equalization payments

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Discussing equalization and other federal transfer payments in summer is about as much fun as a root canal in any season. Nevertheless, Ontario Finance Minister Charles Sousa complained recently that the federal government underfunds Ontario.

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There is nothing like an election to bring out the optimistic side in people—and some mythmaking. In Quebec, recent attention focused on Premier Pauline Marois and her musings that if her party wins the provincial election, and if separation one day occurs, that Quebec would keep the Canadian dollar, seek a seat on the Bank of Canada, and that Quebecois might have dual citizenship.

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In a recent drive from Saint John to St. Andrews, New Brunswick, I marvelled at the mostly four-lane highway that connected the two points on the map—and how empty it was on a Friday evening on a long weekend.  I compared it with much of the TransCanada highway in British Columbia, four-laned in portions where it should be six, and often only two-laned where it should be four, as well as to the regularly packed four-lane highway between Edmonton and Calgary.


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Michael Binnion, CEO of Questerre Energy and head of the Quebec Oil and Gas Association, has a great blog post up in which he discusses the impact that equalization payments have on Quebec's energy and natural resource policy.

Looking at Quebec's budget, Binnion observes:


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Imagine you’re a German asked to pay for the lifestyle of a Greek through ever-more transfers to the European Union or through bailouts for Greek debt. Imagine you, as a German, know the average age for a German retiree is 62 while the average Greek is in his retirement villa at age 60. That knowledge explains why northern Europeans may not wish to indulge Greek lifestyles much longer.


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The 1990s was an economically dismal decade for British Columbia. The province effectively missed the prosperity party enjoyed by the rest of Canada due largely to poor economic policies. As a result, the province actually became a “have-not” province and a recipient of federal equalization payments.

We witnessed young, educated and skilled British Columbians leave the province for opportunities elsewhere and BC had the lowest per person GDP growth among the provinces between 1990 and 2000.