Wednesday, 30 April 2008

Its a Silver Cloud with a Cloudy Lining

Ontario could receive Equalization by 2010!!!!

Run for your lives! The sky is falling! The sky is falling!

Once again, people respond to the headline, but don't read the details. Let me highlight them for you:

The report notes that last year's change to the equalization formula from a five-province to a 10-province standard "brought Alberta into the picture and their soaring resource revenues" have driven up the base upon which equalization payments are based.

Silver News Interpretation: we now have a higher standard to aspire to, the standard is no longer artificially weighted down.

The authors say Ontario's relative decline is "not so much a story of Ontario weakness as it is of booming economic strength in Canada's commodity-based economies."

Silver News Interpretation: Ontario is not getting poor, other provinces are getting rich.

The authors also say that Ontario is still a net contributor to federal coffers and likely will be in the future. Based on the most recent 2005 data, they say Ontario residents contributed $21 billion more to Ottawa than they got back in federal spending.

"We calculate that the province stands to collect as much as $400 million in fiscal 2010-11 and $1.3 billion in fiscal 2011-12,"

Weird News Interpretation: Pay $21 billion, get back $400 mill. Uhhhh..... And that means we're Have-Not? I know my basic math and that DOES NOT MAKE SENSE.

So if Ontario does end up getting equalization payments, "Ontario residents will, in effect, be paying the equalization tab with their own money," according to Drummond and Burleton.

"Is it heresy to ask whether once again the standard for equalization is not appropriate?"

No it isn't heresy. There's a simple solution. Lets save the definition of Have-Not for a province that receives more federal funding than it pays in federal taxes. Or is that too simple?

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