Alberta Premier Danielle Smith has garnered the support of Newfoundland and Labrador’s Liberal government for a reset on how the federal government distributes equalization payments.
Smith has called on Alberta to stop subsidizing provinces with productive economies like Ontario, Quebec and British Columbia.
Smith told reporters Monday that her government had “no issue with Alberta continuing to subsidize smaller provinces with their needs” but that there was “no excuse” for provinces like Ontario, Quebec and B.C. to be “subsidizing one another.”
“That was never the intent of equalization, and it needs to end,” said Smith.
Spokesperson for Newfoundland’s Liberal government Greg Gill responded by telling the National Post that he agreed with Smith’s sentiment on Thursday.
“Equalization is intended to ensure … fairness for all citizens. Currently, this fairness is not achieved for Newfoundland and Labrador,” said Gill.
Newfoundland’s government said the equalization program hurts residents by negating the high cost of delivering services to the remote areas of the sparsely populated province.
“(We) service… more than 500 communities across a large, geographically dispersed, and aging population connected by almost 10,000 kilometres of roads,” continued Gill.
Additionally, he argued that the program currently penalizes the province for developing offshore oil and its other natural resources.
Last year, Newfoundland filed a court challenge against the federal program on the basis that it doesn’t make good on its constitutional purpose.
The lawsuit seeks relief over several issues: the exclusion of service delivery costs in payment calculations, the fiscal capacity cap, the inequitable distribution of excess equalization program funding and the gross domestic product growth ceiling.
“From our perspective, the Government of Canada’s equalization program is insufficient in that it does not consider the cost of delivering services in a province such as ours with a geographically dispersed population; nor does it consider the inequity caused by including 100 per cent of our natural resource revenue in the formula,” said Deputy Premier Siobhan Coady at the time.
“We want the equalization program to treat provinces equitably,” he added.
Smith said in March that Alberta would no longer agree to “subsidizing other large provinces who are fully capable of funding themselves.”
Of the $26.17 billion in equalization payments earmarked for 2025-26, Quebec and Ontario will take the lion’s share for a combined $14.15 billion.
Quebec alone will get $13.57 billion.
On Monday Smith called for Albertans to begin receiving equitable per capita federal transfers and equalization payments at the same rate as Ontario, Quebec and B.C.
“If these points can be agreed to by the federal government, I am convinced it will not only make Alberta and Canada an infinitely stronger and more prosperous country, but will eliminate the doubts a growing number of Albertans feel about the future of Alberta in Canada,” she said.