Canada Should Fix Equalization and Other Regional Subsidies Now, the latest study by the Atlantic Institute for Market Studies and the Frontier Centre for Public Policy, demonstrates how equalization is unfair, diminishes productivity, holds back economic development, and lacks accountability and transparency.
Originally designed to transfer resources to provide for a comparable level of services across provinces, the program has become problematic and, in many instances, counterproductive. The biggest problem is that the federal government has no public measurement and no evaluation to determine if the program meets its objectives.
The federal government can modernize federal transfers to provinces without causing a national political crisis according to the new paper authored by David MacKinnon, Marco Navarro-Genie and Peter Holle for the Atlantic Institute for Market Studies and the Frontier Centre for Public Policy.
“Reducing the size of the public service would allow these provinces to lower their crushing public debt while delivering public services that people need at a price they can afford,” said David MacKinnon.
“The four Atlantic provinces have enormous public debt, sluggish economies, and save for New Brunswick a much larger public sector than they need,” said Navarro-Genie. “Equalization should be tied to debt reduction in each recipient province in any event. The current system encourages some provinces to pile up more and more debt.”
Read the study here.