The most important election issue no one is talking about

How’s that for a subjective blog title?

But I will make the case for it.

As you know, the Equalization system is basically set up to reward economic failure. If your economy can’t generate enough own source taxes, the Equalization program kicks in. I am not going to put forward my thoughts on the program as I have done before.

But I do think that an evaluation of this program allows us to cut through the clutter. The spin. The propaganda. I heard once again yesterday how great the Lord economic track record has been.

Et voila:

Since the 1999-2000 budget, New Brunswick’s Equalization take has gone up 38%. Our neighbour to the east only required 10% more Equalization – and nobody is talking about the economic boom in Nova Scotia – because there hasn’t been one.

On a per capita basis the numbers are even more sobering. In 1999-2000 New Brunswick and Nova Scotia were just about equal in terms of the Equalization they extracted from the Feds. As of 2006-2007, New Brunswick required over $400 more for every man woman and child than Nova Scotia.

I haven’t trended this out but you can certainly see that another seven years of Bernard Lord will only put us deeper in the hole (assuming similar trends).

This is the one thing, however; that the Opposition party has to tred lightly around. On the one hand, I am sure they see these trends and are very worried. On the other, they can’t say ‘no’ when the Feds serve up new money.

It’s easy to see why Premier Lord has become the Welfare Premier. He has become so dependent on the Equalization program, it’s only logical that he is the chief spokesperson for enriching the program nationally.

But it’s the worst possible economic development strategy I can think of. As Canada is in its longest stretch of sustained economic growth in history (the last recession was in the early 1990s) all we can manage is population decline and a deepening dependence on Equalization and other Federal Transfers which are up hundreds of millions since 1999.

Betcha a buck not one party leader mentions Equalization in the debate on Thursday.

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0 Responses to The most important election issue no one is talking about

  1. scott says:

    You’re title should be phrase like this David:

    The most important election issue [is:]no one is talking about [it]

  2. Anonymous says:

    That’s a little bit off the cuff, its bad enough the propaganda gets spread across canada, we don’t need it here.

    Equalization does not ‘reward failure’, and has nothing to do with own source revenues. It is just designed to make services equal across the country. If you think Alberta’s conservatism is home grown your crazy, if Alberta were to spend their fortune benefitting its population through services, which polls show Albertans want, the other provinces would have grounds to challenge Ottawa for more funds.

    There’s a reason Alberta is the wealthiest province AND the most miserly, and the feds have plenty to do with it. So long as their wealth isn’t spent on services, nobody else has to catch up.

    However, that doesn’t mean the other points about the province being able to ‘pay its own way’ isn’t valid. As I’ve said before, you can easily do this by taxing resources, and start giving certain companies carte blanche. If corporations only pay 3% of the budget, make them pay 5 or even ten. That money can be used to benefit those companies by labour market training and other services that benefit the population.

  3. David Campbell says:

    Respectfully, you are wrong. If the New Brunswick economy was as strong over the last seven years as we were told, we would not have needed hundreds of millions more Equalization. You can attempt to categorize me along with the “its bad enough the propaganda gets spread across canada, we don’t need it here” crowd but ask yourself this question. Is there an theoretical end to the Equalization bank account? If in 7 years we need $600M more per year will that be acceptable to the ROC? How about $1 billion more? How about $1 billion more on 10% less population? I will argue ad nauseum that we are using Equalization as a proxy for economic development and I don’t agree with it. I think we need a program like Equalization but not to just ensure an ‘equivalent’ level of government services in every province. I think the Equalization program should be geared to helping provinces have the economic foundation required to ensure an ‘equivalent’ level of governments. We are all for the ‘teach a man to fish’ argument in the third world but ignore it here at home. Canada does not need increasingly dependent regions. Ontario is already (and has been since the mid 1990s) that programs like Equalization and other Federal transfer programs are harming its productivity. You scoff at this but how long will this go ignored. We live in a democracy and at the end of the day, Ontario will dictate much of what happens by sheer voting numbers. We don’t have a US style senate to protect provinces with small population bases.