All Things Being Equal

A study produced by economist Martin Coiteux for the HEC business school in Montreal reflects in large part what former Bloc Quebecois head and former premier Lucien Bouchard pronounced years ago when he called on Quebec to engage in some introspection. The "Quebec model" was no longer working for economic development.

Mr. Bouchard and his group urged his province to "wake up" to reality that the province's safety net was too expensive, and to invite private investors to engage in future economic development.
That report by Les Lucides, elicited rage and rejection among politicians and the population, and Mr. Bouchard and his think-tank removed themselves from the public eye with a Gallic shrug.

Free market reforms would not be engaged in, and nor would social programs be truncated to help ease the provincial debt. The Province's left-wing academics and ferociously-entitled unions believed that high-tax, generous social-benefits spending could continue indefinitely. Of course, helping that machinery along was the unfailing generosity of the rest of Canada, in federal equalization transfer payments.

From the wealthy provinces to the have-not provinces. Where the have-not province of Quebec could offer the lowest university tuition in the country, universal low-cost day care, dental care, and other very much appreciated little perquisites. Which the 'have' provinces could not offer to their populations. They were unaffordable.

Quebec has, within its vast geography, mineral and petroleum resources that it has never bothered developing. Including one of the continent's largest shale-gas deposits. But it is the dread asbestos industry that has proven itself to represent a mineral that is carcinogenic in its extraction and use that Quebec insists must be maintained, and which it happily exports to emerging-economy countries.

In his report Mr. Coiteux set out the argument that "proportionately, fewer Quebecers work [than other Canadians]. They work fewer hours on average. And they earn an hourly pay that's lower than that of most other Canadians." What has also been revealed from other sources is that the formula for figuring transfer funding from the federal government is in need of re-direction. It does not take into account some key elements that should be taken into account.

Such as higher wages, soaring energy costs and lower productivity, a larger elderly population, greater or lesser numbers of health professionals to serve the public, provincial taxation levels, all of which economic details would impact on amounts delivered to the have-not provinces. Currently, equalization payments are based on a province's ability to raise revenues; per capita payments are based on how far below average each province falls.

Quebec has long been suspected of maintaining that data at an artificially low level to ensure it receives the lion's share of equalization, and it has. Quebec receives far more, proportionally, than any other province. If "need" was factored into the equation properly, Quebec would receive $3- billion less than the $7.4-billion allocated to it under the current formula.

Past time for a change, to reflect the realities of today. In response, Quebec will have to cut back on its generous social services programs, because it would receive far less in equalization than it now does. It will have to become more practical and ingenious about exploiting its natural resources, creating greater employment for its under-utilized workforce.

And Canada might be treated to the unusual spectacle of Quebec no longer complaining that the lion's share of equalization payouts it receives from the other provinces via the federal government is inadequate to its exceptional needs as an exceptional nation-within-a-nation.

As if.