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  • Report looks at captured nature of BC’s Oil and Gas Commission August 6, 2019
    From an early stage, BC’s Oil and Gas Commission bore the hallmarks of a captured regulator. The very industry that the Commission was formed to regulate had a significant hand in its creation and, too often, the interests of the industry it regulates take precedence over the public interest. This report looks at the evolution […]
    Canadian Centre for Policy Alternatives
  • Correcting the Record July 26, 2019
    Earlier this week Kris Sims and Franco Terrazzano of the Canadian Taxpayers Federation wrote an opinion piece that was published in the Calgary Sun, Edmonton Sun, Winnipeg Sun, Ottawa Sun and Toronto Sun. The opinion piece makes several false claims and connections regarding the Corporate Mapping Project (CMP), which we would like to correct. The […]
    Canadian Centre for Policy Alternatives
  • Rental Wage in Canada July 18, 2019
    Our new report maps rental affordability in neighbourhoods across Canada by calculating the “rental wage,” which is the hourly wage needed to afford an average apartment without spending more than 30% of one’s earnings.  Across all of Canada, the average wage needed to afford a two-bedroom apartment is $22.40/h, or $20.20/h for an average one […]
    Canadian Centre for Policy Alternatives
  • Towards Justice: Tackling Indigenous Child Poverty in Canada July 9, 2019
    CCPA senior economist David Macdonald co-authored a new report, Towards Justice: Tackling Indigenous Child Poverty in Canada­—released by Upstream Institute in partnership with the Assembly of First Nations (AFN) and the Canadian Centre for Policy Alternatives (CCPA)—tracks child poverty rates using Census 2006, the 2011 National Household Survey and Census 2016. The report is available for […]
    Canadian Centre for Policy Alternatives
  • Fossil-Power Top 50 launched July 3, 2019
    What do Suncor, Encana, the Royal Bank of Canada, the Fraser Institute and 46 other companies and organizations have in common? They are among the entities that make up the most influential fossil fuel industry players in Canada. Today, the Corporate Mapping Project (CMP) is drawing attention to these powerful corporations and organizations with the […]
    Canadian Centre for Policy Alternatives
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Fiscal update and “fiscal imbalance”

Yesterday’s release of the Fiscal Reference Tables also provides data at the provincial level. I reckon that the latest federal surplus of $13.2 billion might start some new cries of “fiscal imbalance” among the provinces in the lead-up to some federal-provincial negotiations this Fall (apart from a wide-ranging discussion paper released at budget time, we still have no real idea of what the Harper government’s position is). For a few years, the principal argument for “fiscal imbalance” has been the presence of federal surpluses coexisting with provincial deficits (this is a bogus argument as provinces have taxation powers that have largely been used to deliver tax cuts in recent years).

Let’s check the fiscal reference tables regarding provincial finances. The bottom line for all provinces together is a surplus of $13.2 billion, exactly the same as the federal balance. Every province except PEI had a balanced budget or better in 2005/06. So there goes one argument for the alleged “fiscal imbalance”.

But probing deeper reveals the real fiscal imbalance: Alberta accounts for $8.9 billion of the total. That is, the imbalance is among the provinces themselves, rather than with the federal government (a horizontal fiscal imbalance is the problem, not a vertical one). And the difference is due to resource royalties, primarily oil and gas. The second largest surplus was BC at $3.1 billion, and again resource royalties play a big part in this number.

As we head into negotiations to achieve a better fiscal relationship, this issue should be at the top of the agenda. Equalization can play some role in pulling up other provinces, but the feds do not have access to the key tax base in question, resource royalties, so they cannot fully bridge the gap. A resource royalty sharing pool, anyone?

UPDATE: Well, that did not take long. Here’s Ontario Premier Dalton McGuinty:

Surplus proves fiscal imbalance, McGuinty says

Canadian Press

TORONTO — Ontario Premier Dalton McGuinty says the federal government’s $13.2-billion surplus is further proof of a fiscal imbalance between Ottawa and the provinces.

Mr. McGuinty said Tuesday that the amount of the surplus shows what all the premiers have been saying: Ottawa has more money than responsibilities while they are in the exact opposite position.

The federal Conservatives say they will put the $13.2-billion toward the debt, but Mr. McGuinty said they should use some of it to offset Ontario’s complaints that it isn’t treated fairly.

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