That mean Premier Ralph Klein of Alberta. What a nerve. He says he won’t give us his money. How mean-spirited, how selfish, how…unCanadian.
But while many provincial governments, especially in less developed provinces, seem to feel that “sharing” is the only Canadian virtue that counts, it is funny how selective their idea of “sharing” is.
Alberta, for instance, is enjoying tremendous prosperity right now, due to oil and gas prices over which it has absolutely no control. That province welcomes with open arms people from all over the country who are needed in its fast-growing economy. Unlike certain other provinces, who throw up all the barriers they can think of to Canadians from other provinces living and working there, Alberta is keen to have newcomers come and share in what they have.
They also contribute generously through their federal taxes to sharing the wealth with the less fortunate, both individuals and provinces. Alberta sends about 140 percent of the national average tax take per person to Ottawa. You may say that there is no virtue in this, because Albertans are better off and their companies more profitable than in many other parts of the country.
But that’s exactly the point. Federal taxes make the better-off pay a bigger share, so Alberta pays more, while Ottawa provides less in spending there (precisely because they don’t need it as much as other parts of the country). The extent of Alberta’s “sharing” is thus understated by the 140 percent of average per capita federal taxes they pay, because they get less than their “share” of federal spending per person.
Ah, but sharing is a good thing, and you can never have too much of a good thing. So lots of provinces, looking enviously at Alberta’s burgeoning oil wealth, are now clamouring for even more sharing. But they are a little confused. They seem to think that Ottawa can impose some kind of “Alberta tax” or an “oil patch tax” and grab yet more revenue from Albertans to spread around through the equalization formula.
Ottawa finances its programmes through federal taxes. That tax burden is the same on everybody across the country. An income-tax payer in Halifax or Saint John makes the same contribution to equalization payments to poorer provinces as one in Alberta. Ditto for profitable corporations. And motorists paying excise tax on gasoline. And consumers paying the GST.
So a plea to “share” Alberta’s oil revenues, via equalization, is really a veiled call for more federal taxes on all Canadians, so that that money can be transferred to equalization-receiving provinces. It is merely dressed up with a crude appeal to envy and greed by making it somehow seem associated with Alberta’s oil wealth. Yes, more of the extra federal revenues would come from Alberta, proportionately speaking, than other provinces, but only in the same proportions as federal taxation already takes money out of Alberta. Calls for more Alberta “sharing” are a bait-and-switch tactic by less-well-off provinces who are sure that they are entitled to more money from somebody and energetically shake their begging-bowl at the slightest whiff of cash.
But sharing is usually justified by two things. One is greater prosperity enjoyed by some than others. Differences of wealth in themselves, however, are not enough. There also has to be a genuine need on the part of those who will benefit from the sharing.
The call to enrich Canada’s equalization transfers to less-developed provinces is thus a claim that these provinces are needy, and cannot provide suitable levels of services to their populations without more money. But is this true?
Here is one test. How much money does each province have available per person to provide public services? Ontario, normally our wealthiest province (except in times of high oil prices!) has the equivalent of about $7100 per person to spend on provincial and local government services. But according to one of Canada’s leading equalization authorities, Professor Tom Courchene, when you make suitable adjustments for the differences in costs of providing services in New Brunswick and Ontario, New Brunswick has the equivalent of $7830 per person to spend on those same services.
And Ontario only needs about 67 public employees per thousand Ontarians to provide local and provincial public services. New Brunswick, on the other hand, needs 21 more, or nearly 88 employees per thousand people.
So while some parts of the country may be more prosperous than others right now, they already contribute generously to programmes to help compensate for the prosperity gap. Not only is there no case for more equalization, we clearly overequalize and recipient provinces are making poor and undisciplined choices about how to spend the bounty.
Leave that nice Ralph Klein alone. He and Albertans have done more than their share already. It is up to us to do better with what we already get.
Brian Lee Crowley is president of the Atlantic Institute for Market Studies (www.aims.ca), a public policy think tank in Halifax. E-mail: [email protected]