British Columbia Premier David Eby has discovered that in Ottawa, some provinces are more equal than others.
“My concern is about fair treatment for British Columbia from the federal government,” Mr. Eby said after meeting in Vancouver on June 13 with Andrew Furey, Premier of Newfoundland and Labrador. The B.C. Premier complained that Quebec and Ontario have been showered with federal dollars while his province’s requests have been rebuffed, and he’s instructed his legal team to look into joining Newfoundland’s pending court challenge to the federal equalization program.
There are two elements to the B.C. Premier’s discontent. One is that his province is getting a smaller share of federal subsidies than most provinces. The other is that British Columbia is contributing too much to the $25-billion equalization program.
Mr. Eby’s critiques are, broadly speaking, on point. B.C. does receive a smaller share of federal funding than most other provinces, and the equalization program is in need of reform. (Although, note to the Premier: his government pays nothing in equalization; British Columbians contribute by paying their federal taxes.)
The solutions for both issues, however, is not for Ottawa to simply spend more.
Since 2002, total transfers from the federal government to Canada’s provincial governments show British Columbia’s share on a per-capita basis is consistently near the bottom of all provinces, according to the website Finances of the Nation.
The data only go up to 2022, but Mr. Eby’s grievances are more recent. He pointed to the tens of billions of dollars the federal government has committed to secure EV manufacturing in Ontario and Quebec in 2023 – industry subsidies that don’t show up as direct government transfers.
The final straw was the $750-million promised to Quebec to help deal with an influx of asylum-seekers. Mr. Eby calls it special treatment, given that B.C. has failed to negotiate commitments for infrastructure, including flood protection and a replacement for the aging Massey Tunnel, a major highway artery in Metro Vancouver.
Stoking the fires of regional alienation is hardly an original play. Premiers have used this tactic to win favour with voters at home since Confederation.
The shift to attack mode is uncharacteristic for Mr. Eby and puts him on the same team as his conservative counterparts in Alberta and Saskatchewan. But Mr. Eby is facing an election in October. Some Ottawa-bashing might go down well with a large block of B.C. voters.
Equalization is designed to even out provincial revenues so that all provinces are able to provide “reasonably comparable” services at broadly similar levels of taxation. It’s reasonable to ask if the program is meeting the needs of Canadians in 2024: the economy and demographics of the provinces have changed since the last overhaul under Stephen Harper 15 years ago. But the federal Liberal government has locked in payments until 2029, barring an assessment to determine if taxpayers’ dollars are being distributed in a fair and just way.
Resentment and squabbling over federal largesse will never end, but Ottawa should reconsider its effort to forestall a review of equalization for another five years. The formula has strayed from its original intent, and now some “have” provinces are getting cash transfers.
But the principle of equalization is that the federal government helps those regions that are less economically fortunate. The last time that B.C. threatened a lawsuit over equalization, in 1972, Quebec’s premier of the day, Robert Bourassa, lashed out at politicians in the West “who don’t seem to care whether two classes of Canadians are created, and poverty increases in certain provinces.” Mr. Eby and Mr. Furey would do better to argue for reform for the benefit of all, rather than grumbling about helping out provinces in need.
As for fiscal transfers more broadly, Ottawa is indeed trying to buy goodwill in vote-rich provinces at the expense of Canadian taxpayers. As this space has argued, the solution is not to spend more in the other provinces, but to slash subsidies.
The savings could be used to cut taxes. That approach would benefit the entire country – and curtail the divisive game of picking regional favourites.