P.E.I. Finance Minister Wes Sheridan was recently reported by the Guardian to be seeking more money for equalization from Ottawa. There are very large problems with Mr. Sheridan’s approach.
First, he is not demanding more money from Ottawa. He is seeking it from other Canadians: Ottawa is just the conduit.
Unfortunately, he is demanding more money from others, principally Ontarians, at time when Ontario is growing more slowly than P.E.I. and after the release of several studies showing that Islanders already have much more access to provincially funded programs than Ontarians have. The Government of P.E.I. is seemingly unaware, also, that Ontario is experiencing a major crisis in its manufacturing industries as P.E.I. demands more money.
Second, in provincial budgets and in other forums and documents, the Government of P.E.I. is misleading Islanders and other Canadians about the constitutional provision respecting equalization.
Mr. Sheridan’s most recent budget speech indicates that section 36 of the Constitution Act provides for equalization to ensure equal access to programs across Canada. In fact, the wording is very different. Section 36 states that all parties agree with the principle of providing equalization but does not require any specific level of payments. The Government of Canada could, for example, provide $5 billion for the program instead of the current $15 billion and still conform to the clause in the constitution because the $5 billion would be a serious commitment to the principle.
Third, Mr. Sheridan and Premier Ghiz seem completely separated from economic and financial circumstances in their approach to other Canadians.
During the great recession, the federal government put a cap on equalization so that it would not grow faster than GDP. In their budget, Mr. Ghiz and Mr. Sheridan described this as an artificial ceiling.
It is, of course, not artificial. What is artificial is a major program of government that grows faster than underlying growth in the economy that supports it and does of over a long period of time. This has been the case with equalization. Viewed from this perspective, Mr. Flaherty’s ceiling is a belated recognition of reality rather than any artifice.
In recent years, senior Ontario politicians have called equalization absurd and demanded change. The approach taken by Messrs Ghiz and Sheridan and some other political leaders from recipient provinces is one of the major reasons for the prevalence of this view and the rapidity with which it is spreading.
Islanders need to ensure that their approach to other Canadians on financial matters is informed, judicious and reflects a sympathetic understanding of the circumstances of the people they are seeking money from. Unfortunately, none of these qualities are present in the provincial government’s present approach.
David MacKinnon is a Research Fellow with the Atlantic Institute for Market Studies.