Rolling the Dice

The fiscal imbalance thing is heating up. The Premiers are in Montreal today to talk about it.

According to the TT article today, the Premier says:

…..over the long term New Brunswick needs “substantial improvements to equalization and substantial increases in federal transfers.”New Brunswick has long pushed for equalization reforms, such as moving to a 10-province standard and comprehensive revenue sharing. Such reforms are not always embraced by larger provinces that could stand to lose money under such arrangements.

However, the Ottawa Business Journal reports that Dr. Marie Bountrogianni, Ontario’s Minister of Intergovernmental Affairs and Minister Responsible for Democratic Renewal says:

“We need an arrangement that recognizes the growing importance of our cities and the demands of the new knowledge-based, global economy,” she said, adding that all Canadians need to be treated fairly. “This would mean that outside the Equalization program, money in federal transfers should be delivered on a per capita basis.”

Now, having listened to a pile of commentary on this, here are my observations:

Ontario wants the current Equalization program to stay in place but they want all other federal transfers ‘delivered on a per capita basis’. For example, I heard Bountrogianni say on the CBC that includes Employment Insurance. Ontario pays billions in and gets only a fraction out. New Brunswick receives hundreds of millions more than it puts in. Ontario also wants health and education dollars, roads, etc. doled out on a per capita basis.

So, the position of Ontario is that New Brunswick should get less – substantially less – although they are diplomatic about it.

And our Premier wants ‘substantial increases’.


Now there are a couple of wild cards here.

Harper craves more seats in Quebec. Quebec is a ‘have not’ province. Any formula change that gives Quebec more could lead to collateral benefits for New Brunswick. So the real battle is between Ontario and Quebec on this.

The other option is to give both provinces what they want – not exactly. Ontario will never get its ‘federal transfers delivered on a per capita basis’ but it could get billions more if the Feds decided to open up the floodgates to all provinces (including Alberta and BC). Where that would leave the Feds is another matter.

The other interesting irony here is that we don’t hear Ontario demanding that federal R&D dollars be spent on a ‘per capita’ basis across Canada. We don’t hear Ontario demanding that Federal industrial incentive programs such as the Technology Partnerships Canada be spent on a ‘per capita’ basis.

You see, the best/worst kept secret in economic development is that the Feds actually spent much more on these types of economic development expenditures in Ontario than in a place like New Brunswick. I think the reasoning is that NB gets more EI, Equalization, etc. so Ontario deserves the R&D, TPC, etc. Cripes, John Manley practically used Industry Canada as his own private re-election tool in his Ottawa riding.

Now, to be sure, if the Feds equalized all spending across Canada, New Brunswick would get hugely shafted (even not including Equalization) but we would get tens of millions more in economic development funding.