Economic fallout upsets Canadian status quo, norms

Media Appearances, Equalization, Frontier Centre

As the economic crisis hit, Canada may have been the best prepared among developed nations when it came to the strength of its banking sector and government finances, but it seems ill-prepared to handle the global fallout.

A variety of recent reports suggest the changing world order has rocked Canada’s political and social culture.

The Mowat Centre for Policy Innovation at the University of Toronto, and the Winnipeg-based Frontier Centre both published studies indicating Canada’s traditionally richest provinces — Ontario in particular — are fed up with having to bankroll national unity and social programs.

A separate study, this one by Jack Mintz of the University of Calgary’s School of Public Policy, shows that the "Alberta Advantage" that once lured investments and people to the richest province has disappeared. The oil and gas business now is far more lucrative in Saskatchewan, British Columbia and even Texas, Mr. Mintz says.

"In many provinces, there is an expectation that Ontario will eventually compromise its own interests for the sake of national unity," Matthew Mendelsohn, director of the Mowat Centre, wrote in the Toronto Star. "There is likely to be a good deal of surprise in some parts of the country that Ontarians are no longer willing to play this role."

And Ontario isn’t the only jurisdiction chafing under the yoke of Canada’s system to equalize social programs. According to the Frontier Centre’s Ben Eisen and Mark Milke, Canada’s 53-year-old equalization program has devolved into a system whereby traditionally poor provinces can afford far superior social programs than those which traditionally pay the bill.

Ontario, the newest member of the "have-not" club, will receive about $347 million in equalization this year. This as it suffers the indignity of having fewer social programs, staffed with fewer people per capita than most other provinces — especially Quebec, which gets nearly $8.4 billion this year.

Between 1998 and 2004, when the Canadian economy was strong and driven primarily by exports of goods manufactured in Central Canada, the Mowat Centre found that Ontarians felt the country was working well more or less and their province was receiving its fair share of respect, money and influence.

Ontario was, by the way, unique in Canada in believing itself so treated. When it asked the same questions in a recent poll, the centre found that 63 per cent of Ontario respondents felt the rest of Canada was ripping them off.

"The implications for our national politics of this important change in Ontarians’ attitudes may soon be apparent," Mr. Mendelsohn wrote. Particularly so considering Canada will have to address structural budget deficits federally and provincially while coming to grips with costly implications of larger immigration numbers, environmental challenges, health-care cost increases and a wave of baby-boomer retirements.

Canadians who traditionally believed provinces such as Alberta and Ontario would merrily go along and sacrifice for the greater good may be surprised by the reaction.

Such changes in its economic and social makeup would challenge a country at the best of times. However, Canada is especially vulnerable because of its weakened political infrastructure. As Mr. Mendelsohn notes, "Canadians are left to face the challenge of globalization with archaic 20th-century policy architecture."

A recent Nanos Research study found that Canadian’s are losing confidence in their democratic institutions. A plurality of people believe the Prime Minister’s Office is too powerful and Parliament too ineffectual.

The Institute of Wellbeing argues that this discontent with institutions is leading to an increasing democratic disengagement.

Canada is not the only country to suffer a crisis of confidence over its governance. The U.S. has notoriously struggled with a partisan divide and dissatisfaction of Washington. And in the United Kingdom this week, cabinet secretary Sir Gus O’Donnell tabled a number of special rules to limit the government’s power in the likelihood Britain emerges from the next election with a hung Parliament.

Whereas a senior bureaucrat can get away with controlling runaway government powers in the Mother Country, it isn’t clear who has the clout to stickhandle Canada’s restructuring.

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"Democracy cannot be maintained without its foundation: free public opinion and free discussion throughout the nation of all matters affecting the state within the limits set by the criminal code and the common law." – The Supreme Court of Canada, 1938