Note to Ibby: Which province – Ontario or New Brunswick has benefitted more from the ‘Canadian model’?

John Ibbitson isn’t tiptoeing through the tulips in his column last Sunday.    He equates Quebec and the Maritimes (he has dropped Newfoundland from his critique in recent years) to the Mediterranean – “The euro zone could become, in effect, a mirror image of Canadian federalism, with the Mediterranean playing the role of Quebec and the Maritimes.”

The government of New Brunswick spends more than $10,000 per elementary and secondary school student each year (from the 2012/2013 budget).  So, in 2012 dollars, the New Brunswick taxpayer spends roughly $10,400 per student per year.  Over the course of 12 years, the taxpayer will pony up $125,000 to educate each young person (in 2012 dollars).

Then some will go on to university where the taxpayer will end up paying roughly $64,000 for each New Brunswicker going through a four year program (in 2012 dollars).   These are order of magnitude estimates as I can’t get break out the exact number of New Brunswickers in NB universities (I can back out foreign students but not other Canadians).

So, the New Brunswick taxpayer will spend over $189,000 per student (in 2012 dollars) only to watch a large chunk leave and go work and pay taxes in Ontario and other Canadian provinces.

You would have to ask Dr. Haan at UNB for exact numbers but suffice it to say that tens of thousands of NBers over the past 40 years have been educated here and used that education elsewhere (mainly Ontario).

If Ibby wants to cut off Equalization, what should we charge him for training his workforce in Ontario?

There are many more examples.  How about federal government spending on science and technology – a subject that makes Ibby break out in goose bumps.

From just 2007 to 2011, the federal government spent $17.5 billion on science and technology (just intramural by the way – not including the billions spent funding other sectors) in Ontario (the province and Ottawa’s share of the Ottawa/Gatineau CMA) or about $1,460 per person compared to less than $350 per person in New Brunswick.  In just the four years 2007 to 2011, that is a $754 million deficit to New Brunswick.  In other words, if the feds had funded science and technology in this province as in Ontario, it would mean another $754 million just between 2007 and 2011.

There are many other examples from arts and culture funding to the large federal government corporate incentive programs but I think the point is clear.

Ibby’s main point in his column was that Germany’s Angela Merkel should avoid Canadian style mutualization of debt lest her country end up like Ontario in Canada.

Slow that down – Ontario – in – Canada.

Ibby would say that New Brunswick has been lucky to be in this Canadian model – that should be avoided by Germany at all costs.

But I ask you.  Which province – Ontario or New Brunswick – has benefitted more from the ‘Canadian model’?

If you understand basic math, Ontario has made out like a banshee and New Brunswick has suffered under an oppressive transfer system that overspends the ‘good’ money (R&D, etc.) in Ontario and overspends the ‘bad’ money (Equalization) in New Brunswick.

At least that is the counterpoint to Ibbitston’s simplistic analysis.  You and I both know this issue is far more nuanced.

But we soldier on.

If Germany follows Canada’s lead and Germany becomes Canada’s Ontario, Germany will boom for the next 50 years while whole regions of the EU will suffer.

So, by that logic, Germany should embrace Canadian-style transfer systems with open arms.


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11 Responses to Note to Ibby: Which province – Ontario or New Brunswick has benefitted more from the ‘Canadian model’?

  1. mikel says:

    I agree with you in principle, but don’t fall into Ibbitson’s world where its ‘us against them’. Keep in mind that one third of NB’s budget comes from the feds, which would lower your numbers somewhat. Of course at a young age thats when you use more health care services and government services, so that can be added as well.

    But don’t worry, Ontario is already well on its way to joining Quebec and the maritimes. I live in a by-election riding where RIM is located, and in order to get elected, the liberals are spending here-get this-to set up services to help RIM’s workforce that is being terminated. That’s right, their idea of ‘spending’ is offering courses in how to write a resume to those who USED to work at RIM. They aren’t even PRETENDING to be able to provide jobs. Add the rumours about RIM selling off its cloud service and this LAST technology center is seeing its LAST large manufacturer enter its forestry stage.

    Take a look at the rest of the province and its already well on its way back. Windsor’s population is leaving faster than any maritime city, London only exists because of the military equipment manufacturing, Hamilton is reeling, and Kitchener Waterloo has seen virtually EVERY manufacturer leave. The only good news has been Toyota, whose wages are steadily going down because they almost literally have people begging at their doors for jobs.

    And thats SOUTHERN Ontario, the north has always pretty much just held on. They say misery loves company, so basically its Alberta and Saskatchewan that are propping up the rest of the country.

  2. Derrick says:

    When a province of 13 million requires a larger share of the equalization budget, does not the math just go to “0” as there
    is nothing to equalize ?

  3. So my main point – long way around – was that Ontario has benefited more than just about anywhere else from this thing called ‘Canada’ and if Germany in the EU got the results over the decades that Ontario has in Canada it should obviously embrace deeper integration in Europe. However, Ontario is hurting these days and it remains to be seen if it can pull out of the current funk.

    It is important to put the Ontario situation in perspective. It still has a much lower unemployment rate compared to New Brunswick. Since July 2009, seasonally adjusted employment in New Brunswick is down 6,400 while it is up 314,000 in Ontario.

    Ontario is still an economic engine – it’s just not the dominant player it was a few years ago.

  4. Richard Reeleder says:

    Ibby could just as well have pointed at the US. States like Alabama and Miss receive oodles of federal dollars via entitlement programs. Without them, they would be worse off than Greece.

    If Europe was a true federation then Europe (and Germany) would be following the US or Canada models – and that would be a good thing, not a bad thing. That surely is one of the objectives of a federation.

    Ibby’s comments harken back to your recent post, David, where you applauded a commentary suggesting that equalization was a bad thing. I suggested that the Harperites would be happy to gut equalization but would NEVER make the R&D or other investments that might replace equalization. Ibby is just acting here (again) as a stalking horse for the far-right radicals that make up the Harperite faction.

    We must be very careful about adjustments to equalization in the absence of other investments. I wish I had more faith in NBs current admin to fight this fight, but I am afraid they are more loyal to the Con Party than they are to NB.

  5. I’ll repeat my position on Equalization. I think it is an admiral quality of a country when it sets as a priority to ensure that all citizens have access to similar levels of public services – health care, education, public pensions, etc. This is not the case in most countries – even developed ones. In a place like Brazil, that I know quite well, the GDP per head is ten times greater in the richest state vs. the poorest state and the quality of public services is highly varied (although it is getting better).

    My point is not that I disagree with Equalization but that I think the broader objective should be fostering stronger regional and provincial economies through good public policy and the building of the kinds of assets and infrastructure that foster economic growth. And, it does seem to me that the current transfer model (Equalization, EI, etc.) does seem to be a model designed to encourage dependency.

    There has to be a more intelligent way for the feds and the province to promote economic growth.

  6. mikel says:

    How exactly does equivalent levels of public services ‘encourage dependancy’? EI is NOT a ‘transfer payment’ in any way, it is simply a federal program funded by WORKERS. Economic development, like ACOA, is NOT a transfer program, it is something else entirely. So those are separate arguments.

    Equilization is tied to education and health care, that’s it. Now, if people have problems with EI, and plenty do, then thats a separate argument and ‘transfer payments’ should not be lumped in with those. For one thing, equalization is enshrined in the charter, so debates on that are about as useful as all those bigots who write into CBC constantly saying that NB should get rid of ‘official bilingualism’. You may not like it, but it ain’t gonna happen.

    And again, that is where you fall through the thin ice-talking about ‘dependance’ is simply another way of saying its ‘bad’. The question is, where is the research done saying what investments have NOT gone to areas where EI may be more supportive than other areas? I would suggest that its the opposite. Otherwise you are simply parroting the party line that says “these deadbeats would be much better off if we cut them off”. Your caveat of “there has to be a more intelligent way…” is something that virtually ANYBODY with a mind will say “yeah, and our government is SO well known for ‘intelligent’ ways of promoting economic growth”. The lowest corporate taxes in the country have worked out how well for you again?

    You DO realize that the claims behind the next wave of free trade agreements is to “get Canada from being merely a resource supplier”. The same problem it had in the 1800’s. And like I said, I live in the technology capital of the country, and the government’s “intelligent way for the feds and the province to promote economic growth” consists of ‘training’ for the newly unemployed whose training is ALREADY state of the art.

    If you want hits and support, then DROP the criticism of these areas and push the economic investment angle. Your like a guy on “LOST” saying “hey, we’ve got to develop our economy and WELCOME companies that want to do business here”. There’s NOBODY out there. Even here in Waterloo most of the training for these newly unemployed is to basically beg them to start companies, otherwise they are screwed because there are so few jobs. What I don’t get is why that is ‘OK’ for some workers in one area, but not OK in others.

  7. Richard Reeleder says:

    @David Campbell
    “There has to be a more intelligent way for the feds and the province to promote economic growth.”

    True, but that won’t happen until we have leaders who understand that data outweigh rhetoric. ‘Dependency’ is just rhetoric, insofar as I can tell.

    Harper has already announced changes to the transfer payments agreement (‘announced’, not ‘negotiated’) and there will be pressure to make further reductions down the road. If NB’s political leaders have any guts/vision, they would have a strategy in hand that called for more fed R&D investment here and/or some other investments to maek up the shortfall. They would demand NB MPs get behind and vocally support that strategy, with the threat of campaigning against them in the nextr fed election. That would get the MPs and Ottawa’s attention. The bullies and thugs in Ottawa understand hammers and tongs – they do not understand or respect calls for ‘discussion’ or ‘dialogue’.

  8. Derrick says:

    Mikel, let’s be reasonable here, if EI was a provincal program paid
    for by the people of NB for the people of NB, we would not have half of the seasonal workers we have today. The government would have figured out a way to move seasonal workers to full time. Fishing people would not be included in the EI system. EI is a transfer as it
    shares the cost of unprofitable seasonal work with full time work.

  9. mikel says:

    That’s not the point. There are LOTS of federal programs that would ‘be different’ if they were provincial. Take a look at National Parks and compare them to Provincial Parks-big difference. Take a look at Heritage Canada spending vs provincial spending on culture. Big difference. EVERYTHING is a ‘transfer’, but that doesn’t make it a transfer payment. Now, maybe people want to stretch the definition, but transfer payments traditionally meant equalization, which meant the programs enshrined in the charter-health care and education.

    And its not purely semantics. The EI program is REGULATED federally, as Richard mentions, there are significant changes underway-probably more to come (so good news for those who just want to ‘cut off those deadbeats’-but bad news if you think any federal economic development is going to accompany it). Meanwhile, health care and education are regulated by the province. In short, even if the province WANTED to make changes in EI jurisdictions, it can’t.

    But underlying that assumption seems to be the notion that the provincial government WANTS these areas EI dependant. Not sure what ‘fishing people’ means, an independant fisherman is very different than a processing worker. Anyway, a self employed fisherman has different regulations than regular EI, but the main difference is that it is based on earnings rather than hours of work-which makes sense. It is also highly dependant on the unemployment rate in the area-and that is always the sticking point. In southern ontario people were complaining that they couldn’t get EI because supposedly ‘there were lots of jobs’. However, that was a structural problem with EI. It makes perfect sense to me that EI would be different in places with NO jobs, vs a place with lots of jobs. Unless of course the aim is simply to get people to move to where the jobs are, which means we’d live in a country where no workers would live east of Saskatchewan. With a surplus there is NO reason a person can’t qualify if they NEED to.

    But not to be too critical, but ‘to be reasonable’ you are seriously saying that if the province managed the EI program “the government would have figured out a way to move seasonal workers to full time”. That is TOO funny, sorry to say it. The province can’t even figure out how to increase ANY kind of direct investment. Your notion could be that they’d just be cheap and cut people off, and people would have to move. Well, EVERYBODY knows that, in fact its fairly clear that thats what the feds WANT. But its hard to have economic development (and pointless) where there are NO PEOPLE.

    PS: The last sentence is a bit of a misnomer. Seasonal work is VERY profitable-to employers. Fewer benefits, lower wages, etc. The ‘sharing’ of EI is between WORKERS, not between levels of government-it is simply managed federally.

  10. Derrick says:

    May be “profitable-to employers” but is it profitable for society, as the stranded labour costs are carried by others. The government does not want seasonal workers, the ongoing situation allows the government
    to avoid any hard decisions or structural changes, so we have the public administration, whose goal is to maintain the status quo? EI is an easy out, everybody gets a little. No voter risk, no risk and no reward, the rewards are reserve for just government people and a few well connected. We are in the same place as we were 40 years ago, just more in debt, maybe the quality of life is better in Saskatchewan most will never know, because that takes a decision.

  11. mikel says:

    Not sure of the point there, I looked all over the internet and all I could find for ‘stranded labour costs’ pertain to energy utilities. By definition EI IS ‘profitable to society’-insurance wouldn’t exist otherwise. If it didn’t exist, NB’s population would be about 500,000 people, if that. And most would be far poorer. The ‘costs’ are carried by others, and although people gripe about it, I’ve never seen any large scale protests about the EI program. My neighbour used to be adamant against it-until one time he found himself out of work.

    Seasonal work is by definition ‘seasonal’. In many ways it isn’t the worker or the employers fault. The reality is you can only harvest certain products at certain times of the year. If you listen to the Newfoundland’s fisheries podcast, you’ll notice that the governments ‘solution’ is basically wait for these people to die off, and move all that production to China. So like agriculture what you’ll find is simply foreign workers housed in camps for X weeks, who then leave to go elsewhere. Great for city folk who get lower cost food, lousy for workers.

    The province certainly is not in the same place it was 40 years ago. Anybody old enough (like me) to remember the seventies (vaguely) knows that it was FAR different-and MUCH worse. The difference has been noted by many economists-there are more poor people, and more rich people. And the poor in many cases, like housing, are worse off. However, by most registrars people are far better off.

    So again, it depends what is meant by ‘tough choices’. Cut off EI for all these people and watch them empty faster. Fewer people means less money for EVERYONE. The people leave, their kids leave, there is no point in even starting new companies because there is no local market. Not sure what the other part meant, the provincial government probably would take ANY jobs it can get. Those people on EI still pay some taxes, and spend money. It’s VERY clear from the PR that the government would LOVE to have fantastic jobs for everybody-and they’d probably take credit. But I’m not sure what ‘tough decisions’ would be-except, again, to cut people off. The result of that is simply people leaving or going on welfare. And going on welfare costs the province.

    Not sure about Saskatchewan, New Brunswick is pretty darn nice, and as nice as most places if you have a decent job. Quality of life is measured in many ways. My interest is in the outdoors, so southern ontario certainly doesn’t have a high quality of life for me. Foodwise its fantastic, but that doesn’t match the interests I have, and most food can be ordered online nowadays anyway. And of course there is great suffering here because we can’t even get Mrs. Dunsters Doughnuts! Or blueberry beer, or Greco pizza. There is great Viet Thai, vegetarian, and middle eastern food, but only Tim Hortons, microbrewery beer that all tastes the same, and lousy pizza.

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