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.
The two independent Canadian public policy groups say the fact that both New Brunswick and Nova Scotia have decided to halt shale gas development is an illustration of how equalization payments actually encourage poorer provinces to put the brakes on resource growth.
“Equalization makes it easier for political actors to turn their backs on national resource development even though it is a potential source of jobs, revenue and economic growth,” said Ben Eisen, director of research at the Atlantic institute.
“Economic incentives to move forward are weakened by the fact that when you do so, a large chunk of the money is clawed back through reduced equalization payments.So that is one of the ways equalization creates a disincentive to pro-growth economic policies in recipient provinces.”
*This article appeared in the Daily Gleaner, Miramichi Leader, Telegraph Journal, and the Times and Transcript on 11 December 2014