B.C. to join legal challenge of how Canada calculates equalization payments

Premier David Eby has confirmed B.C. will formally support Newfoundland and Labrador’s court challenge to how the federal government makes equalization payments.

“We are struggling with this system that we’re paying into that goes directly to the people of Ontario, the people of Quebec,” Eby said Wednesday, at the final day of a meeting of premiers in Halifax.

Newfoundland and Labrador announced plans to take Ottawa to court in May, saying the existing system puts it at a disadvantage.

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The province said at the time of the announcement that it could have received between $450 million and $1.2 billion in each of the last five years instead of receiving nothing due to it calls the formula’s fundamental flaws.

“We are going to stand up and make sure the program is working for them, is supporting them,” Eby said.

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Experts on the Canadian political system, however, note that it is the provinces themselves who negotiate equalization.

UBC political scientist Gerald Baier said it is not as simple as British Columbia subsidizing Ontario.

“I am skeptical this would make B.C. eligible for equalization, and if so it would be a very small amount,” he said.

Alberta, British Columbia, Saskatchewan and Newfoundland and Labrador are the provinces that currently do not receive equalization payments.

Eby argues projects like B.C.’s Massey Tunnel replacement project have been promised federal dollars, but have yet to see the money.

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“The best results will come from us working closely with the federal government when they want to fund these things and we can tailor it to British Columbia’s realities, and we can help them avoid mistakes,” Eby said.

The move comes with a provincial election in the wings, and as Eby has been increasingly critical of what he says is unfair federal funding for Western Canada and British Columbians.

“Part of this is an election strategy that seems to be, at least in part, anything you don’t like in B.C. politics right now you can partly blame the federal government for,” Baier said.

The last major change to equalization came under the Harper government, which required aggregate equalization payments to grow in line with the rate of Canada’s national growth.

Since that change was made just after the 2008 financial crisis, the formula has undergone some minor tweaks, but no real major reform.

— with files from the Canadian Press