Ten Reasons to Remove Nonrenewable Resources from Equalization

The contribution by Ken Boessenkool takes the series from theory and testing to policy. In his paper, Boessenkool, a private policy analyst and commentator, makes the case for a practical change to the current equalization program: removing non-renewable natural resource revenue from the formula used to calculate equalization. In his view, this change would have a number of desirable implications. Most importantly, it would significantly change the incentive for provinces to develop these resources to their full potential. Under the current formula, each additional dollar of such revenue can result in a reduction in equalization of 70 cents or more. In addition, it would allow the federal government to return to a national rather than the current five-province standard because it would be protected from the massive program volatility stemming from price-related fluctuations in Alberta energy revenues.