David MacKinnon February 2, 2017 In recent months, several commentators have been recommending that other countries adopt equalization and other Canadian-style regional subsidies. They argue that this would help avoid the political stresses that the American rustbelt...
In the fall of 2014, the government of Nova Scotia banned hydraulic fracturing, commonly known as fracking. Fracking could have developed industries and created jobs and wealth in the province. This could have ended Nova Scotia’s long standing status as a...
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...
This paper analyzes the fiscal condition of the four small, comparatively low-income Canadian provinces that rely on equalization payments as a source of revenue: Manitoba, New Brunswick, Nova Scotia, and Prince Edward Island. Specifically, we examine recent trends in...
At the time of Confederation, Canada’s Plains Indians were in a desperate situation. The same European-introduced guns and horses that resulted in a briefly glorious golden age for them had also resulted in constant inter-tribal warfare and the rapid disappearance of...
Political attacks on the Indian Act are back in the news, and that is a good thing. However, Canadian politicians, including First Nation politicians, need a credible plan about what to do before we pull out the champagne. Attacking the Indian Act is not a big deal...
The taxpayer should be free to withhold financial assistance to a welfare recipient who says he doesn’t want to work even if he is able to . . .
Admaston-Bromley Mayor Raye-Anne Briscoe says Ontario really has become a have-not province, as far as federal equalization payments are concerned, but there’s precious little media coverage about it.
PQ Leader Pauline Marois says that if she becomes the next premier of Quebec she will demand that Ottawa transfer jurisdictions to Quebec, starting with employment insurance. In her mind, she wins either way. Ottawa’s agreement makes the “Quebec state” more powerful and readier for independence; Ottawa’s refusal proves that Quebec can never fulfill its legitimate aspirations within Canada.
Equalization doesn’t just reward failure. It encourages it. Seven Canadian provinces were chronic recipients of the program from the very beginning and all have been economic and financial underperformers that bleed ambitious young people to more dynamic parts of the country.
The federal government sends transfers to poorer provincial governments, which spend the money on social programs that would otherwise be beyond their means. Some of those programs – such as Quebec’s daycare and tuition subsidies – are more generous than programs in provinces that don’t qualify for transfers. This is exactly what German taxpayers are warning Ms. Merkel they won’t put up with.
Economically, Quebec has lagged behind the richest parts of Canada for many decades. Hence, its tax base is smaller but its welfare programs have been among the most generous in Canada since the 1960s. On its own, Quebec would never have been able to construct such a large welfare state. Thanks to federal transfers, Quebec has been able to live beyond its means for decades.
Residents of the country’s industrial and financial powerhouse states, particularly Bavaria, resent having to make payments to poorer regions like the city-state of Berlin, which tops the list of transfer recipients, with annual help from its neighbors of €3 billion ($4 billion).
It is easy and natural to think of the woes of the West’s main powers as an economic problem. Because that’s the way it is presented to us. And it is economic – at least, superficially. But if you take a step back, what we’re really living through is the decline of the West.
Unless Canadians get a handle on the provinces’ runaway spending, their growing mountain of debt, and the resulting tidal wave of interest charges, we can expect lots more home-grown social unrest, as have-not provincial governments fall short of voters’ outsized expectations.