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Let's stand up to Ottawa and get a better deal
Monday, 20 March 2017 - 8:45am
Since the discovery of oil in Leduc in 1947, it has been in the federal government’s electoral interest to give less to, or take more from, Western Canada.
The region’s relatively small population, and concentrated energy wealth, creates a constant temptation for federal politicians to try to buy eastern votes with the transfer of western energy revenues.
Pierre Trudeau’s 1980 National Energy Program, for example, was a thinly veiled attack on both the oil industry and Alberta. Unchecked or unchallenged, the NEP would have devastated the industry and returned Alberta to its pre-Leduc status as the poorest province in Canada.
Now Pierre’s son, Justin Trudeau, is moving forward with his own plan to skewer Alberta’s economy, by imposing a federal carbon tax on our province (one that many experts have noted will be less costly for Ontario and Quebec) and other costly policies.
It’s time for Alberta to stand up for itself – just as former Premier Peter Lougheed did when he successfully challenged Trudeau’s new natural gas export tax, ultimately leading to the additional protections for provincial control over natural resource development now found in Section 92(A) of the Constitution.
A united conservative party could promise to Albertans: “Vote for us and we will cancel the $3-billion carbon tax and shelve the fast-track coal-retirement plan until Ottawa agrees to a better deal for Alberta.”
In particular, a new, united conservative party could aggressively push for reforming the unfair and antiquated federal equalization program.
To force these issues onto the federal government’s agenda, Alberta has two options and both should be pursued simultaneously.
The first is to hold a provincial constitutional referendum in Alberta (and other provinces) to remove the equalization program from the Constitution. Cynics will be quick to point out that a referendum would be pointless, since the federal government could simply ignore its results.
But, in its 1998 Quebec Secession Reference, the Supreme Court clearly stated that in a provincial referendum on a proposed amendment to the Constitution, if the voting results in “a clear majority … on clear question,” the federal government has “a constitutional duty to negotiate” the issue.
While this rule was laid down in the context of the 1995 Quebec referendum to secede from the rest of Canada, the court went out of its way to phrase its ruling in terms that apply equally to a referendum in any province.
The second option is to seek a judicial opinion on the constitutional validity of the inclusion of mineral royalties in the current equalization formula.
Both Ottawa and the provinces have the legal right to refer questions of constitutional law to their respective courts of appeal, and ultimately the Supreme Court of Canada, for a judicial ruling. This was the tactic used successfully by Lougheed against the National Energy Program in 1980.
The federal government’s current equalization formula is vulnerable to the same kind of constitutional challenge. The Supreme Court has already ruled that taxes and royalties are categorically distinct. Royalties represent the one-off sale of a Crown asset — oil and gas — and are not part of a province’s so-called fiscal capacity.
In its earlier versions, the federal equalization formula did not include provincial Crown royalties. Only in the 1960s — as Alberta’s oil and gas industry became fiscally significant — did Ottawa begin to include revenues from provincial mineral royalties in the equalization formula.
This is unacceptable both as a matter of policy and as a matter of constitutional law, and it should be challenged. Once again, it shouldn’t be difficult to persuade some of the other energy-producing provinces to join Alberta in this constitutional reference.
Alberta has never got anything from Ottawa without fighting for it. Peter Lougheed understood this. Today, we need a premier who is willing to stand up and demand a fair deal for Albertans.
Ted Morton is a senior fellow at the Manning Centre and is a former minister of energy and minister of finance in the Alberta government.
This column was published by the Calgary Herald on March 20, 2017