When the billions flowed as a hefty budget surplus, Albertans didn’t mind subsidizing a better life for poorer provinces.
Petrodollars helped Nova Scotia become the national leader in physicians per capita, gave Quebec students the lowest-anywhere tuitions, created unrivalled regulated day-care space in Prince Edward Island and gave New Brunswick the bucks to hire nurses.
So lucrative has the transfer of wealth become that, according to an excellent new analysis by the Frontier Centre for Public Policy, the less-fortunate provinces now outperform almighty Alberta in delivering almost all services, including health care and the cost of post-secondary education.
In the good times, it was shrugged off as the price of Confederation. Easy come, easy go, it seemed.
But Alberta’s deep in deficit doo-doo — and it’s had enough.
The increasingly perverse equalization formula is under renewed attack by an Alberta finance minister hoping to recruit B.C. and Ontario allies to join a fight to ensure rich provinces can afford to match the service levels provided, as strange as this sounds, by their poorer cousins.
The guy leading the charge is a former Calgary academic named Ted Morton. He might not be a household name in the rest of Canada, but Alberta’s new finance minister is increasingly popular at home and has some interesting history on strained federal-provincial relations.
Less than 10 years ago he co-authored a proposal warning against the evils of Ottawa stealing money from Alberta to feather the government’s electoral nest in other provinces during recessions. He urged then-premier Ralph Klein to build a protective “firewall” around areas of provincial jurisdiction.
His co-author for the letter? Why that would be you, Prime Minister Stephen Harper, who was then serving as the head of a Calgary advocacy group.
Morton shrugs off the irony of watching his former partner sitting on the far side of the firewall and doing nothing about a perceived fiscal injustice.
Neither the throne speech nor the budget devoted a word to fixing a formula increasingly warped by its failure to ensure equality of public services between uneven provincial economies.
“We all know that the electoral mandates of federal politics are different than what they are at provincial politics, but I think he (Harper) knows all these arguments and I think there’ll be an interest in them, particularly on the issue of overall productivity and prosperity,” Morton said in an interview this week.
The way Morton sees it, and studies have repeatedly proven it, the havenots have grown fat on a transferred dollar diet and lack any incentives to fend for themselves, instilling them with a culture of dependency instead of selfsufficiency.
Productivity and efficiency suffers in poor provinces because it creates supersized bureaucracies to deliver cost-shared programs bloated by the fact that the more they spend, the more transfer money they receive.
“This means the taxpayers of paying provinces ultimately subsidize higher levels of government spending and services elsewhere than they themselves receive. Provinces that overspend and overtax and grow larger civil services are rewarded,” fumes Morton.
“In Alberta, and I assume in Ontario, people might’ve said that was the cost of Confederation. With Alberta, Ontario and now B.C. running big deficits, those comparative figures cause a little more angst than they used to,” he adds.
Alberta’s grievance is heightened by noting it still gets a raw deal on health care under the Canada Health and Social Transfer program, coming in at $200 per person below the national average, which works out to about $700 million this year. Again the budget was silent on eliminating this unfairness.
The imbalance seems likely to worsen the longer the existing formula lingers. Quebec, which swallows 60 per cent of every equalization dollar, reaps an $8.4-billion fortune, which has leaped 74 per cent in five years. Manitoba’s transfer amount has soared 30 per cent while New Brunswick is up 25 per cent.
With transfer agreements expiring in four years, Morton has decided now is the time to crank up the volume on his pet peeve, but he’s not getting much of a sympathetic hearing from his federal Conservative cousins.
“Ralph (Klein) signed a lousy deal, so they’ve got to live with it,” cautioned a senior Alberta MP. “He can come back to us in three years and we’ll talk.”
For the hands-out, havenot provinces, the easy money will continue to flow from west to east. But they’re being put on notice the Robin Hood era of stealing from the rich to enhance the poor may be coming to an end.