Would anyone suggest that rewarding the ineffective was good policy? We expect there is someone who would but we won’t. We agree with Mr. Cirtwell of AIMS that equalization has gone off the rails and offers no incentive for provincial governments to perform efficiently or manage their affairs frugally. In an article today in the CH Charles Cirtwell points out that:
ONTARIO accounts for roughly 41 per cent of the national economy. Quebec represents another 20 per cent. Add in Manitoba and the Maritimes, and more than two-thirds of Canada’s wealth-generation capacity now qualifies for equalization payments. This includes the two biggest provinces in terms of population and economic activity. Doesn’t anyone else out there think that is crazy?
Yes, but we may be in the minority Mr. Cirtwell. He thinks so too because he says –
No? Then how about the fact that provinces receiving equalization all share some very disturbing characteristics: massive and growing debts, despite the annual infusion of no-strings-attached money; higher taxes and larger and higher-paid bureaucracies; coal mines, steel plants and fisheries kept open years after they ceased to be economically sustainable; insanely low electricity rates and unsustainable electricity consumption because of it; and systemically high unemployment as a result of years of failed government experiments in subsidizing the “industry of the week.”
He goes on to talk about Ontario but he could well be talking about NS or about our municipalities like Wolfville.
Even Ontario, the newest member of the club, is failing the test of fiscally responsible government policy. It has spurned the national call for a combined corporate tax rate of 25 per cent and Ontario’s provincial government expenditures have grown more than double that of economic growth in four of the past five years. Yet the response from the federal government is to hand it an equalization payment. Is this not ridiculous? emph ours
It is ridiculous. And think about this at the local level. Does it make sense for government to give this town grants while we spend on highly paid staff for positions which seem to multiply, it seems, like fruit flies? For a little town of 3,600 souls? We hope one of the first questions this new council asks is “what percentage of the budget is spent on staff”? If at the 20% level or is over 20% it is too much. Of course it is hard -and often expensive- to let people go; it would have been better had they not been hired in the first place.
The town has been living on a champagne diet and now with harder times on the horizon this new council will have a challenge to provide even the basic services that Mayor Stead is all of a sudden claiming interest in. The idea that Wolfville can be run like a bigger municipality , paying wages equivalent to those in a bigger place or even equivalent to the average, is pie in the sky. It is a small town and should have been run as a small town.
Mr. Cirtwell’s admonishment and suggestions hold true for towns and cities as they do for other levels of government, just replace the word Provinces with municiplaities
This all really begs the question whether transfers are the solution to delivering the same services to all Canadians, as opposed to encouraging provinces to build their own economies and pay their own way – such as through better taxation policy and reducing, or at the very least controlling, government spending that has outpaced economic growth by a wide margin.
The dream of comparable services for all Canadians has turned into the nightmare of entrenched disparity and dependence. Canada is not made fairer by a system that rewards bad and irresponsible behaviour.
It is interesting to note that in the AIMS report card on NS municipalities it observes that:
We have been unable to acquire data for the size of each municipality’s staff [source- IMRCNS governance section]
Surely this is data that should be available but the number of people Wolfville employs is not anywhere stated. While Wolfville doesn’t have a high level of government transfers per capita compared to some municipalities it has had high revenue per capita [from over taxation] which it has been spending [think about what it has been spent on!] and not putting toward paying down debt [ In the AIM report card Wolfville ranked 45th out of 55 for outstanding debt per capita – $784/ person ] . Given the amount the town has taken in over the two terms Wolfville should have been in a good position to weather the economic downturn; instead the new council is left holding a largely empty bag. It would be a mistake to go begging for government money without also making some serious changes so that we can live within our means without further burdening residents with tax increases.
An article at The Canadian Centre for Policy Studies echoes this sentiment, although talking again about higher levels of government.