Rolling the Dice

The fiscal imbalance thing is heating up. The Premiers are in Montreal today to talk about it.

According to the TT article today, the Premier says:

…..over the long term New Brunswick needs “substantial improvements to equalization and substantial increases in federal transfers.”New Brunswick has long pushed for equalization reforms, such as moving to a 10-province standard and comprehensive revenue sharing. Such reforms are not always embraced by larger provinces that could stand to lose money under such arrangements.

However, the Ottawa Business Journal reports that Dr. Marie Bountrogianni, Ontario’s Minister of Intergovernmental Affairs and Minister Responsible for Democratic Renewal says:

“We need an arrangement that recognizes the growing importance of our cities and the demands of the new knowledge-based, global economy,” she said, adding that all Canadians need to be treated fairly. “This would mean that outside the Equalization program, money in federal transfers should be delivered on a per capita basis.”

Now, having listened to a pile of commentary on this, here are my observations:

Ontario wants the current Equalization program to stay in place but they want all other federal transfers ‘delivered on a per capita basis’. For example, I heard Bountrogianni say on the CBC that includes Employment Insurance. Ontario pays billions in and gets only a fraction out. New Brunswick receives hundreds of millions more than it puts in. Ontario also wants health and education dollars, roads, etc. doled out on a per capita basis.

So, the position of Ontario is that New Brunswick should get less – substantially less – although they are diplomatic about it.

And our Premier wants ‘substantial increases’.


Now there are a couple of wild cards here.

Harper craves more seats in Quebec. Quebec is a ‘have not’ province. Any formula change that gives Quebec more could lead to collateral benefits for New Brunswick. So the real battle is between Ontario and Quebec on this.

The other option is to give both provinces what they want – not exactly. Ontario will never get its ‘federal transfers delivered on a per capita basis’ but it could get billions more if the Feds decided to open up the floodgates to all provinces (including Alberta and BC). Where that would leave the Feds is another matter.

The other interesting irony here is that we don’t hear Ontario demanding that federal R&D dollars be spent on a ‘per capita’ basis across Canada. We don’t hear Ontario demanding that Federal industrial incentive programs such as the Technology Partnerships Canada be spent on a ‘per capita’ basis.

You see, the best/worst kept secret in economic development is that the Feds actually spent much more on these types of economic development expenditures in Ontario than in a place like New Brunswick. I think the reasoning is that NB gets more EI, Equalization, etc. so Ontario deserves the R&D, TPC, etc. Cripes, John Manley practically used Industry Canada as his own private re-election tool in his Ottawa riding.

Now, to be sure, if the Feds equalized all spending across Canada, New Brunswick would get hugely shafted (even not including Equalization) but we would get tens of millions more in economic development funding.


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0 Responses to Rolling the Dice

  1. scott says:

    I think the reasoning is that NB gets more EI, Equalization, etc. so Ontario deserves the R&D, TPC, etc.

    I think that Ontario has more heavy hitters that are taken seriously by the feds when it comes to R&D investments. Plus, it doesn’t hurt politically that they have 106 ridings (one third of the countries representation).

    New Brunswick does not have the heavy hitters(much of its educated population has emigrated to other provinces and countries) and it only has 10 ridings (a tenth of what Ontarion has).

    What can we do about this clear inequality?

    I believe, as a country, we have to get out of the mode of provincial comparisons. We seem to capitulate too often to the regionalization aspect of economic development. Instead, we should draft out a clear plan for what it means for Canada if New Brunswick is strong economically.

    We have to move past the sterile debate regarding who should receive more or less from the feds via equalization. There must be a better way.

  2. MartinP says:

    Yeah, that sounds a lot like an article I read from 1919.

    But so much for the ‘fiscal imbalance’:

    Flaherty promises to pay down debt, rein in ‘unnecessary government spending’

    TORONTO (CP) – The Conservatives will rein in unnecessary government spending and will keep their promise to pay down some of Canada’s debt, Finance Minister Jim Flaherty said Tuesday.

    Harking back to his days of presiding over Ontario’s books under former Premier Mike Harris, Flaherty offered a glimpse at what Canadians might expect from his first federal budget, whose release date has not yet been announced.

    “It should come as no surprise that, those of you who knew me in Ontario, that I believe in balanced budgets and paying down debt,” he told members of the Investment Dealers Association of Canada in Toronto.

    “I will behave no differently than I did as Ontario’s finance minister when I made the largest payment against the public debt in a single year in the history of the Province of Ontario – $3.1 billion in 2001.

    “Behaving otherwise – bargaining away balanced budgets and debt paydowns – puts the future of our children and our grandchildren at risk.”

    The Conservatives said they would reduce the public debt each year by $3 billion if elected, a promise Flaherty said they intend to keep.

    The Tories are also taking immediate steps to curb federal spending, namely by working with Treasury Board and Finance officials to ensure that taxpayers’ dollars will be “limited to programs that are efficient and effective,” he said.

    “It is this kind of sensible approach to fiscal management and restraint that will finally result in Canadians keeping more of their money to invest in things that matter most to them,” he said.

    Flaherty later said he doesn’t expect to make any immediate announcements about programs that may be affected by the review”

    Doesn’t anybody else see the huge disparity evident in a country that calls itself democratic, yet lets ONE GUY say “I will behave no differently than I did as Ontario’s finance minister”, and decide how to spend ALL our taxes? Whatevery happened to ‘lowering taxes’?