Morton: Ottawa must not ignore Alberta’s desire for equalization reform

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No intelligent, objective Albertan would support the fiscal status quo with Ottawa if they knew the facts. But prior to the equalization vote, very few knew the facts.

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This is hardly surprising. The nuances of Canada’s fiscal federalism are complex. And like Canadians everywhere, Albertans usually do not place much emphasis on political issues that do not affect their busy daily routines with children, schools, and work. Fiscal federalism is not a popular topic at children’s hockey and football games.

But the referendum has changed this. Thanks to the efforts of groups such as Fairness Alberta, the Canadian Taxpayers Federation, Western Report and Project Confederation, more Albertans know more. And the more the Albertans know, the less they will accept the status quo.

  • In the decade before COVID-19 (2010-2019), a net average of $ 20 billion a year left Alberta for Ottawa (the difference between what Ottawa took from the Albertans and what Ottawa sent back);
  • Ottawa then transferred most of these funds to Quebec. In the equalization program alone, $ 13 billion out of a total of $ 23 billion went to Quebec;
  • Due to the collapse of the oil and gas sector, Alberta’s government went from being debt – free to now having over $ 100 billion in debt;
  • During the same period, Quebec threw $ 11.6 billion away into a new Generations Fund, “with the goal of reducing Quebec’s debt burden”;
  • But Alberta is still considered a “garden-province” and receives nothing, while Quebec is still considered a “garden-not” province and receives two-thirds of all compensation payments.

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Given these facts, let us be aware of two things. If Quebec had been treated like Alberta, they would have left Canada decades ago. And if the Albertans had the opportunity to renegotiate its tax relationship with Ottawa and the rest of Canada, it would never agree to this status quo.

And that is where we are today: at the beginning of a renegotiation process. It’s not going to go fast and it’s not going to be easy. But with 62 percent Yes in the referendum, the process has begun. This is the mandate that 642,501 Albertans have given to the UCP government.

The reason why the referendum question was worded as it was – to approve a constitutional amendment – was awkward and not easy for voters to understand. A simpler wording – such as “Are you against Ottawa taking a net $ 20 billion a year from the Albertans to give to Quebec and the Maritimes?” – would have easily generated 70 percent or more Yes vote. But the wording chosen was necessary to impose on Ottawa a legal duty to respond.

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A province can initiate constitutional reform either by a referendum or by a resolution passed by its Legislative Assembly. Alberta has now done both. The former gives the latter additional political authority. The voice of the people is far more powerful and riskier to ignore than a request from a politician.

In its ruling in the 1997 Quebec Secession Reference, the Supreme Court of Canada stated that in a provincial referendum on a proposed amendment to the Constitution, if the vote results in “a clear majority … on a clear issue”, the federal government has “a constitutional duty to negotiate the issue. “On October 18, the people of Alberta clearly rejected the principle of equalization. The same constitutional principles that the court applied in Quebec in 1997 now apply to Alberta.

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Of course, the Prime Minister could ignore what the Albertans have done, but he would do so at great risk. That would be a clear violation of his constitutional duty. This double standard would further annoy many Albertans and build support for the political reforms for greater provincial autonomy. This path has already been determined by the Fair Deal Panels report: Replace the RCMP with a provincial police force (such as Ontario and Quebec); collect our own personal income taxes (like Quebec); and withdraw from the Canada Pension Plan and create our own Alberta Pension Plan (like Quebec’s Caisse de Depot).

How far along this path Albertans go will depend on how the Prime Minister responds to the referendum. As another Albertan noted earlier this week: “I do not see how a status quo can last if a particular region is treated as both a piggy bank and a colony whose valid concerns matter.”

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This does not have to be a solo journey. Ontario and British Columbia are now equalizers along with Alberta and Saskatchewan. In addition to the equalization issue, there is ample disillusionment with the “Ottawa at best” / one-size-fits-all ideology among the Liberals and the CBC. In a nation as large and diverse as Canada, federalism and respect for provincial self-government are the first and most important form of diversity. It allows us to be governed by elected representatives who live in our neighborhoods and share our hopes and fears – not by remote, anonymous and irresponsible bureaucrats in Ottawa. A more decentralized, more asymmetric federal system could be a path to a less fragile and more prosperous Canada.

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Ironically, Quebec could be Alberta’s allies in this transformation. Quebec supported Alberta’s constitutional challenge to the federal carbon tax – not because they were against the tax, but because they agreed that this kind of policy falls under provincial jurisdiction and not federal. Albertans – and most Canadians? – would be happy to let Quebec be as different as they want to be in terms of language policy and everything else. As long as the same political freedom applies to all nine other provinces. The only caveat: that with political autonomy, such as Bill 96, comes fiscal autonomy: no more transfers. Be as “distinct society” as you want, but do it with your own money.

Alberta’s referendum on October 18 was the culmination of one campaign, but potentially the beginning of another, broader and more far-reaching reform of the Canadian Federation.

Ted Morton is an executive fellow at the School of Public Policy and Professor Emeritus at the University of Calgary. He served as finance minister and then energy minister in Alberta’s government. He is co-editor of the recently published book Moment of Truth: How to Think About Alberta’s Future.

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