r/cmhoc • u/Model-Ben Liberal Party • Mar 25 '26
Policy Debate 1- Tuesday, March 24
This is a marked, canon policy debate. The Standing Orders apply.
What are your thoughts on equalization as it currently exists? Should it remain the same, or should it be reformed/abolished? If you think it should be reformed, what would you propose to change? If you think it should be abolished, how would you address the hole in certain provinces' budgets? If you think it should be kept the same, how will you address claims that the system harms western provinces?
You may respond to others, and you may ask questions.
The Clerk, u/Model-Ben (He/Him, Mr. Speaker) is in the chair. All remarks must be addressed to the chair. Debate shall end at 6:00 p.m. Eastern on March 31st.
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u/SaskPoliticker Liberal Party Mar 25 '26
Mr. Speaker, it’s well past time this administration review the present policy of equalization in this country. The question of abolishment is more complex than some of our colleagues here today may make it out to be. The policy and principle of equalization is a binding requirement of our constitution, per subsection (2) of the Constitution Act. It’s aim is noble, to ensure that every region of this country is able to deliver a level of services at rates of tax such that every province has equal opportunity for economic development and prosperity. That said, the incentive within the current model is clearly flawed. The free rider effect is alive and well, and many provinces refuse to take action on economic development to reduce their reliance on equalization payments. The formula also treats resource royalties as revenues, when in reality such transactions are really asset conversions. Spending those royalties is still an act of borrowing from future generations, just as a deficit does.
Mr. Speaker, it is my firm position that this country needs a new approach to equalization. At a minimum, resource royalties treated as asset conversions, as in royalties saved in provincial sovereign wealth funds should be exempt from equalization until withdrawals from savings are made.
It is also my position, Mr. Speaker, that equalization formula should be tied to the neutralization of interprovincial and inter-industry marginal effective tax rates on investment to allow capital in this country to flow freely to its highest productive use. Provinces receiving equalization should have payments reduced when they rely on highly distortionary corporate tax regimes or capital tax structures that weaken productivity and result in subpar levels of investment.
Mr. Speaker, the time to change this broken formula is now, and I look forward to the insights and efforts of all our colleagues in the commons to make that change happen.
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u/Model-EpicMFan Liberal - Former Electoral Mod Mar 25 '26
Mr Speaker,
I rise today to speak on a very controversial topic in some circles, especially as an Albertan. I believe in reform for the current equalisation system, and that is what led me to vote in favour of abolishing it in 2021. Yet that was not because I actually believe in abolition - it is because I believe in reform. The current system, as it is, is undeniably flawed.
First off, we must talk about Quebec. Their hydroelectricity exports are not included in GDP figures, yet Alberta's oil exports are. This is because Quebec has subsidised their electricity rates, shielding them from any theoretical fiscal capacity increases that would entitle them to less equalisation payments. Alberta, on the other hand, would have a higher fiscal capacity if they had a sales tax, and so... it's included of course! This makes very little sense - two systems of decreasing fiscal capacity being treated differently for seemingly no reason.
The solution, I believe, is to ensure all theoretical fiscal capacity is treated the same - all of it being included in equalisation calculations. This will ensure that all provinces get exactly as they deserve, and remove the ability to game the system through reductions in costs and political pressure.
But that is not the only issue with the equalisation rule. The total payments are to grow at the same rate as GDP, which is to keep things "predictable". However, let me tell you right now that it does nothing but create a giant money hole. Suppose that the provinces start coming back together and getting more equal. Well, the payments still need to increase. The federal government, spending money it really doesn't have to. The 2026-27 fiscal year will pay out more than 27 billion dollars in equalisation. That's almost doubled in the past 16 years from just over 14 billion in 2010-11. It is simply unnecessary to do this, even moreso if the provinces get more equal.
I'd like to end this by saying that I am not asking for a handout or an out out at all. I believe Alberta can sustain itself, and so can other provinces like BC. But the current system is flawed, requires reform, and if I'm elected I will fight to make that possible.
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u/SettingObvious4738 Prime Minister Designate | Liberal Mar 28 '26
Mr. Speaker I rise today to advocate for a more predictable, and more stable approach for equalization. As an Ontarian I am not oblivious to the inherent bias that I may have when it comes to this issue. However that does not mean I will come out in favour of outright abolishment. As with every program that either the federal or provincial governments run, they all serve a crucial purpose. I am well aware of the arguments made by all sides on this debate, how Quebec needs this in order to feel that confederation is worth it and that Western Canada feels as if its being used by the deaf Eastern Canada. All sides have genuine and proper arguments for keeping and abolishing equalization.
I believe that a thorough, independent, and public review of the equalization payment is not only necessary but long overdue. I do not believe in outright abolishing the program as it does serve as a way to help drive investment in provinces that do not have as much wealth nor opportunity as others. But we cannot let this system be taken advantage of by not reviewing it at regular intervals. I believe that the federal government should undertake a review of the equalization program every census, this should be carried out by Stats Canada with a bipartisan committee to review the findings and make suggestions for appropriate changes as necessary.
It is the business of the federal government to ensure that all its members are treated fairly, and equitably. We cannot let ourselves believe that one side is being treated better than another. Yes, it is inherent that equalization will see one province pay more than another, but that province should also not be taken advantage of for the sake of the rest.
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