Quebec And Ontario Squeezing Smaller Provinces Out Of Equalization

Audio, Equalization, Frontier Centre

Manitoba and the three Maritime provinces who rely on equalization payments as a source of revenue are getting a lot less than they used to.

Equalization payments as a share of GDP have been declining significantly in all four provinces since 2009.

In Manitoba, this means losses in the hundreds of millions of dollars.

A decade ago, Quebec was the big winner in equalization, taking 37% of all such transfers, but Ontario was still a have-province in those days and they took nothing.

Quebec’s share is continuing to increase significantly, and Ontario has been on the receiving end since 2009.

This year, Quebec and Ontario together are receiving 67% of all equalization payments.

The decrease in equalization payments to Manitoba and the Maritime provinces does not result from lower federal spending on transfers, which are at historically high levels.

Canada’s two largest provinces have left less behind for the smaller provinces that rely on the program.

It’s a challenging time for these ‘have not’ provinces, and it’s not about to change anytime soon.

Each of them will have to address their own challenges through spending restraint and prudent fiscal management.

I’m Roger Currie. Join us again next week for more thoughts on the Frontier.

To read our latest report on equalization, in partnership with the Atlantic Institute for Market Studies, visit our website