Outdated Solution to Economic Equality

A good idea at one time, to ensure that the wealthy provinces did not completely outstrip the less well endowed provinces within Canada, that those who could afford to share their economic well-being with those who lagged, were part of the solution, Canada's equalization program has outgrown its one-time necessity.

That the identified "have" provinces of Ontario, Alberta and British Columbia were willing to contribute to a national program that levied an additional taxation from them for distribution to the "have-not" provinces spoke to the social cohesion of the country. And Canadians took pride in their selfless desire to assist one another.

The equalization program was flexible enough to preclude British Columbia from sharing its wealth during an economic downturn, temporarily turning it into a receiving province. But it seems to be stuck in economic confusion through an obvious inability to recognize that once-poor provinces are no longer in need of additional help from their more economically privileged sister provinces.

Provinces like Newfoundland-and-Labrador and Saskatchewan, now established as having one of the fastest growing economies in the country have become "have" provinces, yet their premiers will not relinquish demands for ongoing equalization payments. Offshore oil revenues have made Newfoundland-and-Labrador independently wealthy. Rich oil deposits, potash, uranium and other natural resource minerals have enriched Saskatchewan.

The original design leading to equalization payments to ensure that all Canadians, wherever they lived in the country, had access to similar services, has outlived its purpose. Nowhere is that more evident than the condition of Ontario, once termed the "engine of prosperity" for the country as a whole, through its large manufacturing base, hosting headquarters for large Canadian corporations.

The economic slippage through a downturn in logging operations, mineral extraction, and manufacturing jobs heading offshore have turned the province of Ontario into a hanging-in-there province. Public social services have suffered, as a result. The "have-not" provinces of the past, still enjoying the emoluments equalization guarantees them, on top of their happy new exploitation of their natural resources, can offer their citizens services Ontario no longer can.

Per capita, Ontario now has fewer public services, fewer hospital beds, nurses, judges and larger class sizes in their schools than anywhere else in Canada. Of those provinces still considered to be wealthy by the old standards, only Ontario and British Columbia impose a health tax through a health premium. Alberta, undeniably now one of Canada's wealthiest provinces, is set to abolish theirs.

Those provinces who receive equalization payments from the wealthy three impose no such health tax premium on their population. Quebec, another notable recipient of equalization payments, provides free dental services, inexpensive day care and other goodies that Ontario cannot afford for her population.

Federal fiscal transfers, at one time a practical response to inequality between the provinces, now hobbles the economy of struggling Ontario, while providing unrealistic support to some provinces who no longer require it. Provincial economic wealth has now levelled out across all provinces with rare exception.

Yet Ontario, struggling with its economic downturn contributes 3% of its annual provincial product to provide public services to other provinces which it cannot itself afford. The millions of dollars that Ontario finds itself short of, at a time of global competitiveness places the province at another distinct disadvantage.

It's past time for the federal government, in tandem with the provinces, to recognize the inequity in the system, and restructure equalization to better reflect the reality of necessity. Or do away with it, put it in a pending file for future use, if and as required.