After reading Richard Currie talking about New Brunswick as a failing state sucking money from a fed up rich uncle, I figured it was likely time for a bit of a reset.
There is nothing wrong with Equalization or efforts by national governments to transfer some of the profits off natural resource extraction in one province to another. This is done in every developed country in the world. Imagine if Norway restricted the flow of wealth from its oil & gas production just to the epicentre of the drilling area? Iraq has a direct mechanism to share revenue from its oil around the country.
In the absence of that (the dreaded NEP), you need other mechanisms to ensure some fairness and relative equality of public services for all citizens and Equalization has played this role.
In fact, all ‘have’ provinces in Canada with the exception of Ontario (forget the last two years) have a very high percentage of government revenue from non-renewable natural resource royalties and taxes.
I would argue it is a far stronger case associated with transferring natural resource revenue than transferring huge subsidies to prop up agriculture in Saskatchewan and Alberta. But that’s just me. Brad Wall, I suspect, disagrees.
So I do not agree with the rich uncle analogy.
But, and there is the other side of that but….
I do think the system is set up in such a way that ‘have’ provinces seem to be far more interested in their economic development than ‘have not’ provinces like New Brunswick.
I’ve said this many times but if Ontario or BC had New Brunswick’s economic and population performance over the past 10 years or so, there would be an international crisis. In New Brunswick, we get a collective shrug of the shoulders.
So the problem with the system as it is currently constructed is that it provides little incentive for New Brunswick to take economic development seriously.
So we do end up with this divergence where places like NB are less and less able to generate tax revenue to pay for public services and needing ever more from transfers.
Quite frankly, I don’t see how NB will be able to balance its books in the future without even more transfers (I know that we will likely get less as a percentage of the budget but that is a discussion for another day).
We’ve looked at the numbers here and NB is getting older faster than just about every other province in Canada (NL is aging faster).
Where does Anne Murray come in? We need some good news in the media and some clear-eyed thinking about this stuff.
We shouldn’t whipsaw from a strident defence of equalization (a la Bernard Lord) to blaming it as the source of all NB’s problems in just a few short years.
It is likely we will need equalization for my lifetime and probably yours – but that’s not really the point. We need to have more ambition for New Brunswick and we need to focus on building our population, creating strong communities and, yes, generating far more own-source tax revenue.