The long-standing equalization program that sees the
federal government provide money to 'have-not' provinces may not
be legally enforceable and could contravene Canada's constitution, according to Questioning the Legality of Equalization
, a chapter from a forthcoming Fraser Institute book that explores Canada's equalization program.
"Many Canadians commonly assume that equalization payments from
the federal government to the 'have-not' provinces are required
under the constitution. But our research shows this is not the
case," said Sylvia LeRoy, co-author of the study and a senior
policy analyst with The Fraser Institute.
LeRoy and Burton H. Kellock, Q.C., argue that Canada's
constitutional commitment to equalization is a political policy
that cannot be enforced by a court of law. This view is shared by
prominent legal scholars and supported by the documented
intentions of the authorities that debated and ultimately agreed
to include equalization in the
Constitution Act, 1982
"Although the principle of equalization is included in the
, the provincial and federal government representatives that
signed the Act believed the details of equalization were open to
negotiation. There's absolutely no legally-binding language in
the Act that commits the government to fund a certain level of
transfers," LeRoy argued.
LeRoy and Kellock point out that politicians from both federal
and provincial governments realized this problem and attempted to
include amendments in the 1992 Charlottetown Accord to strengthen
the commitment to equalization. However, with the defeat of the
Accord, the issue remained unresolved.
In addition to this legal ambiguity, LeRoy and Kellock's research
uncovered a more fundamental problem: equalization may fall
beyond the scope of the powers of the federal government as
defined in the
British North American Act, 1867
, Canada's original constitution.
Equalization involves the federal government transferring tax
revenue to provincial governments to be spent in areas of
provincial jurisdiction. But that clearly conflicts with the
section of the BNA Act that delineates the powers of the federal
and provincial governments, LeRoy and Kellock concluded.
"The BNA Act is quite precise in its language that federal
dollars can not be directed to matters that fall under provincial
jurisdiction," Kellock said. "This division of powers was
supported by a definitive series of judicial decisions issued in
the 1930s by Canada's highest court of appeal."
Despite the apparent precedent, the federal government has over
time enacted a number of statutes such as the
Canada Health Act and Federal Provincial Fiscal Arrangements
to exercise its spending power within areas of provincial
"The validity of these powers have never been fully debated or
examined by the Supreme Court of Canada," Kellock said. "A court
that respects past precedents and the division of powers central
to Canada's founding Constitution would find that the entire
equalization program falls outside the powers of Parliament. This
has serious implications for other federal-provincial transfer
Kellock, partner emeritus at Blake, Cassels, & Graydon, has
more than 40 years of civil and administrative legal experience
and has appeared in every court in which he is entitled to
practice in Ontario, including the Supreme Court of Canada, the
Federal Court of Canada, and the Ontario Court of Appeal.
Questioning the Legality of Equalization
is taken from the forthcoming book,
Beyond Equalization: Examining Fiscal Transfers in a Broader
, to be published by the Fraser Institute in early