Monday , January 18 2021

The oil-producing provinces call for a reorganization of equilibrium, as the share of Quebec increases to two-thirds

Canadian oil provinces call for shake up in the federal equalization program after the latest figures revealed that Quebec's stake in the $ 19.8 billion program will grow to two-thirds next year.

Quebec is pushing in part because the total cost of the program increases in line with economic growth and Ontario will no longer qualify next year, leaving Quebec with a larger share of the federal transfer program.

The $ 13.1 billion next year queue in Quebec, an increase of $ 1.4 billion, will account for 66% of the total counterbalancing program, from 61.9% when Ontario is still the host federal program, the Provinces provide similar levels of government service to those located in the rest of the country.

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The Federal Ministry of Finance publishes details of the transfer amounts next year on Sunday evening, just before Federal Finance Minister Bill Morneau hosts his provincial and territorial colleagues for dinner in Ottawa. These meetings ended on Monday afternoon.

In an interview with The Globe and Mail, Saskatchewan's Prime Minister Scott Moe said the results of the current formula are "problematic" and underlined his call for a change he would bring to the federal government.

"I do not think that alignment was ever a program that had to pay 66% of its income in a province," he said.

Finance Minister Albita Joe Seci and Finance Minister Newfoundland and Labrador Tom Osborne also called for changes in the program on Monday.

While the results of the current equalizer formula fail to cope well with these provinces, Quebec Prime Minister François Legalt has provoked even more irritation last week when defending the Quebec opposition to the proposed Energy East gas pipeline that will bring raw Canadian crude oil through the province for refining in the Atlantic Ocean,

"I'm not ashamed to reject the dirty energy while offering clean energy at a very competitive price," said Mr. Legault.

Asked about the Prime Minister's remarks in Quebec, Mr. Ceci told reporters: "He obviously does not understand what's going on in the energy sector in Alberta at this point."

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Prime Minister Saskatchewan expressed such an opinion.

"This is this very energy product – which is sustainable, I could add, among the most sustainable in the world … this allows for the equalization in its present form to even exist," Moe said. we support the sharing of our wealth, then we must also support together as Canadians the progress and expansion of this wealth. "

In the Budget Bill this year, Mr Morneu renewed for another five years the formula used to calculate the allocation of funds, although some provinces have called for significant changes. He stood on that decision on Monday when he responded to the critics of the program.

"Equalization may be possible in the next renewal, which will be four years," he said. Mr Morneu said there are other programs to help the provinces cope with short-term challenges and that alignment is not to deal with such situations. "The way it was planned to work was to ensure that Canadians who move from one province to another can get approximately the same level of service in different parts of the country."

The Equalization Program, launched in 1957 and enshrined in the Constitution in 1982, is based on the calculation of the national average of fiscal capacity – mainly the ability of governments to raise revenue – and then to compensate for the provinces below this average value.

However, the details of calculating the average value are subject to constant controversy, especially whether to include income from natural resources and to what extent. Eligible provinces are currently receiving a payment on the basis either of 50% of the income from natural resources, or of the exemption from them entirely, which leads to a larger payment. The program has previously included all revenue from natural resources. Alberta opposition leader Jason Kennie has called for natural resource revenues to be removed from the formula and on Monday reiterated his call for a provincial reconciliation referendum.

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Although payments are a distribution of federal tax revenues, Alberta politicians complain that their province contributes disproportionately to alignment.

A report this year from the parliamentary budget that examined reform options found that neither full inclusion nor total relief from natural resource revenues would make Alberta a beneficiary of equalization.

Quebec Finance Minister Éric Girard said he wants to bring Quebec's fiscal capability closer to the national average, which will lower its share of equalization. He said, however, that the fact that Albanians are heading to the May elections could have brought more emotions than needed in the Quebec debate.

"The fact that Alberta will be in the election can increase the volume of balancing payments," he said.

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