For more than a decade, AIMS has published papers and Commentaries about Canada’s equalization program, pointing out its flaws and making suggestions for improvement.
As the Senate Standing Committee on National Finance met to discuss the issue of equalization and examine whether there is a fiscal imbalance, it turned to AIMS for answers. AIMS vice president Charles Cirtwill and policy analyst Bobby O’Keefe travelled to Ottawa to meet with the Senate Committee.
The resulting Commentary is called “The Brick on the Scale: How Equalization weighs heavily on us all.”
It draws on AIMS indepth research, including its most recent series which gained headlines and comments across the country. “Over-equalized“ shows that equalization receiving provinces often spend more on government services than non-equalization receiving provinces.
As Cirtwill told the Senators, “Equalization receiving provinces tend to have larger numbers of public service employees on a per capita basis and pay their public servants a greater wage premium (compared to the average industrial wage) than the national average of these measures. On top of this, the equalization receivers have higher than average debt levels.”
He explained that while not eliminating the need for equalization, the AIMS analysis provides further support to the argument that the current system over-equalizes, with the result that the extra cash is captured by well-organized public servants — who turn the extra money into either substantially higher wage premiums, extra public employees, or both — or it allows politicians to shift taxation into the future by using equalization to finance high levels of public debt.
To read the commentary based on the AIMS presentation, click here.
To read more about AIMS Special Equalization Commentary Series, click here.