Provincial Equalization Provocations

It does seem to be a noble experiment in social justice on a grand scale, meant to ensure that prized social services be equalized from province to province, through the medium of transferring earned wealth from one economically advanced province to others less advantaged.  And it was a federal-provincial agreement that Canadians were proud of, for quite a long time.  As a piece of social justice engineering.

The theory was a fairly  good one, but as in all such experiments theory and practical reality do not always mesh.  How about the theory that society demonstrates its human values by ensuring that those within it who are in need are given the most fundamental assistance available ensuring that they have value and quality in their lives through welfare payments?

And the consequent discovery that many people find it more comfortable to simply continue to use welfare as the means by which they earn their livelihood, in preference to actually rousing themselves to perform the kind of working-place labour that will also ensure their livelihoods?  This is simply normal human psychology; why make an effort when none is required?

And with the provinces being assured of equalization payments with the less economically viable of them being assured of annual transfers of financial sums enabling them to guarantee their public equal access to health and welfare and other social service benefits, many provinces made no effort to diversity their options and grow them into successful enterprises, simply busying themselves administering funding and services.

Fiscal tax-funded transfers did express Canadian pride in confederation, helping to preserve the country's economic union.  It created the aura of economic stability, equality of opportunity and the provision of at least basic services for all Canadians, regardless of where they live.  Now comes a new study that elucidates what many people have themselves deduced from the experience of witnessing what has resulted.

Those same transfers in wealth-sharing, that initiative enshrined in the 1982 Constitution Act, have rather complicated issues.  For one thing, sometimes the receivers of equalization use this financial advantage to address programs that do not reflect what other provinces provide for their citizens.  We saw this most acutely in Quebec, which receives the lion's share of equalization payments, and which offers social services like less dear post-secondary tuition costs, universal dental care, cheap child-care costs.

Transfers - taking into account the new realities of provincial wealth created by the development of infrastructure geared toward the extraction of natural resources benefiting those blessed with them - may also exacerbate resentments of the 'have' provinces by the 'have-nots', even while the haves continue to fund the have-nots. 

Playing a "counterproductive role if they act to mask inexorable structural change, delay necessary adaptation and create the illusion that the unsustainable can somehow be sustained indefinitely.  Ultimately, they can destroy unity by creating resentment, disrespect and distrust."

The authors of the report which include David Dodge, former Bank of Canada governor, point out the grudge between Ontario and Alberta, the latter's rising oil income helping to create a more robust Loonie held to be responsible for a trade imbalance of manufactured goods, harming the former.  And the newer controversy between Alberta and British Columbia, where the latter insists on 'sharing' the good fortune of the former's earnings from their natural resources.

British Columbia, Alberta, Saskatchewan and Newfoundland and Labrador now are providers of taxes that fund the equalization payments to the six remaining of the provinces.  Ontario, always previously a funder of equalization payments is now a sad and sorry recipient, on track to receive an even larger share as time goes on, if its current economic growth continues to stifle.

Feeling entitled to equalization is little different than a traditional welfare family finding it difficult to leave welfare behind and strike out bravely on their own to become and remain fully independent through the determination and intention to make their own way to prosperity and self-respect.