The Equalization Referendum

Alberta is a mere 132 days removed from the next round of municipal elections, marking a new chapter for the province’s two largest cities who will see significant turnover on their councils. While there is much to discuss on the municipal front leading up to October 18th, the election will share a battleground with the provincial government for campaign attention. As we all have heard since even before the United Conservative Party was elected to their first majority mandate in 2019, there has been much speculation swirling around the details of a provincial referendum sometime during this term.

As of last week, much of that speculation was put to rest when Government House Leader Jason Nixon gave notice of Motion 83.

For some time, there were many who discussed the possibility of multiple referendum questions being placed on the ballot in October following the findings of the Fair Deal Panel last year. However, it seems to be confirmed that there will only be one question put to voters. That question is as follows:

Should section 36(2) of the Constitution Act, 1982 – Parliament and the government of Canada’s commitment to the principle of making equalization payments – be removed from the constitution?

To be clear, that is the wording of the question at this point in time. Once the motion is formally introduced in the Legislature, there is potential for the language to be amended to avoid any potential confusion at the polls. MLAs will debate the wording of the question as it will eventually need to be approved by the Assembly. This writer is reminded of the origin story for the Clarity Act resulting from the befuddlement of the referendum on Quebec sovereignty in 1995. While the Clarity Act is only used in reference to succession questions, it is still incredibly important to put forward a question that the population can easily process at a glance to minimize legal challenges.

Since referenda do not come around every day, it is worth taking a look at where the Legislature goes from here and what the consequence of a “yes” vote could be. Spoiler alert – equalization payments will not immediately come to a halt.

Once the resolution on the question is passed, the Lieutenant Governor in Council will make an order that the referendum is to be held on October 18th in conjunction with the municipal election with voters choosing solely between “yes” and “no” on the ballot. If a simple majority of 50 per cent plus one vote in the affirmative, then the result of the public vote becomes binding on the province as it is a constitutional matter. Pursuant to the act, “if the results of a referendum are binding, the government that initiated the referendum shall, as soon as practicable, take any steps within the competence of the Government of Alberta that it considers necessary or advisable to implement the results of the referendum.”

Then what? As we said earlier, a ‘yes’ result does not automatically remove Alberta from the equalization formula, nor does it eliminate equalization altogether. What are the “steps within the competence of the Government of Alberta” that would need to be taken?

Ultimately, it gives the provincial government a validated public mandate to lobby the federal government to eliminate the section of the Constitution Act that entails equalization across the country. In order for the referendum vote to become federal law, it must be approved by the House of Commons and the Senate. It also requires a provincial threshold of support to be ratified – consent from seven provincial legislatures representing at least half of the country’s population. In 2021-22, the provinces that will receive equalization payments from Ottawa are Prince Edward Island, Nova Scotia, New Brunswick, Quebec, and Manitoba. Those provinces are scheduled to receive about $20.9 billion combined in equalization payments –something they are not likely eager to pass on simply to appease Alberta. Two of these provincial legislatures would need to jump ship for Alberta to have a shot at being successful.

While it is not impossible, there is no question that an affirmative referendum vote would bring with is the herculean task of convincing the federal government and the rest of the country that equalization needs to be concluded. In the end, a ‘yes’ vote would be used as a negotiating tool to pressure the federal government to amend or eliminate equalization and to generate support from other provinces.

Now that we have some understanding about what would happen following a “yes”, what happens if Alberta decides to vote “no”? Obviously, the referendum itself would be finished, but what are the repercussions here at home? Let’s speculate.

Suppose Albertans decide that they do not support the referendum on October 18th. Assuming that the results of the reference on the ‘No More Pipelines’ bill at the Court of Appeal of Alberta are not released at that time, the United Conservatives will be staring at a scoreboard reading “Alberta – 0; Canada – 2” in the constitutional challenge game with the puck getting ready to drop on the third period of this government’s term. Premier Jason Kenney was previously quoted as saying “what Albertans cannot and will not accept is governments across the country benefiting from that wealth and our resources while seeking to block and impair our development of that wealth and those resources by killing pipelines” signaling that he is relying on both the Fair Deal Panel and the UCP’s campaign platform as the basis for this initiative.

Staying with the Quebec sovereignty referendum of 1995, we can see what sort of impact a government has felt following an unsuccessful vote. Former Premier Jacques Parizeau (leader of the Parti Québécois) won a strong majority in the National Assembly in the 1994 provincial election. Support for the Quebec separatist movement began to grow exponentially following the failures of both the Meech Lake and Charlottetown Accords, contributing to the election of the Parti Québécois. The following year, the separatist referendum was held and resulted in a constitutional nail biter where a ‘no’ vote passed by the slightest of margins.

At one point during the referendum campaign, it seemed like the ‘no’ vote was pulling away in terms of popular support. This prompted Parizeau to step aside from leading the campaign in an effort to build momentum leading up to ballot day by allowing a fellow separatist with a bit more public appeal to take the lead. Following the eventual loss on October 30th, 1995, Premier Parizeau resigned as leader to allow the man running the ‘yes’ campaign to take over – Bloc Québécois leader Lucien Bouchard.

According to a Janet Brown poll, the percentage of people who agree with a statement that equalization is unfair to Alberta has remained stable, hovering between 68 and 71 per cent between 2018 and 2021. Now, this is where the wording of the referendum question becomes essential in determining the eventual success or failure of the referendum. The question proposed by the UCP in Motion 83 does not include the full language of the section, something that could potentially change how voters would respond come E-Day (election day).

For reference, the complete wording of Section 36(2) is “parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.” Coupled with an education campaign by the ‘no’ side which would likely focus in on the argument that equalization payments come out of GST revenues and are not paid for by the ‘have’ provinces cutting a cheque to the ‘have-nots’, it isn’t totally unreasonable to foresee a October 19th, 2021 headline reading that the referendum has failed.

With polling trending downward for the UCP since the holiday travel controversy coupled with growing tensions within the UCP caucus, it Is not unreasonable to suggest that this referendum vote could be a defining moment for the future of Alberta politics. With the degree of involvement that we could see from third-party advertisers in both the referendum and municipal election campaigns, the importance of a referendum victory to the future of the United Conservatives, and the local political landscape growing evermore tumultuous, voters will be required to cut through the noise and become more aware than ever before.