Equalization: Corcoran and Courchesne

Update:

Link: Federal government's Industry Minister Hon. David Emerson on funding for Bombardier's C series jets Hansard Mar. 21, 05. Search "Bombardier" to find the relevant section.




Two-tier sharing: Resource revenues pose a challenge to Canada's equalization system. A voluntary interprovincial revenue-sharing pool could create fiscal balance Tom Courchesne, Financial Post, Aug. 32, 05

It has been suggested that equalization is an essential part of the glue that binds Canada together. However, as of late this glue appears to be coming unstuck. Saskatchewan has been reeling under near-confiscatory equalization clawbacks on its energy revenues while Newfoundland/Labrador and Nova Scotia have bargained their way to the privileged position of zero clawbacks. Ontario has lobbied, successfully in part, to reduce its $23-billion shortfall in terms of the province's fiscal interactions with Ottawa (even though on a per capita basis it is less than Alberta's shortfall). [. . . . ]

He makes a good case for sharing though I tend to agree more with Corcoran (link below) on equalization. However, it works for the young, not for the older workers who have homes they cannot sell them for anything that would make the move worthwhile. One couple in their fifties with a husband who lost his job when the Nackawic mill closed are now in a quandary. They live near the Nackawic mill which has shut and the husband has moved to the Alberta oil patch for work. His wife is alone at home and he flies home every once in a while but it is not an ideal way to live. It doesn't make sense for them to sell their home at a loss in a community which has lost its major industry and to start anew in a place where housing is much more expensive. What is the answer? Probably none that is ideal. Read Courchesne's view.



If it's broke, don't fix it Terence Corcoran, August 31, 2005, Financial Post

The problem is that equalization does not fix the problems. It interferes with the economy in that it perpetuates failute. Instead of people moving to where the jobs are, they are artificially propped up in remaining in areas without jobs -- areas like the Maritimes.

Mr. Courchene isn't quite calling for a new Ottawa lunge at Alberta's energy wealth. What he proposes is a "voluntary" equalization plan whereby Alberta would, in a charitable spirit, share some of its oil money with the rest of Canada.
Well, voluntary equalization craziness is better than another National Energy Program fiasco, but not by much.

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