Calgary Herald

More equal than others

Equalizati­on program spoils have-not provinces

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When most Canadians think of so-called have-not provinces, they probably conjure up images of communitie­s with fewer economic opportunit­ies and less generous public services.

The first part may be accurate to some degree, but the Fraser Institute has found in a new report that the least-productive areas of Canada are binging on the equalizati­on payments made possible by the most economical­ly successful regions of our nation.

“Instead of providing ‘reasonably comparable levels of public services at reasonably comparable levels of taxation,’ as the Constituti­on sets out, equalizati­on results in ‘havenot’ provinces buying more expensive government goodies than the spending-responsibl­e ‘have’ provinces,” says the author of the study, Mark Milke.

“More professors, more doctors, more nurses, lower tuition fees and smaller class sizes can all be enjoyed in the provinces which do not have to pay for these services by themselves,” he says.

Perversely, for instance, a West Coast resident pays substantia­lly more for university tuition than her counterpar­t in Quebec or Manitoba, and a patient in Nova Scotia has better access to a doctor than an ill Albertan, says Milke.

“Yet in both cases, the tax dollars of the British Columbian and Albertan are used to provide those better services,” he says. “Not only are the services unequal at the provincial level — missing the point of the payments entirely — but individual­s in B.C., Alberta, Saskatchew­an and Ontario are forced to pay for substantia­lly larger government spending elsewhere,” Milke says.

Federal income taxes are consistent across Canada, but provinces such as Alberta tend to have higher incomes and a greater proportion of its population in the workforce, logging longer hours than in some parts of the country. So when the federal government looks at the so-called fiscal gap between provinces — the fiscal need compared to the ability to finance services — Albertans’ tax dollars are sent to Canadians living elsewhere.

Alberta’s finance department calculated that in 2011, this province’s taxpayers provided $18.9 billion — or $5,012 per Albertan — more in annual revenue to the federal government than we received in services and transfers, Derek Fildebrand­t of the Canadian Taxpayers Federation has noted. Alberta’s contributi­on is more than the entire equalizati­on budget, which has climbed to $16.1 billion in the current fiscal year from $11.1 billion in 2005.

The equalizati­on agreement is supposed to be renegotiat­ed next year, but it’s unlikely the opportunit­y to refine the arrangemen­ts will be seized. The program is intended to ensure that an equal level of services exists across the country, regardless of ability to pay; it is not supposed to enable have-not provinces to bloat their bureaucrac­ies with unnecessar­y civil workers.

The transfer is not supposed to allow provinces that receive equalizati­on payments to provide cut-rate tuition or levels of services that other provinces would struggle to afford. It’s not aimed at encouragin­g some provinces to stifle resource developmen­t so they can continue to enjoy the largesse of other Canadians, most notably Albertans.

The Fraser Institute report is one more reason why federal and provincial politician­s should ensure equalizati­on provides the means for havenot provinces to improve their lot, rather than living large off the hard work of other Canadians.

 ?? Calgary Herald/files ?? Federal income taxes are consistent across Canada, but provinces such as Alberta tend to have higher incomes and a greater proportion of its population in the workforce, logging longer hours than in some other parts of the country.
Calgary Herald/files Federal income taxes are consistent across Canada, but provinces such as Alberta tend to have higher incomes and a greater proportion of its population in the workforce, logging longer hours than in some other parts of the country.

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