Equalization not Entrenched in Constitution

Blog, Equalization, Peter Holle

Equalization has become a hot topic given recent editorial and news comment in various newspapers including the Toronto Star and the National Post.   Part of it was triggered by David MacKinnon’s report  which was recently released by the Ontario Chamber of Commerce. 

Even though more of the media now concedes that the system is quite broken some still repeat the popular myth that equalization is permanently set in concrete because “it is entrenched in the Canadian constitution.”   Thankfully this is not true.   I reprint a letter that was sent to the National Post by legal beagle Burton Kellock now retired in Ontario:

Re: A Transfer System That’s Far From Equal, editorial, Feb. 17. This editorial contains a serious misstatement which unfortunately has been oft repeated: “these [federal/provisional fiscal transfer payments] cannot be done away with completely — they are entrenched in our Constitution.”

Not true. The references to section 36 of the Constitution Act, 1982, has been held to be a provision that is non-justiciable, i.e. ineffective. In fact, there is no constitutional basis whatsoever for such payments. They are utterly illegal. I happen to know this because I have written a book on the subject which is in the process of being revised.

Burton H. Kellock, Rockwood, Ont.

This is strong, but timely, stuff and many of us wonks look forward to seeing Burton’s book.

Brian Lee Crowley, a friend of the Frontier Centre, has spoken frequently and eloquently about equalization’s foibles and its corrosive effect on Canada’s economy and society.   He also says that equalization is not entrenched in the constitution and that the clause that equalizations defenders hang on to to make the claim that it’s entrenched would be thrown out in any court case.  Read his column on that here.

Frontier is one of a handful of policy organizations in Canada that have taken a contrarian view of equalization. It has plenty of material on equalization for interested readers.  Here is an introductory smattering:

  • Several backgrounders on the uniformly negative international experience with equalization (Belgium, Sweden, Italy, Australia, Britain).
  • An interview with Nobelist James Buchanan where he pinpoints the problems in Canada’s equalization model with the mistake of making government to government transfers.
  • How equalization perversely discourages energy conservation by lowering the price of electricity in Manitoba and Quebec.

The gateway to all equalization materials on the Frontier website can be found on this page.