Canadian Politics from Canada's Centre

Thursday, August 03, 2006

Canadian Politics Interviews: Canadian Political Commentator Jo McNair - Part 2

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Canadian-Politics' very own Jo McNair gave us an interview, presenting her opinions on the state of Canadian politics. Today's section of the interview sees Jo considering Canada's problem with

Regional disparity

All of the above leads to one of, if not the most important issue in Canadian politics right now, and that is the problem of the growing regional disparity between the provinces.

If you've paid even the slightest bit of attention to the news the past few months, you may have read something about the growing divisions between the provinces on the issue of the equalization program and/or the matter of the "fiscal imbalance." I know these issues tend to bore people to tears, but personally, I think we may well be approaching a crisis situation on these fronts.

For those not in the know, equalization is a federal program that seeks to ensure that the poorer provinces (the "have-nots") get additional funding in order to better be able to provide the services they are supposed to provide. It's a complicated system, and a grossly misunderstood one, and this is not the forum to start explaining the key ins and outs. I will resort to a bit of self-promotion, however, and refer you to a section on my website that provides a primer on equalization.

The "fiscal imbalance" on the other hand, is no less complex, but somewhat more nebulous. Essentially, the provinces claim that Ottawa has too much money while they don't have enough - a vertical fiscal imbalance. The Liberals, when they were in power, always denied this was the case. The Harper Conservatives campaigned on a promise to "fix" it - however, they seem to have come to the same conclusion as the Liberals - there is no fiscal imbalance. I agree with the Liberals (and now the Conservatives) - there is no vertical fiscal imbalance for the simple reason that it's completely debatable that Ottawa has 'too much money' given our $500-bn debt and grossly under funded military. They're maybe not spending the money they have in the right areas, but you can't really say Ottawa has too much money.

There is a horizontal fiscal imbalance, however, and this is the most important one. I've referred to it in the previous section on health and education - the gross imbalance between the provinces and their ability to raise revenue. We have one province that is 100% debt free, has no sales tax and the lowest personal and corporate taxes in the country, not to mention billion dollar surpluses, and then everyone else. All the other provinces are grossly in debt. Most may well have budget surpluses (only Ontario and PEI don't), but they - with the exception of Ontario and Saskatchewan - don't raise enough revenue on their own to meet national standards and thus qualify for equalization. The pressure Alberta is exerting on the economies of the other provinces cannot be overstated. The growing division between the "have" and "have-nots" cannot be ignored. Anyone who fails to understand just how big a problem this is will be in for a rude shock.

In my opinion, this issue will only worsen over time. There is no easy solution. And again, the more I study this issue, the more I've come to believe that the true cause is, again, our constitutional set up. And I see only one real solution, but it's radical.

In a nutshell, we need to completely reorganise the country. Have one national/central government, get rid of the provinces completely, and replace them with hundreds of much smaller LMAs - local and municipal authorities. All programs would be run and funded by the central government, but administered locally by the LMAs. There would be room - plenty of it - for tailoring said programs to meet local needs - truly local needs (far more local than most provinces can ever offer). I told you it was radical, but seriously - if you sit down and really start thinking about it, the advantages of this are so obvious, you'll find it difficult to argue against it. There is no need for provinces. None. Their existence cannot be adequately justified. I've put the challenge to many and the "reasons" they come up with to justify the existence of and need for provinces can easily be counter-argued.

It will never happen, of course, but at least I'm encouraged that I increasingly see letters to the editor and comments on forums from people proposing something similar. There is hope!

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Here are some related articles:

Canadian Politics: Interview with McNair part 1
Canadian Politics Bloggers Interviewee List

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