Rebalancing priorities for Canada’s prosperity

The Ontario-based Institute for Competitiveness and Prosperity just released its latest report called Rebalancing priorities for Canada’s prosperity. Based on a few factors, I think this institute is gaining in credibility among policy makers.

This latest report is a wide ranging tome discussing everything from education to investment. But I am always on the lookout for hints as to their regional development mindset. I am curious about this for two reasons: 1) they have been quite critical of the Equalization program in the past and 2) Ontario politicians (such as Daulton McGuinty) and other policy influencers have been using this institutes analyses to feed into their thinking around the fiscal imbalance and other issues that could significantly impact Atlantic Canada (one way or the other).

The report is not as blantant in its condemnation of Equalization and Federal transfer programs as previous reports where these two items were essentially blamed for Ontario’s slipping economic success (you remember the theme – taking money that could be used to invest in Ontario’s education system and sending it to poor provinces). But it does make an interesting reference as shown in this chart:

Now this may not mean much to the average Joe. Q. Public, but I read a bunch into it. ‘Fiscal federalism to narrow income disparities’ means the current Equalization system. The system that our Premier wants enhanced. Can you imagine if the Feds said that New Brunswick couldn’t use Equalization to pay for health care and that it must use the funds from that system to ‘enhance prosperity’? That is exactly what this is saying.

On the innovation front, I think this means better alignment between R&D and innovation funding with actual market needs (i.e. economic development). So in the case of New Brunswick, our Innovation Foundation just smacked a pile of dough down on cancer research (a very worthy cause in general) but how is that possibly aligned with the private sector? How many New Brunswick companies are involved in advanced research into cancer for which this new cancer centre could be a valuable resource? How many private sector firms from outside New Brunswick that could use such a research capacity have been attracted to the province? In my opinion, all money spent by government on R&D should be aligned with its economic development goals.

And of course, the catch all shifting from ‘consumption of current prosperity’ to ‘investment for future prosperity’. How much of the New Brunswick government’s budget goes to ‘investing in future prosperity’? Well, they brag about how all government departments have been cut except health and education. And on the latter, thanks a lot for spending more to educate Ontario’s future workforce.