Federalism and resource revenue equalization

In my Institutional Engineering and Democracy course, we have been discussing federalism and the problems of agreeing on an instituional design and revenue-allocation formulas that satisfy both a resource-rich unit of a federation and the central government’s desire to redistirbute to more populous units (thereby potentially increasing the power of the center, especially if its redistirbution is discretionary).

Of course, we have been discussing these challenges of federalism mainly in the context of cases like Iraq, Nigeria, and Russia. However, from CBC comes a reminder that these questions loom very large in Canada.

Ralph Klein, premier of Alberta, a major gas-producing province, says he is ready to “fight” with the eastern provinces to keep Alberta’s resource revenues out of the federal “equalization” program, by which the federal government sends funds to provinces to fund health care and other social services.

At a meeting next month, other premiers are expected to suggest that Alberta’s oil revenues can be included in the calculations that determine how much cash each province gets from Ottawa.

“This is political showdown,” Klein said. “This is also a constitutional issue. Alberta has control and authorization and authority over its resources.”

Like some other resource-rich jurisdictions, Alberta is a hegemonic-party system, with “King Ralph” having been premier since 1992 and his Conservative party having ruled without interruption since 1971.

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