By David MacKinnon (AIMS Senior Fellow)
In recent months, a group named Nova Scotians for Equalization Fairness has been arranging demonstrations, holding public meetings and making presentations to the public.
Unfortunately, this group is advocating a path that is ill informed, unfair and divisive.
The extent to which the group is ill informed is remarkable.
The organization’s website indicates that “the provincial government will receive $1.838 billion this year in the form of an equalization payment from Ottawa…the provincial capital will pass out only $32 million to all the towns and municipalities combined from the $1.838 billion and keep the rest as general revenue”.
The facts are very different. Equalization partially funds provincial programs of all types delivered everywhere in the province. Every school, hospital, community college and other public facility in Cape Breton is partly funded by equalization. Approximately $300 million from equalization supports provincial programming in Cape Breton every year in this way. To ignore this as NSEF has done is nonsensical.
The organization is confusing the federal equalization program with a much smaller provincial program designed to assist municipalities, a problem that should be immediately apparent to anyone with even a cursory understanding of the federal program.
The Minister of Municipal Affairs has provided the correct information, but the misleading information is still on the NSEF website. It should be removed immediately. Facts matter.
The unfairness associated with the claims of this organization is very serious. The organization asserts that funding for equalization and presumably other subsidies to regions – there are many of these – comes from the federal government.
It doesn’t. It comes, via the federal government, from the pockets of many Canadians living elsewhere who have less access to provincial programming then people living in Nova Scotia and Cape Breton.
Hospitals are a good example of this. The Nova Scotia Department of Health lists 43 public hospitals in the province. This compares with 262 public hospital sites and 141 hospitals in Ontario which has 15 times the population of Nova Scotia.
Nova Scotia has three times as many hospital sites as Ontario in relation to population. Four of these are in the Cape Breton health complex which means that people living in Cape Breton have greater access to hospitals and hospital beds than Ontarians.
Similar patterns are evident with respect to almost all public services. Ontario has the least accessible public services of any province and Alberta is in the same position with respect to some public services.
There is also the issue of divisiveness.
There is considerable pressure in Alberta and Saskatchewan to hold a referendum on equalization. This is important because equalization payments are not guaranteed by the constitution as many in Atlantic Canada believe. All that is guaranteed is commitment to the principle of equalization, language that means little in law.
A few years ago, the Ontario legislature passed two unanimous resolutions that complained about the extent of Ontario’s net fiscal deficit with the rest of Canada. The provincial government ran a public information campaign to complain about it.
It is not hard to understand the reasons for these expressions of concern. In a recent 10-year period, Alberta taxpayers made a remarkable net contribution of $228 billion to the federation. In the same period, the net contribution from Ontario taxpayers was $96 billion.
Over the same period, Prince Edward Island, the province where I grew up and that has a population half the size of the city of Markham, somehow absorbed $10 billion from the pockets of other Canadians while Nova Scotia absorbed $60 billion.
Because of this history, it is not hard to see why the NSEF arguments and similar arguments by others that the Atlantic Region and Cape Breton need more equalization is like throwing gas on a fire that is already smouldering. It strains the fabric of the federation.
So, what should Cape Breton do?
Cape Breton’s leaders should recognize that depending on subsidies from elsewhere has led the region nowhere.
Over the past fifty years, money from other Canadians has rained down on Cape Breton in the form of subsidies for heavy water plants, Sydney Steel, cleaning up the tar ponds and even coal mining.
Cape Breton should seek to escape what former provincial Finance Minister Graham Steele called “the iron grip of the status quo” which is what more subsidies represents.
Instead Cape Breton – and the rest of Nova Scotia – should do everything they can to be more self-sufficient and more competitive without constant approaches to other Canadians asking them to write more cheques.
