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.”
Two independent Canadian public policy groups don’t have much good to say about equalization grants. The Fraser Institute and the Atlantic Institute for Market Studies says the grants act as a disincentive for the development of natural resources in New Brunswick and Nova Scotia. AIMS Director of Research Ben Eisen says equalization makes it easier for “political actors” to turn their backs on developing natural resources, even though they’re a potential source of jobs, revenue, and economic growth.
Equalization in Canada means that Saskatchewan, a "have" province, is sending money to "have-not" provinces like New Brunswick and Nova Scotia. Those two provinces have raked in more than $27 billion in equalization since 2005. And it's those payments, according to the Fraser Institute and the Atlantic Institute for Market Studies, which discourage those provinces from developing their natural resources. Ben Eisen, director of research and programs at AIMS says equalization makes it easier for the two eastern provinces to forgo natural resource development that would help spur economic growth. At the same time, Saskatchewan is developing natural resources here and sending some of that revenue to places like New Brunswick and Nova Scotia. Eisen says if governments there want to help create jobs at home, raise income for workers, and increase tax revenues, they should pursue policies that do not harmfully restrict resource development.
