Quebec's $300 billion in equalization payments touches nerve in pipeline wars
The Petroleum Services Association of Canada (PSCA) has recommended to the federal government that inter-provincial transfer of goods should be factored into the country's equalization payments. The move reflects deep frustration over Quebec's constant pushback against Alberta's attempt to export its energy products.
Equalization payments are a hot-button item in Alberta and Saskatchewan, who consistently transfer funds to "have not" provinces, such as Quebec and the Maritimes. The formula takes into account taxes collected by the province and 50% of natural resource revenues, as measured per capita. Provinces above the national average pay into the fund, while those below average collect payments.
The province of Quebec has received the lion's share of the country's equalization payments, about 50% since the program began in 1957. The province received $10 billion this year, which the government put towards balancing its budget. Quebec has received almost $300 billion in equalization payments since 1957 and has never been a net contributor to the fund. The province's significant revenues from the sale of hydroelectric power are excluded from the equalization formula.
The current "have not" provinces are Quebec, Ontario, Manitoba, Nova Scotia, New Brunswick and PEI, with payments extending into the 2016/17 fiscal year. Despite Alberta's serious oil shock, payments are calculated on a 3 year rolling average, meaning the province will not qualify for several more years, assuming conditions do not improve. The last time Alberta qualified for equalization funds was 1963.
In 1982, former Prime Minister Pierre Trudeau amended the constitution to include equalization payments for "have not" provinces, making the program very difficult to undo.
PSAC president Mark Salkeld said he does not expect a response from the federal government but rather was trying to point out a huge hypocrisy in provincial trade politics.