We can be quick to complain about, and even quicker to forget, one of the reasons Canada is a great country. The federal government tries to ensure that, no matter where Canadians choose to live, they receive roughly the same level of public services, thanks to wealth transfer among the provinces.
While most Canadians have little understanding of the arcane mechanisms that drive equalization, they get the basics.
Read Also
Worrisome drop in grain prices
Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
Provincial populations that are doing well pay into the program through their federal taxes but their provincial governments get nothing in return.
Provincial populations that are less well off also pay in through their federal taxes, but their provincial governments receive equalization payments in return.
We may habitually mutter about this wealth transfer, but by and large we accept some reasonable measure of wealth redistribution among provinces just as we accept some reasonable measure of wealth redistribution across income groups. It’s how Canada works.
So, when Ontario, Canada’s largest province and traditionally its wealthiest, joins the ranks of the “have not” provinces, the public services Ontarians have always enjoyed, continue. This past year, Ontario received equalization payments of $31 per capita. It may be a paltry amount compared to other recipient provinces, but it represents a huge change in Canada.
What change? The centre of the Canadian economy is shifting West. In ways that are likely to endure, chronic economic weakness in Ontario is being offset by economic growth in the West.
From now on, the western Canadian economy will carry even more of the fiscal load for the federation and therefore opinions about this region matter a great deal.
So too does the capacity of the re-gional economy to generate wealth, a capacity overlooked in gratuitous attacks of the West’s economic champions.
When politicians from Ontario and Quebec criticized the oilsands at the United Nations’ climate conference in Copenhagen, Denmark, many Albertans were outraged by this attack on an international stage by fellow Canadians, an attack that ignored the contribution of the oilsands to Alberta’s economy, the same economy that helps ensure equality of public service across Canada.
Recently, Bloc Quebecois leader Gilles Duceppe argued that the federal government was supporting the oilsands at the expense of Quebec’s economy, a remark that was not only misleading and malicious, but ignored what are in effect substantial fiscal flows from Alberta’s energy industry to social programming in Quebec.
Criticism of the West’s energy-driven economy is fuelling pushback from Albertans about equalization payments.
Part of it is because Alberta is not doing as well, and generosity to others is harder to defend in the face of a significant deficit and the likelihood of program cuts.
Part of it may be habit, lashing out at the federal government when things are tough at home.
Alberta premier Ed Stelmach has expressed concern about the magnitude of Alberta’s financial contribution to the rest of Canada, and Ted Morton, Alberta’s new finance minister, has been charged with addressing the perceived inequities of equalization.
None of this is helpful to sustaining the country that is the envy of the world.
And, if the western Canadian economy is to carry more of the fiscal load for the federation, then opinions toward equalization in this region matter a great deal.
So too does the capacity of the regional economy to generate wealth, a capacity overlooked in gratuitous attacks on the energy industry.
This biting the energy hand that helps feed recipient provinces with equalization payments is not a sustainable strategy.
