One of the unlikely champions of Ontario’s new sense of injustice over employment insurance and federal transfer payments is a Maritime boy.
David MacKinnon, a native of Prince Edward Island, once served as a director in the Nova Scotia Department of Economic Development and later as CEO of the Ontario Hospital Association from 1996 to 2003.
Last month, the semi-retired 66 year old delivered a hard-hitting speech to the Charlottetown Rotary Club.
Maritime political leaders, he argued, expect too much of Ontario taxpayers, who continue to subsidize the region despite economic woes of their own.
“The problems I’m drawing attention to now were apparent to me 30 years ago when I worked for the Nova Scotia government,” he said in an interview from his home in Wellington, Ont., roughly 200 kilometres east of Toronto.
“The idea that the rest of Canada is an ATM and you just step up for more and you’ll get it, which by and large has happened, was apparent then and it hasn’t improved. If anything it’s deteriorated. That feeling of entitlement is all the more evident.”
MacKinnon has been delivering the same kind of speech for 15 years. His basic argument is that Ontario has been subsidizing Atlantic Canada for decades, to the detriment of both regions.
In the latest version, he argues that Ontario is being shortchanged because it still hasn’t fully recovered from the 2008 economic recession and has lost 30 per cent of its manufacturing jobs over the last eight years.
It is riddled with debt and its public services are the least accessible in Canada. Its universities and colleges are funded at levels far below the Canadian average.
Meanwhile, it continues to hand over wealth to Atlantic Canadians in the form of employment insurance premiums and federal transfer payments. Ontario taxpayers, along with westerners, are in large part subsidizing high rates of EI, federal civil service jobs and public services in provinces such as New Brunswick.
MacKinnon says studies by Ottawa, the Mowat Centre for Public Policy and the Atlantic Institute for Market Studies show conclusively that Atlantic Canada is propped up by too many federal subsidies.
As far as New Brunswick is concerned, he believes the province is much too reliant on employment insurance, pointing to recent comments from MP Bernard Valcourt, a Conservative cabinet minister, who said he was worried that claimants keep going back to EI, even though jobs continue to go unfilled and business leaders complain about a labour shortage.
Up to 100,000 of New Brunswick’s working population of 350,000 uses EI, a ratio MacKinnon described as startling.
He says decades of handouts have made the Atlantic region dependent on government subsidies and created an artificial economy increasingly out-of-step with the competitive global economy. This disengagement from reality, MacKinnon says, keeps Atlantic Canada behind.
“Many people, particularly business leaders, sense that this system can’t carry on the way it is,” he said.
“The political cast don’t get it. What I see is a divergence between the very seriously deficient political leadership, which doesn’t understand these policies or doesn’t want to, and the broader leadership in the community. I encounter many people who recognize the problems that I’ve been drawing attention to.”
MacKinnon has his detractors, including public policy heavyweight Donald Savoie of the Université de Moncton. He doesn’t think highly of MacKinnon’s speech, which he calls Ontario-centric.
“It ignores history, it ignores the impact of national policy on the Canadian economy, it ignores how well Confederation has served Ontario for 100 and some years, it ignores the fact that the federal public service is far more concentrated in Ottawa than in the regions.”
MacKinnon seems to forget, Savoie said, that Ottawa deliberately created the manufacturing base of the country in Ontario and Quebec through the establishment of several Crown corporations. The auto sector in Ontario would never have taken shape without Ottawa’s help either, ensuring its population and economy would grow faster than the regions.
“The thing with federal transfers, they were born out of guilt from Ontario. Ontario saw that Canada had a national policy that greatly favoured Ontario, so they said ‘We’re going to send some guilt money out East.’ ”
Savoie nonetheless agreed with MacKinnon that federal subsidies had made New Brunswick too dependent on Ottawa for financial aid. But he said the solution was to ensure national economic development policies also favoured New Brunswick, not just Central Canada.
EI is an entirely different matter for Savoie. He agreed with MacKinnon that it had distorted New Brunswick’s labour market and that the program should be reformed.
“EI has hurt Atlantic Canada,” Savoie said. “We need to encourage workers to work. I’ve heard too many business people tell me they can’t find workers.”
Savoie believes that EI should include better training programs to help unemployed workers find available jobs. He also had a warning for critics such as MacKinnon, whose arguments he summed up as “Crybaby Ontario.”
“Ontario is complaining that it doesn’t qualify as easily for EI, so it wants to change the rules of the game. Well, fill your boots Ontario. If you think it’s going to help you, we know from experience that EI creates a dependency cycle and we know that’s not how to build a good, strong, vibrant economy.”
Robbing Peter to pay Paul
MacKinnon dismisses Savoie’s criticisms of a “Crybaby Ontario” as old history. He says it’s no longer true that Ontario’s manufacturing might ensures that it has the best public services in the country.
The notion of robbing Peter to pay Paul hit him full force when he was the CEO of the Ontario Hospital Association. He said he often drove through Vaughan, Ont., a city with a population of 288,000 people that has no hospital of its own and whose neighbouring communities with hospitals are all at capacity.
Yet in his native P.E.I., there are seven hospitals for a population of 140,000.
The situation is little better in New Brunswick, which has 22 hospitals for its population of roughly 751,000 people. Both provinces are relatively small and can be driven end to end in a manner of hours, rather than days in Ontario.
“When you see that, you can better understand the excesses of the Maritimes.”
A proposed new deal
MacKinnon proposes moving to a new equalization arrangement based on both need and capacity and transforming the EI program so that it treats all similarly situated Canadians in the same way, regardless of where they live.
As one practical suggestion to deal with a federal subsidy cut, he says the New Brunswick government could undertake an external spending review along the lines of the recent Drummond review in Ontario.
In Charlottetown, the audience members who heard his speech were “very respectful and had very thoughtful questions. They were cautious but questioning in a constructive way.” Over the years, MacKinnon has delivered slightly different versions, mostly to small crowds in Ontario.
It was there that he used to encounter the most hostility. They would tell him he was being divisive.
“People in Ontario see themselves as Canadians first or they did see themselves that way. You can’t attack a fundamental pillar of the federation, all these forms of subsidies.”
But he said now that times are tough in Ontario, attitudes have hardened. The last time he gave the “stop-the-hand-out” speech to a crowd of about 150 people in Belleville, Ont., last year, he had a much warmer response.
“I found a lot of people out in the parking lot near my car wanting to talk about it further,” he said. “There was absolutely not a single hint of the old Ontario noblesse oblige kind of psychology. People were seized with what this is costing them.”