David Clinton

Contrasting the principle of equalization with the execution

Quebec – as an example – happens to be sitting on its own significant untapped oil and gas reserves. Those potential opportunities include the Utica Shale formation, the Anticosti Island basin, and the Gaspé Peninsula (along with some offshore potential in the Gulf of St. Lawrence).

So Quebec is effectively being paid billions of dollars a year to not exploit their natural resources. That places their ostensibly principled stand against energy resource exploitation in a very different light.

You’ll need to search long and hard to find a Canadian unwilling to help those less fortunate. And, so long as we identify as members of one nation¹, that feeling stretches from coast to coast.

So the basic principle of Canada’s equalization payments – where poorer provinces receive billions of dollars in special federal payments – is easy to understand. But as you can imagine, it’s not easy to apply the principle in a way that’s fair, and the current methodology has arguably lead to a very strange set of incentives.

According to Department of Finance Canada, eligibility for payments is determined based on your province’s fiscal capacity. Fiscal capacity is a measure of the taxes (income, business, property, and consumption) that a province could raise (based on national average rates) along with revenues from natural resources. The idea, I suppose, is that you’re creating a realistic proxy for a province’s higher personal earnings and consumption and, with greater natural resources revenues, a reduced need to increase income tax rates.

But the devil is in the details, and I think there are some questions worth asking:

• Whichever way you measure fiscal capacity there’ll be both winners and losers, so who gets to decide?
• Should a province that effectively funds more than its “share” get proportionately greater representation for national policy² – or at least not see its policy preferences consistently overruled by its beneficiary provinces?

The problem, of course, is that the decisions that defined equalization were – because of long-standing political conditions – dominated by the region that ended up receiving the most. Had the formula been the best one possible, there would have been little room to complain. But was it?

For example, attaching so much weight to natural resource revenues is just one of many possible approaches – and far from the most obvious. Consider how the profits from natural resources already mostly show up in higher income and corporate tax revenues (including income tax paid by provincial government workers employed by energy-related ministries)?

And who said that such calculations had to be population-based, which clearly benefits Quebec (nine million residents vs around $5 billion in resource income) over Newfoundland (545,000 people vs $1.6 billion) or Alberta (4.2 million people vs $19 billion). While Alberta’s average market income is 20 percent or so higher than Quebec’s, Quebec’s is quite a bit higher than Newfoundland’s. So why should Newfoundland receive only minimal equalization payments?

To illustrate all that, here’s the most recent payment breakdown when measured per-capita:

For clarification, the latest per-capita payments to poorer provinces ranged from $3,936 to PEI, $1,553 to Quebec, and $36 to Ontario. Only Saskatchewan, Alberta, and BC received nothing.

And here’s how the total equalization payments (in millions of dollars) have played out over the past decade:

Is energy wealth the right differentiating factor because it’s there through simple dumb luck, morally compelling the fortunate provinces to share their fortune? That would be a really difficult argument to make. For one thing because Quebec – as an example – happens to be sitting on its own significant untapped oil and gas reserves. Those potential opportunities include the Utica Shale formation, the Anticosti Island basin, and the Gaspé Peninsula (along with some offshore potential in the Gulf of St. Lawrence).

So Quebec is effectively being paid billions of dollars a year to not exploit their natural resources. That places their ostensibly principled stand against energy resource exploitation in a very different light. Perhaps that stand is correct or perhaps it isn’t. But it’s a stand they probably couldn’t have afforded to take had the equalization calculation been different.

Of course, no formula could possibly please everyone, but punishing the losers with ongoing attacks on the very source of their contributions is guaranteed to inspire resentment. And that could lead to very dark places.

Note: I know this post sounds like it came from a grumpy Albertan. But I assure you that I’ve never even visited the province, instead spending most of my life in Ontario.

2

This isn’t nearly as crazy as it sounds. After all, there are already formal mechanisms through which Indigenous communities get more than a one-person-one-vote voice.

Sam Cooper

Retired Toronto Police Deputy Chief Peter Yuen, who joined the board last year of a Chinese international school in Markham flagged in testimony on foreign interference in a neighboring riding in 2019, has been named the new Liberal candidate in Markham–Unionville. He replaces Paul Chiang, who resigned last week amid an RCMP review into controversial remarks suggesting a Conservative opponent could be handed to Chinese officials for a bounty.

The appointment places Yuen—now a central figure in Prime Minister Mark Carney’s campaign—at the center of a riding already under scrutiny in Canada’s evolving foreign interference investigation.

Paul Chiang, a former Markham police officer who unseated longtime Conservative representative Bob Saroya to win Markham–Unionville for Team Trudeau in 2021, stepped down as the Liberal candidate after the RCMP confirmed it was reviewing remarks he made to Chinese-language media in January 2025. During that event, Chiang reportedly suggested that Conservative candidate Joe Tay—a Canadian citizen wanted under Hong Kong’s National Security Law—could be taken to the Chinese Consulate in Toronto to claim a bounty.

In choosing another Chinese Canadian police veteran, the Liberals appear poised to reassure diaspora voters rattled by Chiang’s exit. Yuen, who immigrated from Hong Kong in 1975 and rose to lead Toronto Police’s community outreach and diversity programs before retiring in 2022, brings deep ties to both the Hong Kong diaspora and the mainland Chinese community in Markham—connections that may stir further controversy.

Videos and a report posted on the Toronto Chinese Consulate’s website show that in 2018, Peter Yuen attended a gala hosted by the Confederation of Toronto Chinese Canadian Organizations—an association with direct ties to the Chinese Consulate and Beijing’s United Front Work Department. During the event, which featured remarks from China’s Toronto Consul General to Yuen and other Canadian politicians, Yuen stood beside a prominent Markham community leader known for attending high-level United Front meetings in Beijing with President Xi Jinping, and sang the patriotic song My Chinese Heart.

In August 2024, Peter Yuen joined the board of NOIC Academy in Markham, an educational institution that came under scrutiny during Ottawa’s Foreign Interference Inquiry. CBC News and The Globe and Mail reported in April 2024 that testimony at the Hogue Commission—tasked with investigating foreign interference in Canada’s 2019 federal election—revealed that CSIS had flagged irregularities involving NOIC Academy students in the neighboring Don Valley North riding.

According to The Globe, allegations tied to NOIC appeared in a declassified summary of CSIS intelligence released during the inquiry. “Intelligence reported after the election indicated that veiled threats were issued by the (People’s Republic of China) Consulate to the Chinese international students,” the summary stated. The intelligence further suggested that “their student visas would be in jeopardy and that there could be consequences for their families back in the PRC” if they did not vote for a particular Don Valley North candidate.

Don Valley North, the riding that neighbors Markham–Unionville, is where Joe Tay is running for Pierre Poilievre’s Conservative Party in this election.

NOIC announced Yuen’s appointment in an August 2024 statement, writing: “The former Deputy Chief for the Toronto Police Service joined the management team of NOIC Academy officially just last week.” The school added: “Before Peter joined, NOIC’s Advisory Committee was composed of ‘literati’ (educators), but this time a ‘general’ was ushered in.”

The academy, which educates international students from China, further highlighted Yuen’s leadership background: “Deputy Yuen was in charge of Community Safety Command which provides proactive and reactive public safety services and programs in partnership with diverse communities and key stakeholders.”

Joe Tay, a former Hong Kong broadcaster whose independent reporting from Canada drew retaliation from Beijing, issued a statement last week rejecting Paul Chiang’s apology for the bounty remarks, calling them “the tradecraft of the Chinese Communist Party.” He added: “They are not just aimed at me; they are intended to send a chilling signal to the entire community to force compliance with Beijing’s political goals.”

His concerns were echoed by dozens of NGOs and human rights organizations, which condemned Chiang’s comments as an endorsement of transnational repression.

Even after Chiang’s resignation, Prime Minister Mark Carney faced renewed scrutiny for expressing confidence in him just hours before the RCMP announced its investigation. Carney characterized the controversy as a “teachable moment”—a stance that drew sharp criticism.

The Durham Regional Police Association—which represents officers in one of the three Ontario forces where Chiang served—issued a statement condemning Carney’s actions. “We are disappointed in the clear lack of integrity and leadership displayed by Mark Carney to stand by this candidate rather than act after such egregious actions,” the association wrote, adding that Chiang’s conduct “would be held to a higher standard for an active officer in Ontario.”

The group also rejected Carney’s defense of Chiang’s law enforcement background: “The fact that Mr. Carney used Chiang’s policing career as a shield for his actions undermines the great work our heroes in uniform do in their communities each and every day.”

Chiang’s resignation and Yuen’s sudden elevation now place the spotlight squarely on Markham–Unionville—setting the stage for one of the most closely watched races in the coming election.

Come back to The Bureau for continued reporting on Canada’s election.