David MacKinnon, AIMS Fellow in Common Sense in Confederation, The Ontario Perspective, takes issue with the approach the federal government,  P.E.I., NS, NB, Quebec and Manitoba have been taking in relation to the regional subsidies the government provides, in this speech delivered to the Charlottetown Rotary Club. He refers to the classic AIMS take that these subsidies are “the help that hurts.”

The considerations put forth in Financial Reality is Needed in Maritime Canada are important for the economic path that PEI is on, and where it will lead. Beginning with the case of Ontario, a province which has not found its footing amongst today’s emerging markets, MacKinnon explains why subsidies are keeping provinces down instead of lifting them up to prosperity. Leaders often observe that equalization and other regional subsidies are required by the constitution. They are not. What is required is a commitment to the principle of equalization to achieve comparable programming across Canada. This isn’t exactly the result of equalization in Canada. For example, P.E.I. has 50% more nurses in relation to population than Ontario, and university funding per student is 28% higher in P.E.I. than it is in Ontario.

MacKinnon raises the fact that population is not considered by the federal government in administering equalization payments. The government also disproportionately favours the Maritimes in these funding arrangements, producing local economies that are out of phase with global demands, and unemployment patterns that leave residents dependent on the government. The biggest danger, MacKinnon writes, is not that other Canadians are growing tired of funding these subsidies, but rather that these provinces now have artificial economies sustained by subsidies coming from other Canadians.

MacKinnon proposes changes to help alleviate these problems, beginning with the elimination of the mindset that Maritimers need to get more money from Ottawa.


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