|The Panel’s mandate involved the most comprehensive review of the Equalization program in more than two decades.
In March 2005, the federal Minister of Finance announced the beginning
of a comprehensive review of Canada’s Equalization program and Territorial Formula Financing (TFF). The review fulfilled an agreement among First Ministers in October 2004.
An Expert Panel was established to review a broad range of issues, consult with provinces and territories, seek the advice of various academics and experts, look at comparable fiscal arrangements in other countries, and
listen to the views of interested Canadians.
Specifically, the Expert Panel was asked to provide advice to the Government of Canada on:1
- The allocation among the provinces of the annual Equalization
allotment set in legislation is to be evidence-based and derived from a formula, including consideration of:
- The current Representative Tax System (RTS) approach
- The treatment of various provincial and local revenue sources, such as natural resources, property taxes, and user fees
- Other approaches to measuring fiscal capacity based on macroeconomic variables
- Indicators of expenditure needs, if appropriate
- The allocation among territories of the annual TFF allotment set in
legislation, as well as specific dimensions of the TFF program
- Mechanisms that would ensure that payments to provinces and territories are stable and predictable, to assist in sound financial planning
- Evidence-based measures of changes in fiscal disparities among provinces and the costs of providing services in the North, to provide information to governments and citizens and assist in future re-evaluations of the overall level of federal support for Equalization and TFF
- Whether to have, on a permanent basis, an independent body to provide ongoing advice to the Government of Canada on the allocation of Equalization and TFF as well as to conduct periodic reviews of provincial disparities and the costs of providing services in the North
- How to address difficult or challenging issues that could be involved in implementing the approach recommended by the Expert Panel