Response to Federal Carbon Pricing: Equalization Reform
- Report by former Alberta Finance Minister Ted Morton identifies two strategies that Alberta (or other provinces) could use to challenge the equalization formula
The Manning Centre released a report today that outlines two new strategies that Alberta, and other equalization-contributing provinces, could pursue to challenge the federal government’s equalization formula and respond to federal carbon pricing encroachment by the federal government.
The equalization program, which transfers funds from “have” provinces to “have not” provinces, is currently set for renewal and renegotiation in 2019. In Response to Federal Carbon Pricing: Equalization Reform, Dr. Ted Morton, a former Alberta Finance Minister and current Senior Fellow at the Manning Centre, puts forward the following two strategies:
1) Provincial Constitutional Referendum: Alberta (and other provinces) could hold a provincial referendum asking citizens if they want the equalization program removed from the constitution. Morton notes that in the Supreme Court’s 1998 Quebec Secession Reference case, the Court clearly stated that if the referendum results showed “a clear majority … on clear question,” the federal government has “a constitutional duty to negotiate” the issue.
2) Constitutional Reference Case: A provincial government could seek a judicial opinion on the constitutional validity of the inclusion of mineral royalties in the current equalization formula. In its origins and in earlier versions, the federal equalization formula was based on the respective ‘fiscal capacity’ of each of the ten provinces. Fiscal capacity was understood as tax capacity and did not include provincial Crown royalties.
“If Ottawa is going to flex its muscles and force a carbon tax on Alberta, then Alberta needs to stand up for itself,” said Ted Morton, author of Response to Federal Carbon Pricing: Equalization Reform. “One way to do that is to play hardball and force Ottawa to change the equalization formula. This would allow Alberta to keep more money in our province instead of sending it to Ottawa.”
To download the report - click here