Examining Equalization

Reporting to Canadians

“Clearly, Canadians want every province and all its citizens to have an equal opportunity to prosper. Adequate and equitable fiscal arrangements make that possible. History shows they work. Therefore we must move forward by strengthening these programs to the benefit of all Canadians.” - Honourable Greg Selinger Minister of Finance Manitoba and Ronald H. Neumann3

The Panel was asked to report to the federal Minister of Finance and the Government of Canada. At the same time, the Panel hopes that its report and recommendations will be of interest to Canadians from coast to coast to coast.

Early on, the Panel realized that the issues and approaches involved in Equalization and TFF are fundamentally different. While both start with a common purpose, they are vastly different in terms of how they are designed, what they measure, how they operate, and how significant they are in comparison to the revenues provinces and territories can raise. For that reason, the Panel has chosen to produce two separate reports – this report focused on Equalization and a second report dedicated specifically to TFF and the unique challenges of Canada’s territories.

We urge Canadians to read both reports for a number of reasons. First, Equalization and TFF may be federal programs, but Canadians pay for them through their tax dollars and they benefit from them in terms of the services they receive, especially in less wealthy provinces and territories. Second, while the programs are complex, it’s important for Canadians to have at least a basic understanding of what Equalization is intended to do, how it works, and how it benefits our entire country. More detailed information and analysis intended for more specialized and technical audiences are available in the annexes to this report.

Canadians deserve better information, clearer information, about these vitally important programs and their role in Canada’s federation. With that objective in mind, our report begins with the basics about Equalization as we know it today.

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