Quebec will receive $13.1-billion in equalization payments next year – a $1.4-billion increase – while Alberta, Saskatchewan and Newfoundland and Labrador continue to be left out even though Canada’s oil-producing provinces are facing deficits and hard times.
The three energy-producing provinces petitioned Ottawa last year to rework the federal transfer formula but Finance Minister Bill Morneau resisted and locked in the existing rules for five years.
The equalization system is part of the Canadian Constitution and is aimed at ensuring provinces can provide reasonably comparable levels of public services at reasonably comparable levels of taxation. But the formula’s details are highly complex and have been revised over time. It is a frequent source of tension between the “have” provinces and the “have not” provinces that receive the payments.
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