Premier Danielle Smith said she and her provincial counterparts should work out a new formula together and not rely on the courts to determine how equalization is administered
Alberta Premier Danielle Smith says she’s content to let premiers work out a new system for equalization and not join in a legal challenge of the formula brought forth by Newfoundland and Labrador.
Smith made the remarks Wednesday on the final day of the Council of the Federation meeting in Halifax.
“We take a bit of a different approach. I don’t know necessarily that I want the Supreme Court deciding this solution, the answer to this,” she said.
“It’s up to us at this table to come together for a new formula that will work for all of us and hopefully be able to have a partner in the federal government who will modify it.”
The nearly seven-decade-old federal equalization program provides unconditional funds to provinces to help balance discrepancies in public services and establish pan-Canadian standards.
Payments are currently determined by a given province’s estimated fiscal capacity, although the three territories are not included.
By law, the formula is reviewed every five years, with the most recent review concluding earlier this year and the next review scheduled to be completed by 2029.
In late May, Newfoundland and Labrador announced its intention to launch a lawsuit against the federal government, asserting the province was being shorted by the program.
‘The formula isn’t working’
Equalization has long been an issue for Alberta, with Smith saying Wednesday the formula is “fundamentally broken.” She pointed to a non-binding referendum the province held in 2021 in which more than 61 per cent of respondents indicated support for removing the program from Canada’s Constitution.
Smith added she is “very interested” in the upcoming lawsuit, despite having no plans to pursue similar litigation or to seek intervener status in the case.
“I don’t believe that those who proposed this formula ever thought that a small province like Newfoundland and Labrador would be a net payer and that large provinces would be net recipients,” she said.
“I think that in itself demonstrates that the formula isn’t working.”
It represents something of a change in tactics for the Alberta government, which often touts its court battles with Ottawa as evidence the federal system is not working.
Feds, premiers weigh in
The office of federal Finance Minister Chrystia Freeland said in a statement the government regularly speaks with provincial and territorial counterparts about equalization.
B.C. Premier David Eby said Wednesday he strongly supports the Atlantic province’s legal efforts and B.C. is considering pursuing its own lawsuit.
“I will acknowledge it is very hard for British Columbians to be paying into a program right now at a time when they are facing serious cost of living concerns,” Eby said.
“Every person in every province deserves high-quality health care and schools and so on, but that is clearly not what the program is doing anymore.”
Saskatchewan Premier Scott Moe said his province would seek intervener status in Newfound and Labrador’s lawsuit and suggested an alternate formula where 50 per cent of equalization funds are determined on a per capita basis with the remainder allocated through the current formula.
Quebec Premier François Legault was more skeptical, saying he doubted the premiers would be able to agree on a new formula and noting the current formula should be kept.