Saskatchewan applies to intervene in Newfoundland’s equalization challenge

The Government of Saskatchewan announced Wednesday, it wants to add its voice to a court case over Canada’s equalization formula.

Saskatchewan’s Ministry of Justice said it applied earlier this month to intervene in Newfoundland and Labrador’s challenge against the equalization formula used by Ottawa. The challenge is set to be heard in that province’s top court on October 20.

The formula determines federal payments to provincial governments to ensure that comparable levels of public service are available across the country at similar levels of taxation.

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The Government of Saskatchewan claims the inclusion of resource revenues makes the formula unfair. According to a Government of Canada chart “natural resource fiscal capacity” was not taken into account, Saskatchewan would have fallen below the average fiscal capacity used to determine who gets equalization money.

The federal government said on its website that a province’s fiscal capacity is what it could raise if it were to tax at the national average rate.

The formula, the provincial government said, also “fails to take into account the structural costs of delivering public services” and overcompensates recipients through the distribution of surplus payments. These are similar to some of what Newfoundland and Labrador has brought up in its statement of claim.

The Government of Saskatchewan has long brought up issues like these and more in long-standing frustration with the program.

According to the provincial government, the average Canadian pays $634 per year into the $26 billion program, adding up to $786 million total from Saskatchewan’s taxpayers.

Tim McLeod, Saskatchewan’s justice minister, said in a news release the formula “has consistently failed” in its intended goal of creating fairness across Canada.

“Like Newfoundland and Labrador, we have serious concerns with the current formula, which has repeatedly punished provinces with strong natural resource sectors like Saskatchewan,” he said.

Saskatchewan has not received payments for the past 18 years.

“Four other provinces will receive nearly $3,000 per resident in 2025-26, while Saskatchewan, Alberta and British Columbia receive nothing. This hardly seems equitable, even by the most basic standards,” McLeod added.

The last NDP government Saskatchewan had, launched a suit against the program in 2007, similarly frustrated over the way natural resource revenues were dealt with in the formula.

The suit looks at whether the act around equalization takes away Saskatchewan’s ownership of non-renewable resources and interferes with its ability to manage them – a theme the Sask. Party government has taken to heart in recent years.

It also called into question whether the formula, which had recently been amended at that time, violated the constitution.

Lorne Calvert’s government was defeated in an election shortly thereafter, and the new Sask. Party government dropped the challenge the following summer, saying it was causing problems in negotiations with the federal government.

This month, Pierre Polievre told Radio-Canada, if his party forms government after what’s expected to be a spring federal election, he wouldn’t make any big changes to the federal equalization program.