Equalization payments

[Bonam]

In principle, I'd be opposed to equalization payments on the grounds that the products of people's labour should belong to them and not to government to redistribute.

However, within the framework of Canada and the reality that we are all heavily taxed anyway, it makes sense for the provinces to be equalized to a certain degree. A national uniformity of the types and qualities of services available is simply more efficient and reduces barriers to trade and movement.

This view might seem contradictory to my generally anti-government viewpoint, but the reality is, if we didn't have equalization payments we'd still be taxed just as much. Just the "have" provinces would have even more excessive social programs that they spend their money on, rather than shipping that money to other provinces so they can have their social programs. Keeping the products of one's labour matters on the level of the individual, but if that concept is already out the window and the choice is simply between layers or locations of government and the individual is taxed to hell anyway, who really cares?

[Wild Bill]

Perhaps I'm unique in my view but I have an impression of equalization payments that hasn't been mentioned so far. It seems to me to be just another politician's scam!

Consider, Ottawa takes money from the "rich" provinces and gives to the "poor". OTTAWA has taken the credit for the money the money the "have not" provinces received. No one ever said "Thanks, Ontario!" or more recently "Thanks, Alberta!"

This system has been in place for generations and nobody paid attention. Why? Because none of the "rich" provinces has been hurting! When folks are comfortable nobody pays close attention to their taxes! That's the true secret to successful taxation. Squeeze 'em just until they barely notice and keep it there!

Have-not provinces didn't just suddenly develop cheaper university tuition or social programs. They've had them in place for years. It's just that if you lived in Ontario or now Alberta you didn't bother to look! Why? Again, you were comfortable and had other things on your mind.

Equalization programs tend to become perpetual! They prop up provincial budgets, removing the pressure to develop other sources of revenue. Governments only try to develop more business for tax revenue when they're hurting! It's human nature when you're comfortable to slack off. Does anyone seriously believe that governments are made up of "worker ants" and not "grasshoppers"?

What's changed is that today Ontario IS hurting! Some of it is McGuinty and some of it is global economic conditions. Doesn't matter. It doesn't change the fact that a lot of Ontarioans have started to feel that their tax burden HURTS! Some have looked around and bandied about the idea of moving to another province. They naturally assumed that a smaller province might have poorer levels of service. When you're getting on in years you worry about the quality of medicare available, among other things.

Imagine their surprise when they saw that those smaller provinces had BETTER medicare! It showed that the equalization programs had MORE than equaled! Given the situation it's only natural for this situation to foster resentment.

Ottawa of course is scurrying for cover. Sure, the whole thing was a Liberal trip but Harper doesn't dare cut down the flow of EQ payments. It would kill him at the polls in those affected provinces. He's going to do what any other party leader in power would do. He will blame McGuinty! Ontario is responsible for screwing up its own economy! This will cause so much ruckus and finger pointing back and forth that no one will have to pay attention to the ordinary, out of work and over-taxed Ontarioan.

Albertans are following all this in the news. They aren't stupid! Naturally, they're questioning a system that really is just a slush fund for Ottawa to buy votes in poorer provinces, with THEIR money!

Don't expect any real changes to the status quo unless the recession drags on much longer than expected. Ottawa knows that if they can just hang on long enough for people to feel comfortable again they will all go back to sleep!

Edited March 15, 2010 by Wild Bill

[Jerry J. Fortin]

The status quo is safe. This nation is not going to change anytime soon.

[Smallc]

Albertans are following all this in the news. They aren't stupid! Naturally, they're questioning a system that really is just a slush fund for Ottawa to buy votes in poorer provinces, with THEIR money!

Ontario has some of the lowest personal taxes in the country. That said, I doubt most Albertan's know much of anything about equalization (they share that with most people) other than the fact that it exists;

[Jerry J. Fortin]

Ontario has some of the lowest personal taxes in the country. That said, I doubt most Albertan's know much of anything about equalization (they share that with most people) other than the fact that it exists;

We know we are footing the bill. We know we are getting the pleasure of covering for services others get. We know there is more than meets the eye with respect to equalization.

[Guest TrueMetis]

Sorry you example doesn't work.

You don't elect you boss as your representation in the world of private enterprise.

Being able to petition him to get a pay raise was my attempt to compensate for that in my analogy. Look at it like the guy you voted for didn't get in but you can still right you MP letters.

Edited March 16, 2010 by TrueMetis

[Argus]

so now that Alberta has taken the first shot on Equalization payments what will be the ramifications in the next Federal election if any, this is an issue Harper doesn't want brought up...or was it just the Provincial Conservatives cutting the legs out from under the WRP...

I assume the complaints relate to this.

Equalization Payments a Failure

[Argus]

Its not the money its the principle, I can't vote on how my tax money is spent in have not provinces and in most cases it is wasted. It amounts to a form of taxation without representation.

Uhm, given Alberta's lavish spending these last some years, I don't think you guys should really talk about the incompetence of fiscal managers elsewhere. And I grant you, they ARE incompetent, at least in Ontario and Quebec.

But you guys having a budget deficit given all that oil is just - pitiful. Get your spending under control and then you can complain about Quebec and its social services. Quebec, btw, does not pay its doctors, nurses, teachers or public servants nearly as much as Alberta does (nor does anyone else). Maybe, even given the same funding, that leaves them some free room to provide more services...

[Shady]

Equalization payments is government inefficiency at its worst. It's basically paying people to live in areas without jobs. The more you pay, the more you get. And the cycle continues.

[wyly]

I assume the complaints relate to this.

Equalization Payments a Failure

nope, it was an article by Don Martin...but the idea is the same...

[Moonbox]

Equalization payments is government inefficiency at its worst. It's basically paying people to live in areas without jobs. The more you pay, the more you get. And the cycle continues.

You're right, but then it's also not that simple. You need only look at what happened to Alberta during the recession to see the problems with people chasing jobs across the country.

Personally I can deal with equalization if the provinces used it to modernize, build infrastructure and become more competitive. The way it works right now, however, is it seems to culturalize under-achievement and inefficiency.

The money should be used to improve the economy and make it so equalization isn't needed in the first place, instead of just pissing it away.

[wyly]

Uhm, given Alberta's lavish spending these last some years, I don't think you guys should really talk about the incompetence of fiscal managers elsewhere. And I grant you, they ARE incompetent, at least in Ontario and Quebec.

alberta had huge growth which was not controlled, you can call it lavish spending but services are strained trying to meet demand...

But you guys having a budget deficit given all that oil is just - pitiful. Get your spending under control and then you can complain about Quebec and its social services. Quebec, btw, does not pay its doctors, nurses, teachers or public servants nearly as much as Alberta does (nor does anyone else). Maybe, even given the same funding, that leaves them some free room to provide more services...

it's not that simple..as Isaid services were strained meeting the demand of a huge influx of people and industrial and commercial growth, all those require billions to service...when the price of oil dropped the need for services did not dissappear nor did the debt for it...I'll admit our conservative overlords are horrendous money managers but the deficit was unavoidable without controling the growth of the energy industry...

wages are dependent on cost of living in each region as well as urban and rural...does a nurse in alberta get paid more in Alberta than Sask? yes...but it also costs much more to live in Calgary than S'toon...

Edited March 15, 2010 by wyly

[wyly]

You're right, but then it's also not that simple. You need only look at what happened to Alberta during the recession to see the problems with people chasing jobs across the country.

Personally I can deal with equalization if the provinces used it to modernize, build infrastructure and become more competitive. The way it works right now, however, is it seems to culturalize under-achievement and inefficiency.

The money should be used to improve the economy and make it so equalization isn't needed in the first place, instead of just pissing it away.

I can agree with that...

[fellowtraveller]

I find this very insulting. I don't want to leave Manitoba, and the Constitution says I can stay. It also says that my province will get equalization.

another welfare bum.

If you moved, it would be to Nfld to get involved with the cod fishery.

[fellowtraveller]

Alberta will be running a $4 billion deficit this year, and still sending roughly a net of $9 billion per annum to starving bureaucrats in Winnipeg, Quebec and elsewhere as usual.

[Smallc]

Personally I can deal with equalization if the provinces used it to modernize, build infrastructure and become more competitive. The way it works right now, however, is it seems to culturalize under-achievement and inefficiency.

I'm not sure how people see it that way. Just over the last 3 years, 2 provinces have emerged from have not status, and every year, Manitoba becomes less dependant on it as a percentage of its revenue. Some provinces simply will never be able to get off of it by virtue of the balancing of the formula though.

[Smallc]

Equalization payments is government inefficiency at its worst. It's basically paying people to live in areas without jobs. The more you pay, the more you get. And the cycle continues.

Manitoba has no shortage of jobs, they simply don't pay as much as in some other places.

[Smallc]

alberta had huge growth which was not controlled, you can call it lavish spending but services are strained trying to meet demand...

And Ontario grew by far more...yet they did it with far less money.

[fellowtraveller]

Manitoba has no shortage of jobs, they simply don't pay as much as in some other places.

simple solution, pay all your civil servants, doctors, teachers and nurses less than what they make elsewhere, problem solved re: equalization.

[Smallc]

Alberta will be running a $4 billion deficit this year, and still sending roughly a net of $9 billion per annum to starving bureaucrats in Winnipeg, Quebec and elsewhere as usual.

I'm glad that makes you happy. There is far more than government in both Quebec and Manitoba. Perhaps if you got out a bit, you would know that. Newfoundland would be a fine place to move to.

[Smallc]

simple solution, pay all your civil servants, doctors, teachers and nurses less than what they make elsewhere, problem solved re: equalization.

They already make less than in Alberta (well, not nurses). If we paid everyone less, that again would create huge disparity.

[fellowtraveller]

I'm not sure how people see it that way. Just over the last 3 years, 2 provinces have emerged from have not status, and every year, Manitoba becomes less dependant on it as a percentage of its revenue. Some provinces simply will never be able to get off of it by virtue of the balancing of the formula though.

And one biggie- Ontario- has gone the other way......

I object to the terminology used, I'd say the 'have' provinces are those that are eternally on the teat of equalization- Maritimes, Quebec and the very worst example, Manitoba.

There are lots of jobless in Alberta, a large operating deficit, and we will still send far more money to Ottawa/Winnipeg than we get back.

[Moonbox]

I'm not sure how people see it that way. Just over the last 3 years, 2 provinces have emerged from have not status, and every year, Manitoba becomes less dependant on it as a percentage of its revenue.

While I know virtually nothing about Manitoba or its industries, the 2 provinces you speak of left have not status the same way Alberta did. Newfoundland's waters are sitting on some sizeable oil reserves and Saskatchewan is a potash powerhouse. If not for these then they'd still be perpetual drains on Ontario's economy.

Some provinces simply will never be able to get off of it by virtue of the balancing of the formula though.

That's because the balancing formula is totally borked.

[fellowtraveller]

They already make less than in Alberta (well, not nurses). If we paid everyone less, that again would create huge disparity.

No, it would drop your operating costs for public services dramatically and decrease the need for equalization in kind. The reduction in taxes would only be a small fraction of the reduction in expenses.

Manitoba is a modern juridiction full of intelligent well trained workforce, cheap energy and plenty of resources. Get off your asses and get to work, or move.

[fellowtraveller]

That's because the balancing formula is totally borked.

Correct. It rewards lack of efficiency.