Ken Boessenkool: I helped author the Alberta firewall. The equalization referendum is dumb

The Fair Deal initiatives will give Albertans a real sense of independence. An equalization referendum is useless.

By: Ken Boessenkool

Every so often a political party gets locked into a policy that is so contrary to its own interests, so contrary to the interests of the jurisdiction it seeks to govern, and is just so plainly silly that you wonder if that party has lost its wits.

More than usual, I mean.

Which brings me to one of Alberta’s winningest premiers — and his proposal for a referendum on equalization.

Jason Kenney won a raw majority of votes in the last election. He got more votes than Ralph Klein secured in all but one of his elections (2001). It wasn’t quite a Peter Lougheed-style win, but there’s a word for electoral victories that conclusive — a mandate, a strong mandate even.

Leaders with strong mandates shouldn’t need a to seek a mandate via a referendum to have a mandate. Leaders with strong mandates simply do the things that they promised to do.

To put it another way, does anyone really doubt that Jason Kenney has a broad base of support to talk to Ottawa about the fairness of federal transfers?

Even if such a vote were successful, a referendum on equalization can’t strip the program from Canada’s constitution. At best, it might force a discussion on the issue, but no outcome in Alberta’s favour is assured, nor is one likely. Proposing a referendum on such a question doesn’t add to Kenney’s mandate to deal with Ottawa. A referendum can only detract from it.

Now I’m no wallflower when it comes to the need for Alberta to get a better deal. I was a coauthor of the original firewall letter. I’ve strongly supported Kenney’s moves to create an Alberta Pension Plan and a provincial police force, among other great Fair Deal ideas.

But equalization is not the problem you’re hearing it is.

Trevor Tombe has done an enormous service by calculating the sources of redistribution in and out of various provinces (See Table 5 of his piece here). Between 2007 and 2016 Alberta sent $2,168 per person more personal income tax revenue to Ottawa than the average province. And $1,148 more Corporate Income Tax and $405 more consumption or product taxes. This happened for a very obvious reason — Alberta is richer than other provinces. And we still are despite the energy shock we are experiencing. We also got $45 less per person for Employment insurance and $328 per person less in Old Age Benefits. Why? Our younger population is better off, as is our older population.

If you want to eliminate all of this net redistribution from Alberta, you will either need to make Alberta comparatively poorer, or other provinces comparatively richer. An aging population, or a shift in employment insurance and defence procurement would make matters fairer, but only by a little.

Maybe Alberta should just be thankful that we’re so much better off. And maybe we would be wiser to run our own programs, like an Alberta Pension Plan and an Alberta police force.

But equalization? Over the period Tombe identified, Alberta received $450 less per person than the average in Canada (exactly the same as B.C., incidentally). That’s 10 per cent of the net outflow of dollars out of Alberta.

It’s not nothing. But I would argue that proponents of dismantling equalization are missing something very important.

Some have argued that equalization is the glue that holds Canada together. My version is that equalization is the bribe that prevents Canada from breaking up.

Without equalization several of our provinces couldn’t provide basic health or education services to their populations. Manitoba and the Atlantic provinces’ residents received between $1,000 and $2,000 more in equalization transfers relative to the average from 2007-2016. Quebec got $600. Without these cash infusions, these provinces would be clamouring for Ottawa to take over their health and education systems. It would produce pressure on our federal government to run more things.

That  would be bad, and not just for for Alberta. Ten per cent of our net advantage over the rest of the country is a small bribe (ok, maybe call it a tip, a reasonable one at that) to make sure that we get to run our own health and education ministries without half of Canada’s provinces wanting to transfer that responsibility to our federal government in Ottawa.

I have been among the most vocal supporters of firewalls for Alberta because I believe that firewalls make Alberta stronger within a united Canada (like firewalls on your laptop make your computer stronger as part of a larger network). Quebec maintains its own pension plan and tax collection agency, and Ontario its own police force. These provinces seem to think that managing these programs closer to home is a net benefit. They are, and Alberta should also bring home the things we can afford to do — even if they cost more.  Especially because these are things that will make Alberta more resilient within a decentralized Canada.

To put it another way, the Firewall proposals and most of Kenney’s Fair Deal proposals are excellent tools to fend off separatism in Alberta, just as many of there were, and are, in Quebec.

The equalization referendum is different.

An equalization referendum is wrong analytically because it cannot address the net transfer to the rest of the country from Alberta. 

An equalization referendum is wrong tactically because Jason Kenney already has all the authority he needs to negotiate transfers with Ottawa, and implement his Fair Deal ideas for Alberta.

And finally, and most importantly, an equalization referendum is wrong strategically because unlike nearly all of the Firewall and other Fair Deal proposals, even if it passes, it doesn’t actually give Alberta any more leverage to negotiate transfers than it has right now. Unlike the Fair Deal proposals, even a successful referendum is unlikely to force any real concessions or policy changes from Ottawa. In short, a policy intended to placate Alberta’s restive separatists will only weaken the province in the long run.

That’s not a good look for a winner.

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