Connect with us

Features

MACKINNON: Regional Subsidies in Canada

mm

Published

on

Equalization and many other subsidies provided to Canadian regions are one of the most widely discussed but least understood aspects of our national life. 

They are widely discussed because the funding devoted to these subsidies is large and their political impact significant. They are not well understood because discussion of them often involves endless technical complexity and because there is incomplete information from the federal government about how many regional subsidies exist and the funding associated with them.

An additional issue associated with equalization, the largest of these subsidies, is the extent to which leaders in recipient provinces have exaggerated its purpose.

The Library of Parliament correctly describes equalization as a program to “reduce the differences in revenue-generating capacity across Canada’s 10 provinces.” This is a limited purpose.

The purpose of the program is less clear than many consider it to be for another reason. There is some uncertainty about the meaning in law of the constitutional clause relating to equalization. It indicates that the federal government is committed to the principle of making equalization payments, not that it is required to make them.

These limited purposes and vague legal underpinnings contrast sharply with observations some Premiers have made about the program. Some feel that it is “the glue that holds Canada together.” Others have indicated that it is “a program that allows us to be a nation”. Yet another stated in a TV interview that his job is to “get into Ottawa’s pockets as much as possible” through equalization and other federal spending in his province.

This difference between the actual purpose of equalization and its legal basis on the one hand and on the other hand the exaggerated nature of the program as seen by some leaders of recipient provinces has the important effect of making reforms to the program appear much more difficult than they should be. To many, this difference makes fundamental change so difficult that change at first glance appears to be impossible.

Prime Minister Justin Trudeau (source: Wikicommons)

We think that change is possible and imperative. Former Finance Minister Joe Oliver has indicated that he feels equalization is “beyond its best before date” and is in urgent need of change. We agree. We also extend his logic to many of the other approaches the government of Canada uses to subsidize regions. 

Problems with Equalization and Other Regional Subsidies

There are many specific problems associated with regional subsidies that make change imperative. These are:

  • The federal government has never studied the economic impact of equalization and other regional studies on recipient jurisdictions, jurisdictions that are net contributors or on Canada as a whole. Federal and provincial legislators and the public, consequently, have no real understanding of the economic impact of approximately $30 billion being spent on these arrangements;
  • federal legislators do not know how many regional biases and specific subsidies are incorporated in federal programming other than equalization. In fact, there are many of these and some are very large but legislative ignorance of them also makes it impossible for legislators to judge the effectiveness of the regional subsidization effort. It is hard to imagine that approximately $30 billion, including $20 billion for equalization, could be spent, as Canada is doing, by a G7 country without any serious efforts to judge the overall effectiveness of the effort and its economic consequences; 
  • similarly situated Canadians are not treated in similar ways by regional subsidies, a circumstance that often leads to profound unfairness. This is particularly evident in EI and related programs dealing with unemployment;
  • neither equalization nor other subsidies conform to Canadian standards for program design. For example, programs should be assessed in relation to the goals set for them. Since no efforts have been made to measure the comparability of provincial programming, the effects of equalization and other subsidy arrangements in achieving the constitutionally mandated goal of program comparability cannot be assessed;
  • the differing needs of provincial populations are not considered in determining equalization payments. Canada is in the remarkable position of transferring $20 billion from one group of Canadians to others without any reference to demographics or to how Canadians live and work wherever they live;
  • the scale of the regional subsidy effort has greatly damaged the market economy in many recipient jurisdictions to the extent that there are very weak or nonexistent market economies, aside from government activities and their direct spin offs, in large swaths of Canada. Cape Breton is but one example of this.
  •  This makes future competitiveness in recipient jurisdictions almost impossible and partly explains why Quebec and the Atlantic provinces are at the bottom in a Conference Board ranking of competitiveness in Canadian jurisdictions and jurisdictions elsewhere;
  • the regional subsidy system is an affront to accountability and democratic processes. One level of government raises money that another spends. Aside from encouraging excessive spending, this makes it very difficult for citizens to decide who is ultimately accountable for the program. 
  • The capacity to assign responsibility is fundamental to parliamentary democracy and damage results when it is frustrated;
  • regional subsidies such as equalization encourage risky behavior by some receiving provinces because they are protected from the consequences of this behavior by the scale of the subsidies. Many recipient jurisdictions have grossly excessive public sectors and large deficits, policies that are only made possible by the funds from subsidies flowing into them and by the implicit guarantee of federal bailouts on provincial public debt that exists. This is a serious moral hazard.

The Challenges of Change

Changing Canada’s system of regional subsidies will be very challenging, for several reasons:

  • as noted, the actual purpose of the program has been artificially elevated to the point that it appears almost too big to change without causing national unity problems. The moment serious changes are proposed, recipient jurisdictions can be counted upon to make the changes issues of national unity rather than deal with them on their merits;
  • significant changes would likely cause short term disruption in recipient jurisdictions, even if they would be better off in the medium and long term;
  • any changes to the equalization program and other subsidy problems could cause problems for Quebec even though that province’s leaders are the only provincial leaders who have recently shown any real interest in getting off equalization;
  • with two exceptions, Ontario’s leaders have not contributed substantially to any public discussion of equalization and related problems such as the extent to which EI discriminates against unemployed citizens in the province. It will be hard to have an appropriate national discussion of possible changes if the largest province continues to be an ineffective interlocutor;
  • the lack of understanding of the economic impact of equalization and of the rest of the regional subsidy system will make it much more difficult than it should be to assess the impact of changes;
  • the core economic problem in Atlantic Canada and Manitoba is massively oversized public sectors as evidenced, for example, by 16 universities for a population just over 2 million. Six of them are in Halifax, a community of about 450,000;
  • downsizing and restructuring the public sectors – the pattern in many other parts of provincial public sectors parallels the Atlantic regional experience with universities – in each of the Atlantic provinces and Manitoba will be a daunting task. It will be made even more difficult by relatively weak local economies in these provinces.

The Case for Change

Fixing a system that has so many deficiencies and problems in the face of significant barriers to change will require major efforts in planning, communication, and management. It will also take courage.

However, the case for proceeding is strong, for several reasons:

  • there is serious and growing concern about problems relating to equalization in Western Canada. One Alberta senator recently indicated that it is the first subject mentioned in conversations he has in the province. This level of concern should worry all Canadians, not just in relation to the many problems associated with the program but also because of the damage it is doing to the fabric of the federation. It pits one or two regions against others;
  • the risks associated with proceeding with it can be mitigated to some degree by steps outlined later in this note;
  • some opinion leaders in Atlantic Canada recognize that new regional goals and tools are needed, and these people need reinforcement. For example, the 2014 Report of the Nova Scotia Commission on Building Our New Economy noted that” major socioeconomic changes are making Nova Scotia weaker and more dependent. If we are to halt the slide, we must change – and quickly – the way we finance our standard of living. We are at a crossroads. The world is changing. We must change too or face the consequences;”
  • regional subsidies including equalization are major contributors to deficient economic performances in recipient jurisdictions. They have led to excessive infrastructure, national wage levels in economies that cannot support them, difficulties for the private sector in competing with governments for skilled and motivated people, governments that are inefficiently organized and unreasonable expectations by large numbers of people that governments can protect them from the market forces of the world. Without major change, these problems can be expected to persist;
  • the future of Atlantic Canada and to a lesser degree both Manitoba and 
    Quebec can only darken if present trends in fiscal arrangements continue. The only recipient jurisdiction with labor productivity growth faster than the Canadian rate is Manitoba. All the others are significantly behind in this measure.
  • This problem, combined with currently poor competitive positions relative to most comparable jurisdictions, means that all recipient jurisdictions have clouded futures without fundamental changes to how they finance their current standards of living.
  • The conclusions of the Nova Scotia Commission on Building the New Economy apply to other recipients, not just Nova Scotia;
  • the scale of regional subsidies almost certainly impedes Canada’s national competitiveness in a substantial way. Transferring in the order of $30 billion from high productivity jurisdictions to those with weaker productivity may overwhelm all other federal programs that encourage economic development. This must be corrected, particularly at a time when the rules based international order is breaking down and competitiveness is becoming correspondingly more important;
  • finally, there is a fundamental moral and political reason for change. All the data available suggests that the province with the least accessible provincial programming is Ontario and that its citizens are paying, in substantial measure, for much more accessible programming in other provinces. A country that prides itself on its fairness, inclusiveness and balance needs to reflect on the significance of this.

What Should be Done?

Equalization

Current funding for equalization should be maintained to avoid a national unity crisis but the program needs to be completely reformed. 

Most equalization funding should be redirected to fund restructuring of excessive provincial public sectors in recipient jurisdictions so that the costs of managing these moves quickly to the national average in relation to population. This restructuring should be mandatory for Atlantic Canada and Manitoba and voluntary for Quebec because that province’s public sector already is closer to the national average than all other recipient jurisdictions except New Brunswick.

Some existing funding could also be used to fund pilot guaranteed income programs in each recipient province

Alberta Premier Jason Kenney

The needs of provincial populations should be weighted equally with revenue and taxation considerations in determining equalization payments. This would ensure that the program has some relationship to how Canadians live and work and to demographics and other related issues.

Equalization should be divided into three different programs: one for Manitoba, one for Quebec and one for Atlantic Canada.

Equalization expenditures in Atlantic Canada should be conditional on the four provinces forming a common services agency to deliver at least 75% of provincial programming jointly. 

Provinces would not be eligible for equalization unless they agree not to prohibit activities underway elsewhere in Canada in environmentally sensitive ways. They would also be ineligible unless they agreed to limit growth in their public debt to the rate of growth in provincial GDP. 

Measurement

The federal government should, as a major priority, establish a system for measuring the comparability of provincial programming. Initially, this system should address accessibility with a public report to be available within a year. Later, matters related to quality and specialization could be addressed.

The economic impact of equalization should be studied, again as a priority, to identify the benefits and problems associated with the current program as well as the impact of the program on national and regional economic patterns including savings, investment, consumption and competitiveness.

Regional subsidies associated with federal programming, other than equalization, should be identified and tabulated, beginning with those linked to EI which are likely the largest but extending to all programs over a reasonable minimum threshold. 

The extent to which the location of federal employees conveys a substantial subsidy should also be identified. There is evidence that the subsidy to Nova Scotia conveyed by employment above average service levels, excluding the Department of Defence, is very nearly as large as equalization. Halifax is to a remarkable extent a federal government city.

This pattern is also evident in some other recipient jurisdictions.

Summary and Conclusion

Regional subsidies including equalization are not the caring and sharing mechanisms that are described in Canada’s public discourse. Rather, they are damaging the fabric of the federation and inhibiting national competitiveness.

The problems associated with this system are especially troubling because the damage being done is insidious. It is not immediately apparent that this system is cutting Manitoba and Atlantic Canada and to a certain extent Quebec off from futures that would otherwise be more positive. It is also not immediately obvious that millions in Ontario and to a lesser extent Alberta are significantly disadvantaged relative to other Canadians in terms of access to public services because of Canada’s fiscal arrangements.

The core elements of the regional subsidy system are now a half century old. The world has changed but this system remains largely intact.

Mr. Oliver is right. Equalization is past its best before date. The same is true for other regional subsidies. It is time to move on.

David MacKinnon works for the Frontier Centre for Public Policy

This article was originally published at www.fcpp.org

Features

Is ‘Paw Patrol’ capitalist propaganda? This professor on the CBC thinks so.

Is the children’s show is turning our tikes into tiny-tea partiers & miniature minarchists?

mm

Published

on

Everyone with a Netflix account and young children can sing most of the introductory title song of Paw Patrol, however much we wish we couldn’t.

“PAW Patrol, PAW Patrol. We’ll be there on the double!… No job’s too big. No pup’s too small! PAW Patrol, we’re on a roll!” etc.

I put it on for a few hours a day to distract my toddler while I try to get something – anything – done around the house. But while I thought that she was learning about teamwork, friendship, and helping her community, lo and behold, she was learning to support the capitalist patriarchy. Or so says a professor interviewed by the CBC’s Rebecca Zandbergen.

In an interview with criminology professor Liam Kennedy, he lays out – much to my surprise – how the repetitive children’s show is turning our tikes into tiny-tea-partiers and miniature minarchists.

“He [my son] has now internalized my feelings about the series and knows that we don’t in fact watch Paw Patrol in our house,” said the professor on the CBC’s London Mornings show.

The professor didn’t just stop his own son from watching the capitalist cartoon. He published an entire report on it: ‘Crime, Conservation and Corporatization in Paw Patrol’. In it, he lays out just how this pack of pups is brainwashing Canada’s children.

“I’ll start with the depiction of the state. Mayor Humdinger and Mayor Goodway — kind of the representatives of the state or the government – are portrayed negatively. Mayor Humdinger is portrayed as unethical or corrupt. Mayor Goodway as hysterical, bumbling, incompetent.”

Ostensibly, the professor believes that any portrayal of government officials as anything other than ethical, calm, collected and competent, is dangerous.

“She immediately calls the Paw Patrol…and so I would argue that the Paw Patrol – as a private corporation – is used to help provide basic social services in the Adventure Bay community…That’s problematic in that the Paw Patrol creators are sending this message that we can’t depend on the state to provide these services. That private corporations – private enterprise – can provide these services to the community.”

Kennedy also felt that the fictional children’s cartoon was not overly realistic in its portrayal of Chase, the German Shepherd police dog.

“It was a show, kind of emphasizing the benevolence of police officers, and, that struck a chord with me. You know, I felt that that wouldn’t speak to a lot of radicalized and marginalized communities, families and children.

With two German Shepherds in our home, it’s not surprising that Chase was my two-year-old’s favourite character. She even calls their collars “Pup Tags” now. But our dogs have not yet engaged in any racist brutalization of the minorities living in our neighbourhood. To help our toddler see Chase for the capitalist pig that he is, we will consider starting a “Poodle Lives Matter” campaign the next time we’re at the dog park.

To be fair to the CBC’s Rebecca Zandbergen, she didn’t appear to buy the theory hook-line-and-sinker.

“So even if what you’re saying is true…how susceptible might a three, a two, a four-year-old be to these underlying messages that you say exist?”

The professor seems to think very susceptible.

“Some children may internalize messages about mistrust of the state. Or, this show puts a lot of responsibility on individuals to go out and recycle, to protect the environment. It places a lot of faith in private corporations…

What a libertarian hellscape, where individuals are expected to take responsibility for their impact on the world, and not rely on the government to do everything for them.

Zandbergen thought this line of argument a bit much even for a CBC audience.

“There are some good messages, in encouraging people to recycle, right?

Professor Kennedy wasn’t having any of it.

“I mean I think everybody should recycle, but I think we should also depend on the state to facilitate that recycling process…”

Zandbergen to her credit pressed on, asking if there was “anything redeeming about the show?” What about, “No job is too big, no pup is too small?”

“To me that’s an individualist message. Pull up your boot straps. You can do it if you just try hard enough. That kind of message ignores structural barriers in our society and not everyone can do it.”

Zandbergen’s interview has been widely shared in Canadian conservative and libertarian online circles, possibly because the CBC’s headline, “Does Paw Patrol encourage our kids to embrace capitalism?” appears to be an implicit endorsement of the professor’s thesis. At most news outlets, headlines are written by editors, and not authors, and this appears to be most likely the case here. In fact, Zandbergen appears to be politely holding back her laughter during the on-air interview.

But if Zandbergen wasn’t particularly convinced by the professor’s post-modernist intersectionalism, someone at the CBC appears to have been.

But maybe the professor does have a point. Paw Patrol – much as it annoys me as it plays in the background – is teaching our children something: mistrust of state, individual responsibility, and voluntary community mindedness.

So I’ll keep on a little longer today. With any luck, my daughter won’t grow up to be a professor writing intersectional nonsense on the government dime.

You can watch the full CBC interview HERE.

Derek Fildebrandt is Publisher of the Western Standard, and President & CEO of Wildrose Media Corp.

Continue Reading

Features

SELICK: Coronavirus’s asymptomatic carriers

mm

Published

on

Reports of coronavirus patients who show none of the usual symptoms – fever, coughing, or shortness of breath – are both good news and bad news. 

First, the bad. The existence of these so-called asymptomatic carriers will undoubtedly bolster arguments for wholesale violations of civil liberties. Wuhan – China’s seventh largest city with 11 million inhabitants – has already been quarantined. That’s more than a minor inconvenience. Prohibiting the movement of people into and out of so large a city will quickly wreak economic havoc not only on those 11 million, but also on the millions they customarily trade with.   

History’s most famous asymptomatic carrier was probably Typhoid Mary. Born Mary Mallon, she migrated from Ireland to the U.S. in the 1880s and held a series of jobs as a live-in cook for affluent New York families. Everywhere she went, people fell ill with typhoid fever. Some died; many were hospitalized; but Mary herself remained healthy. She was imprisoned from 1907 to 1910 as a public safety measure, but eventually won her freedom by promising to cease working as a cook. However, being a laundress didn’t pay very well, so she soon adopted a pseudonym and returned to cooking. For another five years, typhoid epidemics broke out wherever she went. She was re-arrested in 1915 and quarantined until her death 23 years later.  

Scientists of Mary’s day tried to establish what made her immune. Typhoid bacteria were found in many of her stool samples and in her gallbladder after her death. But the research tools available 82 years ago were primitive compared with today’s. 

So here’s the good news. The existence of asymptomatic carriers presents a golden opportunity to determine what makes some people impervious to the virus while others succumb. Will the opportunity be used effectively? 

There’s a 125-year-old controversy that many people, including doctors and scientists, are unaware of. French scientist Louis Pasteur (1822-1895) is well known as the father of modern germ theory—the belief that illness occurs when foreign microbes such as bacteria and viruses invade the body. However, his colleague, Claude Bernard (1813-1878), held a somewhat different theory – the terrain theory – which held that the determining factor in who became ill was the state of the patient’s internal “soil” or terrain. 

Pasteur, incidentally, was no angel, despite his historical glorification. He has been described as an unlikeable person and an unethical scientist who falsified data to produce the results he wanted from experiments. But he was apparently a great self-promoter, unlike Bernard and another French scientist, Antoine Béchamp (1816-1908) who agreed with Bernard. Both B’s died in obscurity.

Reportedly, Pasteur recanted on his deathbed, saying: “Bernard avait raison. Le germe n’est rien, c’est le terrain qui est tout.” (Bernard was right. The microbe is nothing, the soil is everything.) Writer Susan Dorey tried to trace this story back to its source but was stymied by her inability to read French and consult original French sources. 

The terrain theory makes sense when you consider that North Americans who travel to third world countries frequently get gastrointestinal upsets that the natives seem impervious to. Likewise, farmers who routinely drink raw (unpasteurized) milk often aren’t troubled by the digestive symptoms that strike some people trying it for the first time.  

Regardless of whether Pasteur recanted or not, coronavirus and its asymptomatic patients now present us with an excellent opportunity to examine why some people are vulnerable to its ravages while others aren’t, despite their exposure. 

There are several possible explanations. Maybe immunity is genetic. Maybe it depends on the state of your nutrition. But a third possibility is that it depends upon the state of the infected person’s terrain, primarily the gut microbiome. This is turn might be affected by what a person eats, what nutritional supplements he takes, what toxins or antibiotics he has been exposed to, whether he was breast- or bottle-fed, and even whether he was born by Caesarian section. 

Scientific interest in the microbiome, and the interaction between bacteria and viruses, has exploded in recent years, with the development of gene mapping technology. Let’s hope it will be applied intelligently to the coronavirus challenge. 

Meanwhile, I’m planning to take extra care of my gut, by increasing my consumption of sauerkraut (unpasteurized, of course), kefir, kombucha, and prebiotic and probiotic supplements.

Karen Selick is the Copy Editor and a Columnist for the Western Standard. She has previously written for he original Western Standard, National Post, Canadian Lawyer Magazine. She is the former Litigation Lawyer of the Canadian Constitution Foundation and is the owner of KeenEyesEditing.ca.

Continue Reading

Features

Top Ten Good News Stories: 2019 Edition

Western Standard brings you the top 10 stories sure to make Westerns smile back on 2019.

mm

Published

on

2019 was not a good year for Western Canada. With a few exceptions, most news concerning our half of the country was unrelentingly negative. But good things did happen (most of them elsewhere), and the beginning of a new decade seems a suitable time to reflect back on the stories that made Westerners smile.

10. Don Cherry’s private podcast received the highest listenership in Canada shortly after being dismissed by Sportsnet-CBC for his politically incorrect soliloquy on Coach’s Corner. Debate raged over if his comments were genuinely racist, or just the latest example of puritanical cancel culture censoring anything controversial. Lost in most of the debate was the hypocrisy of most left-leaning Canadians voting to keep a man who engaged in the unquestionably racist act of blackface, while demanding that Canada’s uncle be fired for speaking his mind. 


9. Western Canada is more united than it has been in years, with the notable exception of BC. The bloc of blue on election night spoke more loudly than all the rallies or convoys ever could. As it was in 1980 under Trudeau Sr., the Liberals do not hold a single seat between Winnipeg and Vancouver. It’s unlikely the voice of the West will be listened in substance, but if they don’t get the message now, they likely never will.  

8. Western Independence is back with a vengeance. While federalists might not view this as positive, it has got the attention of the Laurentians and as every negotiator knows, to be successful you need an ‘or else’. The question is, if the federalists don’t take the ‘or else’ seriously, can the sovereigntist movement move beyond shouting, to become a serious threat?

7. Teck Resources’ Frontier oil sands mine (sort of) approved. It took ten years and still requires approval from feds, but it’s good news and would create 7,000 jobs if Justin Trudeau allows it to go ahead. If he chooses to side with the climate extremists, it’s likely that the still rag-tag sovereigntist movement will see a flood of new recruits. 

6. Polar bears are back. Long the symbol of apocalyptic climate predictions, the polar bear has increased in numbers to the point where they are causing problems for northern communities. Good news for the bears, bad news for the climate extremists in search of a new icon.



5. The world is growing greener. According to NASA, leaf cover on Earth has increased by two million square miles since the early 2000s. That’s more than half the size of Canada and a five per cent increase from two decades ago. The two primary factors causing this are hyper-efficient agriculture and increased CO2, which depending on your worldview is either plant food, or earth-ending pollution.

4. ISIS was defeated and its leader Al-Baghdadi is dead. It’s difficult to tell exactly how much of this is responsible for a 52 per cent worldwide reduction in deaths from acts of terrorism, but it has surely played a significant part. After 20 years of chasing terrorists in never-ending foreign wars, its finally some good news. 



3. Boris Johnson destroyed Corbyn’s Labour Party in the UK election. Brexit will go ahead, the outcome of the referendum respected. Since Britons voted to leave the EU, globalists have lamented the push back against centralized political and economic control, while patriotic movements have looked to it for hope.

2. Hong Kong still stands strong against all odds, and has not (yet) been overrun by China’s nouveau-communist regime. The courage of freedom fighters in Hong Kong is inspiring, and the sight of its students standing up against tyranny contrasts with students in Western countries demanding free tuition and safe spaces. 

Credit: NDP website



1. The NDP lost their bid for re-election on April 16th, making them Alberta’s first one-term government in its history, and ending the province’s socialist experiment that arguably began with Alison Redford. As Rachel Notley failed to gain “social license” from her green allies, Albertans had little time for punishing economic policies with little gain in sight. It remains to be seen if Jason Kenney’s tough talk with Ottawa can produce anything but headlines, or if more drastic measures will be required. 

Bonus: An aspiring modern Michelangelo duct taped a banana to a wall and sold it for $120,000, presumably as art. In front of a crowd of stunned onlookers, another artist ate it claiming his snack was an ‘art performance’ titled ‘Hungry Artist’. The Western Standard does not endorse vandalism, but we struggle to place this in the same category. 

Continue Reading

Trending

Copyright © Western Standard owned by Wildrose Media Corp.