Equalization = Sympathy?

Anybody who follows politics in Canada knows that a new equalization formula was worked out between the Federal and Provincial governments this week. Equalization is a process where the Federal government distributes tax dollars collected in ‘have’ provinces to ‘have-not’ provinces so that the level of public services delivered can be similar in all provinces. From the media reports, it looks like New Brunswick will get approximately $100 million more per year. The ‘have’ provinces were not overly happy about this. A commentator on CBC radio the other morning outlined his case why the ‘have’ provinces should be happy with this new equalization formula. The rationale, as he stated, is fairly simple. You – the ‘haves’ – send us your money and we will send you our kids – our best and brightest – to work in your offices, factories, etc. It seems to me that he was on the brink of tears as he described this painful exodus of the youth of the Maritime provinces. To me this sounds like fairly good logic. We raise them, pay for their education, get them ready for the workforce and – just when they are ready to be productive members of society – we send them off to Ontario, Alberta or British Columbia to make taxes and then send some of that back in the same way Grandma might send her Grandkids $20 at Christmas.

The problem with this is that it is 1970s or 1980s thinking. Back then, you could hardly avoid meeting people in Toronto or Calgary that would refer to having relatives ‘back east’ or down in the Maritimes. However, during the 1990s, 90% of all the new settlers into Ontario were from places like China and India – most likely not a crowd that is overly sympathic to the plight of Atlantic Canada. In fact, they for the most part would be far more likely to want to send ‘equalization’ payments back home to China or India than… where did you say Moncton was again?

So as the demographic landscape in Canada changes, there will be less and less interest among the general public to keep bailing out Maritime Canada. Hopefully for Nova Scotia and Newfoundland oil and gas revenues will help. As for New Brunswick? I was saddened when I heard the Premier emphatically state that the new equalization money will go into health care and senior’s programs. In the early 1900s, the provincial governments negotiated REDAs (regional economic development agreements) or COOPERATION agreements that put millions into regional economic development. In fact, former Premier McKenna used that money to build the call centre industry in New Brunswick. So, in the 1990s we went to Ottawa to beg for dollars to help fix our economies. In the 2000s we have given up on the economy and we beg for more welfare. So much for ‘pulling ourselves up by the bootstraps’……