Financially Faltering Ontario Poised To Receive $345M In Equalization Payments
Posted November 3, 2008 12:00 pm.
This article is more than 5 years old.
It’s worrying that Ontario will receive equalization for the first time in its history and the state of the economy suggests the province will collect the payments for “some time,” Finance Minister Jim Flaherty said Monday.
“Of course is worries me… I don’t rejoice at this,” Flaherty said after emerging from a half-day meeting with the country’s finance ministers, during which he laid out a new funding arrangement for equalization.
“Regrettably, I expect that Ontario will be in the equalization program for some time to come. The manufacturing sector, the auto sector are weak. American consumer demand is weak.”
Ontario, which qualified for equalization in the late 1970s but never collected, will receive $347 million next year.
Before the meeting, Ontario Finance Minister Dwight Duncan was angry that Flaherty announced he wanted to limit growth in the equalization program just as Ontario would start receiving payments.
Afterward, Duncan questioned just how long Ontario would qualify given the new arrangement.
“It looks to us, at first glance, like we won’t qualify for very long based on the constraints they put on it,” he said.
The equalization program has seen excessive growth and funding will now be tied to real economic growth, Flaherty said.
Flaherty made the announcement after a meeting with the country’s finance ministers Monday to discuss the worsening economic crisis.
Flaherty is also promising a six per cent increase in health and three per cent increase in social transfers for all provinces.
Under the new equalization plan, Quebec will get $8.35 billion, Manitoba $2.1 billion and P.E.I. $340 million in transfer payments. Nova Scotia will receive equalization payments of $1.57 billion and New Brunswick $1.69 billion.
Flaherty insisted equalization will continue to grow year after year, but said it cannot be sustained at the current 15 per cent growth each year.
Equalization payments are meant to ensure that have-not provinces are able to provide comparable services at taxation levels comparable to those in wealthy provinces.
Monday’s meeting will lay the groundwork for a First Ministers’ meeting on the economy with Prime Minister Stephen Harper in Ottawa next Monday. That meeting will prepare Canada for an economic summit of the 20 leading economies in Washington on Nov. 15.
