Taking from Peter to pay Paul

May 07, 2008

That strange old cliché, ‘taking from Peter to pay Paul” is what Canada’s equalization payment scheme is all about.

Equalization is the government of Canada’s way of addressing fiscal disparities among provinces. These payments enable less prosperous Provinces to provide their residents with services that are reasonably comparable to other provinces, at reasonably comparable levels of taxation.

The equalization program was entrenched into our constitution back in 1982. It is unconditional and provinces are free to spend the funds according to their own priorities.

I leave the detail to others except to say that these transfer payments have the following results:

Newfoundland and Labrador--$1781.00 per person

Prince Edward Island--$2310.00 per person

Nova Scotia--$1679.00 per person

New Brunswick--$2111.00 per person

Quebec--$1038.00 per person

Manitoba--$1732.00 per person

In total these six provinces will receive over $13.6 billion in equalization payments in 2008/2009.

Many of our politicians and pundits view the payments as a price of confederation, others are not so kind. Today we hear anguish from some provinces and sick humor from others.

For many observers of the national scene, trying to get ten provincial premiers to agree on anything is as hopeless as trying to get ten banana republics to accept democracy.

Like the world economies, Canada’s provincial finances are changing dramatically and quickly. Gone are the long held views that manufacturing areas are the big guys on the block. Today energy and mainly oil have become the source of huge revenues and larger power.

While the principle of equalization is enshrined into our constitution the details are open to negotiation. That means we are back to the bickering between provincial leaders who many times do behave just like the banana republic leaders.

Some of these characters are very clever and they would like us to believe, ‘if only Ottawa would give up more money.” What if Ottawa wants to cut our federal taxes and leave provincial jurisdictions to the provinces.

So far Ontario has never received an equalization payment. But, that could change with the production of oil in Atlantic Canada and the overall high price of liquid gold. Some economists are predicting Ontario will become a have not province within two years.

The most important thing for the average Canadian to realize is that equalization payments are based on a province’s ability to raise revenue. Like it or not, if a province has a series of governments that don’t manage things well, we the tax payers across Canada must make up the difference.

My home province of Manitoba has had great leaders such as Duff Roblin, who was Premier from 1958 to 1967. “Duff” as he was known, built the famous Red River Floodway which came to be called “Duff’s ditch.”

Since then Manitoba has suffered from mediocrity with no sense of vision except higher taxes. The province has enough hydro potential to make it’s future the envy of North America, if it’s politicians would learn to do things instead of just talking.

The point is that we as Canadians pay for the folly of provincial politicians in all parts of Canada. While the details of transfer payments need to be continually negotiated, it is high time some rules of spending were included.

The Premier of Newfoundland and Labrador may feel like a weasel when he “digs” Ontario. The Premier of Ontario may think he is clever by “baiting” Ottawa and the government in Manitoba can continue falling asleep; but it’s our money they are fooling with.

They should not be allowed to forget that simple fact!

Email | Print | Letter to Editor | Share on Facebook

Taking from Peter to pay Paul

Most read in your Region

Most read across BC