Understanding Equalization

Blog, Equalization, Ben Eisen

Last week, the Globe and Mail ran an article authored by John Ibbitson which profiled David MacKinnon, a Frontier Centre senior fellow and one of the country’s leading critics of Canada’s equalization program.

David’s work over the past several years has helped show that not just equalization, but several other features of Canada’s existing system of fiscal federalism harms economic performance across the country and creates a host of other negative unintended consequences.

While David’s research has shown that the current system of fiscal federalism is doing economic damage across the country, he has paid particular attention to its impact in the province of Ontario. Despite Ontario’s recent entry into the ranks of the “have-not” provinces that receive equalization payments, Ontario is still severely disadvantaged by equalization and other fiscal transfers. A major research paper on the topic that was published by the Ontario Chamber of Commerce is available here, and it is a great starting point for anybody who wishes to learn about the disastrous impact that the country’s current approach to fiscal federalism is having on the country’s most populous province.