December 19, 2018
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Legislative Report

13 December 2018

Fairer Equalization Program Needed for Canada

Saskatchewan people are proud of our contributions to Canada.

It is frustrating, however, when provinces like Quebec say there is “no social acceptability” for oil from western Canada when, at the same time, there seems to be a lot of social acceptability for Equalization payments from western Canada.

Quebec is now receiving $13 billion in total Equalization, $1.4 billion more than last year, and 66% of the Equalization pool in Canada. Yet they oppose needed pipeline projects, which support our energy sector, and generate the wealth that helps fund the Equalization program Quebec depends on. It just doesn’t add up.

Equalization is a federal program funded by the taxes you pay through federal income tax and GST. Equalization is calculated based on a complicated formula that is supposed to reflect the relative strength of different provincial economies. So, the "have" provinces get nothing while the "have-not" provinces get billions of dollars.

The problem is, the formula is flawed and doesn't really reflect what is going on in different provincial economies. For example, while the economies of Saskatchewan, Alberta and Newfoundland were being hit by a downturn in the resource sector, they continue to get nothing while subsidizing other provinces whose economies are actually doing better.

In Saskatchewan, every man, woman and child contributes on average a little over $500 in federal taxes towards Equalization every year – money that is then handed out to other provinces. In total, Saskatchewan taxpayers pay about $600 million a year towards Equalization, subsidizing programs and services in other provinces. This has to change.

Earlier this year, your Saskatchewan Party government introduced a plan to fix Equalization by making it fairer for provinces that have been particularly hit hard by energy sector challenges. Unfortunately, the Trudeau government quietly renewed the program in its current form, which sees provinces like Quebec get increases to their take while provinces like ours get $0.

Not very equal, is it?

Saskatchewan is proposing a simple change that doesn't require a complicated revision of the current Equalization formula. We call it the 50/50 formula. Under the 50/50 formula, half of the total Equalization pool would continue to be paid out under the current formula and the other half would be paid out on a per capita basis. This would ensure that every province would receive some money from Equalization while "have-not" provinces continue to receive more.

Under the 50/50 plan, Saskatchewan would still contribute to Equalization but would also receive about $300 million while Quebec would continue to receive about $8 billion a year. That seems more than fair.

The 50/50 plan is a simple, fair solution to fix Equalization and makes it just a little more equal for everyone.

On the jobs front, workers and businesses across Saskatchewan continued to exceed expectations in November. Saskatchewan’s year-over-year employment increased by 16,300 jobs according to Statistics Canada’s latest Labour Force Survey. This is the best rate of job growth in western Canada, the largest jobs increase since 2013, and marks the fourth consecutive month of strong job gains for the province.

While Saskatchewan’s economy is showing signs of strength and improvement, we are still facing challenges due to the threat of a damaging federal carbon tax, and a deeply discounted price for our oil caused by a lack of pipelines.

Your Saskatchewan Party government will continue to stand up for our province’s economy and resource sector to ensure further growth in order for Saskatchewan to remain the best place in the nation to invest, work, play and to raise a family.

If you have a question about this Legislative Report or any other matter, just Contact Glen.

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