Ontario To Become Have-Not Province?

[Riverwind]

-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?)

A couple points:

1) The BOC does not/should not set its policies based on social objectives. The BOC is only interested in preserving confidence in the monetary system. Any Canadian dollar related policy must come from gov't spending.

2) "Re-distribution" of oil wealth happens within Alberta. I am sure that if someone sat down and calculated the net contribution of the Fort McMurrury area to the provincial coffers you would find that the residents of Fort McMurrury are being quite short changed. I find this attitude that all the oil wealth some how intrinsically 'belongs' to the current residents of an arbitrary geographic area within a soveriegn country quite puzzling.

  -is redistribution of wealth an appropriate remedy to economic problems in regions of the country that are experiencing economic hardship?

The devil is in the details - some gov't programs (like EI for seasonal workers) are extremely counter productive. Others, are quite useful (i.e. job training or relocation assistance).

Personally, I was thinking that a national program to re-locate as many out of work people to Alberta as possible would be the most politically effective way to deal with regional inequity. Once in Alberta the unemployed would be entitled to their share of Alberta's so-called birthright and those Alberta firsters could not complain a bit about federal programs designed to help those people since the money would be going back into Alberta.

[Hawk]

The devil is in the details - some gov't programs (like EI for seasonal workers) are extremely counter productive. Others, are quite useful (i.e. job training or relocation assistance).

Personally, I was thinking that a national program to re-locate as many out of work people to Alberta as possible would be the most politically effective way to deal with regional inequity. Once in Alberta the unemployed would be entitled to their share of Alberta's so-called birthright and those Alberta firsters could not complain a bit about federal programs designed to help those people since the money would be going back into Alberta.

<{POST_SNAPBACK}>

No, more likely we would simply open 'homeless hunting season'

Or maybe the entire evil plan would backfire, and the jobless would actually find work and furthur enrich our economy... thereby making you even more sore about our wealth =)

As for the rest of this topic, if the Liberals are foolish enough to try and take more of Alberta's money they deserve the chaos that would ensue. Equalization doesn't work, as has been proven by Ontario and Alberta both getting sucked dry. Rewarding failure has never worked in the past and will never work in the future, but that is exactly what equalization does.

And for anyone that claims 'Alberta should help us out because we helped them when they needed it', I don't consider around 60 million in equalization over an EIGHT YEAR PERIOD in the 1960s as counting as much.. in fact, we pay more than twice that per week now.

[Riverwind]

Personally, I was thinking that a national program to re-locate as many out of work people to Alberta as possible would be the most politically effective way to deal with regional inequity.

Or maybe the entire evil plan would backfire, and the jobless would actually find work and furthur enrich our economy... thereby making you even more sore about our wealth =)

I was mostly serious. I would expect most of the people to find work in the growing Alberta economy (especially if the relocation program included a training component). This, in turn, would reduce the social services load in areas of the country where there is no reasonable prospect of work.

Frankly, I think it is a win-win scenario. The larger population would increase Alberta's electoral strength and the need for transfers to other regions would go down so Alberta would keep more of 'its' oil wealth.

[Hawk]

Personally, I was thinking that a national program to re-locate as many out of work people to Alberta as possible would be the most politically effective way to deal with regional inequity.

Or maybe the entire evil plan would backfire, and the jobless would actually find work and furthur enrich our economy... thereby making you even more sore about our wealth =)

I was mostly serious. I would expect most of the people to find work in the growing Alberta economy (especially if the relocation program included a training component). This, in turn, would reduce the social services load in areas of the country where there is no reasonable prospect of work.

Frankly, I think it is a win-win scenario. The larger population would increase Alberta's electoral strength and the need for transfers to other regions would go down so Alberta would keep more of 'its' oil wealth.

<{POST_SNAPBACK}>

Agreed, but thats assuming that a large group of people that have been babied and nannied their entire lives into believing they 'deserve' money from the government every month would actually go look for work... more than likely they would bellyache for more welfare housing and AISH payments

[Guest eureka]

Why not establish some Gulags in the Far North and send those "leeches" there?

Do we really want them flooding already crowded cities in prosperous regions; driving up Real Estate costs and burdening our welfare and hospital systems?

Don't we actaully need the seasonal work that is done in some of these areas? How else would we get our fish ans some other commodities? Would it not be just a tad more sensible, and economic, to get serious about investment in the regions and provide other work for the areas that would be turned into barrens by relocation.

I think that the answer lies, not in "tough love" and cutting subsidies to the lagging regions, but in continuing to spread the wealth but doing it a little more intelligently.

[Bakunin]

I think we should get rid of the equalization payment.

But if we do, we need a light and flexible central federal government too, to let the poorer province have a smaller government and use their share of the federal government surplus instead of EQ money.

For a sample, in quebec, they get about 4 billions in Eq payment wich could be partly absorbed by getting rid of the duplication of the federal and provincial program evaluated to 2,6 billions in quebec. So they need 1,4 billions more to have a balanced budget. Then if the federal government redistribute 50% of its surplus wich is about what ? between 10 and 15 billions.

so quebec's share is between: 5 * 23% = 1,15billions | 7 * 23% = 1.61 billions.

(23% is its population)

This way, if a provincial government have a good economy, they wouldn't be punish and if a provincial government have a less good economy, they would have no choice but to fix it. In other word, get rid of the Eq payment and the fiscal imbalance and this country will be on track.

Canada lose 37,3 billions per year to pay the debt interest, another solution would be to concentrate all our money to pay back that debt.

[Black Dog]

Agreed, but thats assuming that a large group of people that have been babied and nannied their entire lives into believing they 'deserve' money from the government every month would actually go look for work... more than likely they would bellyache for more welfare housing and AISH payments

Do you have a clue what you're talking about? The point of AISH is to help people who are unable to work. As it stands someone collecting AISH gets about $850/month: a pittance.

Anyway, I find it interesting that in any discussion of "western alienation", electoral reform is almost never mentioned, even though ditching FPTP would spell an end to the phony regionalization of Canada's representative system.

[Riverwind]

Do we really want them flooding already crowded cities in prosperous regions; driving up Real Estate costs and burdening our welfare and hospital systems?

I was wondering if anyone would connect the dots and realize that regional subsidies are allow Alberta to keep the 'riff-raff' away. Eliminate those susbisdies and Alberta will end up with a lot more people on its welfare roles. Personally, I think Albertans are living in denial - the oil wealth translates into a huge amount per capital because the population of Alberta is so small - not because the oil wealth is so large. If we moved to a model where each province paid only for programs that it could afford then more people would move to Alberta which would then reduce the per capita value of the oil resource. At some point in time Calgary would have all of the big city problems that Vancouver, Toronto and Montreal have - including all of the costs associated with them.

[Bakunin]

Do we really want them flooding already crowded cities in prosperous regions; driving up Real Estate costs and burdening our welfare and hospital systems?

I was wondering if anyone would connect the dots and realize that regional subsidies are allow Alberta to keep the 'riff-raff' away. Eliminate those susbisdies and Alberta will end up with a lot more people on its welfare roles. Personally, I think Albertans are living in denial - the oil wealth translates into a huge amount per capital because the population of Alberta is so small - not because the oil wealth is so large. If we moved to a model where each province paid only for programs that it could afford then more people would move to Alberta which would then reduce the per capita value of the oil resource. At some point in time Calgary would have all of the big city problems that Vancouver, Toronto and Montreal have - including all of the costs associated with them.

<{POST_SNAPBACK}>

This is problably true though they would need alot of people before the change become apparent, but being wealthy isn't a crime, if they have a small population, good for them ! As i see it, some people seem frustrated about it. Why not be happy for them ?

[B. Max]

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.

<{POST_SNAPBACK}>

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

<{POST_SNAPBACK}>

Actually what they wave at at least some media are dollar bills, and in other cases licensing. A friend of mine whos daughter worked for a radio station in drumhellar where she did the news was telling us about it a long time ago. Is this a case of that, i don't know, but i know it's out there, and i know what i heard.

As far as what is really extortion payments. Klien doesn't make, never did make, nor did any other premier make a contribution. The payments are collected through taxes by the feds. It is the amount the feds hand out back to the provinces that creates the difference or the socalled equalization. Alberta gets these payments also even thow there are those who think they don't. Where a province like PEI would get back all of their tax the feds collected, alberta would not. That's how it works. What klien agreed to i believe was that alberta would take a reduction of another 2 billion i think it was in returns. Last year alberta recieved back ten or twelve billion less that the feds collect depending on what all is figured in such CPP payments and the like. I never kept any links to it, but there were plenty posted over at FD about three months ago which one might be able to find with a lot of looking because that's a busy place.

[Riverwind]

So they need 1,4 billions more to have a balanced budget. Then if the federal government redistribute 50% of its surplus wich is about what ? between 10 and 15 billions.

so quebec's share is between: 5 * 23% = 1,15billions |  7 * 23% = 1.61 billions.

(23% is its population)

A per capita redistribution of the surplus is just equalization by another name. The federal gov't should reduce taxes and leave it up to the provincial gov't to raise taxes to pay for programs that it wants to fund. I am willing to bet that Quebec government does not want to get the money that way because then they would have to be accountable for the money they spend. It is politically much easier to bully Ottawa for money than it is to tax your own citizens.

[August1991]

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.

A family argument about how to spend the $5000 lottery win is one thing; a family dispute about how to share the $10 million jackpot is quite another. Oil last reached such prices (in real terms) in 1980. Think, Kimmy.

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

True, it has been discussed here but I have yet to see any premier talk about it publicly.

1) The BOC does not/should not set its policies based on social objectives. The BOC is only interested in preserving confidence in the monetary system. Any Canadian dollar related policy must come from gov't spending.

I would like to agree Sparhawk but already the BOC has decided not to raise interest rates (despite hints of inflation). Unlike the US Fed, our central bank is not independent of government. (Dodge used to be Number Two to Martin.)

2) "Re-distribution" of oil wealth happens within Alberta. I am sure that if someone sat down and calculated the net contribution of the Fort McMurrury area to the provincial coffers you would find that the residents of Fort McMurrury are being quite short changed. I find this attitude that all the oil wealth some how intrinsically 'belongs' to the current residents of an arbitrary geographic area within a soveriegn country quite puzzling.

There you go, Kimmy. Take a look at that non-Albertan argument: Taking the money from Albertans is not really doing anything that Albertans themselves don't do.

Personally, I was thinking that a national program to re-locate as many out of work people to Alberta as possible would be the most politically effective way to deal with regional inequity. Once in Alberta the unemployed would be entitled to their share of Alberta's so-called birthright and those Alberta firsters could not complain a bit about federal programs designed to help those people since the money would be going back into Alberta.

Sparhawk, on the contrary, one purpose of equalization is to pay people to stay away. Until Alberta has residency requirements, or builds a wall, it is not only in Albertans' interests but also the federal government's interest if people don't move around the country solely to seek tax benefits.

Or maybe the entire evil plan would backfire, and the jobless would actually find work and furthur enrich our economy... thereby making you even more sore about our wealth =)

Hawk, if people moved to get a better job, fine. The problem is that some people leave good jobs for less good jobs in Alberta because of taxes. The economic justification for equalization payments is to prevent such nonsense.

A per capita redistribution of the surplus is just equalization by another name.

I agree Sparhawk. Ontario and Alberta taxpayers paid for that surplus. If it is distributed on a per capita basis, we have de facto equalization payments. Or rather, de facto interprovincial welfare (AISH) payments.

----

From what I understand, non-renewable resource revenues are excluded from the formula used to calculate equalization payments. IMV, this runs counter to the economic justification for equalization payments. But then, in practice, equalization payments are only the tip of the government interprovincial transfer payments - which are minor compared to the private interprovincial transfers.

At present, there is in effect a large private transfer of purchasing power going from Ontario to Alberta because of high oil prices. Because of world events, Ontarians are handing over to Albertans on paper a large command over real resources.

It is understandable that Ontarians are going to try to recuperate that purchasing power. (One solution is to borrow it. I suspect Americans, facing a similar problem, will opt for that solution.)

--

Of course this will cause stress between regions in Canada. After all, Canada is all about regional politics.

Imagine for a moment that a father pays his son $10 to cut the lawn. Then, a rich neighbour moves in and offers $50 to the son for cutting his lawn. The son accepts, and insistes on $50 from his own father too. The father grumbles and then starts to cut the lawn himself instead. We have the makings of a family dispute.

[Bakunin]

Then maybe we should concentrate more on paying back that huge debt to get our 37,3 billions back ! it would be a good way to invest in the futur of the country.

[Toro]

I would like to agree Sparhawk but already the BOC has decided not to raise interest rates (despite hints of inflation).  Unlike the US Fed, our central bank is not independent of government.  (Dodge used to be Number Two to Martin.)

I'm not sure why you think this August. Both are independent of the government by law. Dodge may have been Martin's number two, but Greenspan was an advisor of Nixon. Its been a tradition of late that the Federal Reserve Chairman has served in some capacity as an economic advisor to the President. That is why Ben Bernanke recently resigned his position on the Federal Reserve to sit on one of the President's economic advisory councils as he is a candidate to be the Chairman of the Federal Reserve when Greenspan resigns next year.

But I digress. (Don't want to be chastened by Argus! )

[mirror]

Actually the last I heard the Bank of Canada is going to raising interest rates on Sept 7.

August has a tendancy to see anything Canadian in a negative light.

[August1991]

August has a tendancy to see anything Canadian in a negative light.

mirror, I disagree strongly with you. I do not see Canada in a negative light. Furthermore, I am saddened by your implication that somehow I am not a good Canadian patriot. Canada is the only country that I can call home. Where else am I to live?

Moreover, I think no good in the long term can come from believing something that is false. Repeating an idea constantly will not make it true. A symbol can signify reality but no symbol can make reality, however much we may wish it.

[mirror]

August

Anything that I can recollect you saying about Canada has come across as negativity to me.

You are very welcome to that point of view, and it does not make you a bad Canadian for thinking that way.

I just cannot understand why Canadians, the privileged people that live here in Canada, are so consistently critical of our society and its institutions.

But that's just me.

PS Toro I like your current signature!

[Hawk]

August

Anything that I can recollect you saying about Canada has come across as negativity to me.

You are very welcome to that point of view, and it does not make you a bad Canadian for thinking that way.

I just cannot understand why Canadians, the privileged people that live here in Canada, are so consistently critical of our society and its institutions.  

But that's just me.

PS Toro  I like your current signature! 

<{POST_SNAPBACK}>

Maybe its because, with pathetic voter turnouts, we get majority governments that don't respresent our views and instead impose elitist policies on us and force through controversial legislation?

This isn't 'our' Canada mirror, its yours and those that think like you.

[mirror]

Hawk.......stop feeling so persecuted.

You have it good and the whining here at mapleafweb about Canada is unbelievable, and makes me want to puke.

If there is a group of people that are oppresed in Canada it is the poor, but who is ever going to speak up for them.

[Hawk]

Hawk.......stop feeling so persecuted.

You have it good and the whining here at mapleafweb about Canada is unbelievable, and makes me want to puke.

If there is a group of people that are oppresed in Canada it is the poor, but who is ever going to speak up for them.

<{POST_SNAPBACK}>

Speak up for them? I drive to get my lunch, with my hardearned cash, and pass hundreds of 'poor' people shambling around downtown completely zoned out to the world around them... high on meth (Methbridge, haha), alcohol, lysol, weed, or any other variation of drugs.

If you think the poor have no choice you are delusional, the majority of today's "poor" are soley responsible for their plite in life. If that is not the case, then explain how we have multi-generation welfare families?

Nobody needs to speak up for them, they need to get off their @$$es and work to better their own lives.

As for me being persecuted, I never said I was persecuted. I was talking about the shame of a country your Liberals have created and how they destroyed a national symbol, I have no respect for any Liberal in this country and I will never salute the Canadian Flag again. I salute the Red Ensign and flag of Alberta until a proper Western/Alberta Independance flag is put in place.

I am Canadian, I am still trying to figure out what you have become.

[mirror]

Hawk

Good riddance.

Bye!

PS Don't forget to turn your Canadian passport in at the gate.

[mirror]

How the Equalization Program works

Globe and Mail Update

The federal government's Equalization Program was designed to reduce fiscal disparity between the ‘have' and ‘have-not' provinces.

Its main objective is to allow less prosperous provinces to provide public services comparable to those of their wealthier counterparts.

A province will receive equalization payments if its ability to raise money, technically referred to as its fiscal capacity, falls below the national standard.

The term national standard is different from the national average. The standard has been set by averaging the fiscal capacity of the five ‘middle-income' provinces -- Quebec, Ontario, Manitoba, Saskatchewan, and British Columbia.

When Equalization was enacted in 1957, it was originally designed to bring all the provinces' per capita tax revenues in line with the two richest provinces. Later, the system was changed to bring every province up to the national average.

Since that time, the current five-province method came into being. This method was created in 1982 when the Equalization Program was enshrined in the Canadian Constitution.

The fiscal capacity of a province is determined by measuring 33 different revenue sources -- personal income, corporate, sales and property taxes, among others.

For 2004-2005, the fiscal capacity of each Albertan was $10,471. Ontario was second at $6,669 and PEI was at the bottom at $4,436.

For 2004-2005, equalization payments ensured each province had $6,217 per resident to underwrite public services.

In 2004, the federal government made a deal with the provinces to increase funding for the Equalization Program by $28-billion over ten years. The deal set the 2005-2006 annual equalization payment at $10.9-billion, with an annual increase of 3.5 per cent until 2010.

The territories -- Nunavit, Northwest Territories, and the Yukon -- receive a separate set transfer payment of $2-billion that is split among them. The framework under which this transfer was created is called Territorial Formula Financing.

Meanwhile, the federal government is reviewing how equalization payments could be better allocated. A federal committee has been struck and its recommendations are expected by the end of 2005.

The committee is charged with giving recommendations on how Canada can move from the five-province standard to another method, which will consider how natural resources and other sources of revenue alter the fiscal capacity of a province, and therefore how the equalization payout will be measured.

As it stands, the Equalization Program is federally funded with Ontario underwriting 43 per cent of the program, a number reflective of the amount of federal taxes collected in the province. Alberta, which has the highest fiscal capacity, contributes only 12 per cent of the federal funds.

However, Alberta does contribute the most federal taxes per person than any other province.

For the 2005-2006 fiscal year, PEI, New Brunswick, Newfoundland, Nova Scotia, Manitoba, Quebec, British Colombia and Saskatchewan were considered the ‘have-not' provinces. Ontario and Alberta are currently the only provinces that do not receive equalization payments.

In 2005-2006 Quebec is to receive the most in equalization payments -- nearly $4.8-billion. Saskatchewan received the smallest payment at $82-million.

Ontario is the only province to have never received equalization payments, but has argued that under the current five-province standard, by 2010, it will be a ‘have-not' province. The Ontario Chamber of Commerce argues the gap between the amount of taxes paid and services received in the province has risen to $23-billion.

[B. Max]

The Ontario Chamber of Commerce argues the gap between the amount of taxes paid and services received in the province has risen to $23-billion.

The chamber has it right on. Ont. has been a have not for a long time. What they don't have is a clue. They like to elect governments that will give them everything they want, now it's time to take everything they have to pay for it. So pay up.

[kimmy]

2) "Re-distribution" of oil wealth happens within Alberta. I am sure that if someone sat down and calculated the net contribution of the Fort McMurrury area to the provincial coffers you would find that the residents of Fort McMurrury are being quite short changed. I find this attitude that all the oil wealth some how intrinsically 'belongs' to the current residents of an arbitrary geographic area within a soveriegn country quite puzzling.

There you go, Kimmy. Take a look at that non-Albertan argument: Taking the money from Albertans is not really doing anything that Albertans themselves don't do.

There's no doubt that Fort McMisery is being short-changed right now. However, the provincial government is going to have to invest a *lot* of money there to upgrade the city's infrastructure, simply to try to catch up with the explosive growth there. I have high confidence in the provincial government to direct money that Fort McMurray needs back to Fort McMurray. I have very low confidence in the federal government to do so.

From what I understand, non-renewable resource revenues are excluded from the formula used to calculate equalization payments.

I believe you're mistaken. I believe that was true from 1957 to 1964, at which point premiers in other provinces demanded to know why Alberta was receiving equalization payments even though the oil business was making the province quite wealthy, and as a result natural resources were incorporated to the formula in 1964. I believe that other provinces have made reference to Alberta's 7-year grace period in recent discussions with the federal government and requested a similar grace period by which they could be allowed to continue receiving transfers despite their growing resource revenues.

-k

[August1991]

I believe you're mistaken.

I think I am, and so I think you are right Kimmy.

Then there's the question of offshore oil and gas reserves. In 1964, changes were made so that the resources a province had were added to the equation. As a result, Alberta's oil and gas bumped up the province's revenues enough that it no longer qualified for payments.

CBCSo, between 1957-64, resource revenues were not included and Alberta received payments. In 1964, resource revenues were included in the calculation and as a result, Alberta received no equalization payments.

----

However:

Alberta’s energy revenues are so high that the federal government has permanently removed the province’s tax revenue from any calculations it makes for the national standard of ‘provincial fiscal capacity.’

Maple Leaf Web

In addition, the recent 2005 Atlantic Accord effectively removes offshore oil & gas revenues from the calculation of equalization.

My point in any case was that equalization payments are only one way in which there are interprovincial transfers. For example, if Alberta has many people with high incomes, then they pay more income tax and that creates another transfer.