Equalization

Last week, a group of university and private sector analysts released a report on shale gas that included an economic study that predicted New Brunswick could create between 5,900 and 7,900 full-time jobs, both directly and indirectly, if the industry annually drilled between 150 and 200 wells. That would translate into between $1.4 billion and $1.8 billion in economic growth. Another report released this week by the Atlantic Institute for Market Studies stated that shale gas could help enrich the region.

An essay published by two of Canada’s leading think-tanks–the Fraser Institute and Atlantic Institute for Market Studies–suggests New Brunswick and Nova Scotia dependence on federal equalization money is acting as a disincentive for natural resource development in those two provinces. New Brunswick has received $14.5 billion in equalization over the past decade and this gift of cash funnelled from the more prosperous regions of Canada still represents close to 40 per cent of provincial revenues.

Equalization is acting as a disincentive for natural resource development in New Brunswick and Nova Scotia, according to a commentary released Tuesday by the Fraser Institute and the Atlantic Institute for Market Studies.

Across almost every major economic indicator, Nova Scotia and New Brunswick under-perform the rest of Canada and rank amongst the poorest regions in the country. Nova Scotia and New Brunswick rank eighth and ninth, respectively, amongst the provinces for average household income. Only Prince Edward Island has a lower average household income level.

The Fraser Institute and the Atlantic Institute for Market Studies will release a new essay on Tuesday about equalization payments, natural resource development, and the economic malaise in Nova Scotia and New Brunswick, and veteran provincial affairs reporter Chris Morris will be on hand to break it down and deliver it to the Telegraph Journal. The essay, “Nova Scotia, New Brunswick, and the Equalization Policy Crutch” examines the effect of the federal equalization program on the two most populous Atlantic provinces.

The Atlantic Institute for Market Studies releasing an essay with the Fraser Institute on how New Brunswick and Nova Scotia rely on equalization payments yet shun natural resource development.

AIMS Director of Research Ben Eisen joins CTV Atlantic host Steve Murphy to discuss his new study, coauthored with Mark Milke of the Fraser Institute, “Nova Scotia, New Brunswick, and the Equalization Policy Crutch.” In the “One-on-one” interview with Murphy, Eisen remarks that “Equalization creates perverse incentives with respect to natural resource development, and frankly, some other kinds of economic development. We’re suggesting that the formula needs to be changed, and the policy needs to be changed, so that there aren’t these disincentives that discourage generating own-source revenue.”

AIMS Director of Research Ben Eisen joins CBC host Harry Forestall to discuss his new study, coauthored with Mark Milke of the Fraser Institute, “Nova Scotia, New Brunswick, and the Equalization Policy Crutch. In the interview with Forestall, Eisen remarks that “The argument that we make is the equalization program creates a disincentive. It’s one reason that it’s easier for governments, in this instance, New Brunswick and Nova Scotia, or recipient provinces in general, not to aggressively pursue natural resource development.”

Equalization payments are discouraging at least two provinces–Nova Scotia and New Brunswick–from developing their natural resources and generating prosperity for their residents, finds Nova Scotia, New Brunswick and the Equalization Policy Crutch, a new essay released jointly today by the Fraser Institute and the Atlantic Institute for Market Studies (AIMS), two independent, non-partisan Canadian public policy think-tanks. “Equalization makes it easier for Nova Scotia and New Brunswick to forego natural resource development that would help spur economic growth while Saskatchewan, for example, is developing its natural resources and is now a net contributor to Canada’s equalization program,” said Ben Eisen, director of research and programs at AIMS.

AIMS Director of Research Ben Eisen and Fraser Institute Senior Fellow Mark Milke authored the study, “Nova Scotia, New Brunswick, and the Equalization Policy Crutch” and Eisen appeared on CBC Radio Mainstreet to discuss it with host Stephanie Domet. Eisen remarks that “Keeping an open mind and a positive attitude towards resource development is one approach to driving prosperity that governments in the region should take.”