Monday , January 25 2021

Ontario joins provinces that call for a reconsideration of equalization after they have given up

OTTAWA – For the first time in a decade, Ontario will not receive an equalizing transfer from Ottawa, forcing the provincial finance minister to join the calls on the federal government to review how the program was created.

Canadian finance ministers are in Ottawa for the second of their two-year meetings that started with a working dinner at a hotel in Ottawa on Sunday night.

Just before this dinner, Federal Finance Minister Bill Morneu publicly disclosed the amount of money Ottawa would transfer to the provinces and territories in 2019-20, including approximately $ 20 billion in equalization.

This is almost $ 880 million from the current year, but this amount will be split between five provinces – Quebec, Manitoba, Nova Scotia, Prince Edward Island, and New Brunswick. For the first time since the recession in 2008, Ontario is on the list of provinces that are not, but Ontario is not among them.

Quebec, on the other hand, receives more than $ 13 billion of the program, an increase of nearly $ 1.4 billion.

Technically, Ontario's economic growth is good enough in 2016-17 to push it out of the no-no status when provincial finances are considered to be lower than the average and qualify them for leveling. But because of the way the program works, Ontario still received 963 million dollars in 2018-19.

We certainly call on the federations to review their payments for federal transfers because we want to make sure that businesses and families in Ontario receive a fair share

The government was aware that this year will not qualify for equalization, but Ontario's Finance Minister Vick Fedelli said this is further evidence of why reconciliation needs to be reconsidered. He said that Ontario would give $ 8 billion for equalization and would not get anything from it. Overall, Ontario will give Ottawa $ 12.9 billion in more taxes than it would get from federal spending, he said.

"So, of course, we are calling on the federations to reconsider their payments for federal transfers because we want to make sure that Ontario business and families get our fair share," Fedelli said.

Alberta, Saskatchewan and Newfoundland also called for changes to the formula.

Mourneu said the formula was resumed earlier this year for a five-year period after extensive discussions by his department, but he knows the formula will be raised on the table.

"Ontario is moving away from this program is a reflection of sustainable positive economic outcomes in Ontario and I expect this to be overall positive, but it will certainly be a discussion," Morneau said.

Mourneu added that the program was only one of the ways in which Ottawa helped the provinces with their finances, pointing to a stabilization program that in recent years helped Alberta and Newfoundland through a rough patch.

The move from Ontario to this program is a reflection of sustainable positive economic performance in Ontario, and I expect it to be a positive one, but it will certainly be a discussion

He also proposed Ottawa's decision to spend $ 4.5 billion on the acquisition of the Trans Montana pipeline to ensure that its expansion is another aid program for the province to help Alberta overcome the challenges He did not mention the fact that the expansion was stopped until a further environment and local consultations emerged after the Federal Appellate Court canceled the initial federal approval.

Quebec Finance Minister Eric Guyard said Québec had 22 percent of Canada's population, but accounts for 19 percent of his economy, and this is something the new government wants to change. Guyard said the Avenir Quebec coalition wants to see Quebec's equalization need to decline as it works to improve its economic performance, but said it would take some time.

Fedelie also said that while carbon tax is not on the agenda, he will make sure it is being discussed. Ontario and Saskatchewan are challenging the plan of the Ottawa court to impose a carbon tax on their provinces next year.

Fedel and Saskatchewan's Finance Minister Donna Harpauer wrote to Mourneu last week asking him to make an in-depth analysis of the economic impact of what the carbon tax will do, especially when it comes at the same time that companies pay more for their contributions Canadian Pension Plan. CPP's long-planned expansion will begin next month, with earnings from employees and employers rising over the next five years, so the program can increase payouts for benefits.

Mourneu said the companies would drop their payments for employment insurance at the same time, and said that since Ottawa returned revenues from the carbon tax to individuals, it should not have any economic effect.

With files by Andy Blatford

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