Canada’s national wealth-sharing scheme violates the Constitution with a half-baked equalization formula that shortchanges provinces like Ontario, a major new study has found.
In a 41-page paper to be released Monday by the Mowat Centre for Policy Innovation at the University of Toronto, equalization expert Peter Gusen said the status quo is unconstitutional.
And that costs Ontario, British Columbia, Alberta, Saskatchewan, Newfoundland, Nova Scotia and New Brunswick billions of dollars annually that go instead to Quebec, Manitoba and Prince Edward Island.
“If equalization continues to ignore differences in expenditure need it will not be treating provinces fairly and it will not be fulfilling its constitutional mandate,” writes Gusen.
When dispensing equalization payouts from the taxpayer-funded $15.4 billion pool, Ottawa doesn’t take into account that wages and cost-of-living expenses are higher in Ontario and B.C. than in much of the country.
“Provinces … differ in their ability ‘to provide reasonably comparable levels of public services’ because they have to spend different amounts to offer similar services; in other words, because they have different expenditure needs,” he writes, quoting Section 36.2 of the Constitution Act.