By Nia Williams
CALGARY, Alberta (Reuters) - Alberta held a referendum on Monday asking whether Canada should remove a commitment to redistribute wealth among provinces from its constitution, but the vote envisioned by Premier Jason Kenney as a tool to gain leverage with Ottawa could backfire against the deeply unpopular leader.
The nonbinding referendum on equalization payments fulfills Kenney's 2019 election promise to stand up for Canada's main oil-producing province. But it comes as Alberta relies on help from other jurisdictions to tackle a deadly fourth wave of COVID-19 and Kenney faces calls to resign for his handling of the pandemic.
The vote taps into a refrain among core supporters of Kenney's United Conservative Party (UCP) - that Alberta, whose oil sands make Canada the world's fourth-largest crude producer, is unfairly treated by other provinces despite helping power the Canadian economy.
Equalization payments are enshrined in the Canadian constitution as a way of addressing fiscal disparities among the 10 provinces. They are a long-standing grievance in Alberta, and opposition has grown in recent years as volatile oil prices rocked the provincial economy.
Critics say it is unfair that Alberta contributes billions to dollars to equalization every year, while some provincial governments benefiting from the system oppose the development of crude export pipelines that boost Alberta government revenues.
A poll last week from the University of Alberta showed 43% of Albertans support removing equalization from the constitution. But the same poll showed the "no" camp gaining ground and some political scientists warn Kenney's unpopularity means the referendum may become a proxy vote on his leadership.
"This referendum is now putting Kenney's leadership on the line. He has a lot to lose," said Jared Wesley, political science professor at the University of Alberta.
Kenney faces a leadership review in the spring, which was brought forward from next autumn to stave off revolt within the UCP caucus. Many Albertans are furious with Kenney for failing to bring in stronger public health measures over the summer when COVID-19 cases first started to rise in the western Canadian province.
In a social media post on Sunday, Kenney said a resounding "yes" to ditching equalization would give him a strong mandate to negotiate on behalf of Alberta, although the vote alone will not halt equalization because it is embedded in the constitution.
"The referendum is a chance for Alberta to say 'yes' to our request for a fair deal," Kenney said.
The referendum question is attached to municipal elections taking place across Alberta, and the results will be announced on Oct. 26.
'BACK WAY INTO NEGOTIATIONS'
Equalization, which started as a federal program in the late 1950s, transfers federal tax dollars collected from "donor" provinces to those whose ability to raise revenues falls below the national average.
Alberta was an equalization recipient in the mid-1960s, but has since been a donor and currently contributes about C$11 billion-C$12 billion a year. Four other provinces are currently donors, but among them, only Saskatchewan, another resource-rich, conservative-leaning western province, has publicly considered a referendum on the issue.
The referendum is a key part of Kenney's "Fight Back" strategy, in which he promised voters he would stand up for Alberta's oil and gas industry, the cornerstone of the provincial economy.
"He is using the constitution as a back way into negotiations over oil and gas legislation that Alberta is not happy with," said Duane Bratt, a political science professor at Mount Royal University in Calgary.
While the "yes" camp is expected to win Monday's vote, what happens next will depend on how other premiers across Canada and the federal government negotiate with Alberta.
One risk to Kenney is that he could win the referendum but still fail to win concessions from the rest of Canada, which may reinvigorate calls among some right-wing Albertans for the province to leave the federation, Bratt said.
Part of the reason Kenney first promised the referendum was to appease the separatist movement on the conservative right that could leach support from the UCP.
"This is all about generating anger in Alberta and I don't think he has fully thought about all the consequences of doing that," Bratt added.
(Reporting by Nia Williams; Editing by Peter Cooney)