Ontario's Equalization Non-Disaster

How is it even possible that the good news story of Newfoundland & Labrador coming off equalization has somehow turned into catalyst for concern and near hysteria in some circles?

After 59 years of being a so called "have not" province one would think the news this week that Newfoundland & Labrador will no longer need equalization payments would be a good thing but in reading the headlines one gets the opposite impression.

Unfortunately Newfoundland & Labrador's announcement took place at the same time that financial analysts are saying Ontario could soon become an equalization receiving province. As with most things Canadian, when Ontario sneezes everybody listens and all else is quickly forgotten in the rush to find a tissue.

As a result, instead of cudos being offered, everyone from politicians to the media have gone on the offensive to protect poor little Ontario from those cruel people down East. CTV political reporter, Mike Duffy" even went so far this week as to accuse Premier Danny Williams of being "uppity" because he had the gall to say that he was glad his province was finally able to stop collecting federal support, and in doing so, allowing the system to better help those who needed support.

"Uppity" now there's a word you don't hear very often regarding Newfoundlanders & Labradorians. In fact the last time I recall hearing the word it was used in reference to individuals from a certain segment of the North American population that had been repressed for generations and had finally found a voice. I believe the exact term was, "That's one uppity...".

I won't finish the quote but believe me when I say that the "N" word used in that context wasn't Newfoundlander, though the sentiment was reminiscient.

Thanks to a perfect storm of high oil prices, a soaring Canadian dollar and a booming economy out west and in Newfoundland & Labrador Ontario is no longer at the top of the heap financially. Add to this the coincidental events of Newfoundland and Labrador moving off of equalization while Ontario moves in to replace it and the perfect scapegoat has been created for all that pent up Central Canadian anger. Who better than Canada's favorite whipping boy, er... Province, to take the heat.

According to reports, Ontario MPs are fuming over the situation and one columnist in an Ontario paper was quick to note that, "Newfoundland was always the place we pointed to as somewhere to go if we wanted to see our tax dollars at work".

Through all the noise the prize for twisting reality and spewing venom has to go to none other than the Premier of Ontario himself, Dalton McGuinty.

The Ontario Premier is telling anyone who'll listen, and apparently there are quite a few, that the reason Ontario is in such hard shape is because his province sends $20 billion more to Ottawa than it gets back in services. Money that is being used to support the rest of Canada.

Putting aside the simple geographical fact that Ottawa itself is a part of Ontario, McGuinty is still full of it.

To listen to the guy you'd think Ontario was on the brink of collapse. That bread lines were forming on every street corner and food was being flown in by Oxfam.

Calm down Dalton, things aren't all that bad.

In truth, the reason Ontario may become an equalization recieving province is because the new 10 province standard(adopted in consultation with the Ontario Premier)has raised the provincial average, pushing Ontario closer to the center line of "Have" and "Have Not".

In addition, though McGuinty would love to have people believe the opposite, in reality Ontario doesn't send $20 billion to Ottawa to fund social programs or equalization across the Country.

Federal revenues used for these programs come from the pockets of all taxpayers across the Country. It doesn't matter if you live in BC, Alberta, Ontario or in Newfoundland & Labrador, everyone pays the same federal tax rates. In other words, someone making 50K in Medicine Hat pays the same taxes as someone making 50K in Twillingate. It's these taxes that pay for equalization, not the Province of Ontario or any other Province for that matter.

The reason for the $20 billion discrepancy is simply that Ontario has more people paying federal taxes and a larger percentage of high paying jobs than many other places. That's not exactly the profile of a Province on the brink of collapse.

As one columnist for the Halifax Chronicle Herald recently put it, "...hold the cat food orders, Toronto.

...Mr. McGuinty says Ontarians pay too much to Ottawa. But we all pay the same federal tax rates, so Ontarians can only pay less if Ottawa returns more money through transfers.

Mr. McGuinty is really saying: Give me more transfers, but don’t call them equalization – that’s for have-nots."