The gap between richer and poorer provinces has been shrinking.
In a year when two heavyweight provinces, Ontario and Alberta, which together constitute 55 per cent of Canada’s GDP, are running substantial deficits, there are three ways to reduce the red ink.
With the plunge in oil prices over the last six months (and already soft natural gas prices), it’s not headline news to note that provinces heavily dependent on energy-related revenues are suffering.
Canada’s federal equalization program is motivated by good intentions. However, the program has unintended consequences, and creates perverse incentives that have allowed at least two “have-not” provinces to shun sensible economic opportunities.
From the fur trade to fisheries and forests, Canada was built on the toil and sweat of those who wanted to prosper. But these days, it’s harder to create opportunity. And sometimes, government is to blame. The latest example comes from Nova Scotia.
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.
There is nothing like an election to bring out the optimistic side in peopleand 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.
Souris Mayor Dave MacDonald recently told the Premier's Council on EI that recent changes to the federal EI program are killing his town.
Unfortunately, Mr. MacDonald did not note that Islanders receive three times as much as they contribute to the EI program. This was a subsidy in 2010 of about $150 million from citizens living elsewhere to people living on PEI.
As anyone who has ever watched puppies tussle over a bone knows, nothing will lead to acrimony quicker than competition for an object everyone wants. Keep the puppy image in mind. Replace it with provincial governments, many of whom now have a stake in the federal transfer program, equalization.