Conservative leadership candidate Maxime Bernier says he would freeze “unfair and inefficient” equalization payments to so-called have-not provinces and establish a parliamentary committee to review the existing equalization formula.

“When it was started in 1957, Canada’s equalization program had a noble intention — to ensure that Canadians from coast to coast have a similar level of service from their provincial government, whether they live in poorer or richer provinces. It was seen as a way to unite the country,” Bernier said in prepared remarks on Parliament Hill Thursday morning.

“Unfortunately, that is not how it turned out. The program has had numerous unintended consequences. It is unfair and inefficient in multiple ways. And it is disuniting Canadians instead of uniting them.”

The Conservative MP from Beauce, whose fourth quarter fundraising data from earlier this week showed him to be topping the leadership field, said his conversations in provinces across the country over the past 10 months have confirmed his belief that equalization creates interprovincial tensions, discourages growth and prevents necessary economic reforms.

He used Alberta as an example.

“With its strong economy and strong energy sector, Alberta has been for years a net contributor to the equalization program. Its citizens pay federal taxes to fund it, but the province never receives any of it,” he said.

“However, Alberta’s economy has been severely contracting for two years, in part because of the collapse in oil prices. Yet the province will still not get a penny from equalization this year and next year.”

That’s the result of the equalization formula using two-year-old data that calculates an average of fiscal capacity over three years, he added.

At the same time, he argued the equalization formula also makes Quebec and Manitoba look poorer than they really are.

“The equalization formula uses five criteria to determine a province’s fiscal capacity, including energy revenues. However, it doesn’t treat all forms of energy revenues the same way,” he said.

“These provinces are therefore encouraged to continue their policy of subsidizing their local customers instead of getting the full value for their energy — for example, by exporting it. This whole situation is a mess from the point of view of good public policy. It’s unfair and inefficient.”

Instead of benefiting from equalization, Bernier said provinces that have been on the receiving end of equalization for decades — Manitoba, Quebec, Nova Scotia, New Brunswick and P.E.I. — have been locked in a poverty trap.

“Quebec is the province that received the largest amount of money, $10 billion out of a total of $18 billion this year. But that’s because it has a much larger population. The other four actually get more money per capita and are even more dependent on federal support,” he added.

“The system is similar to badly designed welfare programs that used to discourage recipients from working, because they would then lose all their benefits and would be worse off than if they stayed on welfare.”