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ST. JOHN’S, NFLD. – The Canadian Constitution Foundation (the “CCF”) is relieved to learn that Newfoundland and Labrador has discontinued its challenge to the federal equalization formula. The CCF had argued this was not a proper question for the courts.

In 2024, Newfoundland and Labrador filed a case in the Supreme Court of Newfoundland that the federal government’s current equalization formula violates section 36(2) of the Constitution Act, 1982, which states: “Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.”

The province claimed that the current formula is unconstitutional for a number of reasons, including that service delivery costs are higher for a sparsely-populated province and that the formula arbitrarily limits funding rather than ensuring provinces are “fully funded.” Newfoundland sought a ruling that declares the current formula unconstitutional and requires Ottawa to provide additional payments.

The CCF was granted intervener status to argue that Newfoundland’s claims under section 36(2) were not justiciable: in other words, these were political questions and are not the type of matter that a court can consider. The CCF would have also argued that, if the court were to find a breach of s. 36(2), the only appropriate remedy would have been a declaration rather than an order compelling a different allocation of funds.

Josh Dehaas, Counsel for the CCF, said he was pleased that the case is not moving forward because it risked upsetting the balance between courts and elected legislators.

“While the Constitution commits the federal government to the equalization principle, it does not dictate how that must be achieved in practice,” said Dehaas. “That is left for the two levels of governments to negotiate between themselves.”

Christine Van Geyn, Litigation Director for the CCF, said the taxpaying public deserve accountability for how their money is being distributed.

“Newfoundland was essentially asking courts to override Parliamentary decisions and force the federal government to spend more on that province,” she added. “If the court grants this request, it would set a damaging precedent that judges, not voters, decide who pays equalization and how much, which the framers of the Constitution did not anticipate.”

The CCF was represented in this intervention by Pierre N. Gemson, Laura Thistle and Patrick J. Leger of Borden Ladner Gervais LLP.