Redact all you want, we’ve gone overboard on equalization

Posted on March 3, 2011 in Governance Debates

Source: — Authors: – RoB/commentary
Published Thursday March 3, 2011.   Neil Reynolds

To redact is to edit or to revise. Strictly speaking, redaction does not mean censorship – though nowadays, this seems its primary purpose: to spike or to kill. Governments prefer “redaction.” It’s a government kind of word. Conveying an assertion of formidable learning, it permeates simple censorship with intimations of national survival. From a political perspective, it’s better to get caught redacting than censoring, spiking or killing.

An astonishing government redaction, it now appears, has deep-sixed a federal report on – believe it or not – the justice of equalization payments. The Mowat Centre for Policy Innovation (a part of the School of Public Policy and Governance at the University of Toronto) filed a Freedom of Information request for the report and got back a copy so heavily redacted that it couldn’t be deciphered. Little wonder the centre gave the government a failing grade (D+) for transparency in calculating federal transfer payments (“opaque, confusing”) and for accountability (“Canadians have a hard time following the money”).

This sort of extreme redaction might be expected in federal studies on the collapse of the cod fishery, the corruption of the Shawinigate scandal, or the treatment of prisoners of war in Afghanistan. What exactly does the government have to fear from a study of equalization payments? We don’t know. But according to a February report published by the Ontario Chamber of Commerce (“Dollars & Sense: A Case for Modernizing Canada’s Transfer Agreements”), the government has much to fear – most importantly the revelation that Canada’s equalization program now distributes billions of dollars a year to provinces that least need the help.

Has Canada equalized so extravagantly that it now takes money from provinces with the least public services (such as Ontario) to finance payments to provinces that have the most public services (such as the Atlantic provinces and Quebec)?

“This is important because a fair assessment of population need would likely show that [it] is greatest in Ontario and B.C., not traditional recipient provinces,”the report suggests.

“However, the [government’s] reluctance to release the study seemingly confirms that equalization is coming from the people least able to afford it, going to regions that have much more accessible services than Ontario.”

The report repeats a Chamber of Commerce request, first made in a 2005 report, that Auditor-General Sheila Fraser investigate the equalization program and other transfer payment programs. “[She] should examine the lack of metrics associated with federal regional subsidies because it appeared to violate federal audit requirements that measures be put in place to determine the effectiveness of all programs,” Dollars & Sense says.

Call it the disequilibrium of equalization. Everyone knows about it, of course: the transfer currently of as much as $50-billion a year from provinces of higher productivity (especially Ontario and Alberta) to provinces with lower productivity (especially Nova Scotia, New Brunswick, PEI and Quebec). With each passing year, the needs-based gap grows wider, and the public sectors of the “have-not” provinces grow bigger. With each passing year, the rich provinces get progressively poorer – in the provision of government services – compared with poorer provinces.

Newfoundland has 983 registered nurses per 100,000 people, for example; New Brunswick has 923; Ontario has 633. PEI has more than twice as many registered daycare spaces as Ontario – 41 PEI spaces per 100 preschool age children compared with 19.6 Ontario spaces.

Atlantic Canada has 16 universities to serve two million people; Ontario has 21 universities to serve 13 million. PEI has 3,657 federal employees per 100,000 residents – more than twice the provincial average; New Brunswick has 2,655. Ontario has 1,742. PEI has 1,891 provincial employees per 100,000 residents; New Brunswick 1,344. Ontario has 680.

And consider total government spending as a percentage of provincial GDP: PEI, 63 per cent; Nova Scotia, 58 per cent; New Brunswick, 55 per cent; Ontario, 35 per cent. With government spending providing two-thirds of the island province’s GDP, Prince Edward Island is now essentially a government-operated theme park.

The federal government should release its heavily censored report on equalization payments without delay.

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