I have posted on this topic a few times, most recently here, pointing out that not only was Jason Kenney part of the government that crafted the equalization formula that he now suggests favors Quebec, but also that changes to the overall federal transfer system brought in by the Harper government and continued under the Liberals have in fact benefitted Alberta more than any other province.
That’s because the new equalization formula was only part of a package of changes to the transfer system that included equal per-capita cash transfers for health and social programs. Although equalization gets more attention, it represents just over 25 per cent of the $75 billion in major federal transfers to the provinces, while health and social transfers will total $55 billion in 2019.
It was acknowledged at the time that the move to per-capita funding for health and social transfers would benefit the wealthier provinces, but the enriched equalization was supposed to compensate the less wealthy ones for those losses. Unfortunately that has not happened, for several reasons. To recap:
- In 2008 the government Kenny was part of deemed that the sudden rise in oil prices and royalties made it too expensive to fully equalize provinces’ fiscal capacity, and so put a ceiling on equalization, limiting increases to GDP growth;
- In 2011 the Conservatives announced that the six per cent a year increases in health transfers would end in 2017, to be replaced by increases tied to the rise in the GDP;
- In 2013, the Conservatives decided that an extra $800 million in health cash to bring Alberta to the same per-capita cash amount as the other provinces would come from the overall health transfer allotment, reducing increases to the other nine provinces from the usual 6 per cent range to anywhere from 0 (Newfoundland) to 4.3 per cent (Saskatchewan);
- Making matters worse, future increases to CHT would be calculated on the diminished 2014-5 base.
As a result, with the exception of Quebec, equalization-receiving provinces (ERPs) like Nova Scotia received lower than average increases in total federal transfers – that’s equalization, CHT and CST – over the last 12 years.