Last weekend, the Mowat Centre for Policy Innovation at the University of Toronto began releasing glimpses into a new study it has completed on how badly Ontario is being jobbed by Confederation. Ontarians send about $11 billion more to Ottawa each year than the province gets back in federal spending and transfers. This discrepancy the Mowat Centre refers to as the “fiscal gap.”
I’ve got news for you, Ontario: When it comes to being jobbed by Confederation, you’ve got nothing on Alberta.
Last year Mowat calculated that Albertans sent a similar amount more to Ottawa than the province received in return — and Alberta has one-quarter of Ontario’s population.
But the issue here is the folly of Canada’s vast system of interprovincial wealth transfers called equalization. When even Ontario begins whining that it deserves billions more in equalization, you know the system has become so dysfunctional that the best action would just be to dismantle the whole scheme.
Yes, Ontario has recently fallen on semi-hard times. It has unemployment higher than the national average and less economic growth. Its costs to provide public services are higher than the Canadian average while its ability to raise tax revenues is lower.
But much of Ontario’s malaise is of its own making — or at least the making of the Liberal government of Dalton McGuinty (and now Kathleen Wynne) that has run that province since 2003 and has run it into the ground.
Take for instance the contention popular among New Democrats, environmentalists and lefty economists that the rise of Canada’s energy sector has cost central Canada (Ontario included) hundreds of thousands of manufacturing jobs by driving up the value of the Canadian dollar and making Canada’s manufactured goods more expensive to international buyers — the so-called Dutch disease.
It’s far more likely that the McGuinty government’s breakneck push for green energy is behind the manufacturing job losses. Since 2009, $18 billion has been spent on solar, wind and biofuel alternatives in Ontario, without producing any new net energy. Still, the scheme has pushed up the price of electricity by 40% or more. And since electricity is one of the largest input costs in manufacturing, this has likely had much more impact on job losses than the oil and gas boom in Western Canada.
For the rest of this article, please go to the Sudbury Star website: http://www.thesudburystar.com/2013/04/02/gunter-grits-green-push-leaves-ontario-in-the-red