The Paradox of Equalization: Solving Inequity by Increasing Disparities

• Main Author: Fuss, Jake
• Other Authors: Flanagan, Tom
• Format: Master Thesis
• Language: English
• Published: School of Public Policy 2018
• Subjects: Newfoundland; Canada; British Columbia; Prince Edward Island
• Online Access: http://hdl.handle.net/1880/109329; https://doi.org/10.11575/PRISM/34951

The design of the equalization system is a policy concern in Canada because it has extensive political, social, and economic implications. Equalization is intended to ensure all provinces can offer similar public services and to reduce fiscally induced migration across the country. The program is entrenched in the constitution and has been in operation since 1957. However, equalization has been reformed numerous times over the decades and controversy has followed with each new iteration of the system. In 2018-19, fiscal equalization payments will total $18.96 billion and will be split between six provinces. Quebec will receive $11.73 billion, or 61.88% of the total amount, while Prince Edward Island will receive the most per capita at $2,835. Conversely, the provinces of Alberta, British Columbia, Saskatchewan, and Newfoundland & Labrador will not receive any money. This project was designed to determine the level of success equalization has had in meeting its own objectives and constitutional obligations. Specifically, the focus of the project is on the service comparability aspect of the equalization system. Analysis was conducted by collecting data from Statistics Canada regarding eight different education indicators by province. Provinces were then compared to the national average in each category and any outliers were recorded. This statistical analysis provided insight into how “reasonably comparable” services are across provinces in Canada. Key themes from the literature review include equalization’s ability to reduce fiscal disparities, promotion of bad fiscal policy, political influence, and the system’s lack of focus on service comparability. Authors suggested that equalization was important for national unity, but also emphasized that the system is designed for political motives rather than economic efficiency. Findings propose that equalization has enabled services to improve across the country, but service comparability appears to have faltered over time. In fact, service disparities between ...