I sense there is a growing misunderstanding in Saskatchewan about what a new equalization deal can and cannot do for Saskatchewan. For readers outside the province, the Saskatchewan government has been campaigning for years to get a deal from Ottawa that would exclude oil and gas from the equalization formula -- along the same lines as what some Atlantic provinces have obtained.
Now it seems that all good things promised by the Saskatchewan government are somehow contingent upon receiving more generous support payments from Ottawa.
The government even promises more equalization payments will help us all achieve our dreams and desires, and I read Saskatchewan political columnist Murray Mandryk echo that statement in a recent column. Indeed, the only thing holding us back as a province is the equalization program. (Read with John Lennon's Imagine playing softly in the background.)
Imagine how a Fair Equalization Deal could help us build the province that we have all dreamed of, a strong and vibrant province where our young people will find their futures. You know that you can trust Lorne Calvert and the NDP government to be there for you, to help make these dreams a reality.
So what is stopping us?
The question really is, WHO is stopping us?
The problem with equalization handouts is they do, in reality, the exact opposite of what is promised. Equalization actually creates incentives to NOT develop a strong and vibrant economy. Think of it this way: If equalization was all the province made it out to be, wouldn't Atlantic Canada be a beacon of hope for the rest of the country? They have, after all, been recipients of generous handouts for decades.
How does equalization hold a province back? Consider taxes, for example.
The Saskatchewan government promises that if we achieve a better deal from equalization it can significantly lower taxes which would help grow the economy.
Imagine how a Fair Equalization Deal could help us all build a stronger economy. With lower taxes and a greater investment in post-secondary education and skills training together, we could grow an economy that will create more jobs and provide greater economic opportunities for young people.
The catch is that part of the equalization formula is based on the province's "fiscal capacity." To put it simply, equalization looks at a province and says "if you can afford to cut taxes, you don't need as much welfare." The feds reduce the payments to the provinces if they cut taxes.
If a government wants to cut taxes, it's hit with a double whammy. First, it must forego the revenue it collected before the tax was reduced. Second, it must see its transfers from Ottawa reduced as well. In fact, the same rule applies to economic development as a whole. The more successful a province becomes, the less welfare it gets.
It's tough enough to get a government to cut taxes without the strong disincentives equalization brings. The equalization program can't and won't save us from decades of crappy government economic policies.
Imagine if the government sold you some magic beans.