Those Figures…
A while ago I put up a graph demonstrating why Danny me b’y Williams needs to STFU regarding this whole whine about Newfoundland and Labrador not getting enough moolah from the Federal Government. Since this time the other premiers of the Atlantic Provinces have started whining long and loud so that they get as much of the pie as they can when Stephen Harper realizes he’ll get no seats in the Atlantic area in the next election and caves into their demands.
(Federal Transfers (All) to Provinces Per Province Capita)
As usual the Mainstream Media (CTV CBC) have done a bang-up job of not explaining what the issue is about. Harper isn’t helping either because he’s been saying nothing about it on air. This leaves pug-dog yappers like Stephane Dion and Jack Layton to make all kinds of promises they could not keep.
I’m going to place into layman’s terms what the whining is all about right now. In this example the Corvette represents Natural Resourses such as oil:
Basically you have a room-mate friend who makes less money than you. So you agree to subsidize his rent a bit. You pay $350 per month and he pays $250. (You’re paying $50 in transfer payments to your room-mate). One day your room-mate inherits a Corvette from his dead uncle. Your room-mate needs cash so he sells the Corvette for $5000.
So you approach your room-mate and say, “Hey buddy, like, can you pay $300 a month now because you have $5000 in the bank?”
And he says, “No way man, that was a one time sale. I’m going to need that to pay my tuition debt, buy a gym membership, a TV and some CDs.”
So you tell your friend to fuck off, and everyone else takes his side.
These guys who wrote the AIMS Report basically use a convulted bit of accounting to explain why your friend is right not to help you out with the rent. They are saying that the Corvette is a financial asset which is still an asset when converted into money.
What it really comes down to is this. Either you believe that:
A) Subsidies should prop up poorer provinces. Poorer provinces shouldn’t have to balance their books, they should just be able to tap into the rest of our wallets to do it.
B) Poorer provinces should balance their books. If there are no jobs people should move to places where there are jobs and quit relying on government pogey.
The right answer that leads to economic prosperity is B even though it is a hard road for those people. But I had to move for work too so I have sympathy and understanding -Â but that’s life.
I have always maintained that instead of these crazy transfers and subsidies the government instead should give people money to move. In fact that is precisely why people went to Canada. Also it is why many Newfoundlanders are flying to Alberta to work on rigs. Responsible people know that they shouldn’t rely on the rest of us when they can do things for themselves as hard as it is.
What is often left conveniently out of any CTV or CBC report is that the experts agree and applaud the Harper government for enacting the clean and well thought out process for determining transfer payments. Not that I agree with this subsidy, of course.
What they should do is this. But then the world would be perfect.
(In Eden No One paid taxes and everything but apples were free)
Good info!
It’s interesting that Quebec is not that outrageous on a per capita basis.
But yes the whiners are already getting lots.
Comment by nomdeblog — June 11, 2007 @ 10:33 am
This is a really unfortunate situation, and one that I’ve experienced first hand. However, there are many problems with Federal Transfer Payments that go above and beyond the simple fact that everyone’s paying to keep the Atlantic provinces alive.
Honestly, the East Coast is sometimes like a totally different world. When I go back home and tell people I’m doing a Ph.D. it’s a HUGE deal. No one knows anyone with a Ph.D. Being a pharmacist is like the most skilled, technical job people can imagine. There’s no job security, everyone’s working at call-centers that close every 5 years (relocate where they can get tax breaks) AND to top it all off, when you work at these Centers, you’ll find that maybe half the staff have basic university degrees. Why???
NO ONE WANTS TO MOVE! Seriously. Everyone I’ve met since moving out of the Maritimes has family everywhere (often all over the world) but it’s just not like that in New-Brunswick: Everyone’s entire family is often within a two-hour drive away. It’s all just part of the culture, and it’s horrible. For example, my high-school awarded a series of scholarships for academic and sporting achievement however, you forfeited all money if you chose to go to any English University or one outside NB. The school’s stated mandate was to ‘promote French culture in New-Brunswick. How does this help the struggling community at all?
This kind of bullshit is ridiculously pervasive there. I’ve known a handful of people who have been offered very good jobs in other provinces who either turned them down or left and soon quit because EVERYONE they’d ever known was back home; they just didn’t ‘fit-in’ elsewhere.
If we’ve gotta have the transfer payments, then there’s gotta be some accountability tagged onto them. The worst decision ever had to be when the Chretien government lifted the obligations on where the money actually had to go. In New-Brunswick, for example, an aging baby-boomer voting population is dragging all of the money into an ineffectual health-care system, driving education down and tuition fees up. What’s significant about this isn’t so much the Universities (too many people get degrees anyways) but rather that a) Most technical colleges have closed and b) no one can afford to go to them anyways. So there’s a huge demand for trades people, but no one’s doing it.
Point is that the places aren’t just behind in economic development, they’re also not getting better. I don’t know what the solution is, but transfer payments aren’t about equalization anymore (if they ever were) they’re pretty much about life-support.
Comment by Carlo — June 11, 2007 @ 1:07 pm
Hey Carlo,
What you have said is exactly what other maritimers have told me (including closely related ones) about what is going on. Its also what I have experienced during my travels there.
Economics hates subsidies. Subsidies are the worst thing you can do to anyone. I don’t like using simple examples to explain things, but this may work:
Its like having a 21 year old child who doesn’t try and maintain a job or get an education because you keep bailing him out financially every time he gets into trouble. Its really that simple.
I have no problem with disaster aid if there is a foreseeable end goal. IE: Halifax gets a hurricane. This paying subsidies to inefficient businesses, dying or dead industries, seasonal workers, university programs with no end occupation, its a waste of my money.
I’m sick of it. I’m sick of the complaining. Its time to grow up.
Comment by langmann — June 12, 2007 @ 6:48 am
I can’t disagree with you here. However, and I may be wrong, before Alberta was a ‘have’ province, weren’t their natural resources exempt from the tranbsfer paymetns, UNLIKE Newfoundland’s?
Comment by Necator — June 12, 2007 @ 11:40 am
@ Necator,
Since 1982 the formula has used a 5 province revenue calculation (British Columbia, Saskatchewan, Manitoba, Ontario, and Quebec I believe). The reason is because otherwise even Ontario would have been receiving equalization payments. Hence Alberta’s old/gas was not factored into the equation in full - even though Alberta of course has not received any equalization transfers. So the point is pretty much irrelevant. The issue that the Atlantic provinces have with that is they feel that not including Alberta in those calculations has decreased the amount they would have received.
Of course this leaves out the idiocy and disasters of Pierre Trudeau’s National Energy Policy which is estimated by economists who have studied this area to have extended and worsened the the recessionary effects in Alberta of the 1980s Canadian recession. Ironically Chretien, who is hated in Alberta, I believe weaned off the policy and the Conservative cut it entirely under Mulroney. Trudeau was a disaster in so many ways, I wonder exactly why he is so well considered.
Stephen Harper’s government has actually implemented a process where ALL 10 province’s tax revenue is included in the calculation and that no province receives more than a non receiving province. The final part was that only 50% of natural resources would only be included.
Here is why I am angry and why I think both the Liberals, the Atlantic Provinces and the Media are Hypocrites and why Harper deserves recognition which he will never get except perhaps in history books.
a) Harper enacted the recommendations of an Expert panel report Achieving A National Purpose: Putting Equalization Back on Track (O’Brien report) that involved years of study. Harper didn’t just wake up one day and think this strategy up.
b) the report was actually commissioned by the government of Canada under the Liberals when they were the government. If they were in power they would have probably enacted it too. What this country needs is a concerted front from all parties saying enough is enough, this is a decent agreement. Stephane Dion could prove he is a leader by doing that - but he is not a leader as he has demonstrated. he’s an idiot.
c) the Atlantics can keep their old agreements or have the new one. Its their choice. Either way they are getting MORE MONEY under this Conservative government budget than EVER BEFORE.
So frick off to them all I say.
Comment by langmann — June 12, 2007 @ 8:19 pm
[...] Guess who was right, Danny and the media or the economist and me? And notice how the media ignores the whole issue when Harper looks like he’s right [...]
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