Should we rework the equalization payments for the provinces?

[Signals.Cpl]

It's all Greek to Quebec

Licia Corbella, Calgary Herald

Published: Friday, May 07, 2010

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In Greece, citizens can, on average, retire with a full government pension at the age of 58.

In Germany, the citizens expected to help bail out the bankrupt Greeks must work until the age of 67 before they can retire. Naturally, German citizens are wondering how this can be considered fair. Why should they have to work nine years longer so Greek citizens can live a life of leisure? What's more, in Germany, most working people pay taxes. In Greece, only 20 per cent pay taxes. Again, unfair. And yet equalization between "have" European Union states and "have not" European Union states continues, even though it's not making things equal -- it's rewarding laziness, leisure and possibly even criminal tax evasion. Why pay taxes if some hard-working Germans will do it for you? Thus the riots in Greece. They believe they are entitled to those entitlements.

Dysfunctional? You bet. We Canadians would never stand for such a thing. Right? Think again.

Equalization in Canada was established to ensure that "have-not" regions could enjoy the same programs as "have" regions and most Canadians wouldn't quibble with that. But that has not happened. In fact, the reverse has occurred. The have provinces have fewer services than the have-nots.

In Quebec -- which opted out of the Canada Pension Plan and administers its own pension plan -- citizens can retire with a full pension at age 62. In the rest of Canada, the age contributors can receive full benefits is 65.

In light of the fact that Quebec received $8.6 billion in equalization payments in 2010-11 out of a total equalization pot of $14.4 billion, it's safe to say that citizens in Canada's "have" provinces -- British Columbia, Alberta and Ontario -- are paying for Quebecers' early retirement, as theirs is the only province which has such a generous, early retirement benefit.

In other words, equalization is not very equal.

What's more, Quebecers can take advantage of $7-a-day day care, whereas, in most other provinces, $7 wouldn't even buy you an hour of day care or babysitting.

Quebec has a very generous pharmaceutical program unlike any other in the country and Quebec university students pay considerably less for tuition within Quebec than students from anywhere else in the country.

For instance, to attend McGill University in 2010, Quebec students pay $3,475 for tuition and fees. An out-of-province student attending McGill pays $7,008, or $3,533 more than a Quebec student -- more than double! Five of the six cheapest universities in Canada are in Quebec -- but they're only the cheapest for Quebecers. Those same universities are among the most expensive in Canada for non-Quebecers.

Sherbrooke has the lowest university tuition and fees in the entire country -- but again, only for Quebecers, who pay just $2,381. To attend the same university, a non-Quebecer, from Alberta, for instance, must pay $5,914 or $3,533 more than his Quebec colleague. In other words, when that Alberta student works through the summer in Alberta to save up for tuition and living expenses, the taxes he or she will pay will actually help subsidize the Quebec student's tuition.

Lately, Quebecers, like Conservative MP Maxime Bernier, have criticized Quebec's overreliance on equalization, saying Quebecers are "spoiled children."

But that's got Quebec's Liberal provincial government fighting back. In its 2010-11 budget document, the Jean Charest government is actually arguing that it should receive even more equalization than it's getting because Alberta's oil industry is keeping the Canadian dollar high, which in turn harms Quebec's manufacturing sector. This is not a joke.

"A rise in the world price of a barrel of oil favours provinces that have that resource," states the budget document in Section E.

"However, the rise in the Canadian dollar that accompanies the rising price of oil hampers the exports of the other provinces. An adequate equalization program can mitigate this phenomenon by increasing the revenues of provinces that are negatively affected by the rise in the dollar, without reducing the revenues of provinces that benefit from the higher price of oil."

In other words, Quebec, which received $8.6 billion of the $14.4 billion doled out in equalization this year, is arguing that it's not enough! It wants more and it blames Alberta's oil industry for its troubles. It's a curious argument since it can be argued that Alberta's oil industry is literally fuelling Canada's economy and largely provided the money that was sent as equalization to Quebec in the first place.

In 2007, the last year Statistics Canada figures are available for all provinces, B.C., Alberta and Ontario were the only provinces that paid more into Confederation than they received. Alberta paid a total of $37.064 billion in taxes and transfers to the federal government and the feds returned $17.567 billion in services and programs, meaning that Alberta contributed $19.5 billion net to the rest of Canada.

But Charest, who complained in Copenhagen that Alberta's oilsands industry "embarrassed" him, is actually making the argument that despite Alberta's largesse, it's to blame for the trouble Quebec is in.

In short, it's all Greek to Quebec -- and that's frightening.

http://www2.canada.com/calgaryherald/news/sportsmonday/story.html?id=4099a7c3-229b-464f-b216-74a9a8c920de&p=1

If we rework the equalization payments so that Quebec does not get all of the social programs paid for by provinces that cannot provide the same services to their people, can we use the excess money to pay down the national debt?

I don't believe its fair that Quebec consistently complains how badly it is treated by the other provinces yet it get the best deal in the country. Equalization payments were meant as a means of giving have not provinces the ability to meet their basic necessities rather then subsidize their social programs to such a level that the rest of the country can only dream of.

Edited May 15, 2012 by Signals.Cpl

[waldo]

MLW rules advise not to post articles in their entirety... in this case, it's doubly egregious given the BS nature of yet another piece of Corbella crapola.

[Signals.Cpl]

MLW rules advise not to post articles in their entirety... in this case, it's doubly egregious given the BS nature of yet another piece of Corbella crapola.

You must be from Quebec.

[waldo]

You must be from Quebec.

so... anyone not automatically and outright buying into your agenda... as you say, "must be from Quebec"

Licia Corbella: In Quebec -- which opted out of the Canada Pension Plan and administers its own pension plan -- citizens can retire with a full pension at age 62. In the rest of Canada, the age contributors can receive full benefits is 65.

The retirement pension under the Québec Pension Plan

You can start receiving a retirement pension as early as age 60, but the amount will be lower than if you wait until you reach normal retirement age, that is, age 65. If you stop working earlier, you will have to wait until you turn 60 to start receiving it.

care to keep... dancing?

[Signals.Cpl]

so... anyone not automatically and outright buying into your agenda... as you say, "must be from Quebec"

The retirement pension under the Québec Pension Plan

care to keep... dancing?

I don't think you have the mental capacity to keep up but sure...

[waldo]

I don't think you have the mental capacity to keep up but sure...

how soon you forget!

in any case, sorry to burst your bubble over the Quebec Pension Plan - hey?

[Signals.Cpl]

how soon you forget!

in any case, sorry to burst your bubble over the Quebec Pension Plan - hey?

How exactly did that burst my bubble? And forget what? You are wrong on all issues and the only reason people let you win a discussion is because you are so obnoxious that everyone gets tired of you. That and arguing with you is about as much fun as talking to a wall...actually much less fun.

[Signals.Cpl]

how soon you forget!

in any case, sorry to burst your bubble over the Quebec Pension Plan - hey?

I would stay and debate all night, but I have to go to work tomorrow, you know someone has to work to pay for your welfare after all...

[waldo]

How exactly did that burst my bubble?

buddy, read the quote from the linked Quebec Pension Plan site... ya see, it kinda doesn't agree with your favoured Corbella article's take on the retirement age/benefits for the QPP. Like I said, sorry to burst your bubble... steal your thunder... mess with your agenda, hey?

[waldo]

I would stay and debate all night, but I have to go to work tomorrow, you know someone has to work to pay for your welfare after all...

runaway, runaway!

[Peter F]

It's all Greek to Quebec

Licia Corbella, Calgary Herald

Published: Friday, May 07, 2010

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In Greece, citizens can, on average, blah blah blah

What is this garbage? A province should only be able to opt out if the service it chooses to provide is worse? Sounds like sour grapes

to me.

[Newfoundlander]

Yes.

[Signals.Cpl]

What is this garbage? A province should only be able to opt out if the service it chooses to provide is worse? Sounds like sour grapes

to me.

Why should Ontario, Alberta and British Columbia pay equalization to Quebec so that Quebec could take that money and provide better services to its people then either of those 3 provinces can? Why should the rest of us have to pay 2 or 3 times the tuition and then when we go to work we pay for the Subsidized Education of Quebec? Why make Quebec's daycare affordable while taxpayers in Ontario are barely able to afford to pay daycare? Equalization payments are meant to bring the 7 poorer provinces to the standard of the 3 better-off provinces, it was not meant to make the 3 better-off provinces pay for Quebec's social programs and make them world class while the rest of the provinces struggle to provide the basics. This is the same as one person is working and a portion of his income is given to a less fortunate friend who lives considerably better then the person providing aid and consistently demands more. I think that the other 6 have not provinces might want some more federal assistance to be able to afford a better standard of living, rather then watching Quebec with envy while Quebec consistently spits in our collective faces and demands more because they are so hard done by the rest of Canada.

[waldo]

Why should Ontario, Alberta and British Columbia pay equalization to Quebec

if you're going to presume to champion 'a cause', you really should get current, hey? ... in 2012-2013, Ontario will receive the second highest equalization payment amongst the so-called 'have not' provinces.

Why make Quebec's daycare affordable while taxpayers in Ontario are barely able to afford to pay daycare?

Quebec’s child-care program pays for itself

After 12 years, the Quebec scheme more than pays for itself through mothers’ annual income and consumption taxes, says Pierre Fortin, an economics professor at the University of Quebec at Montreal.

For every dollar Quebec invests, it recoups $1.05 while Ottawa receives a 44-cent windfall, he says.

“The argument can no longer be that governments cannot afford it. This program is paying for itself. It is self-financing.

The increased economic activity, which includes mothers’ income and consumption taxes, more than covered the province’s $1.6 billion annual child-care costs that year. (The province subsidizes each spot by about $10,000 annually.) And it poured more than $700 million in additional revenue into federal coffers.

[Smallc]

Why should Ontario, Alberta and British Columbia pay equalization to Quebec so that Quebec could take that money and provide better services to its people then either of those 3 provinces can?

Since the very fact that those provinces don't receive equalization (well, except Ontario) means that they have a higher than average fiscal capacity, they could in fact provide the same services as Quebec, and more, if they so chose.

[Signals.Cpl]

if you're going to presume to champion 'a cause', you really should get current, hey? ... in 2012-2013, Ontario will receive the second highest equalization payment amongst the so-called 'have not' provinces.

Quebec’s child-care program pays for itself

Ok does it matter if Ontario is getting equalization payments? The point is if we are paying equalization to provinces, it should be to bring the standard in line with the REST OF CANADA not bring them well above the rest of Canada. Ontario has paid for the equalization and will pay again in the future while Quebec has no chance of EVER getting away from equalization payments because their standard of living will have to drop to the level of the Rest of Canada.

It is easy to say Quebec's child care policy pays for itself, but who will pay for Ontario's child care policy in the mean time? You know the time between starting the program and the point in time it starts paying for itself? Now by the looks of it the article states that it took about what 10-11 years to get to that point, now imagine if we in Ontario get this policy? Can we afford the admittedly rough estimate of 2.6billion dollars a year for 10 years before it begins to repay itself?

Equalization should make sure that any province that is a have not should get assistance when needed rather then a one province getting what it wants and the rest getting stuck with the bill.

[Smallc]

Ok does it matter if Ontario is getting equalization payments? The point is if we are paying equalization to provinces, it should be to bring the standard in line with the REST OF CANADA not bring them well above the rest of Canada.

And that's what it does. It brings them to mathematical average, not above it. Have provinces have a higher theoretical fiscal capacity than have not provinces. It's up to provinces how much they tax and where they spend their money after that, because, well, it's a program enshrined in the Constitution....and it's their money...our money.

[Signals.Cpl]

Since the very fact that those provinces don't receive equalization (well, except Ontario) means that they have a higher than average fiscal capacity, they could in fact provide the same services as Quebec, and more, if they so chose.

10 people work

3 make 100k a year

1 makes 70k a year

and 6 make 50k a year

the 3 richest people get taxed by 20k to support the rest. That would be 60k, splitting up the 60k to the 6 people that needed most is ideal but what happens in Canada is we give the guy that makes 70k half of the equalization payments and the other 6 people 5k each. So at the end it comes out like this:

3 people that support the rest make 80k a year

1 person that gets the most equalization makes 100k a year

and then the 6 poorest people get 55k a year

Now this is very simplified and rough explanation.

Think about it, if Quebec were to separate from Canada would they be able to maintain their standard of living? Or would they have to drop to the level of the rest of us?

[Newfoundlander]

And that's what it does. It brings them to mathematical average, not above it. Have provinces have a higher theoretical fiscal capacity than have not provinces. It's up to provinces how much they tax and where they spend their money after that, because, well, it's a program enshrined in the Constitution....and it's their money...our money.

If the federal government is giving money to the provinces in the form of equalization why shouldn't they attach strings to it so we can see if they are actually spending it in a way that will help their economy?

[Smallc]

Think about it, if Quebec were to separate from Canada would they be able to maintain their standard of living? Or would they have to drop to the level of the rest of us?

There's a disconnect in your logic. Equalization brings Quebec up to the level of the 'rest of us', or to an average approximating the middle, adjusted for inflation and economic growth since the last formula was created. They wouldn't come down to our level without equalization, they would go below it. Quebec doesn't enjoy more than you do now, they enjoy about the same or less, it's simply that their governments have different priorities. That means higher taxes and more generous social services than the Canadian norm. You're arguing with the wrong person about the mechanics of equalization.

[fellowtraveller]

I don't understand the OP connection between equalization and CPP/QPP.

Arten't both programs actually pension schemes that are self-sustaining and paid for from contributions by employees and employers? If there is enough sustainable revenue to start paying at 60, 62, 65 or whenever, what does that have to do with equalization?

[waldo]

I don't understand the OP connection between equalization and CPP/QPP.

Arten't both programs actually pension schemes that are self-sustaining and paid for from contributions by employees and employers? If there is enough sustainable revenue to start paying at 60, 62, 65 or whenever, what does that have to do with equalization?

as you recognize, there isn't a connection... aside from the linked article's author failing in stating incorrect 'facts' about the QPP, she also had a 'brain fart' in presuming to make a connection between pension schemes and equalization. The article's wrong 'facts' and author's 'brain fart' were simply carried through by this threads originator.

Edited May 15, 2012 by waldo

[fellowtraveller]

For instance, to attend McGill University in 2010, Quebec students pay $3,475 for tuition and fees. An out-of-province student attending McGill pays $7,008, or $3,533 more than a Quebec student -- more than double! Five of the six cheapest universities in Canada are in Quebec -- but they're only the cheapest for Quebecers. Those same universities are among the most expensive in Canada for non-Quebecers.

Sherbrooke has the lowest university tuition and fees in the entire country -- but again, only for Quebecers, who pay just $2,381. To attend the same university, a non-Quebecer, from Alberta, for instance, must pay $5,914 or $3,533 more than his Quebec colleague. In other words, when that Alberta student works through the summer in Alberta to save up for tuition and living expenses, the taxes he or she will pay will actually help subsidize the Quebec student's tuition.

Mostly untrue or misleading as well.

An Alberta student paying $5914 for a standard undergrad program at Sherbrooke would pay a very similar amount staying home at U of A. A Quebec student attending the U of A pays the same as an Alberta student, around $5900 for a full year undergrad.

The cost to taxpayers per student at the U of A is around about $25K per year, so each student (from AB or PQ) gets in the area of a $19K subsidy. The numbers are similar for PQ, though the bursary programs for low income students in PQ are a lot better.

[Newfoundlander]

An interesting article.

http://m.theglobeandmail.com/report-on-business/economy/economy-lab/quebec-shale-gas-and-pandoras-box/article4572601/?service=mobile

[Rocky Road]

Something has to be done to realign the equalization formula.