Fiscal Imbalance – Redux

You know on these pages I have been talking about the widely divergent views of the so-called ‘fiscal imbalance’ in Canada. My theory (based on public statements) is that in Ontario the fiscal imbalance means less of Ontario’s taxes going out of the province. In New Brunswick, the fiscal imbalance means New Brunswick is not getting enough of Ontario’s taxes. Don’t take my word for it, Premier Lord was quoted recently as saying we have a ‘Constitutional Right’ to more dough.

Now, this little theory of mine is making the mainstream. Wendell Fulton, a former legislative researcher for 30 years and now a retiree residing in New Maryland, wrote an op-ed in the Telegraph-Journal this weekend. Here are some of his comments:

Somehow finding the so-called fiscal imbalance is akin, to the Atlantic premiers, to going on a Monty Python-like search for the Holy Grail.

If I should meet Premier Lord on the street, I would ask him this question: Mr. Lord, how much money would you want so there would no longer be a so-called fiscal imbalance for New Brunswick? I would be interested in the answer.

Provincial governments, especially those in the Atlantic Provinces, have real cause to worry.

For instance, the Canadian Council of Chief Executives says the federal government should scrap the GST and eliminate health and social transfers to the provinces. Transfer payments could be taken away and applied to tax incentives instead. The GST (the province’s own part of the HST) could be given to the provinces and they could impose their own spending for the provincial constitutional responsibilities of health and education.

[ooops, would this hammer New Brunswick, or what?] – not exactly what Premier Lord has in mind, one thinks.

In thinking about what could (but may not) happen to the Atlantic Provinces in the short term, where in New Brunswick around 40 per cent of the provincial budget comes from Ottawa, is troubling, There are so many “what ifs.” I can only think of that great New Brunswick Tourism slogan: WOW! The long term is even more challenging.

Touché , Mr. Fulton. Touché.

With a declining population and increasing government spending (not to mention the aging population), New Brunswick is going to need a whole lot more of Ontario’s taxes to survive – not less.

Unless, somebody gets around to fixing the underlying economic problems.

So, in my opinion the fiscal imbalance is actually this:

More Ontario taxes or more economic development in New Brunswick.

Which one would ultimately be more palatable to all parties involved?