Nova Scotia’s Public Sector Excesses Borne by Other Canadians

Media Appearances, Equalization, Frontier Centre

In his recent attack on a study on equalization by the Frontier Centre or Public Policy (Weekend Feedback: Attack on Equalization Off Base, March 27), John Malcom, chief executive officer of the Cape Breton District Health Authority makes a number of errors. 
Malcom fundamentally misunderstands the purpose of equalization. Its purpose, as laid out in the Constitution, is to enable comparable programs. Revenue comparisons of the type Malcom writes about are a means to an end but not the end in itself.
Without making comparisons of provincial programs to assess service levels, one cannot evaluate the program, and the Frontier Centre report is a starting point on measuring just such outcomes.
Malcom claims that a smaller number of senior citizens as a proportion of the population in Ontario, Alberta and British Columbia shapes the resulting statistic for residential care beds. Actually, when one crunches the numbers for operational residential care beds per 1,000 senior citizens (instead of the entire population), the main "have" provinces are still well below most of the so-called have-nots.
Ontario, B.C. and Alberta are near the bottom on this indicator.
Curiously, while making an argument that the levels of programming in each province are shaped by demographic differences, Malcom gives no weight to other population-related issues such as the crushing costs Ontario and British Columbia incur to support immigration absorption, the sheer scale of their geography (Ontario has more than 400,000 square miles) and so on. Unfortunately, population need assessments are not used in Canada.
Malcom claims the federal government provides health funding to provinces on a per capita basis. That is incorrect. For all the years since medicare was introduced, Ontario received a smaller per capita payment than its population would suggest. That was changed only last year but a similar discrepancy remains true in Alberta.
Finally, the education argument Malcom uses is greatly flawed. The 11 universities in Nova Scotia (a preposterous number for a population of under a million) that he says are enabling a remarkable contribution to the rest of Canada exist only because other Canadians pay large amounts to support them via the federal regional subsidy system.
The universities are also wasting some of these funds, as the Masters of Business Administration programs at St. Mary’s and Dalhousie demonstrate. These universities are only a mile apart and are located in a small metropolitan region of 350,000 but they each offer an MBA program.
This is but one example of the excesses in the Nova Scotia public sector that are enabled by the involuntary contributions of Ontarians, Albertans and other Canadians.
Malcom does not realize how much has changed in Ontario in recent years. Toronto is Canada’s unemployment capital and all the major industrial cities in Ontario have higher rates of unemployment than the major cities of Atlantic Canada, Manitoba and Quebec. The implications of this are profound. In this context, his comments about making the wealthy wealthier are absurd.
 In effect, Ontario has been forced, by the federal regional subsidy system, to export much of its university capacity to Nova Scotia and fund it there. The Nova Scotia educational contribution, if it exists, is the product, in substantial part, of this exported capacity.
In summary, it is important that the people of Nova Scotia and other recipient provinces recognize new realities.
First, the minister of finance for Alberta is reflecting the views of many Albertans when he expresses his distaste for equalization.
Second, Ontario’s circumstances have deteriorated and there is evidence that the views of its citizens toward the national government are changing as well. Its provincial government is asking for greater fairness.
Third, there is evidence that regional subsidies are condemning Canada to industrial irrelevance because they involve shifting massive resources, each and every year, from high productivity regions to others, such as the Maritime provinces, where productivity is much lower.
It is time to find a new path forward.