In a recent piece published in the Financial Post, AIMS President Brian Lee Crowley, pays tribute to one of the pioneers of clear thinking economics. Frédéric Bastiat, whose bicentennial is celebrated this year, was a brilliant French writer, polemicist and economist of the mid-nineteenth century who often challenged the well-intentioned actions of government by exploring their hidden consequences.
In taking a serious look at recent proposals for new economic development spending in Atlantic Canada the National Post turned to “Retreat from Growth” as a definitive source for why this is not the way to go. “Retreat from Growth” is AIMS’ most recent book and a finalist for the Donner Book Prize for the best public policy book of 2000. In it, author Fred McMahon notes that by the late 1960s, employment and business activity in Atlantic Canada had nearly caught up to the rest of the country, after suffering years of stagnation, only to lose that ground and more after 1972 when then prime minister Pierre Trudeau lavished transfers, economic development schemes and improved unemployment insurance benefits on the region.
In the August/September edition of Atlantic Business the Honourable John Crosbie, former federal minister and current AIMS Board member, profiles two recent AIMS studies on equalization. In the first part of a serial article for upcoming issues Crosbie argues there can be no question that equalization is a generous program but he looks beyond this generosity to question its effectiveness. Looking at the continuing gaps in provincial fiscal capacity he concludes equalization has failed of its basic intent. Recognizing this failure, Crosbie says we must now look at ways to fix the problem.
Ken Boessenkool, author of the AIMS paper "Taking off the Shackles: Equalization and the Development of Nonrenewable Resources in Atlantic Canada" published this piece in the National Post in response to an earlier article by Jack Mintz of the C.D. Howe Institute. Boessenkool agrees that the equalization system needs to be fundamentally reworked. He argues, however, that a necessary step in that reworking is to make a clear distinction between proceeds from the sale of a capital asset (royalties from nonrenewable resources like potash or natural gas) and revenues (like corporate and personal taxes). Publication: NP, July 31, 2001
The public debate initiated by two recent AIMS papers on equalization and its negative impact on economic growth in Atlantic Canada has taken yet another turn. Most commentators appear to have accepted the concept that the equalization system is due for a serious rethinking. The debate now is what to do first. Jack Mintz, President and CEO of the C.D. Howe Institute, and Arthur Andersen Professor of Taxation at the J.L. Rotman School of Management, University of Toronto, argues in this piece from the National Post that we need to look at the entire formula for equalization. In Mintz' s view, addressing the treatment of non-renewable natural resource revenue alone carries more risks than rewards.
The national debate spurred by two recent AIMS papers – "Equalization: Milestone or Millstone?" by Roland Martin and "Taking off the Shackles: Equalization and the Development of Nonrenewable Resources in Atlantic Canada" by Ken Boessenkool – continues in the July 9 edition of Canadian Business magazine. In his commentary, Andrew Nikiforuk takes a dim view of the current situation in relation to equalization and offshore royalties and argues that, to be equal, Nova Scotia must be master in its own house. Taking a page from Boessenkool’s paper, Nikiforuk concludes it is time for Ottawa to "…unshackle the provinces and get smarter about giving money away and clawing it back."
The July 9 edition of Maclean's magazine includes a column by Mary Janigan that explores the negative impacts of equalization and looks for solutions. She finds them in two recently released papers by AIMS - "Equalization: Milestone or Millstone?" by Roland Martin and "Taking off the Shackles: Equalization and the Development of Nonrenewable Resources in Atlantic Canada" by Ken Boessenkool. Quoting both authors, Janigan looks at the positive impacts, for Ottawa and the provinces, of eliminating nonrenewable resource revenue from the equalization formula and allowing the provinces to keep that revenue to spur sustainable growth.
The Nova Scotia government's decision to forestall by legislation strikes in the health care sector and to impose a settlement on their workers raises the thorny question whether public sector workers in essential services should be allowed to use the strike weapon. In his regular column, AIMS President Brian Lee Crowley says that, while there are arguments on both sides, on balance the public interest is better protected by a no-strike rule. But that doesn't mean that governments should be able to do just whatever they please -- if workers lose the right to strike, the government must also give up the right to impose wage settlements unilaterally.
William Watson has taken a thoughtful look at a recent AIMS paper on equalization and offers his positive comments in a National Post column. In addition to being a regular columnist at the Post, Watson is the editor of Policy Options, the magazine of the Institute for Research on Public Policy, and a professor of economics at McGill University. In his article, Watson explores each of Boessenkool's arguments in favour of excluding nonrenewable natural resource revenues from the equalization formula. Watson is the latest in a series of national writers to enter the debate that has been sparked by "Taking off the Shackles: Equalization and the Development of Nonrenewable Resources in Atlantic Canada", by Ken Boessenkool.
This enlightening study by Kenneth J. Boessenkool, a senior policy analyst now based in Ottawa, outlines a win-win strategy to reduce the overall cost of equalization and put more money into the hands of the provinces in the long term.