Trevor Tombe: It’s time for a (new) New Deal for the provinces

From Joseph Howe in 1867 to Danielle Smith over a century-and-a-half later, provincial and federal leaders regularly spar over who should tax what, and where the cash should go.

But the scale and intensity of these clashes appear to be mounting right across the country.

In recent surveys, a majority in all regions believe that Canadian federalism has more disadvantages than advantages. Two decades ago, most people—including in the West—thought otherwise.

When asked which government “best represents your interests?” Canadians, by a nearly two-to-one margin, say their provincial government rather than Ottawa.

Of course, Alberta has been the most vocal lately. It held a referendum on equalization, funded national advertising to oppose several federal programs, and is considering leaving the Canada Pension Plan.

But others are increasingly joining the fray.

Two weeks ago, Newfoundland and Labrador announced a constitutional legal challenge to the federal equalization program. They worry that the program does not “ensure provincial governments have sufficient revenues to provide comparable levels of public services at comparable levels of taxation,” per section 36 of Canada’s Constitution.

Their main concern is that the formula ignores public service cost differences, includes resource revenues, and only distributes excess funds to equalization-receiving provinces. While I can’t judge their legal claim, it sets up a new front in the (never-ending) battle over this important federal transfer program.

Is there anything Canada could do to improve the situation?