Perhaps there is an incentive there, but it's not clear that straddling a line is the preferred position.