We have talked a lot here about the future of the Equalization system and transfer payments in general. There is a growing consensus, I believe, that federal transfers to New Brunswick and other Maritime Provinces are going to begin to moderate and even go down in the future. Here is the recent trend in transfer payments for New Brunswick. If that happens, we will need to find more own-source revenue and I believe the best way to do that is through a sustantative and sustained economic development effort.
For me one of the top reasons why Equalization will be going down eventually is the growing trend in Ontario to blame the system for its own woes. Historically, Ontario was more pragmatic about it, IMO, realizing that it was better to be on the giving than the receiving end of that process. But since Daulton McGuinty’s ‘fairness’ campaign, the discussion has fundamentally shifted in Ontario. Increasingly Ontario pundits, think tanks and other influencers are blaming Equalization and other transfers for Ontario’s problems. Take this example. It is the U of T president commenting in The Varsity:
President Naylor believes the problem of funding the university is twofold: first, that post-secondary education is low on the list of provincial priorities after health care and the financial crisis, among other issues; second, that the policy of equalization is seeping money out of Ontario to other provinces. “Something about a crowded [university] classroom doesn’t seem to grab public attention and political capital the way that a crowded primary school classroom does,” he said in an interview with The Varsity earlier this month. “In essence, Ontario students and universities and colleges are paying higher tuitions that subsidize tuitions in other provinces.”
Now, as I have pointed out before, if you can convince Ontarioians that Equalization is the reason why the province is not able to invest in its universities that makes it far more than a nuance in the mind of Ontarioians.
The changes are coming. We can either get out front and be more intentional about developing own-source revenue or we can wait and get squeezed from the top down.