McGuinty: 'Gap' Ottawa Problem, not Alberta's

CANADIAN PRESS

The Ontario government's long-standing complaint about how much of its tax base gets sent to Ottawa is an issue for Prime Minister Paul Martin to worry about, not Alberta, Premier Dalton McGuinty said today.

Alberta Premier Ralph Klein is planning a visit to Ontario to explain that his province already pays its fair share to Ottawa despite its vast oil riches, which are expected to lift Alberta's surplus as high as $8.8 billion if oil and gas prices keep rising.

McGuinty has long argued that there's a $23-billion gap between what the province sends to Ottawa and what it gets back in transfer payments to help fund federal services, but he said today that he's not asking Alberta to hand over more of its revenues.

"I welcome economic growth in every region of this country and I think ultimately it will stand to the benefit of all Canadians," McGuinty said when asked whether he was irked by Klein's plans to travel to Ontario in November.

"My issue is with the prime minister and this $23-billion gap. We're just asking to retain a bit more of our wealth so that we might invest it in our colleges, our universities, our health care system our infrastructure, so we can grow this economy, something that, again, stands to the benefit of all of Canada."

Klein's tour, which is still in the planning stages, would see him speak out about Alberta's role in Confederation and how his province's oil sector riches benefit Canada as a whole. Klein's officials also say he'll offer details about how Alberta already contributes to the other provinces through federal revenue-sharing programs.

McGuinty has called on Martin to assemble a national commission that would examine the issue of fiscal fairness within Confederation.

At a meeting today in Charlottetown, the Canadian Chamber of Commerce endorsed McGuinty's call for a review, recommending that Ottawa "develop potential changes in federal provincial fiscal arrangements that might redress any inappropriate imbalance."

Len Crispino, president and CEO of the Ontario Chamber of Commerce, said the existing system is outdated and hampers Ontario's role as the country's economic engine.

"Ontario is proud of its role in Confederation. However, to maintain Ontario's economic strength, and it's ability to help other provinces, we must have a system that responds to the fiscal realities that face the country," Crispino said.

McGuinty said a commission on the issue could take up to two years to complete, but is necessary to help future governments.

"There's all kinds of pressure to look at the next quarter, and then the next budget, and then the next election," he said.

"But nobody is up in the crow's nest taking a look at the next 10 to 15 or 20 years and that's the purpose that a commission would serve."

He's absolutely right. What has Alberta to do with Ontario's fiscal woes. I didn't vote for McGuinty (Hampton), but I wholeheartedly support his demand to be recompensed.
Ontario pays the equalization payments because it is considered a "have" province; but is it really a "have" province when it has a projected deficit of $1.6-3 Billion?
$23 Billion a year is a pile of money that is desperately needed here. If Ontario were to receive only, say, 60% of that back (or pay 60% less of that surplus to Ottawa), it would make a significant difference.

Yay for McGuinty! My opinion of him just skyrocketed.

Why does Ontario have to be the "economic engine" of Canada? The Canadian economy should be more evenly distributed accross the country (population as well). That way Canada wouldn't have do deal with this stupid equalization fiasco.

It's an ego issue I think... ;)

Why does Ontario have to be the "economic engine" of Canada? The Canadian economy should be more evenly distributed accross the country (population as well). That way Canada wouldn't have do deal with this stupid equalization fiasco.

Well, you do have to find a way to feed 13 million mouths. ;)

Why does Ontario have to be the "economic engine" of Canada?

It doesn't have to be. In the 1800's it was the East Coast and parts of Quebec. In the 2100's it may well be the West Coast. Unfortunatley the East Coast was a supply side economy and eventually wiped out most of their resources.

At this time, having the Toronto economic region fall (provinces are not economic engines -- only cities have that ability over a significant time frame) would not be good for the country in part or in whole.

No thats true rbt. As you alluded to, in the next 100 years what we are going to see is the continued decline of Quebec's importance on the national level and the increased profile of Alberta and BC.

Why /\
Forestry in B.C sure, but oil in Alberta? Nah...oil will be obsolete in 20 years.

It's an ego issue I think... ;)


Okay that's unfair. Name me one country that has wealth equally distributed. There's is none. Canada happens to be southwestern Ontario, USA has the Eastern Seabord, England has the Greater London Area, China has the Pacific seabord, etc.

You can find excuses if you want, but it is natural progression of countries that allows a certain area (usually the historic beginning) to become the economic centre. It may not be right, but face it, it is reality.

You can find excuses if you want, but it is natural progression of countries that allows a certain area (usually the historic beginning) to become the economic centre. It may not be right, but face it, it is reality.
also near the capital or the actual capital itself.

Economic power, and importance shifting out west? What kind of an idea is that.

I personally think that Vancouver is HQ ready and it should work on initiatives that attract Ontario and Quebec companies (especially finance, IT,services) to head west. Of course, taxes have to be trimmed quite a bit. For one, a stock exchange should be re-established in Vancouver, and it could specialize in Asian-growth equities.

Maybe you should create your own companies instead of trying to take.

^^ Well, of course it's going to be a double assult. However, it's almost impossible to open companies in certain industries in this country. For one, consider the Canada Bank Act. Would they allow another Chartered A Bank to set up?

You want to take from the people that helped your province get on its feet? Talk about kicking somebody when their down..

I wouldn't mind the west diversifying their economies are whatever it is, as long as they don't steal from the original four. Anyways, the economic power and financial centers should stay where the peopel are.

I personally think that Vancouver is HQ ready and it should work on initiatives that attract Ontario and Quebec companies (especially finance, IT,services) to head west.That is a sure-fire way of ensuring that Vancouver growth halts dead.

The companies you would attract would be the ones capable of moving. That is, they have a large amount of atonomy from their surroundings and are able to pick up and move at any time they wish.

In order to attract them, you need to not only out-compete Toronto but every other city in the world. If Vancouver can get them with a simple tax reduction and cheap utilities, then so could Mexico, or a sub-belt city, or anywhere else.

So now you have a number of companies in Vancouver that do NOT pay their share of the tax load and can threaten to leave at any point they wish. Eventually they will leave for greener grounds (say Dubai offers cheaper taxes now) and you are left with
lacking the support structure that can support a city when employement moves.

You may even quash the natural import replacement that currently happens in Vancouver from odd tax load.

Attracting external employers is not what you or any other region wants. It almost always back-fires (Taiwan being a notable exception).

Take your tax cuts or other breaks and encourage growth and creation of local businesses that will have very strong ties keeping them in Vancouver (suppliers and local market -- moving means starting completely over).

You will find the results turn out much better for the city over a long timespan (50+ years) and it is what has made Vancouver the city it is today.


I have no doubt that the financial industry as we know it today will eventually leave Toronto core just as most manufacturing is gradually getting further and further from the core; but I also have no doubt that Toronto will be able to grow new industry and firms to take their place in the city centre though I could not guess what those firms will be doing.

^^ The problem is that Vancouver doesn't have a large business base to start with, and admittedly, there are many industries that Vancouver will never have a dab at because of strict regulations in this country. Also, Vancouver's costs are high even when taxes are not considered as part of the equation, and consequently it's harder for Van to compete. Start-ups are more likely to head out to Alberta, where costs are lower and where their companies could benefit from the recent oil boom.

Vancouver could focus on Asian-growth corporations, but that alone is just not enough.

Also, Vancouver could thrive as a financial centre, but companies like HSBC Canada aren't even recognized as a Chartered A Bank, so it's hard to enter the market. The spinoffs that comes from the nation's five largest HQs is enormous, and I don't think Torontonians realize how impressive the amount of capital floating around the MINT cluster is.

The problem is that Vancouver doesn't have a large business base to start withOf course not. A city doesn't start out large, it grows to become large.

Also, Vancouver's costs are high even when taxes are not considered as part of the equation, and consequently it's harder for Van to compete.This is a problem

Start-ups are more likely to head out to Alberta, where costs are lower and where their companies could benefit from the recent oil boom.A startup serving the population of Vancouver must be located in or near Vancouver. A startup without borders will not stay in Alberta for more than a decade before looking for still cheaper ground. New York is insanely expensive for new companies, and yet there are thousands of new businesses started every year, and thousands of others go out of business.

Cost of business doesn't matter if you can sell your product at a profit and have a market willing to purchase it. Perhaps Vancouver needs to focus more on service oriented companies than manufacturing.

Vancouver could focus on Asian-growth corporations, but that alone is just not enough.Why doesn't Vancouver focus on companies serving Vancouverites? Those are by far the most likely to be successful. Vancouver companies selling products to non-Vancouver based markets aren't going to get anywhere.

Also, Vancouver could thrive as a financial centre, but companies like HSBC Canada aren't even recognized as a Chartered A Bank, so it's hard to enter the market.I disagree. If it could thrive as a financial centre it would be doing so already. There is obviously something missing that makes it difficult.

Regulations do not lock banks or other financial services into Toronto region. You could argue that Montreal has laws like that working in its favour for old crown corporations, but even those are slowly going away.

Any company that you could easily move to Vancouver is obviously highly mobile and just as likely to goto a different location at that time or shortly after.

In order for Vancouver to grow and not have a bubble burst 50 years down the road it needs to grow in the more traditional way. Incentives are far more likely to cause problems after a short period than do any good.

FYI, The MINT in Toronto didn't generate the city that raised the capital. The MINT located in the city that had the capital that they could use. You have the cause and effect backward. If the MINT built the city, Montreal or Kingston would be the largest city in Canada.

Torontonians know how lucky they are. The question is do the banks realize how lucky they are that a city like Toronto exists to supply them with the things they need (money, manpower, and markets) to survive?

I personally think that Vancouver is HQ ready and it should work on initiatives that attract Ontario and Quebec companies (especially finance, IT,services) to head west. Of course, taxes have to be trimmed quite a bit. For one, a stock exchange should be re-established in Vancouver, and it could specialize in Asian-growth equities.

Don't count on a stock exchange being re-established in Vancouver. Little history lesson on what happened to VSE. Back in 1999, they consolidated Vancouver Stock Exchange (VSE), Alberta Stock Exchange (ASE), Winnipeg Stock Exchange (WSE) & (Boursses de Montreal)ME into the CDNX. This later got turned into the TSX Venture Exchange and relocated to it Toronto.

The whole point of it was to consolidate all the minor exchanges that were virtually unheard of in international eyes, and bring into one larger venture fund that would have the same brand name as the Toronto Stock Exchange. It actually has been a huge success and the TSX Venture virtually destroys the previous exchanges records on volume of trades.

The only thing I can see happening is that the TSX parent decided to relocate the venture fund to Calgary to capture more exposure to the Energy companies. But I even highly doubt that because the majority of the Venture exchange is recourses and minerals, in which the majority of the head offices are still in Toronto.

Economic power, and importance shifting out west? What kind of an idea is that.

Look at demographics of Canada and the economic reality of Canada from 1975 to today at 2005. In thirty years Alberta has grown significantly and there is no way you can say Alberta had as much impact in 1975 that it does today. Plus Quebec was much more important economically and % of Canada's population than it is today. This shift is happening but in a slow pace. In the next 15 years if the Alberta provincial government is smart, the province can do many things. Plus its should be noted that Saskatchewan is now a have province and looks like BC is becoming one again as well. So yes economically the West is growing faster than Ontario and Quebec and the gain in that sence will continue.

Why /\
Forestry in B.C sure, but oil in Alberta? Nah...oil will be obsolete in 20 years.

Remember where was Alberta 50 years ago and where was it today. Hell where was Toronto relative to Montreal 50 years ago vs today.

Alberta has a growing population, and has a huge gap between it and second place Ontario in terms of GDP per capita and this gap is only widening not shrinking. Alberta has a growing economy that is actually diversifying. Plus the provincial government has no debt and if they use the next 15 years wisely there is no telling what can be done with that money. Remember this year Alberta is spending more in infrastucture than Ontario in absolute terms. Plus the funds set up for research and the investments being made into the post secondary institutions of this province. By the way BC does not have an economy based on forestry. But its population will continue to grow as the population of Canada ages. Remember its nicer in the lower mainland and the island in January than say Ontario and a Victoria winter looks very nice in comparison. As there people move and with them take their money there will be a shift.

^^ The problem is that Vancouver doesn't have a large business base to start with, and admittedly, there are many industries that Vancouver will never have a dab at because of strict regulations in this country. Also, Vancouver's costs are high even when taxes are not considered as part of the equation, and consequently it's harder for Van to compete. Start-ups are more likely to head out to Alberta, where costs are lower and where their companies could benefit from the recent oil boom.

Vancouver could focus on Asian-growth corporations, but that alone is just not enough.

Also, Vancouver could thrive as a financial centre, but companies like HSBC Canada aren't even recognized as a Chartered A Bank, so it's hard to enter the market. The spinoffs that comes from the nation's five largest HQs is enormous, and I don't think Torontonians realize how impressive the amount of capital floating around the MINT cluster is.


Well you can thank alot of people for that, starting with provincial governments, city council etc. Anti-business, no wonder there is not a huge number of head offices, there are many, but not what it should for the city of its size. If it wasnt for the NDP policies and such, i dont think we would be having this conversation, it would be a different story, but Vancouver and B.C. in general is quickly getting out of that mess anti-business caused by the NDP.

UBC has a nice view though.

Alberta has a growing population, and has a huge gap between it and second place Ontario in terms of GDP per capita and this gap is only widening not shrinking. Alberta has a growing economy that is actually diversifying. Plus the provincial government has no debt and if they use the next 15 years wisely there is no telling what can be done with that money. Remember this year Alberta is spending more in infrastucture than Ontario in absolute terms.
Alberta vs. Ontario doesn't work. Economic centres don't follow provincial borders. I've been in both Northern Alberta and Northern Ontario and they're both waste lands.

Calgary + Edmonton vs. Toronto + Ottawa, however would be a fair comparison. I see absolutely no reason that Calgary and Edmonton could not both be 2 to 3 million persons strong in the next 50 years (Alberta population of about 6Million).

Interesting immigration factoids:
http://ottawa.ca/city_services/planningzoning/facts/counts/counts_jul_04/index_en.shtml

I think you will eventually find the lack of water in Alberta difficult to manage (replace outbound oil with inbound water) and I'm sure weather will become an issue as it has for Toronto and Montreal, both of which built huge underground laberinths to avoid winter. Edmonton already has a start with their amusement park/mall.

However, with most of the countries urban centres growing at a fast pace, I'm not sure that the ranking will change any time soon. The country as a whole will certainly be better off if there are more strong cities.

Heck, I'm still hoping Toronto manages to become a big city some day instead of just being middle-sized. ~7Million people is pint sized compared to the big boys.

^^...YUP......................

I don't get this "power shifting west" crap.
Ontario is growing faster than Alb, BC, Man, & Sask COMBINED. This backed up with the fact that {like it or not} Toronto will continue, by far, to be Canada's corporate headquarter city.
Calgary has a lot of headquarters but most are oil. Vancouver has absolutly none and is nothing but a branch plant city.
By 2031 its estimated that Ontario will have between 43 to 45% of the country's population and nearly half its GDP.
The West is doing well right now but all things go in cycles.
The thing with Alberta too is that when things eventually slowdown to a more moderate level people will start to leave again like they always do.
This may offend some Albertans but so be it, people move to Alberta to get work.
When has anyone actually moved to Alberta just because they want to. Very few.
People go to BC for the weather and lifestlye and Tor/Mon for the big city and multicultural experience.

^^Well, I did consider that Calgary University my second last choice before lakehead - you only need a 78% to get into life sciences there.

Choosing a university is different then deciding where you want to live on a more permanent basis.

It's not as though I would have stayed there indefinetely.

I know many people who have moved here because of jobs and have like Calgary so much that they have never left. A large proportion of these people happen to be from BC or Ontario.

Ahem, you mean like, imperial oil employees?

I don't get this "power shifting west" crap.
Ontario is growing faster than Alb, BC, Man, & Sask COMBINED. This backed up with the fact that {like it or not} Toronto will continue, by far, to be Canada's corporate headquarter city.

Thats a given that Ontario will be growing and that Toronto will remain the financial centre of Canada. However if we are to use the US as an example New York is still king when it comes to the economy. But that has not stopped other centres in the country to emerge and grow in differing fields. For instance companies in Alberta could continue to grow and diversify the economy and other spin offs. Plus remember this one thing the 2 western most provinces as a proportion of Canada's population is growing every year. Plus while its true that many people move to Alberta for Jobs, they do tend to live here for decades, have kids here and many remain. My parents moved to Edmonton in the 70's from Montreal and now will not move back simply due to the fact that I live in Alberta along with 2 of my 3 brothers and other family memebers have since moved to Alberta because of jobs. Yes things are cyclical sometimes here in Alberta, but as long as the economy is growing the provincial population will continue to grow.

power isn't "shifting west." calgary may be more important now than it was 30 years ago but so is toronto. power isn't shifting....it's consolidating.

Pfft, Toronto isn't seen as important though.

power isn't "shifting west." calgary may be more important now than it was 30 years ago but so is toronto. power isn't shifting....it's consolidating.

It's shifting west from Quebec and the Maritimes.

^^Didn't that happen like, 20 years ago..

Yes but it still is. In the near furture Alberta and BC will have a larger population than Quebec and already have a significantly larger economy.

Oh no, am I happy for the west or sad for Quebec? Hmm.