addisonwesley
August 24th, 2005, 06:33 PM
From Wednesday's Globe and Mail
In-the-red province eyes booming Alberta
Ontario is in jeopardy of becoming a have-not province as a result of the funding shortfall between what it contributes to the federal treasury and what it receives from Ottawa, a report to be released today warns.
The very title of the report -- Fairness in Confederation. Fiscal Imbalance: Driving Ontario to "Have Not" Status -- raises provocative questions about a province long considered one of the country's wealthiest.
The report, prepared by the Ontario Chamber of Commerce, will likely provide provincial Premier Dalton McGuinty with fresh ammunition in his campaign to wrest more money from Ottawa. He has argued that the gap between what Ontarians pay in taxes to the federal government and what they get back in programs and services has swelled to $23-billion from $2-billion in 1995.
The release of the report comes just as there is growing unease in Ontario over the cash windfall Alberta is reaping from soaring world energy prices. But while government officials in Ontario would welcome a debate on the challenges Alberta's overflowing coffers pose for Confederation, they are leery of sparking a potentially divisive debate.
Nonetheless, Alberta officials are bracing for the day when politicians from other provinces and Ottawa try to score political points in Central Canada by grumbling about its swelling coffers.
"As we head into a federal election, I'm quite sure there will be comments made by other politicians to focus on Alberta," said Ed Stelmach, the province's minister of Intergovernmental Relations. Alberta is doing its part in Confederation, he said.
"We can hold our head high in any of these discussions that come forward."
Alberta is enjoying the best of times because it happens to be sitting on vast oil deposits. Its surplus is expected to soar to $7-billion, four times higher than the province's official figure, thanks to the money flowing in from crude and natural-gas royalties. It has prompted a province-wide debate on how to spend the surplus, with the government even considering eliminating corporate taxes altogether. Oil prices are hovering above $65 (U.S.) a barrel, 50-per-cent higher than Alberta's official estimate.
By comparison, Ontario is struggling with a $2.8-billion deficit and a growth rate that lags behind the national average. To make matters worse, every time oil prices go up, manufacturers in Ontario are hurt because their operating costs increase.
"Ontario is looking for a way out of its straitjacket," said Harvey Lazar, a fellow at Queen's University's Institute of Intergovernmental Relations.
But Dr. Lazar said that it would be difficult, if not impossible, to amend the very foundation of Confederation, which confers ownership of onshore resources to the provinces in which they reside.
"It's not politically on in any way, shape or form," he said.
The last time crude prices soared, back in 1980, the federal government introduced a mechanism, the infamous National Energy Program, to redistribute wealth from oil-rich Albertans to the rest of the county. The NEP was touted by the government of Pierre Trudeau at the time as good for federalism. But many Albertans have never forgiven Ottawa.
At the time, crude prices were $35 (U.S.) a barrel and everyone thought prices would remain high forever, said Michael Phelps, a Vancouver businessman and a former adviser to former federal energy minister Marc Lalonde, architect of the NEP.
In-the-red province eyes booming Alberta
Ontario is in jeopardy of becoming a have-not province as a result of the funding shortfall between what it contributes to the federal treasury and what it receives from Ottawa, a report to be released today warns.
The very title of the report -- Fairness in Confederation. Fiscal Imbalance: Driving Ontario to "Have Not" Status -- raises provocative questions about a province long considered one of the country's wealthiest.
The report, prepared by the Ontario Chamber of Commerce, will likely provide provincial Premier Dalton McGuinty with fresh ammunition in his campaign to wrest more money from Ottawa. He has argued that the gap between what Ontarians pay in taxes to the federal government and what they get back in programs and services has swelled to $23-billion from $2-billion in 1995.
The release of the report comes just as there is growing unease in Ontario over the cash windfall Alberta is reaping from soaring world energy prices. But while government officials in Ontario would welcome a debate on the challenges Alberta's overflowing coffers pose for Confederation, they are leery of sparking a potentially divisive debate.
Nonetheless, Alberta officials are bracing for the day when politicians from other provinces and Ottawa try to score political points in Central Canada by grumbling about its swelling coffers.
"As we head into a federal election, I'm quite sure there will be comments made by other politicians to focus on Alberta," said Ed Stelmach, the province's minister of Intergovernmental Relations. Alberta is doing its part in Confederation, he said.
"We can hold our head high in any of these discussions that come forward."
Alberta is enjoying the best of times because it happens to be sitting on vast oil deposits. Its surplus is expected to soar to $7-billion, four times higher than the province's official figure, thanks to the money flowing in from crude and natural-gas royalties. It has prompted a province-wide debate on how to spend the surplus, with the government even considering eliminating corporate taxes altogether. Oil prices are hovering above $65 (U.S.) a barrel, 50-per-cent higher than Alberta's official estimate.
By comparison, Ontario is struggling with a $2.8-billion deficit and a growth rate that lags behind the national average. To make matters worse, every time oil prices go up, manufacturers in Ontario are hurt because their operating costs increase.
"Ontario is looking for a way out of its straitjacket," said Harvey Lazar, a fellow at Queen's University's Institute of Intergovernmental Relations.
But Dr. Lazar said that it would be difficult, if not impossible, to amend the very foundation of Confederation, which confers ownership of onshore resources to the provinces in which they reside.
"It's not politically on in any way, shape or form," he said.
The last time crude prices soared, back in 1980, the federal government introduced a mechanism, the infamous National Energy Program, to redistribute wealth from oil-rich Albertans to the rest of the county. The NEP was touted by the government of Pierre Trudeau at the time as good for federalism. But many Albertans have never forgiven Ottawa.
At the time, crude prices were $35 (U.S.) a barrel and everyone thought prices would remain high forever, said Michael Phelps, a Vancouver businessman and a former adviser to former federal energy minister Marc Lalonde, architect of the NEP.