Equalization

United in Dependence

Imagine that you have a pile of money and several kids. Some of those kids work hard and are quite self-sufficient. Some of them, on the other hand, just never quite seem able to look after themselves. Because you’re rich and you believe all your kids deserve a similar standard of living, you pay the ne’er-do-wells a good allowance accompanied by lots of well-meaning admonitions to try and harder and make something of themselves.

Featured News

Redact All You Want, We’ve Gone Overboard on Equalization

What exactly does the government have to fear from a study of equalization payments? We don’t know. But according to a February report published by the Ontario Chamber of Commerce (“Dollars & Sense: A Case for Modernizing Canada’s Transfer Agreements”), the government has much to fear – most importantly the revelation that Canada’s equalization program now distributes billions of dollars a year to provinces that least need the help.

Time to Overhaul Equalization

With Ontario clamouring for change to Canada’s equalization payment system and even beneficiaries in Atlantic Canada questioning its worth, the time is ripe for an overhaul of what has become an antiquated model of fiscal federalism, which rewards failure and punishes success.

Germany Knows What Doesn’t Work

It isn’t just Germany that is being forced to re-examine the way it redistributes income between rich and poor regions. In Italy, Spain and, most dramatically, in Belgium, the trend is unmistakable: the unbearable pressures put on state budgets by the financial crisis and the ensuing recession are flushing out all the hidden subsidies and transfers that governments have built into their economies in the name of national cohesion and social peace over the past six decades.