Ontario To Become Have-Not Province?

[mirror]

Ontario fears 'have-not' status

Ontario is in jeopardy of becoming a have-not province. How Sad. Although I don't expect too many tears will be shed outside of Ontario. Apart from the other provinces that are going to have to bail them out that is.

[Renegade]

Excellent!! I can't wait for the equalization payments to start flowing back to Ontario.

[crazymf]

Don't be licking your lips and looking at us!

[Renegade]

Don't be licking your lips and looking at us!

<{POST_SNAPBACK}>

cm'on now, all you fat cats in alberta have piles of cash to share, don't ya?

[crazymf]

Ralph will straighten you out on that....

[shoop]

If I read this story right the fiscal imbalance, the difference between what Ontario pays into federal coffers and what it receives back, has jumped from $2 billion to $23 billion in 10 years.

That is a 1050% rise over that time period.

Anybody know where there is a link to this report?

The numbers seem sorta unreal...

[kimmy]

Am I the only one who was suddenly reminded of that old song?

Some folks are born

Silver spoon in hand

Lord don't they help themselves?

And when the taxman

Knocks on their door

Ooh the house looks like a rummage sale, yeah

It ain't me, it ain't me

I ain't no fortunate son

It ain't me, it ain't me

I ain't no millionaires son

We have but recently discussed Ontario's "fiscal imbalance" here on our happy forum.

The surprising part, to me, is not that this figure (by McGuinty's estimations) is currently at $23 billion, but that it was a paltry $2 billion 10 years ago. Ontarions, along with Albertans, have the highest incomes and lowest unemployment rates in Canada. It is beyond obvious that residents of these two provinces on average contribute the most to Canada per capita.

The current equalization formula excludes Alberta from the averaging formula. The Atlantic premiers want Alberta to be included in the formula, which will boost the national average considerably. McGuinty should concern himself with keeping that from happening, because if it does, his $23 billion figure will mushroom considerably.

This is just the latest creation of Canada's regionalized politics. McGuinty, like his counterparts in other regions, has realized that "taking on" the feds plays well with the voters back hom. McGuinty has simply borrowed the fiscal imbalance theme from Quebec; it's something they've been harping about for years, and unlike Quebec, Ontario actually has a legitimate case to make. McGuinty already used the fiscal imbalance to shake down PMPM for $6 billion earlier this year; I bet PMPM thought that writing that cheque would save him from having to battle against Ontario politicians during an election. Now, as a federal election call may be just 3 or 4 months away, McGuinty is dusting it off again, and Martin is saying "aw man, not again," as he reaches for his chequebook.

-k

[August1991]

A controversial UQAM professor has called for the nationalization of the oil industry. Leo Paul Lauzon says he's studied the profits of the big three oil companies in this country and found them to be immoral. Lauzon says Imperial, Shell and Petro Canada's profits between 1990 and 2004 totalled 27 billion a 585 percent increase. He says shareholders reaped the benefits while the companies cut back on exploration, gas stations and employees. Lauzon says boycotts and the competition bureau have failed. He says the exploration and refining aspects of the industry should be nationalized while the retailing should be left to the private sector.

940 News

Leo-Paul Lauzon is well known in Quebec as the average man's financial analyst. I heard him yesterday on R-C tallking about this and what struck me is how he kept referring to the need to nationalize "our" oil reserves. (I of course thought of this forum and the various threads about who owns Alberta's oil.)

The fact of the matter is that the Albertan government is receiving big bucks right now, and other people are eyeing it closely. If Ontario becomes a have-not province, that leaves only one province in the elite club of "haves".

[kimmy]

If Ontario becomes a have-not province, that leaves only one province in the elite club of "haves".

McGuinty pointing to the fiscal imbalance to show that Ontario is becoming a have-not province would be like pointing to your high personal income-tax bracket to show you're a poor-person.

-k

[mirror]

Actually Saskatchewan, Alberta, and Ontarion are HAVE provinces at the present time. And I think BC will return to the fold in the not too distant future.

[B. Max]

630 in edmonton was reporting this afternoon that Martin has promised to plunder alberta and hand it out to the rest of the country. Since tranfer payments come right out of the pockets of working albertans is Martin suggesting that he is going to tax albertans at a higher rate? Is he going to make the alberta government write him a big cheque every year? Will he tax the oil companies with some big special tax, likely through kyoto. Whatever the means, i can see that 43% who want to explore secession becoming 100% demanding it.

[mirror]

Unless you have some specifics please stop spreading your drivel.

[B. Max]

Unless you have some specifics please stop spreading your drivel. 

<{POST_SNAPBACK}>

Does one have to draw you a picture. I really don't care what you think. What matters is what concerned albertans will think. Come to think of it, when the last ballot is cast for secession it will for once, be a time when Ont. and the rest of the alberta haters will have no say what soever in any of it.

[mirror]

Alberta haters.

Give US a break. Your hockey teams aren't that good, are they?

Name one prominent Canadian that supports Alberta's separation.

[Bakunin]

With fiscal imbalance, evry province except alberta is becoming a "have not" well most of them were already a have not but its just becoming worst.

Its not a new phenomenon, but under chretiens it became a political strategy and i wouldn't be surprised if it was taken for the same reason they built a sponsorship ads program. The federal is taking more and more place by struggling the province and then trying to have the good role when it come to redistributing its surplus.... a surplus caused by giving less and less money for healthcare, education, employment and evry other sector while the province have to take care of more and more stuff. Healtcare cost exploded, its putting more and more pressure on the province and they will have to work harder to keep up a balanced budget and one day they will have to raise taxes just because the federal is greedy and want to struggle the province to take over their juridiction. Evryone will lose in it, the war between those 2 governments will hurt the population on the long run because i think that the province will prefer to restart doing deficit than giving more power to the federal and the federal will prefer to sink its money on ineffective social program to justify their overwhelming surplus than actually become rational and accept its role.

[mirror]

An Open Letter to the Premier of Ontario, The Ontario Chamber of Commerce, and the People of Ontario

Canadian humour at its best! Comedians are going to having a field day with this issue from here on.

[kimmy]

630 in edmonton was reporting this afternoon that Martin has promised to plunder alberta and hand it out to the rest of the country.

I broke my "no AM radio" guideline yesterday to tune in and listen for this report. All I heard was 630 Ched reporting that Alberta's intergovernmental affairs minister was not concerned with the possibility.

All of the media outlets are likewise today carrying stories in which PM Martin, Ralph Goodale, John McCallum, and Anne McLellan express their skepticism toward the report and explicitly say that they have no intention of a raid on resource revenues.

Ralph Goodale notes that the report is based on data compiled while Ontario's economy was battling a number of unusual circumstances including the SARS outbreak. Speaking on the possibility of an NEP2, Goodale said of the original NEP: "I just don't see that as a viable alternative or suggestion. If you look at the statistics, how the sector did for the whole country at that time, we lost growth, we lost jobs, we lost revenue. It was the trigger for a downturn."

Martin says he feels that "it is a good thing when provinces become wealthy," says that existing programs for sharing wealth between provinces are adequate, and says that "Ontario is a very strong province and will continue to be that way."

John McCallum says: "The fear that any province will have a hard time keeping pace with Alberta these days is well-founded, but the idea that Ontario is heading for have-not status is something I find hard to believe," and that "The control over those resources falls under provincial jurisdiction, and we've gone through a number of episodes on that matter over the years."

McLellan bluntly states "The resource is owned by the province of Alberta."

All of this sounds rather definitive to me.

Meanwhile, what of those who are promoting this Ontario report?

Globe 'n' Mail

Ontario's ability to compete on the world stage is at risk of being severely impaired, the chamber's report says.

"The report is clear proof that Ontario is in trouble," said Len Crispino, president of the Ontario Chamber of Commerce. "This is not just an Ontario problem. It is a national problem that every Canadian should be concerned about."

Ontario's $23-billion gap reflects equalization payments and federal spending on programs that are distributed unevenly across the country, the report says. Ottawa has agreed to help close the gap by providing $5.75-billion to the province over five years.

A business lobby group is calling for federal action to put more money into (or take less money out of) Ontario so as to improve their competitive position...

Marie Bountrogianni, (Ontario) Minister of Intergovernmental Affairs, called on her federal Liberal cousins to help the province extract more funding from Ottawa.

"We have no intention of allowing Ontario to suffer," she said. "I'm hoping they will step up to the plate as well."

...and a provincial government asserting that it is being unduely put upon by the federal government.

In other words, this is just business as usual in Canada.

-k

[B. Max]

630 in edmonton was reporting this afternoon that Martin has promised to plunder alberta and hand it out to the rest of the country.

<{POST_SNAPBACK}>

I broke my "no AM radio" guideline yesterday to tune in and listen for this report. All I heard was 630 Ched reporting that Alberta's intergovernmental affairs minister was not concerned with the possibility.

-k

<{POST_SNAPBACK}>

Well i did hear it. Only once mind you, but once is enough. I guess the feds got to the media and told them to keep quiet because you're right there is nothing being said in the print media. I know the topic was on rutherford today but i didn't hear the show. If there is nothing to be concerned about and the topic doesn't exist why are all these government officials commenting on it. McGuinty and company must be feeling like they were given a backhand by some of the things being said. Chretien was here just before he packed it in and said albertans had to hand more over and klien did. He can't be trusted.

[kimmy]

Well i did hear it. Only once mind you, but once is enough. I guess the feds got to the media and told them to keep quiet because you're right there is nothing being said in the print media. I know the topic was on rutherford today but i didn't hear the show. If there is nothing to be concerned about and the topic doesn't exist why are all these government officials commenting on it. McGuinty and company must be feeling like they were given a backhand by some of the things being said. Chretien was here just before he packed it in and said albertans had to hand more over and klien did. He can't be trusted.

Yeah, sure. Paul Martin is the Grand Wizard of the Illuminati, and he just waved his fingers to make newscasters "forget" the issue. Just like he did with ... uh, Gomery? Grewal? ... uh-huh.

Why was the media asking questions? Because there has been widespread and public speculation for months that Ottawa would make a play on Alberta's resource revenue. Because Klein himself has made public warnings that such a thing could happen. Because McGuinty refered to Alberta's resource revenues as "the elephant in the room" at the recent Premiers' summit ("the elephant in the room" is a metaphor for a subject that is foremost in everyone's mind, but that nobody feels comfortable mentioning) and in wake of the Ontario report declaring they're rocketting to the poorhouse, McGuinty's "elephant" musings led people to the natural conclusion that he was interested in sharing resource money. The topic was on the horizon because of McGuinty and because of media speculation, not because of anything Paul Martin or his colleagues said.

Chretien demanded more money and Klein gave it to him? I know Chretien made comments about wanting more "sharing", but I'm not aware of any change in the equalization formula in response, or of Klein giving him any special contribution. Can you provide some clue as to what the heck you're talking about?

-k

[mirror]

BM

How about when you make this wild outlandish accusations you back them up with at least a URL link so that we don't get the impression you're smokin' some of that funny stuff that no one has, but that eveyone one talks about.

[kimmy]

The Star: Ontario's Fiscal Gap

MacKinnon concluded that Ontario's per capita income was 12 per cent above the Canadian average in 1990 and only 5 per cent above it in 2003. If that trend continues, it will fall into "have-not" status in 2010.

"A have-not Ontario, given that it's got 40 per cent of the country's population, would be a disaster for everybody in a financial sense," he said.

"If ... in terms of income that 40 per cent of the population is below the national average then our ability as a country to compete in the world stage or to do any of the other things we want to do would be seriously impaired." Nor is it advisable for Ontario to raise taxes to cope with its financial challenges, MacKinnon cautioned.

Given that Ontario has 40% of the population, I think it would be very surprising if Ontario's per capita income is ever very far from the national average. Perhaps the real anomaly here is not that Ontario's per capita income was "just" 5% above the national average in 2003, but that Ontario's per capita income was a whopping 12% above the national average in 1990. 40% of the country was earning 12% more than the rest in 1990? What were the rest of us doing in 1990?!

There's no doubt that this trend is quite alarming. The rest of Canada's per capita income gained 7% relative to Ontario's in 13 years... if that trend holds, then in just 100 years Ontarions will be earning only HALF of what other Canadians earn!

More from the Star on the subject:

The Star: Ontario's status

# Ontario's per capita income was 12 per cent above the national average in 1990 and 5 per cent above in 2003, meaning if that downward trend continues, the province will take on "have-not" status by 2010 because it will have fallen behind the national average.

Is Ontario going poor, or is the rest of the country just doing better? Will the rest of the country continue to gain 1% every two years relative to Ontario? Seems kind of unlikely, don't you think? Particularly, as Ralph Goodale noted, since 2003-- the year this paltry 5% above national average was realized-- was the year Ontario was battered by SARS.

# There is a $23-billion gap between what Ontario taxpayers send to Ottawa and what is returned to the province in terms of funding transfers and services.

As I mentioned yesterday... pointing to this statistic to show how poor you are is like pointing to your high income tax bracket to show how poor you are.

# Ontario has the fewest registered nurses per capita in Canada at 65 per 10,000 people, well below the national average of 73. The Northwest Territories lead the country with 118 per 10,000.

# The numbers are only slightly more encouraging for physicians. There are 180 doctors per 100,000 Ontarians — the national average is 189. Nunavut has just 35 per 100,000, while Quebec leads Canada with 212.

# There are just 2.7 hospital beds per 1,000 Ontarians, the lowest in the nation. The national average is 3.6 beds and New Brunswick leads the way with 5.3.

But McGuinty and his supporters, as well as lefties of all description, have been blaming this on the Mike Harris Tories for years. And now it's not? Now it's actually because of "the fiscal imbalance"? Does this mean that everybody owes Mike Harris a big fat apology??

But wait... the Star still isn't done (so neither am I...)

Star Editorial: Looting Ontario to Undermine Poor Provinces

Ontario, long-suffering milch cow of Confederation, has recently awakened to the hard reality that the wealth Ontarians work so hard to create is being cavalierly seized by Ottawa in amounts that no one could describe as fair or equitable. When Ontarians finally realize that their economy is being so looted to finance programs that actually harm the regions of the country they're supposed to help, they'll demand change.

That day is not too far away, as evidenced, for example, by yesterday's interim report on the impact of the federal transfer system on Ontario published by the Ontario Chamber of Commerce.

...

Change will only come when Ontarians stop being so timid and apologetic about demanding real reform of Canada's regional transfers.

The issue is not more transfers for Ontario. Federal transfers taken as a whole are poor policy with perverse results. There are many better ways to ensure provinces can pay for their programs, including federal tax cuts.

When Ottawa retorts that transfers are the price of helping poorer parts of the country, Ontarians must demand to see the evidence that transfers actually do help.

Remember:

When Ontarions grumble about transfer payments, they're demanding change from a system that's unfair, inequitable, and are concerned about harming the provinces they're supposed to be helping.

When Albertans grumble about transfer payments, it's because they're greedy.

Author David MacKinnon is the latest in a growing number of analysts to draw on our institute's work to demonstrate how massive federal transfers like equalization harm those, like Ontario, who pay the bills, while retarding real economic development in places like Newfoundland, New Brunswick and Manitoba.

...

There is a consensus among economists that lagging economies catch up with leading economies naturally, by a process known as "convergence." For example, high unemployment normally causes wage demands to be moderated, thus attracting new investment.

Similarly, under the shock of economic decline, governments may improve their tax and regulatory policies to make their jurisdiction more attractive to business. This convergence would normally have closed the disparity gap between Ontario and Atlantic Canada by about 2 per cent a year without the need for any subsidies or transfers.

...

We've engaged in a massive wealth transfer that has undermined these natural adjustment processes, leaving poorer parts of the country dependent and underdeveloped.

See, when Stephen Harper talked about this, he used words like "dependancy" and "culture of defeatism." If he had talked to the folks at the Atlantic Institute for Market Studies, they could have explained how to phrase it so as to not hurt peoples' feelings.

-k

[mirror]

Unfortunately the Liberals have a lock on most of Canada's MSM, especially the CBC News Dept, which might as well be an arm of the Martinites, so Canadians are constantly subjected to the Liberal spin, much, much more than any other political party.

Hopefully at some point Canadians will tire of the BS and turf them out.

Kimmy

You do a good job of dissecting and explaining issues. Why don't you ask Harper for a job!

[August1991]

See, when Stephen Harper talked about this, he used words like "dependancy" and "culture of defeatism." If he had talked to the folks at the Atlantic Institute for Market Studies, they could have explained how to phrase it so as to not hurt peoples' feelings.

Excellent point, Kimmy.

With fiscal imbalance, evry province except alberta is becoming a "have not" well most of them were already a have not but its just becoming worst.

Its not a new phenomenon, but under chretiens it became a political strategy and i wouldn't be surprised if it was taken for the same reason they built a sponsorship ads program. The federal is taking more and more place by struggling the province and then trying to have the good role when it come to redistributing its surplus....

Bakunin, I never accepted this "Yves-Seguin-fiscal-imbalance" argument. Andrew Coyne has rightly argued that if the provinces want more money, they just have to tax more. Seguin's argument amounts to saying that "the federal government taxed first and there's no room left for the provinces".

Now I realize that Seguin's argument is far more pernicious. Federal tax revenues from one province do not stay in that province. Those provinces who argue in favour of a fiscal imbalance are in effect asking the federal government to do their taxing for them. But in Canada, that means one thing: taxing people in rich provinces. In effect, provincial governments in poorer provinces want money from the federal government and that means receiving money from richer provinces. Equalization is not the only way inter-provincial transfers occur.

For example, if the federal government creates a national day care programme with minimum standards across the country, where will it get the money to pay for this? From rich Canadians. And where do rich Canadians reside? In rich provinces.

...and a provincial government asserting that it is being unduely put upon by the federal government.

In other words, this is just business as usual in Canada.

It's not business as usual when the price of oil is over $60.

----

Last point, we have yet to hear the argument that Alberta's oil is causing a high Canadian dollar which is hurting central Canadian exporters.

[Bakunin]

theorically its right august, why does the provinces doesn't taxes us more ? but thats not the point. The federation trudeau built is a one way federation. The federal government can always get more money by lowering their healthcare and education transfer. In fact thats exaclty how paul martin make the federal rich.

So why doesn't the province taxes us more ? lets take quebec that is already the most taxed in north america. Actually they did higher sereval hidden taxes. But why don't they higher the real taxes ? Maybe cause it could screw up the economy. Screw up the next election and punish the population for the way the federal is acting. In theory he could but in practice its a political suicid.

There should be a law that make it impossible for the federal to stop transfer(not perequation) without giving the money back in % taxes.

[kimmy]

Kimmy

You do a good job of dissecting and explaining issues. Why don't you ask Harper for a job! 

In other words, this is just business as usual in Canada.

It's not business as usual when the price of oil is over $60.

Sure it's business as usual.

-a private lobby group wants lower taxes

-a provincial government wants more pie

-the federal government leery of giving one province more pie because they know the other provinces will be looking for pie too.

What's more Canadian than that? Since BC joined Confederation in 1871 for the express reason of wanting pie, that's been the way Canada works.

In this instance, the fact that it's Ontario looking for pie make this slightly unusual, and skyrocketting resource revenues make this a particularly important pie... but this whole discussion strikes me to be as Canadian as beer and hockey on Saturday nights.

Last point, we have yet to hear the argument that Alberta's oil is causing a high Canadian dollar which is hurting central Canadian exporters.

Sparhawk and Eureka have both spoken of Dutch Elm Disease ... or something like that... recently in reference to our dollar becoming a "petro-buck".

I can't pretend to understand the exciting world of international high-finance or currency trading. However, it seems to me that there are actually 2 separate issues here.

-is our dollar becoming overinflated? If so, redistributing oil wealth around the country doesn't actually address that issue as far as I can tell. If the dollar is becoming overinflated, doesn't the Bank of Canada have the only tools we have to counter that (by controlling the money supply and interest rates?)

-is redistribution of wealth an appropriate remedy to economic problems in regions of the country that are experiencing economic hardship? Well, it seems to me that we as a country have operated on the assumption that yes, it is, to a degree... and that's why we have the equalization program. If the high dollar is hurting Ontario's economy, it'll soon be reflected in average income and that oil wealth will begin finding its way to Ontario indirectly in the form of reduced equalization from Ontario. If that isn't sufficient, perhaps there's room for tinkering with the formula. The TorStar editorial from the Atlantic Institute guys seems to argue that redistributing wealth around the country is actually a harmful policy.

-k