Saskatchewan Premier Scott Moe pitches new 50-50 equalization formula

Saskatchewan Premier Scott Moe has written a letter to Prime Minister Justin Trudeau and the nine other premiers to pitch a new vision for equalization.

Equalization sees federal tax dollars from the provinces pooled together, and distributed to “have not” provinces to ensure that they all have a similar fiscal capacity. This year’s equalization fund was nearly $19 billion.

“Equalization is an incredibly inequitable and flawed program, which has seen provinces like Saskatchewan, Alberta and Newfoundland receive zero year after year, even through the economic downturn in the resource sector,” Moe said.

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“Meanwhile, other provinces continue to receive billions every year. That means our taxpayers continue to pay for programs and services in other provinces, even when those other provinces’ economies are strong.”

Moe has taken particular aim recently on his social media accounts at the amount of money Quebec receives.

In his proposal, Moe is calling for what he calls a 50-50 formula. This would use the same revenue sources, like non-renewable resource revenue, to determine the fiscal capacity of each province.

Half of the collected money would be distributed in the same manner it is now.

The other half would be distributed on a per capita basis, relative to the other provinces. Moe said this would ensure all provinces receive at least some equalization funding.

“This would not result in any huge windfalls to our province of Saskatchewan,” Moe admitted. “Our province would receive about $300 million, about 1.6 per cent of the total equalization pool- but we would receive something.”

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The provincial statement said the benefit for Saskatchewan would still be small, receiving about $300 million in equalization payments had the 50-50 formula been in place this year.

“As Saskatchewan has not received one dollar of the $177 billion in equalization paid out over the past 11 years and is not expected to receive any equalization payments for the foreseeable future under the current formula, I would contend that this proposal is more than reasonable in terms of its benefit to our province,” Moe said.

Saskatchewan NDP Leader Ryan Meili urged caution.

“This is really an insurance program for those economies that are struggling more,” Meili told reporters. “While we’ve been fortunate the last few years to not require that support, in the past we certainly have needed it. That’s something we want to be making sure in the future we wouldn’t find ourselves in a more difficult circumstance without any help.”

Moe hopes to see the 50-50 formula added to the agenda for July’s Council of the Confederation meeting in New Brunswick. Alberta Finance Minister Joe Ceci is taking similar concerns to Ottawa next week.

The equalization renegotiations are scheduled for next year.