Reducing interprovincial prosperity gaps

Ontario’s Institute for Competitiveness & Prosperity was set up by the former Tory government in that province, in my opinion, to push a Mike Harris style vision for economic development across Canada. Given that Harris had said around the same time that Nova Scotia wanting a ‘side deal’ on oil and gas revenues was like a welfare bum winning the lottery and wanting to keep his welfare cheque.

So, needless to say, I wasn’t expecting much.

And true to my opinion the first few papers that I read coming out of this Institute were Ontario-centric complaining that New Jersey had higher incomes and GDP than Ontario and that, it seemed, was a travesty.

So when this new paper was released with recommendations for how to eliminate the ‘prosperity’ gap with the US, I expected it to be full of the usual Equalization, EI and transfer bashing language.

Which it is. But interestingly, they have added another dimension to this work which piqued my interest.

Here’s one of the recommendations:

Make fiscal federalism more effective in reducing interprovincial prosperity gaps

In the past 20 years, “Regional disparities in GDP per capita have stayed higher in Canada than in the United States. In seventeen of the past twenty years, the United States has had lower levels of inequality in regional GDP per capita than Canada, and the trend indicates that, without a change in course, Canada will never match US convergence performance.

Where have you heard that before? Traditionally, Ontario was about Ontario. As goes Ontario so goes Canada. Now, they are agreeing that the lack of regional development is hindering convergence with US GDP.

More specifically, we have recommended shifting from transfer spending to tax relief that stimulates business investment in the have-not provinces and also shifting the focus from greater funds transfer to increased tax authority transfer.

Isn’t that fun. I love it. I have an idea. Let’s make New Brunswick a tax haven for the auto sector! That should make the Institute change its mind in a hurry, no?

Final Comment:
Don’t get me wrong here. This paper still talks forcefully about deep cuts to EI and a serious restructuring of Equalization that if not balanced with real investment and business expansion could turn Atlantic Canada into an economic basket case. We have depended on Federal transfers for decades so cutting them hard without significant new biz investment would be devestating.

So if this is the position of Ontario – that’s great. But don’t dump on New Brunswick when they quadruple their economic development spending around the world.

And when New Brunswick starts attracting global investment for which you [Ontario] believe have a God given right, applaud nicely. And when Harper/Graham dole out $200 million in incentives to secure some mega economic development project (like they have done multiple times in Ontario and Quebec since being elected), applaud nicely.

At the end of the day, talk is cheap. If the OICP really believes in the need for “reducing interprovincial prosperity gaps” it must support aggressive efforts to make that happen.

Otherwise, it’s just more whistling dixie. I like the tune of the whistling but I’ll like it a whole lot more when there’s proof in the pudding.

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