Who Should Own Revenues from Natural Resources in Canada

The question of who should hold jurisdiction over the rights of revenues generated from the exploitation of natural resources is not an easy question to answer. Currently, the responsibility lies in the hands of the provinces (Usher, 1995). However, considering the extremely uneven distribution of natural resources amongst the provinces, across this vast nation, questions are raised about the appropriate treatment of revenues from natural resources, specifically dealing with equalization payments (Boadway, 1983). The current equalization program has shown potential for equalization across provinces. Many argue that it does more damage than good, causing destabilizing effects on total fiscal resources of receiving provinces (Smart, 2004). If Canada were to initiate a new system of equalization, in which revenues generated by natural resources deemed to be of national interest (such as energy resources) were under the jurisdiction of the Federal government, and resources off less impact on the nation's economic stability (such as forestry resources) were the responsibility of the provincial governments, Canada would find a more equal fiscal climate amongst the provinces, leading to a stronger symmetrical federal system.

Equalization is enshrined within the Canadian constitution under section 36 (2) of the constitution act of 1982, to be a responsibility of the federal government of Canada (Usher, 1995). However, the responsibility of exploring and exploiting natural resources to produce revenues falls under the jurisdiction of the provinces (Perry and Treff, 1999). Considering the differences in revenues generated from the exploitation of natural resources, Alberta generating the highest with $4.32 billion and Prince Edward Island generating the lowest with $4 million (Usher, 1995), would it not seem logical to have both of these responsibilities falling under the same jurisdiction? However, due to arguments posed against the provincial government's ability to control equalization payments, it seems only fitting that the federal government would assume the responsibility. Then considering the current system for calculating and making equalization payments, there are arguments against the efficiency and effectiveness, which would call for a reform (Smart, 2004). A symmetrical federation (which Canada strives towards) is characterized by equal