Canada’s equalization program is one of the most important federal transfers — and one of the most misunderstood. To help, I'm *very* excited to share a new tool from @FONCanada: an 🚨interactive equalization simulator🚨
financesofthenation.ca/2021/02/23/new… #cdnecon #cdnpoli🤓😎
financesofthenation.ca/2021/02/23/new… #cdnecon #cdnpoli🤓😎
This allows you to explore every aspect of the program, and much more.
Potentially most interesting is what's in store for next year. We include a *rough* projection for 2022/23. If this pans out, then every province except BC and AB may receive.
Potentially most interesting is what's in store for next year. We include a *rough* projection for 2022/23. If this pans out, then every province except BC and AB may receive.
Why is that? Both NL and SK end up receiving because their resource revenues fall enough so that the "fiscal capacity cap" doesn't fully claw back their payment.
But why does Ontario start to receive in this scenario? Well their entire amount is an "adjustment payment". This happens anytime there's dollars "left over" after the formula does its thing. This happened in 2018/19 onwards.
What if we turn off the "fixed growth rule" button. We see the program shrinks in size by $2.3 billion.
What about Alberta next year? Are things 'unfair'? I'm not sure what that means in a political context, but in EQ the province still has the highest fiscal capacity of all.
What about Alberta next year? Are things 'unfair'? I'm not sure what that means in a political context, but in EQ the province still has the highest fiscal capacity of all.
But wait! This 'moving average' stacks the deck against Alberta! < say some >
Well you can use the tool to turn that off. Definitely changes the picture but Alberta remains in an above-average position (though may lose top-spot next year, we'll see.)
Well you can use the tool to turn that off. Definitely changes the picture but Alberta remains in an above-average position (though may lose top-spot next year, we'll see.)
"But why is Quebec hydro excluded!?! That's unfair." < say others >
Ah, but it is included. But perhaps their power prices aren't high enough. We have a feature to adjust that too. You can even play with BC/MB prices. Or introduce an Alberta sales tax!
Fun times :)
Ah, but it is included. But perhaps their power prices aren't high enough. We have a feature to adjust that too. You can even play with BC/MB prices. Or introduce an Alberta sales tax!
Fun times :)
There's thousands of potential changes you can make to fully understand how the program works, how it doesn't, and what the future might hold. Enjoy!!
P.S. with a referendum on equalization coming up in Alberta, there will be lots of claims about this or that feature of the program. I hope this tool will help separate the crazy from the reasonable.
And I'm indebted to the many expert reviewers who commented on earlier drafts of the tool. And to several dedicated public servants at @FinanceCanada who also reviewed the tool and provided the underlying data needed to operate it. Thank you!
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