Resentment creeping in

I have discussed in previous blogs the growing resentment – mainly in Ontario – of the Equalization formula that takes money from rich provinces and gives it to poor ones. The largest straw on this camel’s back was the lump sum payments to Newfoundland and Nova Scotia to cover offshore oil & gas revenues. But the festering straw and the one that might jab in deeply is provinces like New Brunswick claiming balanced budgets and offering tax cuts while Ontario is running major budget deficits. Some would say how can New Brunswick cut taxes while Ontario taxpayers subsidize hundreds of millions of dollars worth of New Brunswick’s budget?

Both the editorial boards of the Toronto Star and the National Post are supporting the Premier of Ontario’s campaign to convince his citizens that “they are being taken to the cleaners, by virtue of the now-famous $23- billion gap” according to National Post columnist Andrew Coyne.

Coyne sites a weekend editorial that confused the equalization program with Employment Insurance (“In some parts of Atlantic Canada, for instance, it is the norm for workers to work three months a year at a fishing plant, then spend the rest of the year on the dole).

If the most read newspapers continue to hammer home this point, how long will it be before Ontario gets its wish? And who will pay for that? All you have to do is look at the last recession in the early 1990s for your answer. New Brunswick and all the other ‘have not ‘ provinces will pay for Ontario’s desire to claw back some of this equalization.

But, in fairness to Ontario taxpayers, it must be somewhat annoying to pay billions more in taxes than you get in government services and your provincial government is running huge deficits and raising taxes/fees. Ultimately, something’s gotta give.

That’s why I think that Daulton McGinty should be the biggest supporter of a revamped economic development plan for Atlantic Canada. He should be leading the fight for more funds to support long term, sustainable economic development that will ultimately lead to less dependancy on Ontario taxpayers.

But rationality doesn’t necessarily factor in here. If you were giving your brother-in-law $600/month out of your pocket to help him cover his monthly payments and he came and asked for $1,000/month – with the promise that sometime in the future your monthly payments would go down – would you ante up the cash?