The results of Alberta‘s referendum on equalization payments likely won’t be entirely clear until next week — but in the meantime, constitutional experts say it’s important to keep in mind that a “yes” vote will neither scrap the often-contentious program nor force changes to how it works.
Alberta Premier Jason Kenney has billed the vote as one that would give the province “leverage for constitutional negotiations” with the federal government on equalization — that famously thorny formula by which Ottawa hands over some of the money it gets through taxes to some provinces.
“This is about whether or not Alberta should push hard to get a fair deal,” Kenney has said.
That concept of fairness is one often raised whenever the topic of equalization — loathed among many Albertans who feel they get a raw deal — comes up.
In reality, though, a “yes” vote in the referendum carries no legal weight to force the federal government to scrap equalization or change the way it calculates which provinces are eligible.
“A change in the Constitution requires something close to total consensus right across Canada,” said Eric Adams, a professor at the University of Alberta specializing in constitutional law.
“I don’t think it’s a surprise to anybody that Alberta is nowhere near reaching that consensus on equalization, and I don’t think that’s going to change.”
The question on the ballot asked Albertans the following: “Should Section 36(2) of the Constitution Act, 1982 — Parliament and the Government of Canada’s commitment to the principle of making equalization payments — be removed from the Constitution?”
That section is what specifically commits the federal government to provide equalization payments to the provinces: in other words, payments aimed at making sure each province can provide a comparable level of service to its residents, even if they have very different fiscal situations.
What is equalization?
Money given back to the provinces that get equalization payments comes from federal taxes rather than provincial taxes, and the question of which province gets what amount is calculated by weighing what’s known as “fiscal capacity.”
The Department of Finance defines this as a measure of “the revenues a province could raise if it were to tax at the national average rate.”
“Equalization supports provinces that have a lower than average fiscal capacity,” the department notes. “Provincial spending decisions and overall fiscal results do not affect Equalization.”
This measuring of fiscal capacity is based on five things: a province’s personal income taxes; business taxes; consumption taxes; property taxes; and natural resource revenues.
In other words, if a province with abundant natural resources and taxation below the national average rates is struggling financially — but has also chosen not to raise those taxes — it won’t necessarily be deemed a “have not” province eligible for equalization payments.
What’s behind the referendum?
The province is not currently eligible for equalization payments, a longstanding point of contention that has become increasingly bitter for residents amid the sharp economic downturn linked to the oil price drop and challenges getting its resources to international markets.
Kenney has repeatedly raised frustrations over the fact that provinces like Quebec and B.C., which oppose many of the pipeline projects that he says would help Alberta stabilize its key industry, do qualify for equalization payments.
The current formula was last adjusted while he was a cabinet minister in the former Conservative government of Stephen Harper.
Many Albertans share his anger, but some also appear to have little understanding of the fact that the question on their ballot would not actually translate into stopping equalization payments.
“There’s a substantial proportion of people who are planning to vote ‘yes’ who believe that there will no longer be equalization if the vote wins, or who believe that this is a way for Albertans to get out of paying into the equalization system,” said Lisa Young, a professor of political science with the University of Calgary, in an interview with Global News on Oct. 13.
“That’s simply not true.”
What makes it so hard to change the Constitution?
What is clear is that doing what the referendum proposes — scrapping an entire section from the Constitution — is not a decision that any one province has the power to make on its own.
Seven of the 10 provinces representing at least 50 per cent of Canada’s population, plus the federal government, would have to agree.
Quebec, Ontario and B.C. also have veto power under a provision laying out the requirements for regional and provincial buy-in on constitutional amendments.
Under that same provision, two or more Prairie provinces representing at least 50 per cent of the region’s population would also have to agree, as would two Maritime provinces representing the same.
In an interview with The Canadian Press, one of the advocates involved in the “yes” campaign said the hope is that a “yes” result can serve as a pressure relief valve for frustrated Albertans, and that it could push other provinces to demand changes to the equalization formula.
“It can get the ball rolling,” said Bill Bewick, head of Fairness Alberta.
However, pushing for change and getting the federal government to sit down and talk about it are two very different things, and it’s not clear that a “yes” vote would force that negotiation.
Those who argue the referendum should force Ottawa to negotiate point to a 1998 Supreme Court reference case that followed that province’s referendum on whether to secede from Canada.
The federal government asked the court to rule on “whether Quebec has a right to unilateral secession.”
In the directions provided by the court, the justices said a “clear majority vote” in favour of Quebec secession would provide democratic legitimacy to the demand, and that other parties to the Constitution would have to acknowledge that and engage in “principled negotiation.”
The question put to the court in that case, though, was narrow: specifically focused on secession, not on amendments to the Constitution itself on other matters.
Adams explained that requirement was factoring in very real concerns that ignoring a vote on such a powerful matter as secession could trigger political violence and social instability.
“The Supreme Court said, to avoid all of those worst-case scenarios, the rest of the country has to sit down and negotiate. That is not what they said about any old constitutional referendum on any old constitutional topic,” he said.
“That does not apply to a run-of-the-mill proposal by Alberta to change one feature of the Constitution.”