The Meek Shall Inherit… more Equalization

At the very heart of the matter, this is what is holding Atlantic Canada back.

Halifax-based Jim Meek in this article, clearly outlines Donald Savoie’s contention that federal public policies led directly to the growth of the auto sector in southern Ontario, the aerospace and pharmaceutical sectors in Montreal and the high tech sector in Ottawa.

So, naturally, Mr. Meek followed up with a clear case that Ottawa should support similar economic development programs in Atlantic Canada.

Actually, no. Take it away Mr. Meek:

It will be our premier’s job to push for similar, and fair, treatment as Prime Minister Stephen Harper enters a protracted set of negotiations with the provinces over transfer payments and equalization – the programs designed to give all provinces the money to fund crucial programs in health and education.

So, the federal government’s policies that led to strong economic development in central Canada can be equated to the fight for more Equalization in Atlantic Canada.


Now, to be fair, Meek continues:

A fair deal on equalization is one thing. But the real key to this region’s future will be persuading Ottawa to help create some winning economic conditions Down East – on the Ontario and Quebec models. Absent economic growth, all the moneyed and honeyed promises of the recent campaign – better health care, better education, better roads, less crime, more help for seniors – will end up proving as empty as they now sound.

That makes sense for sure. But the previous argument is dead wrong. There is considerable evidence that the more Equalization and transfers this region gets the less likely it is to get serious about economic development. Consider the last six years in New Brunswick as an exaggerated example of this.

What we need is a Federal-Provincial agreement alright. But not on Equalization. On the most ambitious economic development agenda ever put forth for this region.

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0 Responses to The Meek Shall Inherit… more Equalization

  1. Anonymous says:

    That’s garbage. There are tons of economic development plans that are unused. PEI has aerospace attempting to be built up, and they have gotten more equalization than NB.

    Just because you get money for social services doesn’t tie your hands. The buck stops with Lord. Unless you suspect that Ottawa told Lord “here, we’ll give you more money if you shut up about economic development”.

    A lack of equalization is just that, there is NO evidence that the two are correlated. For the end of the eighties McKenna had more equalization coming in, it didn’t stop economic development.

  2. David Campbell says:

    Look at the reality for a minute. The NB government has several ways to raise revenues to pay for its rapidly increasing government services. It can raise ‘own source’ revenue – such as the massive increases in property taxes or it can raise more transfers such as Equalization. Given the amount of effort put into the latter versus the former, one can only assume that the government believes that it is a more effective way to raise funds. In my humble opinion, that may be true but Equalization is not the ‘best form’ of government revenue. I believe the best form of government revenue is ‘own source’ because it is not as subject to ephemeral political whims. If you want to control your own future and destiny, you need to raise the ‘own source’ revenues. That is the source of my frustration. In my opinion, Federal dollars should be used to support the growth of ‘own source’ revenues – not as a subsidy to offset the lack of them.

  3. Anonymous says:

    The specifics of equalization are that the averages of four provinces are used, and due to the charter, provinces must be able to provide a similar level of services. If you look at the vast majority of government spending in NB it has been social services, in fact public administration spending dropped last year.

    Government spending went up in those four provinces, and equalization goes to social services to ensure NB stays on a ‘level’ playing field. In reality, NB must spend more as it has much higher social spending needs.

    That has nothing to do with economic development. As we’ve said over and over again, NB has 6 billion in pension funds it invests elsewhere. An accounting firm says that NB is currently running a deficit, though the government disagrees and according to the liberals they are expecting a cheque from the feds later to cover the shortfall so that they don’t look bad on the only thing they say they accomplished.

    Those of fiscal policy decisions. For example, virtually everyplace else in the world is still deficit spending, because our notion of deficit spending has been so distorted that it doesn’t even mean what people think it means.

    For example, let’s look at our Atlantica neighbour Maine. They have a few hundred thousand more people, however, they have a government budget that is almost double New Brunswicks. They spend 10.65 billion, and from the census information I’ve seen, the federal contribution to Maine, at least in 2001, was 8 billion dollars!

    AND, they are running a deficit of 2 billion dollars! That’s pretty heavy duty government spending and makes New Brunswick look pretty paltry. Equalization isn’t even 2 billion, and ACOA, is pretty marginal as well.

    We can’t control the feds, but we can control deficit spending. If the province borrowed for training and infrastructure, that is not much different than what everybody else is doing.

    So ‘own source’ can be all kinds of things, even increasing taxes on the wealthy, or on funds leaving the province headed for the Caymans. Those are things completely within a governments power and equalization has nothing to do with it.

  4. Anonymous says:

    Sorry, that info is wrong. Maine gets 2.4 billion from the feds. It’s budget is 6 billion, the same as New Brunswicks, which has 450,000 fewer people. However, federal aid doesn’t include contracts with the various shipbuilding companies building navy frigates.

  5. Anonymous says:

    Thought this might interest:

    August 8, 2005

    BANGOR – Governor John Baldacci today signed LD 998, “An Act to Authorize Bond Issues for Ratification by the Voters at the November 2005 Election” outside the University College of Bangor’s Camden Hall. Flanked by supporters of the bond package, including Legislators, Bangor City officials, and University of Maine System Chancellor Joseph Westphal, the Governor said the package contains crucial investments in economic development, infrastructure improvements and Land for Maine’s Future. A portion of the bond package would make significant investments in biomedical research and development, including $1 million for Camden Hall, which will house the new Graduate School of Biomedical Sciences.

    The Governor commended the Legislature for their leadership. “The overwhelming support Legislators gave to these investments illustrates a spirit of collaboration and bipartisanship, and acknowledges that these projects are vital to growing good paying jobs with benefits; to growing our economy; to further improve our infrastructure; and to conserve and protect our environment, land and working waterfront.”

    The Governor remarked that the $83 million bond package will yield more than $200 million in matching and leveraged funds from federal and private sources. These investments will generate additional opportunities for all Maine citizens.

    “We finished Fiscal Year 2005 with a surplus. Jobs and incomes are growing and our tax burden is falling. We’ve created Pine Tree Zones, reformed our tax system, controlled government spending, focused on business costs, education, job training, and created Dirigo Health to help small businesses and workers. But more is needed, and this bond package will keep Maine on the path of positive economic development.”

    “In the first two years alone, construction and transportation spending will support more than 2,300 jobs. Many more jobs will grow from investments is research and business development. This package simultaneously strengthens Maine’s natural resource-based industries while supporting the growth of promising new ventures in the biomedical field and the creative economy.”

  6. Anonymous says:

    Hey, how’s that Dirigo Health workin’ out for you Mainers?