Where does the money come from?

I know a few Ontarioians read this blog so I have a reasonable question for you. I have not read much about the fiscal gap that Ontario has with Ottawa but I keep reading stories about how unfair it is to Ontario and the fact that Ontario is the poorest province in Canada because of this gap – no wait, I just made that last part up – Ontario is still the richest province in Canada if you measure it by per capita income/net worth (although Alberta must be sneaking up here I haven’t looked recently).

But let’s say majority rules and Ontario’s fiscal gap gets erased. Where does the money come from? In virtually the press I have read on this the complaints are about Equalization, and unequal health transfers and unfair EI allocations – all Atlantic Canada and Quebec focused.

Why target the guns at the poorest parts of Canada? Why not talk about Ontario’s ‘share’ of all that oil wealth in Alberta?

Serious question. Newfoundland notwithstanding, places like New Brunswick would be hit hard if you clawed back a few hundred million each year to fix the imbalance.

I am not an advocate of NB being a ward of the state so to speak but in the short term, our existence depends on it. I would like someone to tell me if Daulton McGuinty has an opinion on where all this money for the fiscal imbalance should come from?

Finally, I don’t think there are too many New Brunswickers who wouldn’t be ready to switch the imbalance in favour of Ontario – more EI, Equalization, etc. as along as the economic fortunes of each province were switched at the same time.

But to paraphrase old Mike Harris who once said Nova Scotia wanting its equalization and offshore oil royalties was “like the welfare bum who wins the lottery and wants to keep his welfare cheque”, if Daulton wants to fix his imbalance by beating up on places like New Brunswick it would be like the millionaire wanting to cut the housekeeper’s salary because he lost a killing speculating in the market.

My point is the reason why there is a fiscal imbalance is precisely because Ontario has been the strongest economy in Canada for decades. I don’t think Ontario will solve its short term economic challenges by by trying to beat more money out of New Brunswick.

Ontario would be far better off showing strong support for a real self-sufficiency agenda in New Brunswick. That would lower our requirement for elevated transfers and presumably free up some of this money for Ontario.

But that’s just my opinion.

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0 Responses to Where does the money come from?

  1. richard says:

    So McGuinty has jumped onto the Harris bash-equalization bandwagon (that’s what the ‘fiscal imbalance’ argument is really all about). Should Harper get his majority, I think that we can expect Canada to become a meaner, nastier place. With ON onside, equalization programs will be phased out. After all, with de-regulation of industry, and lower business taxes, prosperity is there for all. Or so the story will go.

  2. mikel says:

    Dalton’s shooting his mouth off on equalization is no different than Graham shooting his mouth off about ‘self sufficiency’. After all, if you accept that Graham can be full of air on a talking point, why wouldn’t ANY politician be the same?

    However, to refer again to my last point (a pretty important one), Ontario and the rest of Canada DO have a point in saying “why should WE be paying more because your damn scottish corporations are too damn cheap to ante up?”

    Dalton of course never says THAT, you aren’t allowed to blame the corporate sector for anything.

    And in a way that’s true, its the provincial government that sets policy. However, five seconds look at New Brunswick is enough to tell you who REALLY sets policy. The blackmail over the pulp mill was evidence enough, but add the wallboard factory, the LNG and refinery and its pretty clear. That the percentage contribution is so low and they are talking about making it smaller is proof that either the business class runs policy or else ‘your’ government is simply insane (maybe some of that agent orange got into Grahams birth canal).

    But again, that has nothing to do with New Brunswickers-YOU don’t set policy. THere is a point that the people who DO complain about Irvings aren’t exactly in front of the legislature, but then again, thats just guaranteeing they or their families won’t find work again.

    But for three of the largest ‘dynasties’ in Canada to contribute less than a mere 3% of your budget (not even) is a disgrace -particularly when CIT is 12% in Saskatchewan, 15% in Alberta, and even 10% in Prince Edward Island- the rest of Canada SHOULD be griping about that since they pay the difference. As we know from this blog, New Brunswickers themselves pay MORE than their fair share.

    But again, that NEVER gets mentioned, in fact I did the comparisons and I don’t think I’ve EVER seen media even follow it up-and I’ve mentioned it lots of places where I KNOW media members read all the time.

    But yeah, I’m pissed that New Brunswick needs more equalization because the Irvings are so goddamn cheap its embarrassing. I’m embarrassed that I’m even from the same province as people who would sue the government over whether they should be allowed to knock over Heron’s nests, and sue to get some of their measly 4 million back when they pay among the lowest property tax rates in probably the world (that doesn’t even get into the fact that they don’t even pay penalties when they illegally pollute and don’t even get started on the Irving Whale). So should EVERY New Brunswicker, but as said, even where people KNOW they are getting screwed, there is simply nothing they can do about it.

    And to be critical on monday morning, THAT is a pretty big mozza ball hanging off New Brunswick’s face (and not anybody else’s). So griping at Ontario’s griping seems a little akin to Dalton’s tunnel vision. You want money and want to protect federal dollars and go into more debt that’s fine-just don’t forget you live in a province that HAS money in the first place-but just chooses to give it away to the richest.

  3. David Campbell says:

    Just to let you know that I read your stuff, Mikel, I think you mean ‘matzo ball’. I have tried the soup and it is an acquired taste.

  4. mikel says:

    Not being jewish I don’t have to spell it correctly, but yes, like all hebraic delicacies its an acquired taste (tho the same is usually said about coffee, beer, goulash, sauerkraut, relish, etc:)

    But I wouldn’t worry about reading my stuff, a good portion of it is stuff I LEARNED at this blog, so most of it I know you k

  5. Anonymous says:

    David, on a somewhat related topic, in my opinion the major obstacle for Atlantic Canada is very well described by (Liberal MP) Paul Zed in today’s TJ (“Tory polls suggest just three seats out of reach”):

    “Zed said the national polls are not a reflection of the way voters decide in Atlantic Canada.

    “In this region, there are 32 mini-elections with voters very focused on who their candidate is and what they’re going to do for the riding,” he said.

    In other words: forget about economic development. It’s all about the pork barrel politics.

    That’s the reason why I got tired and left the region after living there for just over 5 years. And many more are doing the same virtually every day.

  6. David Campbell says:

    A couple of academics looked at pork barrel politics a few years ago and concluded there was more of a correlation between that and how people vote in Atl. Canada than in the rest of Canada. But I chalk that up to our chronic economic development challenges. In an environment where there is a long term lack of private business investment, government investment becomes that much more important. If community leaders fought for private business investment as much as they did government pork, New Brunswick would be a far better place.

  7. nbt says:

    In an environment where there is a long term lack of private business investment, government investment becomes that much more important.

    Or it becomes an even larger roadblock to a strong, competitive economy. I mean honestly David, someone has to pay for all these grants and corporate welfare loans to businesses that don’t need them or ones that can’t even make a real go of it in a competitive global market.

    Hopefully, you realize that this has gone on as long as there has been paper to print ink on in New Brunswick. There’s gotta be a better way.

  8. richard says:

    “Dalton’s shooting his mouth off on equalization is no different than Graham shooting his mouth off about ‘self sufficiency’.”

    Except that ON gets what it wants. If ON want to kill equalization, they can do so. NB does not have the heft to counteract that.

    “who REALLY sets policy.”

    The same ones who set policy in ON set policy in NB: those with enough power to influence politicians. NB is little different from ON in that regard; there are just fewer players here and thus less opportunity for politicians to play one against the other.

    “the Irvings are so goddamn cheap its embarrassing.”

    Being cheap isn’t the real problem. The real problem is the short-sightedness of the Irving clan; by trying to control everything (e.g. even their distribution pipeline) they are just stubbing their own toe. They would be much wiser to open these things up; that would alow more inovation to take place. In the long run, both the Irvings and the rest of us would be better off. Unless they change their business model, the Irving empire will soon start to shrink. I expect the province will be worse off then, not better (at least in the short term).

    Convincing the Irvings et al to ‘pay their fair share’ would not really change that much. We’d still need equalization.

  9. mikel says:

    Actually, I showed the data that showed if Corporate Income Tax were at the level of, say, PEI or Saskatchewan, New Brunswick WOULDN”T need Equalization AT ALL (I think theres’ maybe a 100 million shortfall but that wasn’t counting Graham’s smaller increase of high income tax than everyone else and the cut in capital gains tax). That’s not JUST Irving, but a good lot of it is. Heck, just property tax on the oil refinery would bring in at least 28 million more per year if it were up to the low level of many american states-over the life of the oil refinery that’s 28 million times forty years-you do the math.

    However, I didn’t say that NB was politically ‘different’ than ontario, Richard’s points about the interests are pretty much bang on.

    However, where he has no evidence is that ‘ontario gets what it wants’. IF that were true, Dalton wouldn’t be ‘talking’ about getting rid of equalization, but actually DOING something about it. He’s actually never said anything specific about equalization, so that’s a good clue that what he REALLY wants is more federal money. And if they wanted THAT, then certainly Harper would be shovelling even more into Ontario than he’s doing now since he needs ontario for a majority.

    But again, equalization is in the charter, you CAN”T get rid of it, and certainly a provincial government can’t get rid of it.

    It’s also, dare I say, a little bit crazy to state that a growing enterprise is being ‘short sighted’ by growing. Research and technology goes on all over the world, they don’t need New Brunswick as a lab to test research-they could own the whole damn province and still have access to TONS of research. For the society though its far different.

    But as for NBT, again, there ARE better ways, he just doesn’t like them. Taxing the rich is not ‘in vogue’ nowadays.

  10. richard says:

    ” that ‘ontario gets what it wants’. IF that were true, Dalton wouldn’t be ‘talking’ about getting rid of equalization,”

    ON gets the autopact when it was needed, ON gets auto industry investments when needed, ON gets the seaway when needed, ON gets bioethanol plants when needed. Hisotrically, ON gets what it wants. If ON want equalization dead, equalization will be gone. And, yes, McGuinty is talking about equalization; correcting the ‘fiscal imbalance’ means equalization shrinks to insignificance.