Herding cats: St. John’s edition

Looking towards the Council of the Federation meetings in St. John’s later this week, John Ibbitson thinks he’s found the magic elixer to solve the alleged “fiscal imbalance”:

This week, the provinces probably will suggest a compromise. The first component of any federal transfer would consist of an equalization fix, based on a report commissioned by Ottawa and released in May, that would benefit Quebec and the smaller have-not provinces. The second component would include direct cash transfers, on a per capita basis, that would benefit everyone. The third component would rejig the formula of the federal health and social transfers, ending a built-in equalization component and converting that program into a strictly per capita transfer, which would benefit the wealthier provinces.

Ibbitson is wrong on the third component. A per capita transfer is a built-in equalization component because poorer provinces get the same as rich provinces per person. This is what the feds already do when allocating transfers to the provinces, though there are some unnecessarily comlicated gymnastics along the way as the premiers’ Advisory Panel on Fiscal Imbalance pointed out a few months back.

As for the other two, it seems unlikely to me that these measures would solve this phony problem, because it really just amounts to more of what the Chretien and Martin governments did in recent years. It certainly is not going to appease Quebec nationalists who see federal transfers as the essence of the fiscal imbalance.

It will be interesting to see what PM Harper puts on the table come September, since he has both embraced and denied the issue of fiscal imbalance by trying to woo Quebec on the one hand and looking realistically at how federalism works on the other.

There are no votes to be found in transferring money to provinces. So they’ve been talking about adding a postsecondary-education component to the negotiations. The Tories have signalled that any transfer of funds to the provinces may be targeted to increased spending on colleges and universities.

That spending could take one of two forms. It could consist of transfers to provinces, with the provinces agreeing that the money will go to increased assistance for postsecondary education. Or it could consist of direct transfers to citizens, say by increasing the Canada Student Loans program, with the provinces agreeing that this would be considered part of the fiscal-imbalance formula.

Either proposal would be a deal-breaker for most provinces. If the money flowed through the provincial governments, then they would be expected to report back to Ottawa on how they are spending it. The provinces fought any accountability mechanism in health care; why would they agree to it in postsecondary education? Quebec would never consent to such an intrusion in its jurisdiction.

Canada needs a central government to transfer revenues to the provinces in support of national objectives. Post-secondary education is one such objective. I have no problem with strings attached to federal contributions; otherwise, they can just be used to finance tax cuts, which is what I’m presuming Charest wants to deliver prior to a Quebec election next year.

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