Be fair to Ontario

NationalPost.com – Fair+Ontario
Wednesday, Nov. 17, 2010.    Matthew Mendelsohn, National Post

What follows is the last in a five-part series on Ontario’s changing role in the Canadian federation. The subject is the focus of the annual State of the Federation conference, which runs Nov. 19-20 in Toronto.

Maxime Bernier, the former Conservative Cabinet minister, has been travelling the country suggesting that we gut the federal government. Not in those exact words. But that is his intent.

This has never been a vision supported by Ontarians, but things may be changing. Unless the federal government re-designs its major programs so they treat Ontario more fairly, Ontarians may join Bernier in his crusade.

In Bernier’s proposal, the federal government would stop most of its major transfers to the provinces for health and social programs. It would stop collecting some of its taxes. It would be up to provinces to fill that vacated tax room, raise their own revenues and pay virtually all their own bills.

Provinces like Alberta would be rolling in it. Ontario and B.C. would do pretty well too. Most others would go through a difficult transition, with fewer resources to fund their services.

Most Canadians do not embrace a model of Canadian federalism where the federal government runs the military and the Bank of Canada — and almost nothing else. Yet Bernier articulates the traditional perspective of many in Quebec and Western Canada who would like to see the federal government shrink to virtually nothing.

What has usually prevented implementation of this vision has been the strong belief amongst most Canadians that all should have equal access to social programs regardless of where they live in the country. Ontarians largely paid to build this vision and in return have received a good dose of contempt from the rest of the country.

But something may be shifting. The province used to be supportive of a strong federal government because it worked in Ontario’s interest. And Atlantic Canada and some other provinces, like Manitoba, supported a strong federal government because regional redistribution was the only way they could afford the same standard of programs as Ontario.

However, Ontario can no longer support the same level of inter-regional redistribution that it once did — and many other provinces are generating more income now. This has consequences for federal policy. Canada is no longer a country of a prosperous “centre” and a needy “periphery.” Yet Ontarians still contribute about $20-billion more than they get back in federal transfers and services for purposes of redistribution to other parts of the country.

There are two possible solutions to federal policies that are poorly designed for Ontario: Fix federal programs so they treat all provinces and all Canadians equally or gut the federal government — as proposed by Bernier — and let Ontario keep more of its own money and fund and define its own programs.

Canadians outside Ontario need to ask themselves a serious question: Are policies designed for a time when the southwestern Ontario manufacturing sector drove prosperity across Canada still appropriate for an open, globalized, service-and petroleum-based economy? If the answer is “no,” then there is an even more important question for Canadians to ask: Am I prepared to support parties that propose to do something for Ontario, or do I want Ontarians to join the movement to gut the federal government?

– Matthew Mendelsohn is director of the Mowat Centre at the University of Toronto and a former Ontario deputy minister. For more information on the State of the Federation conference, please visit stateofthefederation.ca.

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