Two Alberta professors and a policy analyst are weighing into proposed changes to equalization..Canadian Taxpayers Federation Franco Terrazzano called equalization a “bad idea” in a July 6 Western Standard guest column. He said Conservative leadership candidates should commit to “put it out to pasture” and phase equalization out. .The next day in an interview with Cory Morgan, Jean Charest said should he become prime minister, he'd make an accord with Alberta to give them a “fair deal” on equalization..Geoffrey Hale, professor emeritus at the University of Lethbridge, says Canadian prime ministers have been cutting side deals like this for decades..“Province-by-province negotiations over compensation for federal exploitation of provincial lands during the 1920s ultimately gave the three Prairie provinces control over their own resources on the same basis as other provinces,” Hale explained in an interview with Western Standard..“Mr. Charest's proposal builds on the provincial deals that the Mulroney government negotiated with Newfoundland in the Canada-Newfoundland Atlantic Accord of 1985 in which Ottawa gave Newfoundland roughly the same jurisdictional rights over offshore oil resource development as other provinces had for on-shore resource development.”.Hale said Charest’s pledge to Alberta could help his leadership chances, though a provincial accord could lead to similar requests from other provinces. History suggests that may not turn out well..“The Martin and Harper governments renegotiated the Atlantic Accords in 2005-07 under fairly acrimonious circumstances, including Williams' lowering the Canadian flag over provincial government buildings.”.University of Calgary economics professor Trevor Tombe tells Western Standard he welcomes Charest’s approach..“He's proposing to seriously and actively engage with Alberta and listen to concerns the government here may have. That's a fair enough position to take and leaves the onus on Alberta to specifically define the way in which the formula should change,” Tombe said..“I interpret this as a commitment to listen to regional concerns in Canada and then genuinely work towards addressing them. I'm glad to see Charest engaging on it in this way. Not hanging his hat on specifics, I think, is actually the right thing to do.”.Tombe believes a federal commission should be formed to recommend changes to equalization, something not done since 2004. He welcome a simpler formula that keeps provinces from “gaming” the system, as well as a lower floor on minimal equalization increases. He adds it’s hard to assess whether equalization accomplishes its constitutional purpose of leveling out the provinces’ ability to provide public services..“They've never incorporated an explicit measure of need in the formula. They have looked at it, they've thought about it, but getting something that measures it actively and comparably with enough precision that you could actually tie dollars to it — no one's come up with a good way to do that,” Tombe explained..“The program is not meant to ensure equal levels of public services, but to ensure provincial governments have comparable levels of revenue-raising ability. And then whatever they choose to do with that ability, that's between their government and their voters.”.Ian Madsen, a B.C. resident and senior policy analyst with the Frontier Centre for Public Policy, says equalization discourages provinces from governing well..“There's a lot of disincentives with this blanket equalization policy and it could be part of the reason Canada is not performing. In the U.S. when states aren't doing well, they have to make some attempts to improve their efficiency and their attractiveness to business and to residents, to not leave them [just] as they're fleeing California and Illinois and New York and so on,” Madsen said..“There needs to be some effort and incentive for them [provinces] to do better themselves, and there seems to be much less of it if they're getting this money regardless.”.Madsen challenges the political wisdom equalization is a vote-winner in Manitoba, the Maritimes, and Quebec. He doubts people there relish the reputation of being perpetual handout recipients..“Perception is that way. But it's a kind of pandering that's misplaced, and obviously has not helped very much, those places anyway,” Madsen said..“I think most people have some self-pride and want to be self-determining and self-reliant. And that's the great majority of people everywhere. They don't want to be labeled that way and then they don't want to live in a place where that sort of behavior and performance is rewarded.”.Like Terrazzano, Madsen believes a “non-inflammatory…gradualist and cautious approach” could wean provinces from equalization entirely — constitutional constraints aside, of course..“Ten, 15, 20 years sounds like a long time. But if things do slide down to zero in that time, then there will be more effort to do something,” he said..“You have to do other things to make these places more attractive to business.”
