Saskatchewan Premier Scott Moe Challenges Federal Equalization Payments

Saskatchewan Premier Scott Moe is intensifying his campaign to reform the federal equalization payment system, which he argues disproportionately benefits Eastern and Central Canada at the expense of Western provinces. In a recent post on X, Moe shared a map illustrating that Saskatchewan, along with Alberta and British Columbia, will receive no equalization payments in 2026, while provinces like Quebec will obtain $13.9 billion, and Nova Scotia and New Brunswick will receive $3.5 billion and $3.3 billion, respectively.

The federal government announced next year’s equalization amounts to provincial finance ministers, highlighting significant disparities. Ontario is set to receive $406 million, while Newfoundland and Labrador will get $182 million, and the smallest province, Prince Edward Island, will receive $723 million. The only exception among Western provinces is Manitoba, which will receive $5 billion.

Moe has long criticized the equalization formula, asserting it is unfair to resource-dependent provinces like Saskatchewan. He contends that the current system penalizes provinces with substantial natural resource revenues. According to Jill McAlister-Lane, Saskatchewan’s executive director of media relations, “The equalization formula doesn’t reflect the economic realities of the western provinces.” She emphasized that while equalization aims to ensure comparable public services, the existing formula obscures fiscal challenges in some areas while supporting others.

The debate surrounding equalization payments has the potential to create tensions among provinces, but McAlister-Lane stressed that the issue is not about one province against another. Instead, it is about reforming the formula to accurately represent Saskatchewan’s contributions to the national economy, particularly in sectors such as energy, mining, and agriculture.

Calls for Reform and Legal Challenges

In 2018, Moe proposed a significant reform to the equalization system, suggesting a reduction of total payments by approximately 50 percent, redistributing the savings to all provinces on a per-capita basis. His plan would result in “have” provinces like Saskatchewan, Alberta, and British Columbia gaining funds, while “have-not” provinces would see a decrease. Notably, Quebec, which currently receives over half of all equalization payments, would lose funding under this proposal.

The Saskatchewan government has also engaged in legal battles regarding the equalization formula. The province joined a legal challenge initiated by Newfoundland and Labrador in 2024 against the federal equalization program. This challenge is currently before the Supreme Court of Newfoundland and Labrador, where the province argues that the formula unfairly penalizes it by not considering service delivery costs associated with its dispersed population. The case highlights concerns over a fiscal capacity cap and a GDP growth ceiling that could deprive Newfoundland and Labrador of billions.

Moe has reiterated that Saskatchewan has not received equalization payments for several years. He argues that the formula fails to account for the structural costs incurred by provinces with low populations. The legal proceedings are ongoing, with no trial date established. The Canadian Taxpayers Federation and the Saskatchewan government have been granted intervenor status, opposing demands for increased payments due to potential risks for net-payer provinces.

The issue remains a focal point in Moe’s agenda, as he echoes previous criticisms from Alberta’s Premier Danielle Smith, stating that Saskatchewan, Alberta, and British Columbia are “helping support the rest of Canada” while receiving no equalization payments themselves.

As the discussion continues, the provincial government seeks a reform that not only addresses its concerns but also promotes a more equitable distribution of resources across Canada.