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Saturday, January 27, 2007

L'illusion tranquille

L’illusion tranquille involves an ageing society living beyond its means, unable to shake the grip of meddlesome government and powerful trade unions”. This quote is from an article in today’s National Post entitled “Quebec film hits socialiste nerve”.

What I find galling is that with so many things in this country tilted to favour Quebec, equalization, industrial milk quotas (46.5 of the nation’s share), aircraft industry deliberately centered in Quebec since the Mulroney years, federal civil service hiring policies, cheap hydro electricity from Labrador at Newfoundland and Labrador’s expense and I could go on and on, they are still running up yearly deficits and adding to their colossal debt.

As an Albertan I would like to make some points. University tuition is much cheaper in Quebec than it is in Alberta, Alberta has nothing to compare to the daycare program that Quebec operates at a cost of seven dollars per day per child to users, snow clearing is reportedly much quicker in Quebec cities than it is in Alberta cities. These programs are considered too costly in our supposedly rich province. It should be noted that Alberta’s contribution to equalization approximately equals the income to the provincial government from our petroleum resources and also approximates what is handed over to Quebec. Therefore you could argue that Quebec benefits from Alberta’s petroleum resources while Alberta doesn’t. The irony here is that equalization is supposed to level the playing field so that all provinces can dispense the same level of social services if their tax resources are not sufficient to keep up to the wealthier ones. By that argument Quebec should be topping up Alberta’s coffers.

Perhaps there is some hope for reform if Francophone Quebecers themselves are recognizing the problem. There is more in the article that I hope will still be available here.

Posted by Bob Wood on January 27, 2007 | Permalink


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Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.
"Hamlet", Act 1 scene 3

Posted by: Halfwise | 2007-01-27 8:03:43 PM

Maybe there's hope yet. Maybe the start of some realization and awareness that the quebec "elite", intellectual/union, is and are traitors to their own and to Canada. Your lily pad is hopefully beginning to sink.

Posted by: Western Canadian | 2007-01-27 8:05:47 PM

You people are sick. Shut down this site so it won't keep giving real conservatives a black eye.

Posted by: Real Conservative | 2007-01-27 9:32:46 PM

Real Conservative said

"You people are sick. Shut down this site so it won't keep giving real conservatives a black eye."

Funny, that doesn't sound like something most conservatives I know would advocate...restricting free speech because you disagree. The debate is open. Please contribute something of substance.

Posted by: h2o273kk9 | 2007-01-27 10:31:32 PM

Lots of complaints regarding Quebec's special status are justified.

However, the value of argumentation will be mitigated, even disqualified by stating nonsense like

"Alberta’s contribution to equalization approximately equals the income to the provincial government from our petroleum resources and also approximates what is handed over to Quebec"

The actual facts are:

1. Alberta's imaginary share on the equalization is somewhere between $1 and $1.1 billion per year. Imaginary, because so much would be the share of all Albertans together if the amount of equalization payment were distributed evenly among the population, but Albertans do not get anything from that. Note, that Ontario's imaginary share is about $3.9 billion/year.

2. Alberta's revenue from non-renewable energy royalty was $14.347 billion in 2005/2006.

In other words, Alberta's oil income was *fourteen times* higher, than the "handover to Quebec".

3. If I am very charitable and calculate the federal income tax, which Albertans pay *in excess to the Canada wide average*, I find $2.3 billion in 2004.

Posted by: Cato | 2007-01-27 11:01:44 PM

Quebec (The Province) is just a few miles up the road from here in the boring City of Moncton (actually named after Colonel (Later Lt General)
Robert Monckton who deported the Acadians. One never hears mention of Alberta (or any other Province
except perhaps New Brunswick in Quebec social circles) The socalled Quebec Elite are only "Elite"
in Quebec (Dion the Dual Citizen) is on the fringes
of that Circle. Quebec's bargaining power is based on Electorial Distribution of Seats. Fact is, Party
say, that wins Quebec and Atlantic Region, wins everything. Some Politicians even in Alberta are smart enough to know that. Quebec is only barely part of Canada, but no Quebecers I know care - good for them. MacLeod

Posted by: Jack MacLeod | 2007-01-28 5:10:17 AM

Cato's numbers on Alberta's contribution to equalization is off by an order of magnitude. Bob's Woods declaration is correct - Bob did say approximately. Cato's numbers from Alberta's petroleum royalty revenues is correct.

Posted by: Brent Weston | 2007-01-28 7:00:45 AM

What ever Quebec wants Quebec gets. The "new" Conservative government is pandering to them in the hope of more seats. Do they really believe they will get them? The Conservatives should have won a majority in the last election, after all the Liberal scandals. But could not. Why is this? It's because two provinces control the country Quebec and Ontario. I believe the "new" Conservative government will have a hard time getting re-elected. Why? Because they are trying to be just another Liberal party. Of course the Establishment elites are happy the Reform Party is gone and now we have a "choice" of Red Tories or Gliberals oops I mean Liberals. We are back to the future as the saying goes. We DO NOT HAVE A CONSERVATIVE PARTY TO VOTE FOR.

Posted by: Stephen Gray | 2007-01-28 11:13:07 AM

I coined the term minophone at the time of the last federal election and will use it again.

These are the Central Canadians (mainly Ontario & P.Q. but gaining elsewhere) who:

are unilingual French plus

those who are bilingual French-English/other plus

many other minority groups (who support them as being the "best way to further their own self-interest" plus

the financial backers who pretty much choose/promote the political "winners and losers" to further their own intersts - whether or not it is power financially, politically, or both. In total this group probably makes up about 30% of the population of Canada.

Their color is basically purple as it represents all shades of those in the Liberal party combined with many of the red/pink Tories who can probably be comfortable with either the Liberals or Conservatives - probably depending on what it does for them individually.

Sooooo - Canada has been, still is, and in all likelihood will continue to remain a country where a 30% minority faction controls most all things socially, culturally, politically, federal employment-wise while the rest of us are forced to continue contributing dollars to whatever it is they choose do do - like pander to P.Q./continue Offical Bilingualism/Official Multiculturalism no matter what the cost.

Along, of course, with the voting supporters who keep returning the minophones to power. This group is still huge as one only has to follow the political polls over the last 6 months or so. The Conservatives should be far ahead in the polls right now but they simply are not.

Over the past 35 years, the minophones have basically controlled all things/people federal and have left a trail of legislation/legal system appointments/tribunals in place to ensure that they are likely to continue in power, for the most part, in perpetuity. The most recent piece of legislation being Law S-3 (2005)- the regulations of which are now being drafted.

S. Hussein ruled Iraq with a 30% minority through violence and eventually it couldn't last. In Canada we are allowing a 30% minority to control this country via the legal framework - which really isn't much more than a different type of subjugation of the majority. Is it effective - you be the judge. Will it change? Only if enough people choose to make it happen.

Quebec is never going to separate - why would they possibly do this. The financial backers of the political minophones are not about to change much - why would they possibly do this? It would mean giving up some power (nobody is suggesting they should give it all up but even a little seems to be unthinkable).

I really don't see much option other than the West has to seriously start thinking about either quasi or full blown separation - not a knee jerk kind of thing but something that is very well thought out.

What comes down the pipes in terms of equalization adjustments will probably have some pretty significant impact. A promise to do some tinkering with the Senate as some kind of olive branch is not likely to do much at all.

Posted by: calgary clipper | 2007-01-28 1:12:41 PM

It is part of the Quebec mythology that all of the present Canada was once theirs.
The fact that they get far more out of the country than they put into it is their version of rent seeking, they are owed this money.

PET was especially put off by the fact that the others now controlled 'these lands which once ours'.
That's why he spent so time spraying his French language signs around Western Canada like some old tomcat marking out his territory.
It was an ego thingy.

David Creighton, a historian of Canada wrote some years ago an article for a Cdn magazine saying that this nation will go one of two ways.

The ROC Canada will let Quebecers run the country into the dirt and then Quebecers will leave when Canada is of no more benefit to them.

Or English Canada will get tired of the Quebec 'gimme, gimme' tirades and just throw them out.

A very recent poll put ROC voters saying Canada would be better off without Quebec at better than 2 to 1.

Creighton was smart man. He wrote the article in 1966.

Posted by: rockyt | 2007-01-28 2:39:03 PM

"Posted by: calgary clipper | 28-Jan-07 1:12:41 PM"

An excellent post.

Posted by: deepblue | 2007-01-28 3:20:14 PM

calgary clipper:

Here are some numbers that I had previously posted about a month ago that might provide some motivation for the Alberta Independence. These are the Alberta Equalization numbers.

From a study done by Robert Mansell at U of Calgary:

Total Per
1961 -470 -353
1962 -380 -278
1963 -316 -225
1964 -253 -178
1965 -229 -158
1966 243 166
1967 396 266
1968 718 472
1969 895 574
1970 762 478
1971 660 401
1972 889 526
1973 2,229 1,294
1974 11,260 6,424
1975 10,479 5,812
1976 8,853 4,751
1977 9,176 4,729
1978 7,795 3,869
1979 13,745 6,578
1980 25,409 11,641
1981 29,089 12,735
1982 20,200 8,563
1983 9,368 3,924
1984 7,008 2,933
1985 5,501 2,292
1986 1,648 680
1987 1,418 583
1988 1,365 557
1989 1,450 582
1990 2,185 860
1991 1,502 581
1992 1,369 521
1993 2,330 875
1994 3,075 1,140
1995 3,406 1,248
1996 4,994 1,803
1997 7,263 2,573
1998 8,653 2,996
1999 8,747 2,969
2000 10,561 3,524
2001 10,244 3,358
2002 10,317 3,319
Total 243,554

The 2003 - 2006 numbers are between 10B and 12B annually. Let's just use 11B * 4 years. Therefore the total is around 287.5 Billion dollars that Alberta has contributed since 1961. If we were to extrapolate backwards to 1957 (seeing that revenues were declining) I will extimate -2.5 Billion over those 4 years. Therefore I have a total somewhere near 285 Billion net outflow out of Alberta since the beginning of Equalization payments began.

Posted by: Brent Weston | 2007-01-28 6:28:52 PM

1. The mentioned figures do not relate to the equalization payments but to the federal fiscal balance. (Note, that Alberta's indicated "balance" from 2000 to 2002 is more than the entire equalization payment in Canada.)

Quote from Mansell's paper:

"there are other programs that generate even larger interregional transfers. For example, the Employment Insurance program and the Canada Pension Plan involve substantial interregional transfers"

2. The largest chunk of this "inbalance" fell on the NEP years.

4. Mansell did not provide the detailed calculations for the result. As such, it is difficult to evaluate, and it is unserious even to cite it.

Though he DID give a glimps, and that makes the reasearch very questionable: the "balance" is calculated simply as the difference between what has been raised in the province for the feds (federal income tax, GST, sin taxes, contribution) and what the province/the people of the province received.

In Mansell's world, Alberta has no use for Canada's defence, for governments, for general programs, for foreign aid, for federal courts and penitentaries, etc. (Plus, he ignores the horrendeous inefficiency: when the feds pocket some money, even in best case less than half of that will appear there, where it was intended for.)

Posted by: Cato | 2007-01-28 8:05:30 PM

Brent: no greater motivation exists for Alberta secession than the fact that Ontario is exempt from Kyoto. Alberta will carry the whole burden for it. This is no conspiracy, just (from the Eastern perspective) good, open, clean politics.

Unfortunately, this is a global problem. It affects everyone. This makes exempting Ontario from Kyoto inherently unfair. They're the single largest polluter yet they're exempt. Sorry, not good enough. Either remove the exemption or Alberta will have no choice but to declare independence and be done with the farce of Canada once and for all.

Posted by: Zebulon Pike | 2007-01-28 8:54:43 PM

The film sounds like it's extremely accurate. Quebec is a stale and decaying province. Visit a place in Quebec that you visited twenty years ago - there's little difference except that the roads, bridges, sidewalks are all worse now, and since they've stopped having kids you can notice the average age going up, the people look tired and desperate to be forever young.

Hopefully the film changes nothing, the 'Quebec question' will go away faster that way.

Posted by: Philanthropist | 2007-01-28 11:31:47 PM

The "Quebec Question" will indeed go away as the demographics and effect of immigration from France
in particular (mostly Algerian extraction from Metropoliton France) plus their rising birth rate.
The overall lack of marketable skills of most if not all these immigrants has already affected Quebec's GNP, which for one thing: Giant Bombardier
is constantly expanding in the Far East, US and Europe.All Canadian Political Parties will realize that the profound change in demographics has already drastically changed voter and voting patterns. Even the long established Quebec families we know and deal with have little or no interest in "Canada" or "Ottawa". Politicians who cater for the 75 Quebec Seats would be better focusing in Ontario and BC - MacLeod

Posted by: Jack Macleod | 2007-01-29 4:18:20 AM

The Quebec problem may solve itself but the 30% control of the majority by the minority will continue on. In fact it is becoming an increasing problem.

The factions within the 30% minophone grouping will probably change in number. The unilingual francophones will (and are) going down in number but the number of immigrants/refugees are going up along with a high birth rate - particularly in Ontario & Quebec. The fluently bilingual component of P.Q./ON is growing and there is a small growth of the fluently bilingual in parts of the West.

All of the critical legislation in place was designed for the benefit of Francophones and for the forced proliferation of French in the ROC. The spin -off is that the very same laws can and are being used to allow the proliferation of languages other than English or French. The translation business has evolved from French/English to French/English/Other (many) - not because of functional necessity/majority approval but much more because of succeeding in legal challenges and forcing the issue - combined with seemingly little expectation that newcomers here must learn English (or legally, French)

I am all for "small m" multicultural happenings but this is not the same as Official Multiculturalism. I am all in favor of young people maintaining cultural ties/languages, etc. This is different from Official Bilingualism.

In the West - English is the functional language and I think the expectation of newcomers to the province has been that they are wanting/willing to learn/use English and have done so. There has been a palpable change in this attitude over the past decade or so.

Even here - it is becoming increasingly easier for newcomers to settle into a favorite quadrant of say Calgary and Edmonton where they are functionally not pressed to learn/use either English or French. They can attend their own place of worship (often now funded by huge money from abroad). They can legally set up - and are doing so - their own schools on a linguistic/cultural basis. Their social life is within their own families (large) and the local community. There is becoming less of a need to interact with the majority culture so they don't. The one thing newcomer groups are pushing for is their legal right to as much of their own culture that they can force onto the majority society.

In short - there is becoming less and less reason for newcomers to assimilate and they need not think about who to vote for. If they do vote, they are much more likely to vote in blocks for whomever the leaders sanction as being best able to further the minority interest - not the interest of a province or of Canada.

All of this is possible for newcomers because they are gaining in numbers and are not shy about using the existing legal framework - legislation, courts, tribunals, IRB, Immigration rulings, etc. A common reaction is basically - well if you are dumb enough to give your country away - then we would be foolish not to accept.

The Calgary police seem to be pulling their hair out these days when they stop a vehicle. To often the response is - no speak English - to the point of frustration and the police just let them go. They have a license, drive a vehicle, create a reason for being pulled over - and then are let off. Why? Because they know they can pull this off.

No, I don't see the minority control of the majority in all things federal (or provincial either for that matter) as "going away". It simply has a different face and is going to continue to become an increasing problem - just as it has in Toronto, Montreal, and Vancouver. Soon to be in a place near you unless some heavy corrections are made.

Posted by: calgary clipper | 2007-01-29 9:06:44 AM

A very good Post Clipper and absolutely correct
-saw this haappening in Toronto GTA first hand
-not a problem here on the East Coast because the
"Immigrants" are not coming here. Nova Scotia where I grew up is notoriously racist in any event. A newly arrived "can't speaka da english" in a confrontation with Halifax's finest would be instantly locked up. Macleod

Posted by: Jack Macleod | 2007-01-29 9:16:52 AM

Alberta is lagging behind most of the other provinces in infrastruture and provincial development...this was the result of a long term economic belt tightening on provincial spending in order to pay down crippling provincial debt.

When Ont/Quebec/BA were lavishing themselves in equalization-subsidized public programs, Alberta was recoverning from an Ottawa-made oil patch collapse and massive debt reduction payments from the Getty free spending era. We went without fancy subsidy programs for students and industry or even paving all our provincial roads. We bit the bullet and worked hard for over a decade to become debt free and liquid.

Now that the debt has been retired there is a balanced budget and most of the revenues from a current resource boom are so-called surplus which is unallocated in the budget as of yet.

Of course fiscally irresponsible eastern socialist governments want a chunk of this "surplus" cash through equalization (Quebec has not seen a "surplus" in living memory)...HOWEVER, as has been discussed here, Alberta's budget may be balanced but the province's needs are still wanting for expanded infrastructure, housing and local skill/professional development to deal with the current boom and future service sustainability...in that regard Alta is behind the other provinces.

Hapless Eddy should quickly allocate these surplus funds for use in Alberta for the provinces current short falls, long term viability and continued self sustainability...education, housing programs, Treasury branch personal and business loans, industrial diversification and public works...expand the budget with programs to address the expanded needs of this booming province and get this damn cash out of the sight of the salivating socialist hordes back east...Alberta's current liquidity is the direct result of Albertans making sacrifices and doing without for over a decade to remove the debt that was strangling government revenue allocations. We earned the current "surpluses" and paid for them with hard work and sacrifice... we are entitled to it and we have our own needs to fill with it.

Take care of Alberta's needs first and give to equalization only the minimal symbolic sums that Alberta saw in the tears when Ottawa's taxing policies put us into a depression...equalization has been abused for the past 2 decades by fiscally irresponsible governments in Quebec to top off their lavish provincial subsidy programs...I has to end...it WILL end...and the confrontation is near.

Alberta is no longer the captive finacier of Quebec's decadent over-indulgent socialism.

Posted by: Wlyonmackenzie | 2007-01-29 9:21:30 AM

If my Partners and I lived in Alberta we would be
searching for financial partners in the Public and Private Sector to form a joint venture with Israel Aircraft Industries one of the most sophisticated in the international Aerospace and Technology Sector to locate in Alberta. Alberta was deliberately left out of the loop of national aerospace development when
Ottawa and Quebec based Bureaucrats focused everthing in the industry into Quebec more or less
with some minor investments in NS and PEI, some in Manitoba and a modest amount (too modest) in Ontario. Macleod

Posted by: Jack Macleod | 2007-01-29 9:58:29 AM

Yes I recall the troubled times Pratt-Whitney in Lethbridge had keeping open when they seemed to lose all theyr tenders to Quebec bidders who finished these contracts +20% over bid.

Alberta has to become aggressive in getting hig dollar industries into the province to off set the inevitable bust in the oil patch economy.

Posted by: Wlyonmackenzie | 2007-01-29 11:24:48 AM

Right on Bob.

Quebecers complain they are not receiving the same amount as the rest of Canada, when they really do have it good.

Fact is, Quebec population would crumble should Quebecers pay the same tuition levels and money for services as the rest of Canada.

Posted by: Lady | 2007-01-29 11:51:56 AM

United Technologies Pratt&Whitney Canada has been in Longeguile Quebec since 1927, but we negotiated with them to establish their first Flexible Computer Integrated CNC Manufacturing Plant in Halifax County NS - today that Plant is their most successful in their World, Litton Systems now L3 Communications came in at the same time. Alberta should be the next logical choice for high technology and related aerospace development. But we are close to and impressed with IAI who will be seeking North American Investment shortly - MacLeod

Posted by: Jack MacLeod | 2007-01-29 11:52:17 AM


"1. The mentioned figures do not relate to the equalization payments but to the federal fiscal balance. (Note, that Alberta's indicated "balance" from 2000 to 2002 is more than the entire equalization payment in Canada.)"

This is technically correct and I should have been more careful tan I was in my previous post. Thank you for pointing out my error. Yet, this does not change the essential argument that monies are transferred out of Alberta by the Federal government into other provinces such as Quebec to fund programs that Alberta itself cannot afford. That these transfers are implemented through programs other than the "Equalization Payments" program does not change the fact that these transfers are taking place and to the degree that his numbers suggest.

"Though he DID give a glimps, and that makes the reasearch very questionable: the "balance" is calculated simply as the difference between what has been raised in the province for the feds (federal income tax, GST, sin taxes, contribution) and what the province/the people of the province received.

In Mansell's world, Alberta has no use for Canada's defence, for governments, for general programs, for foreign aid, for federal courts and penitentaries, etc. (Plus, he ignores the horrendeous inefficiency: when the feds pocket some money, even in best case less than half of that will appear there, where it was intended for.)"

I will quote him more fully than you did. From: http://www.iseee.ca/images/pdf/Backgrounder1_18Nov2005_2column.pdf

"We can do this by calculating the net fiscal contribution for each province or region. This measure is the sum of all federal revenues collected in a province (federal personal and corporate income taxes, indirect taxes such as GST, contributions to Employment Insurance and Canada Pension Plan and so on), minus the sum of all federal expenditures and transfer payments flowing back to residents, companies or governments in that province."

He states "all federal expenditures" and he states to governments (plural) which would imply federal government programs and agencies. I think he is simply stating all (federal) expenditures flowing to everybody but he divides everybody up into 1) individuals, 2) non-government corporations, and 3) government(s) and their related agenices. I think that only your claim regarding foreign aid is fair; it appears he did not include that in his calculations and I do not see how that changes the point. In fact, it really says that most provinces do not contribute anything to foreign aid and it implies that foreign aid could be larger if these type of transfers were not occurring. Are you sure that you want to be making this point?

You also suggest bureaucratic inefficiencies. Does it really matter whether Ottawa "efficiently spends" its monies disproportionally in one province vs another or whether it "wastes" more money disproportionally in those same two provinces? The point was the disproportionality. Or, if Quebec receives a certain amount of inefficiencies in Federal government spending, should not Alberta receive that same in a proportional manner? (I am not actually arguing for inefficiency; I am advancing the idea of impartiality and consistency.)

"4. Mansell did not provide the detailed calculations for the result. As such, it is difficult to evaluate, and it is unserious even to cite it."

After the quote I provide, the professor then provides a footnote to an article in Canadian Business Economics to detail his methodolgy so that others may fairly critique his methods. I quote again: "For a detailed description of the methodology see R. Mansell and R. Schlenker, “The Regional Distribution of Federal Fiscal Balances,” Canadian Business Economics, Fall 1995."

I think it is fair to critique someone, but if you are going to do that, should you not provide a serious analysis that refutes the Professor's findings, corrects them (if you feel they are incorrect) and submits new figures with the methodology that was used to generate the alternative study?

In short, if you do not agree with the table on page 3 from the above URL, what do you believe are the correct numbers and how did you arrive at them?

Posted by: Brent Weston | 2007-01-29 12:34:25 PM

You are all a bunch of jalous anglo Westerners (including you Halifax Jack). Stop whinning and start working to take the power your province deserve. Even the "Alberta Agenda" is citing Quebec as an exemple in many political actions. Again: stop whinning and start working to get it done.
Thank you.

Posted by: Marc | 2007-01-29 2:33:30 PM

Be careful Marc or Wolfe the Dauntless Hero will be back. But I agree with you, Quebec has been a major player in the International Aerospace Sector since about 1928 - they fought hard to establish their expertise and frankly do not need help from a few misguided Ottawa Bureaucrats who should refrain from unfair and biased activities which reflects badly on them not on Le Belle Province. Keep hearing about Alberta "Separation" will never happen. But if somebody volunteers to sink P.E.I. we will gleefully
help them - MacLeod

Posted by: Jack Macleod | 2007-01-29 3:34:25 PM

Hey Halifax,
Wolf falled on the same day as Champlain on les Plaines d'Abraham where, while we're talking, the english language is rarely eard.
Some of their suvivors just decided to choose a language more...eh...raffiné. After that, our anglo brothers had never been able the exterminate us all...because we have superpowers.
Send Wolf back in Quebec...he will fall in love and succombe to our charme.
In fact, send us all the francos you have there: You're province will collapse whitin days. If not, it's gonna become a very sorry place to live.

Same in Québec. Without our Anglos (from many regions)...it would'nt have became that place we love and cherish.
Thank you Mister Harper for having shown me the word "within"...whatever da hell that truly meant. Since that day, i'm slowly improving myself in english onna everyday basis.

Hey by the way MacLoed: I'm a BLOC voter. Do I need to specify what I think of PET ? Hopefully, our yougest only thinks it's another name for "airport".


Posted by: Marc | 2007-01-29 4:07:52 PM

By the way Marc, just a slight correction. It was Montcalm not Champlain who fell on the same day.

Posted by: Frico | 2007-01-29 8:08:18 PM


I did not question the fiscal imbalance between Alberta and the feds, nor that between Alberta and the other provinces. However, I do question the value of operating with nonsensical data. What the Alberta separatist lunatics are doing is plain demagoguery.

You said, "the point was the disproportionality". No, the point was *the magnitude* of the disproportionality.

There is only *one* way to calculate with the equalization payment:

a. The equalization is a bulk amount of the budget, funded from the *general revenue* of the fed; that incorporates the federal income tax just as the gas tax and GST. *There is no equalization contribution*, and that's it!

b. The amount of equalization in 2005/2006 fiscal year was $10.9 billion.

c. The equalization will be distributed on a per capita basis. This means, that the share of every person was $340 (assumed a population of 32 million).

d. Albertan's have not received a penny, consequently Alberta "lost" $1.09 billion (assumed a population of 3.2 million).

Like calculations can be made for other areas.

Example unemployment insurance. As the unemployment is very low in Alberta, it's share is much lower than that of provinces, where the unemployment is high.

If someone would "transfer" the unequal transfers to the equalization payment, then one would have to lie when talking about the other areas (that difference would have to be taken from somewhere else).

To the Mansell paper:

1. Mansell adopted the "cash flow" method. This calculates only the monetary values. The other generally used method is the "Benefit method". Ruggeri made another study, only of the years 1992-1997, using a combination of these methods, and he came to a *very* different looking result.

2. Re the detailed description: there is no "The Regional Distribution of Federal Fiscal Balances", but I do have "Provincial Distribution of Federal Fiscal Balances" by Mansell. (He must have forgotten the title of his own paper :-), and that does not contain any detailed figures. Apparently his paper was not meant for peer review, i.e. you accept his word or you don't.

Anyway, the brisance of this issue is, that Quebec's leaders don't stop complaining about the "fiscal imbalance" (is not that funny?).

Yes, there is a huge fiscal imbalance, due to the inefficiency and plain wastefulness of the feds. They take away $1, and if you are lucky, you receive $0.5 in cash and benefits.

The core of the problem is, that the federals are constantly overstepping their jurisdiction by abusing the taxation. They are collecting far too much money for the areas they are responsible for; they are wasting lots of it, and distributing some of it, while encroaching on areas of provincial responsibility.

Examples: health care, unemployment insurance, higher education, social services.

The solution is simple in theory, but it would be disappointing to some: the feds should cur back the taxes to the amount, which is required to fulfill the federal mandate. Then the provinces have to increase their taxes until they can cover whatever they decide to fund.

The upside is

1. less waste: the closer the raising of the fund to the spending, the less waste, and less politicking,

2. less complains from the provinces: they raise the funds, they decide, what to do with it,

3. more fiscal responsibility could be expected from the provinces.

The downside is

1. less power to the federal (back to the founding principles!),

2. not so easy to put the blame on the feds, as now. For example all provincial premiers have blamed the feds for the health care "underfunding" (which is a lie anyway). It is true, that the feds reduced the funding, but that was only part of the equation,

3. some provinces, particularly Quebec, would be surprized by the result of establishing a fiscal balance with the federals.

Posted by: Cato | 2007-01-29 8:41:21 PM


Posted by: Marc | 2007-01-29 8:57:49 PM


You make some good points about the inefficiency of the Federal bureaucracy and provide an estimate of its magnitude; I will not challenge your numbers because that is more than I claim to know and nor was it part of my point.

I appreciate your post of how you arrived at the Alberta "equalization" numbers. I might gently say that it appears to me to be an unorthodox manner of computing the number. It may be fair to use a per capita basis - only on a provincial basis since that is how the equalization payments are computed - but not on a national basis as you have done.

The main point was the fiscal imbalance (I repeat that I appreciate your earlier correction regarding my terminology) and not these two points that you discussed.

Posted by: Brent Weston | 2007-01-30 9:08:27 PM

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