What is Equalization?

I was talking with a colleague the other day and we got into a lively debate about Equalization – the federal program that provides additional funding to provinces that do not generate enough taxes locally to ensure their public services meet some basic standard (that’s a paraphrase).

He was suggesting that Equalization is a legitimate program and that wealth sharing should be a component in any civilized society. And I agreed.

Where we disagreed is on the perception of Equalization across the board. If you read this blog on a fairly consistent basis, you will know that I report on how ‘Equalization’ is perceived across Canada.

Bernard Lord, his provincial counterparts and the majority of the public in Atl. Canada believe that Equalization is not only a legitimate transfer of wealth but also a Constitutional right. We have as much ‘right’ to our share of Alberta’s wealth as they do. This is, after all, a country.

But that is increasingly becoming out of synch with the rest of Canada (except old faithful, the Toronto Star). Every think tank you can imagine as well as most of the national economics columnists (Ibbitson, et. al) define Equalization in a totally different way saying that ‘Atlantic Canada is hooked on Equalization’. That it is sucking the economic life out of AC. That we are dependent on this welfare. And even more disturbing in the last two years led by McGuity and the Ontario Centre for Competitiveness and Prosperity the new thinking is that Equalization is a drain on Ontario’s prosperity. And don’t forget our old pal Mike Harris who equated Nova Scotia getting to keep its offshore gas royalties with the ‘welfare bum’ who wins the lottery and wants to keep his welfare cheque.

So to me there is a teensy weensy difference between a “Constitutionally guaranteed wealth distribution model that ensures consistency of public services across the country” and a productivity draining, welfare-type, dependancy model that threatens the future of not only Atlantic Canada but also the stronger economies.

Now, my opinion is that wealth sharing is part of what a country is. To me NB is to Alberta as Hinton is to Alberta. That, in many ways, is what governments do – transfer wealth – up and down socioeconomic levels (rich to poor), across interest groups (Aboriginals, Maritimers) and within jursidictions (southern Ontario to northern Ontario).

I, quite frankly, would like to have a national policy on the sharing of natural resources revenues (like Iraq). I realize I have just blown any hope of ever becoming a politician but I don’t care. If we perceived our natural resources as benefitting all of Canada and not just one or two provinces, we would be acting more like a country.

But barring that (which will never happen), I think we need to rethink Equalization in terms of growing the economy – not just sustaining basic public services. Because there will come a day and I think in the next 10-15 years where there will be overwhelming pressure to cut the Equalization system to the bone. New Brunswick’s population continues to decline while the province’s budgets increase on pace with the growing provinces. Eventualy, someone is going to say enough.

That’s why we need to get the economy growing. We need to reduce our dependancy on Equalization. We need some economic sovereignty so that Alberta and Ontario won’t be dictating our future.