Identifying the issues

Replace the concept of a fixed pool included in the
New Framework

“... the announcement of a new framework for equalization instead of providing the intended stability and predictability for the provinces, seems to have opened up a Pandora’s box and unleashed long pent up regional tensions.” - France St-Hilaire10

The vast majority of provinces, academics, and experts did not support the New Framework, particularly the concept of a fixed pool with a fixed annual rate of increase. They preferred a return to a formula to set the overall size of the pool even though this could result in greater year-over-year uncertainty about the size of the total pool. Receiving provinces, in particular, were concerned that the fixed pool shifted more risks to provinces and introduced new dynamics among the provinces sharing in a single, fixed pot. Concerns were also raised that the 3.5 percent rate for annual increases in the Equalization program was an arbitrary amount that doesn’t necessarily reflect changes in fiscal disparities among the provinces.

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