| Canada’s system
of fiscal transfers is broken and, while well intentioned,
the federal government’s attempts to “re-balance”
the system are missing the mark and failing to address
the real issue.
The focus cannot be on putting more money into
this dysfunctional fiscal arrangement. Doing so
would only make a broken system unsustainable
and further erode the principles of wealth-sharing
in Canada.
Ontario’s economic standing is slipping.
In 1990 Ontario’s GDP per capita was 112
per cent above the average of all other provinces.
In 2004 that figure had slipped to just 103 per
cent – and for 2005 it fell to 101 per cent.
In short order – likely within the next
year – Ontario’s per capital GDP will
be below the national average.
At the same time, Ontario’s taxes are roughly
equal to those of other provinces, and our public
services are funded at a lower level. In 2005,
Ontario’s GDP growth was $20 billion, yet
we contributed $23 billion to the rest of Canada
through the federal transfer system.
In short – Ontario pays more to the rest
of the country, depriving our taxpayers of the
services that we pay for in other provinces.
Our leaders need to stop talking about how to
calculate the transfers – and pay attention
to the fundamental flaws in the system.
First, we need to look at why, after nearly 50
years of transfer payments, six provinces have
never – ever – been in the “have”
category.
Why haven’t Quebec, Newfoundland, Prince
Edward Island, New Brunswick, Nova Scotia and
Manitoba ever been able to use one of the largest
ongoing transfers of wealth in the world to improve
their competitiveness and create jobs and prosperity
for their citizens?
No government in Canada has ever examined the
effectiveness of the transfer programs. For 50
years tax dollars have flowed into the “have-not”
provinces without any sense of accountability
or transparency. No system exists to measure effectiveness.
No system exists to measure if recipient provinces’
public services are at – or better than
– those in the “have” provinces.
This is a serious failure of accountability and
governance – not to mention a disservice
to taxpayers across the nation.
Second, the federal government must end the practice
of using other transfer payments as a sort of
stealth equalization program – or equalization
outside of equalization. Transfers for programs
like health and employment insurance must be allocated
on a per-capita basis – not to subsidize
regions.
These programs should be available to all Canadians
at equal levels – regardless of which province
they live in.
As Ontario Premier McGuinty has recently said,
this province receives $86 less per person to
support health care and post-secondary education
than provinces that receive equalization.
This allows other “have-not” provinces
to have higher levels of nursing per patient,
more university professors per student and higher
grants for each college student than Ontario does.
By all standards, this is simply unacceptable
and unfair treatment of Canadian citizens.
To restore fairness the federal government must
show courage and commitment, by returning non-equalization
transfer programs to a per-capita funding model,
by putting in place systems to measure the levels
of public services between provinces, and by creating
a system to ensure subsidies like the equalization
program are actually helping provinces improve
their competitiveness and future prosperity.
All Canadians are equal under the law. It is time
we all receive equal treatment from the government’s
funding models.
Len Crispino, President
and CEO
Ontario Chamber of Commerce |
