Identifying the issues

Find a better way of dealing with resource revenues

“Returning to a 10-province standard would more accurately measure provincial fiscal capacities and better achieve the Constitutional commitment of the federal government.” - Honourable Greg Selinger Minister of Finance, Manitoba12

When we say “find a better way,” that’s not to suggest that there was agreement on what that “better way” would be. In fact, of all the issues involved in Equalization, the treatment of resource revenues is the most controversial. Opinions ranged from 100 percent inclusion of resource revenues in the formula to complete exclusion. In the words of Thomas Courchene, treatment of resource revenues is “a theoretical and empirical minefield,” an issue that “one copes with rather than solves.”¹³ From an
academic perspective, concerns were expressed about the current RTS approach to measuring resource revenues, the increasing complexity this causes, and the challenges involved in getting accurate data. Alternative suggestions included developing new measures of economic rent, introducing macro measures as a proxy for resource revenues, or measuring only actual revenues collected and used by provinces to support public services.

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