One University of Calgary professor believes there are certain misconceptions when it comes to equalization payments in this country.
Doreen Barrie says a big one is that each province dips into its coffers and contributes something to the pot that the federal government then distributes to other provinces. The equalization money actually comes from general tax revenue that the federal government makes, and none of the provinces contributes directly to that.
On Sunday Barrie told the Alberta Morning News, the last time Alberta received equalization payments was in the 60’s.
“Our incomes have been so high, in fact they’ve distorted the formula, and that’s why they decided at one point to include Alberta as one of the provinces to get the average.”
The federal government collects the revenue from individuals and businesses and redistributes those funds utilizing a pre-set formula to provinces that need some help. But, Barrie said, those provinces that need help can change over time.
“For example, Saskatchewan was a recipient until 2008 more or less continuously,” she said. “Then it began to get this bonanza from resource revenues and it became a have province.”
Despite the polarising effect equalization payments can have, Barrie believes most people support the program.
“It sounds as if Canadians are very supportive of the idea that if you’re experiencing hard times other provinces will help you, when you’re better off, you’ll help them.”
The formula and average that determines “have” and “have-not” provinces is reviewed every five years. (kb/amn)