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United Conservative Party candidates say equalization renegotiations possible

United Conservative Party candidates say equalization renegotiations possible
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Alberta United Conservative Party candidates have geared up their tough talk, saying both equalization renegotiations and withholding oil shipments to British Columbia could be in the cards if the province s energy industry is stymied by Ottawa and other provinces.

While the pronouncements play to a part of the conservative base, experts say the ideas put forward by UCP leadership candidates have a shaky legal basis.

"The equalization formula is in the federal government s purview," said David Schneiderman, professor of law and political science at the University of Toronto, who calls the tactic of a provincial referendum to force Ottawa s hand on equalization "an odd proposal."

The strong-arm manoeuvres on equalization from candidates Brian Jean, Jason Kenney and Jeff Callaway strike a chord with some Albertans who have lost their jobs or businesses, or are frustrated with the lack of progress in building new pipelines to foreign markets. Both Mr. Jean and Mr. Kenney are raising the possibility of using the 1998 Supreme Court Quebec secession reference to try to negotiate the removal of non-renewable natural-resource revenues from the current equalization formula.

The leadership candidates equalization argument is based on a report from former Alberta cabinet minister Ted Morton that says while the Quebec secession reference was written in the context of a referendum to secede from the rest of Canada, the Supreme Court phrased it in terms that could apply to a referendum in other provinces. He wrote earlier this year that the case could provide a legal pathway for the Alberta government to hold a referendum to force Ottawa to renegotiate equalization, if the federal government won t willingly come to the table.

Equalization is the constitutionally enshrined federal program meant to ensure that all Canadians have access to reasonably comparable public services no matter where they live. It s paid by Ottawa to provincial governments from general federal revenues. Entitlements are determined by measuring each province s ability to raise money, or "fiscal capacity." Alberta s mostly strong economy over the past 15 years has meant its citizens and businesses have paid more in the way of federal taxes than it has received back – a point that has received more scrutiny with the oil-price drop of the past three years.

The leadership candidates say the equalization case could be used to fight the federal Liberals on their plans to implement a countrywide carbon price – or if Ottawa refuses to roll back the National Energy Board s broadened scope in considering indirect greenhouse-gas emissions in its assessments of pipeline projects.

Prof. Schneiderman said there isn t a clear answer on whether the Quebec case lays out the duty to negotiate in circumstances other than secession. But even assuming it can be interpreted that way, he said the constitutional path suggested by Mr. Kenney and Mr. Jean would require other provinces and the federal government agreeing to such a proposal.

"One has to wonder what the end game would be," Prof. Schneiderman said.

Mr. Kenney also said this week that if British Columbia finds a means of significantly delaying the Trans Mountain pipeline expansion, Alberta has to consider what actions it could take to block shipments of oil to the coastal province through the existing pipeline. The majority of the fuel used by B.C. residents and business comes from Alberta, for both refined products such as gasoline and diesel, as well as crude feedstock for its refineries.

What many in B.C. view as a question of protecting ocean waters, many Albertans see as a straight-up market-access issue. If the NDP-led B.C. government finds a way to delay the expansion, Mr. Kenney believes Albertans will favour a strong show of interprovincial trade retaliation.

"The mayor of Vancouver says he wants a carbon-free economy by 2040. Maybe we should help give him a carbon-free Vancouver by 2020?" Mr. Kenney said to a receptive audience of party members at a UCP leadership debate this week.

Others are calling for action but don t agree with Mr. Kenney. Mr. Jean said the oil-blockade plan is not well thought out, and is premature. Calgary lawyer Doug Schweitzer, another leadership candidate, more tamely proposes ejecting B.C. from the trade pact among the four Western provinces. Alberta Premier Rachel Notley has said if new oil pipelines are not built, her land-locked province will increasingly be forced to rely on crude by rail.

Nigel Bankes, University of Calgary natural resource law professor, said no province can restrict interprovincial trade in energy because it s Ottawa s jurisdiction. Alberta has been focused on that fact as it pushes for the Kinder Morgan expansion, with the argument the project has federal approval.

"Any suggestion of a provincial veto – by either B.C. or Alberta – is completely contrary to Alberta s interests in gaining enhanced access to tidewater," Prof. Bankes said. "It would be political suicide for Premier Notley to make that claim. It should equally be political suicide for Mr. Kenney."

Adrien Byrne, a Vancouver-based spokesman for Chevron, said a trade war between provinces is something no one wants, and has huge potential to hurt Alberta. He noted 70 per cent of B.C. s refined products are supplied by Alberta refineries that would lose sales with any politically motivated push to block shipments.
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