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Cynical me isn’t sure what to think of this. Do I believe her?
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Premier Danielle Smith is pushing for equalization reform — the federal program that (in theory) redistributes money from “have” provinces such as Alberta to deemed “have-not” provinces including Quebec and provinces in Atlantic Canada to help them provide government services.
Smith argues that Albertans shouldn’t overcompensate other provinces but rather should only “equalize to the point of need.” Seems reasonable — right?
Let’s dig into what exactly Premier Smith is talking about.
Essentially, the formula Ottawa uses to determine equalization payments is broken. In 2009, in an effort to control costs, the Harper government introduced the “fixed growth rate rule” so the overall size of the equalization envelope would grow roughly in line with the Canadian economy. However, the rule has had unintended consequences.
Since 2018/19, the rule has worked as an escalator rather than a safeguard. That’s ...
