Konrad Yakabuski reports on the ramifications of Alberta Premier Jason Kenney’s plan to revamp Canada’s equalization payments. Although Mr. Kenney has recently criticized the current formula as being unfair to Alberta while favouring provinces like Quebec, the formula in question was developed in part by Mr. Kenney when he was in the Harper Conservative government. As well, Mr. Yakabuski claims that had Mr. Kenney’s proposed plan been in place to this juncture, Quebec would have received even more than it has now.

Appropriate Subject Area(s):

Social studies, current events, economics

Key Question(s) to Explore:

• What is the federal equalization program and why does Alberta feel the distribution formula is unfair to them?

New Terminology:

Equalization, fiscal capacity

Materials Needed:

Globe articles, https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/200820E

Introduction to lesson and task:

NOTE: This somewhat challenging lesson is designed for senior high school students.

Jason Kenney’s new United Conservative Party was recently elected in Alberta, in part because Mr. Kenney promised to fight for a better deal for Alberta in the federal equalization program. Introduced in 1957, the formula works “…[b]y compensating poorer provinces for their relatively weak tax bases or resource endowments, Equalization helps to ensure that Canadians residing in provinces have access to a reasonably similar level of provincial government services at reasonably similar levels of taxation, regardless of which province they call home.” (https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/200820E)

Although this topic may very well be more appropriately addressed in an economics course, equalization also represents a kind of social engineering, distributing the wealth to ensure a more equitable life for all Canadians. Students in the prairie provinces especially will have heard their provincial governments complain about the equalization payment system, but all senior students should know what is fact and what is unsubstantiated opinion on this subject. This collaborative-learning exercise will help them understand the basis and the validity of these complaints. Working in groups, they will use a government website and the attached article to complete a short worksheet on this subject.

Action (lesson plan and task):

Ask students if they’ve heard this complaint from government or anyone in their community: “It’s not fair that our province is penalized for doing better financially by sending money to provinces that aren’t able to pay their own bills—for example, like Quebec.” Without explaining the quote, hear their comments and announce the exercise, below. Assign them to groups, and provide all with the following worksheet. They are to be prepared to present their findings orally at the end of the exercise. They will need this link, which is taken from the article itself (the word, “formula” in the fifth paragraph): (https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/200820E)

Worksheet

Use the link to the library of parliament to find answers to this part:

• In what year were equalization payments started in Canada?
• Find a quote from the website that explains what the program “helps to ensure.”
• Do provinces actually pay money to each other—for example, does Alberta send money to Quebec? If not, how does the money flow in this process? What role do provinces play in this?
• What was the total amount of payments in 2013-2014, per the article?
• Which province receives the largest portion of the payments, and in what year did these rise significantly? Which current provincial premier was part of the government that created the new formula in that year, and yet another form of it two years later?
• What is meant by “fiscal capacity”?
• How do these relate to fiscal capacity: “personal income taxes, business income taxes, consumption taxes, property taxes and natural resource revenues.”
• Refer to the article by Konrad Yakabuski: Explain this excerpt from the article: “…as Alberta Premier Jason Kenney ramps up his crusade for equalization reform, he is misleading Albertans and feeding into longstanding myths about the program.” Identify the myths and explain why they are not factual.
• Why are some equalization payments clawed back, and which province has seen billions clawed back in recent years?
• Which province pays higher provincial taxes, Alberta or Quebec? By how much?
• Finally, search online to see if your province is a net beneficiary or net contributor to the equalization program.
• Be prepared to report to class.

Consolidation of Learning:

• Students present and discuss their work with the whole class.

Success Criteria:

• Students can explain the minimal basics of the federal equalization payments program.

Confirming Activity:

• Students note media reports on equalization.