Analysis

Winnipeg Free Press - PRINT EDITION

Alberta vote is a gift for Harper

By: Frances Russell

Posted: 04/25/2012 1:00 AM | Comments: 0

Alberta Premier Alison Redford (POSTMEDIA EDMONTON JOURNAL)

222Redford's solid win (61 of the 87 legislature seats and 44 per cent of the popular vote) closes Alberta's 107-year history of being an outlier -- a province different from all the others.

Redford's reference to putting up walls or building bridges was a not-so-subtle criticism not just of Danielle Smith's libertarian Wildrose party, but the federal Conservatives as well.

Throughout the campaign, Smith closely aligned herself with Prime Minister Stephen Harper's Conservatives. She revived the famous "firewall" manifesto of 2000, signed by a who's who of Canadian conservatism, including Harper, Tom Flanagan, Ted Morton, Rainier Knopff and Ken Boesssenkool. Among other things, it proposed Alberta set up its own pension plan and withdraw from the Canada Pension Plan, create its own police force and exert its full powers against the federal government.

Smith pledged to "aggressively address" the issue of transfer payments to Ottawa and the other provinces. She said Alberta must never accept a repeat of the current equalization program, which she claims is unfairly generous to provinces like Quebec at Alberta's expense.

Keith Brownsey teaches political science at Calgary's Mount Royal University. He believes the Harper government dodged a bullet Monday. Wildrose's aggressive stance on everything from equalization to social issues like gay marriage would have been very bad news for the federal Conservatives.

Harper would be forced to choose between standing up to Alberta -- and in some cases, his own preferences -- or going on a collision course with much of the rest of Canada and even many in his own party in other provinces.

"Harper is completely unprepared to take on the task of national unity," Brownsey said in an interview. "He doesn't want to."

He believes Harper's inclination would be to support Smith, even if it threatened national unity.

Here's Wildrose's manifesto on equalization: "Equalization and other wealth transfer programs are failed Trudeau-era reforms that clearly are not working as originally intended and do not treat Albertans fairly. It is no small irony that the biggest single beneficiary of such transfers, Quebec, provides cheap university tuition and inexpensive daycare, while Albertans pay high prices for and have severe shortages of both in their own province. These annual wealth transfers also create the perverse incentive for have-not provinces to retain fiscally irresponsible taxation and spending levels, thereby remaining on the transfer dole in perpetuity."

The manifesto then pledges that Smith will "aggressively address the issue of interprovincial wealth transfers with the federal government and Canada's premiers."

Not only have Wildrose and Smith forgotten that Alberta went bankrupt during the Great Depression. They seem not to recall that Alberta, as a have-not province, was a longstanding equalization recipient until 1947 and again from 1957 to 1965.

Wildrose's condemnation of Quebec didn't go unnoticed.

"Contrary to what is often heard, equalization does not fund $7 daycare or lower tuition fees in Quebec," Quebec Finance Minister Andre Bachand replied. "Quebec's more generous programs are funded through taxes, paid by Quebec taxpayers to the Quebec government, which are higher than the Canadian average."

Bachand invited Albertans to enhance their social programs by increasing their income taxes or imposing a provincial sales tax. He continued:

"Let's remind everyone here that Quebec has a 9.5 per cent provincial sales tax while Alberta has none," he continued. "If Alberta adopted Quebec's tax system, it would then have ample revenue to offer the same services as Quebec. It is only a matter of choice."

A new study by University of Alberta economist Melville McMillan, titled Alberta and Equalization: Separating Fact From Fiction, puts the fractious and divisive debate into proper perspective.

McMillan clarifies some common misconceptions, the first being equalization-receiving provinces enjoy more public services than non-recipients. Using 2008 data, McMillan finds equalization receivers spend an average of $12,600 per person on public services. The non-recipient average is $13,000.

The second -- and most poisonous -- misconception is Alberta transfers money directly from its treasury to the coffers of supposed provincial "welfare layabouts."

McMillan says all provinces and territories -- receivers and payers alike -- contribute to equalization because all individual Canadians pay the same federal income, corporation, sales and other taxes.

The biggest contributors to the equalization pot, in descending order, are Ontario, Quebec (yes, Quebec is in second place), Alberta and B.C.

Alberta's federal taxpayers provide just 15 per cent of federal revenues. They therefore finance just 15 per cent of equalization.

Frances Russell is a Winnipeg author and political commentator.

Republished from the Winnipeg Free Press print edition April 25, 2012 A10

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