Controversial equalization plan similar to Alberta's tactics

[CD]

Controversial equalization plan similar to Alberta's tactics, says think-tank
12 Feb, 6:32 PM

CALGARY (CP) - A controversial plan to include half of all non-renewable resource revenues in Canada's equalization program is no different than the tactics Alberta used to pay off its debt, says a new report by The Canada West Foundation.

Ken Boessenkool, who authored the report, said opposition to the plan - especially in Alberta - is hypocritical since it mirrors what the oil-rich province did with its energy revenues over the past decade.

"If you go back for the last 10 years and you see what Alberta's actually done with non-renewable resource revenues, they've spent half of them and they've put half of them against the debt," he said Monday.

"The challenge . . . that Alberta has, is they're making the argument that Ottawa should act one way, when in fact, over the last 10 years, they've acted quite a different way."

Boessenkool said a perfectly good argument can be made that non-renewable resource revenues should not be included in the formula, but only if the provinces aren't spending them either.

The revenues should either be saved for future generations, with just the interest going to fund programs, or used to pay down debt, he said.

The western-based economic think-tank's report is at odds with all three western provinces - and several others - that have decried the findings of last year's O'Brien report.

The report by former Alberta deputy finance minister Al O'Brien says 50 per cent of natural resource revenues must be included in the calculations that determine which provinces must subsidize the others.

Prime Minister Stephen Harper has promised to fix the fiscal imbalance between provinces and is expected to take some steps in that direction in the federal budget coming in late March, even if the provinces remain deeply divided over what they want.

Saskatchewan and Newfoundland have been the most vocal in their opposition to including resource revenues, saying it would cost them hundreds of millions each year.

They want Harper to live up to a pre-election pledge that he would not include non-renewable resource revenues in the equalization formula.

"We do not support the O'Brien recommendations, nor does the prime minister, at least by virtue of his commitments," Saskatchewan Premier Lorne Calvert said Monday in Saskatoon.

"It does not address the prime minister's commitment, nor does it provide significant benefit for the people of Saskatchewan."

Alberta's new premier, Ed Stelmach, has taken a less confrontational stand than his predecessor, Ralph Klein, but has said that the province already pays its fair share.

The equalization program, currently worth about $11 billion a year, is intended to reduce fiscal disparities across the country through federal payments to have-not provinces. Currently, Ontario and Alberta are the only provinces that do not receive equalization. Saskatchewan and British Columbia teeter in and out of the program.

Until two years ago, the formula for calculating payments was based on the average fiscal capacity of the five middle-income provinces, excluding oil-rich Alberta and the four poorest Atlantic provinces.

However, former prime minister Paul Martin abandoned the formula-based approach in 2004, deciding instead to simply increase equalization by an automatic 3.5 per cent each year.

Boessenkool, a former senior policy adviser to Harper, admits that Quebec - where Harper's minority government needs to retain and gain seats - stands to gain the most from the inclusion of non-renewable resource revenues.

And he said the prime minister's election promise early last year to keep resource revenues out of the formula is definitely "a constraint" on the government's ability to act.

"I think if you include it 100 per cent or if you include it zero, you're going to make a whole bunch of people unhappy. And you're going to cause the program to be massively different than what it is today, which will cause some dislocation."

[grimey]

"If you go back for the last 10 years and you see what Alberta's actually done with non-renewable resource revenues, they've spent half of them and they've put half of them against the debt," he said Monday.

"The challenge . . . that Alberta has, is they're making the argument that Ottawa should act one way, when in fact, over the last 10 years, they've acted quite a different way."

I don't see how it's hypocritical at all. Alberta used its oil revenues to pay down Alberta's debt, not the federal government's. Now the federal government is asking them to give up half of their revenues to equalization payments, which will go out of Alberta. It's a totally different issue. Alberta acted responsibly and solved its own problem, and now they (and other oil-producing provinces) are being asked to solve everyone elses. It's like going to an AA meeting to solve your drinking problem, then being expected to solve everyone elses, and getting held accountable if you don't.

[corporate joe]

"If you go back for the last 10 years and you see what Alberta's actually done with non-renewable resource revenues, they've spent half of them and they've put half of them against the debt," he said Monday.

"The challenge . . . that Alberta has, is they're making the argument that Ottawa should act one way, when in fact, over the last 10 years, they've acted quite a different way."

I don't see how it's hypocritical at all. Alberta used its oil revenues to pay down Alberta's debt, not the federal government's. Now the federal government is asking them to give up half of their revenues to equalization payments, which will go out of Alberta. It's a totally different issue. Alberta acted responsibly and solved its own problem, and now they (and other oil-producing provinces) are being asked to solve everyone elses. It's like going to an AA meeting to solve your drinking problem, then being expected to solve everyone elses, and getting held accountable if you don't.

That has a strange resemblances to the separatist speech in Quebec. Not saying it's right, not saying it's wrong, just saying it sounds familiar.
That's the whole point of being Canadian. Money goes through a federal agency and then it is redistributed "equally".

[Dust Devil]

"If you go back for the last 10 years and you see what Alberta's actually done with non-renewable resource revenues, they've spent half of them and they've put half of them against the debt," he said Monday.

"The challenge . . . that Alberta has, is they're making the argument that Ottawa should act one way, when in fact, over the last 10 years, they've acted quite a different way."

I don't see how it's hypocritical at all. Alberta used its oil revenues to pay down Alberta's debt, not the federal government's. Now the federal government is asking them to give up half of their revenues to equalization payments, which will go out of Alberta. It's a totally different issue. Alberta acted responsibly and solved its own problem, and now they (and other oil-producing provinces) are being asked to solve everyone elses. It's like going to an AA meeting to solve your drinking problem, then being expected to solve everyone elses, and getting held accountable if you don't.

That has a strange resemblances to the separatist speech in Quebec. Not saying it's right, not saying it's wrong, just saying it sounds familiar.
That's the whole point of being Canadian. Money goes through a federal agency and then it is redistributed "equally".

Then provinces should be more responsible with their spending. Quebec who is getting I think it was 7 billion out of the 10 billion has one if not the biggest social program spending in the country. Perhapse equalization should take into account the "social imbalance" in the country.

Money goes through a federal agency and then it is redistributed "equally

This isn't the deffinition of being Canadian too me. Federalism isn't about a cash grab.

Oil revenues are a cyclical thing and should remain in the province where it is earned. I'd like to know what Quebec's cyclical industry is that is currently taking a hit. When oil tanks what is Quebec going to contribute to the oil producing provinces?

[corporate joe]

Well I can't discuss numbers that provinces got, because I do not know enough about that to argue facts. A question that comes to mind is :wouldn't it be a fairer assessment to compare per capita equalization distributions rather than total number since Quebec and Ontario will get more than PEI for example, but the population is also a lot different?

However, Federalism isn't about a cash grab, it's about a centralizing agency taking excess revenue and re-distributing it (as well filling deficits). That's the role we gave the government when we signed the constitution and decided we would join all the provinces together and put them under a single banner. There's the whole political, legal and philosophical aspect to the role of the federal government, but that doesn't do much in reality. We all know it's about the money, and that's the federal government's true power and role: taxation.

As for industries in Quebec taking a hit? There's a couple I guess but the first one that comes to mind is the forestry industry. Ontario was on top with it's manufacturing sector a while back and the federal government took and redistributed as they saw fit. Then BC, and now Alberta because of oil. I am in no way defending how the federal government "equalizes" but Alberta's situation is no different.

Today Oil is money. Maybe in 10 or 20 years it will change. My guess is drinking water is going to be the next key resource and Quebec possesses something like 15% of the world's drinkable water. When they start making a fortune with it, what will be saying then?

[shitdisturber]

"If you go back for the last 10 years and you see what Alberta's actually done with non-renewable resource revenues, they've spent half of them and they've put half of them against the debt," he said Monday.

"The challenge . . . that Alberta has, is they're making the argument that Ottawa should act one way, when in fact, over the last 10 years, they've acted quite a different way."

I don't see how it's hypocritical at all. Alberta used its oil revenues to pay down Alberta's debt, not the federal government's. Now the federal government is asking them to give up half of their revenues to equalization payments, which will go out of Alberta. It's a totally different issue. Alberta acted responsibly and solved its own problem, and now they (and other oil-producing provinces) are being asked to solve everyone elses. It's like going to an AA meeting to solve your drinking problem, then being expected to solve everyone elses, and getting held accountable if you don't.

Bluntly, and I'll admit it's been a long time since I studied confederation in high school; it's unconstitutional for the feds to ask for resource revenues to redistribute. Mineral rights etc were ceded to the provinces during the confederation talks; and as such, the provinces including Alberta should be able to tell the feds to go pound sand.

[Dust Devil]

Today Oil is money. Maybe in 10 or 20 years it will change.

I wish I shared your optimism. I give Oil 5 years max. I've been in the industry long enoough to know it's cycle. $9 oil is just around the corner boys.

[HMMMM]

"I wish I shared your optimism. I give Oil 5 years max. I've been in the industry long enoough to know it's cycle. $9 oil is just around the corner boys." Dust Devil.


I agree with you Dust Devil, in the past everything seems to be cyclic....And I hope you are right with the oil, however in the past aircraft insurance was the same but insurance premiums keep climbing. Oil fell $2.00 a barrel todayand world wide consumption is down by approx. 2 million barrels a day but all it takes to jack the price up again is our texan friend down south flexing his military muscle again.....Getting back to topic, sharing natural resource revenues is kind of like all of us working people sharing our hard earned money with those that don't want to work for it????

[Dust Devil]

"I wish I shared your optimism. I give Oil 5 years max. I've been in the industry long enoough to know it's cycle. $9 oil is just around the corner boys." Dust Devil.


I agree with you Dust Devil, in the past everything seems to be cyclic....And I hope you are right with the oil

My statement wasn't meant to be a positive one. $9 oil is a very bad thing

[HMMMM]

"I wish I shared your optimism. I give Oil 5 years max. I've been in the industry long enoough to know it's cycle. $9 oil is just around the corner boys." Dust Devil.


I agree with you Dust Devil, in the past everything seems to be cyclic....And I hope you are right with the oil

My statement wasn't meant to be a positive one. $9 oil is a very bad thing

Not for me, it isn't.... Can I ask why you think it is a bad thing, besides exploration slowing down? And fort Mac probably turning into a ghost town? It is gonna happen anyway, you can only drill so many holes.

[Dust Devil]

"I wish I shared your optimism. I give Oil 5 years max. I've been in the industry long enoough to know it's cycle. $9 oil is just around the corner boys." Dust Devil.


I agree with you Dust Devil, in the past everything seems to be cyclic....And I hope you are right with the oil

My statement wasn't meant to be a positive one. $9 oil is a very bad thing

Not for me, it isn't.... Can I ask why you think it is a bad thing, besides exploration slowing down? And fort Mac probably turning into a ghost town? It is gonna happen anyway, you can only drill so many holes.

What do you think is fueling this hot economy right now? High oil prices. Oil drops Alberta comes to a screeching halt, pilots get laid off and once again the pilot labour market is flooded. So much for pilots being able to get their incomes up.

For the enviromental types. Oil drops to $9 all of a sudden funding for alternative fuel disappears. Everyone who still has a job can afford to buy an SUV. Global Warming engulfs the planet. The polar ice caps melt. North America is covered in water. All land animals are extinct. except for a few bandits here and there that have captured and oil tanker and ride jet skis terrorizing people living in small floating cities.



ya cheap oil means @#$! all.

[HMMMM]

My statement wasn't meant to be a positive one. $9 oil is a very bad thing

Not for me, it isn't.... Can I ask why you think it is a bad thing, besides exploration slowing down? And fort Mac probably turning into a ghost town? It is gonna happen anyway, you can only drill so many holes.

What do you think is fueling this hot economy right now? High oil prices. Oil drops Alberta comes to a screeching halt, pilots get laid off and once again the pilot labour market is flooded. So much for pilots being able to get their incomes up.

For the enviromental types. Oil drops to $9 all of a sudden funding for alternative fuel disappears. Everyone who still has a job can afford to buy an SUV. Global Warming engulfs the planet. The polar ice caps melt. North America is covered in water. All land animals are extinct. except for a few bandits here and there that have captured and oil tanker and ride jet skis terrorizing people living in small floating cities.



ya cheap oil means @#$! all.

I agree with you that high oil prices are good for the economy in Alberta as well as B.C., But keep the "global warming" from low oil prices out of it. The world will consume every last available resource regardless of the price per barrel. I again agree with the gas guzzling SUV thing, but with oil prices high and companies going after every available drop, do you know how much fossil fuel is burned to seperate the crude from the oil sands? I am not sure on the exact number, however I do know it is quite substantial.

P.S. After watching road warrior I was under the impression it was because they were fighting over oil?