The Uneasy Case for Equalization Payments

Randall White is the author of Voice of Region: On the Long Journey to
Senate Reform in Canada and Global Spin: Probing the Globalization
Debate.

Federal-government equalization payments to the less-affluent provinces
have become something of a sacred cow of Canadian federalism, to the
point of being enshrined in Section 36(2) of the 1982 Constitution Act.
Dan Usher, who teaches economics at Queen’s University, has taken some
pains to craft a critical evaluation of equalization payments that is
“accessible to readers not well schooled in formal economics.” This
monograph reflects his longstanding concern about “the reorganization
of English Canada in the event of the separation of Quebec.” The
thrust of his argument is that the case for equalization payments is
considerably weaker than conventional wisdom has allowed. Among other
things, he suggests that equalization payments may have “the entirely
unintended effect of herding poor people into some provinces and
concentrating the rich in others.” The conclusions he arrives at
suggest various reform options for a Canada with and without Quebec.
This book makes a valuable contribution to the con-tinuing uneasy debate
on Canada’s future.