Opinion
What I Stand For
From the Fraser Institute
By Alex Whalen and Tegan Hill
Back in the summer at a meeting in Halifax, several provincial premiers discussed a lawsuit meant to force the federal government to make changes to Canada’s equalization program. The suit—filed by Newfoundland and Labrador and backed by British Columbia, Saskatchewan and Alberta—effectively argues that the current formula isn’t fair. But while the question of “fairness” can be subjective, its clear the equalization program is broken.
In theory, the program equalizes the ability of provinces to deliver reasonably comparable services at a reasonably comparable level of taxation. Any province’s ability to pay is based on its “fiscal capacity”—that is, its ability to raise revenue.
This year, equalization payments will total a projected $25.3 billion with all provinces except B.C., Alberta and Saskatchewan to receive some money. Whether due to higher incomes, higher employment or other factors, these three provinces have a greater ability to collect government revenue so they will not receive equalization.
However, contrary to the intent of the program, as recently as 2021, equalization program costs increased despite a decline in the fiscal capacity of oil-producing provinces such as Alberta, Saskatchewan, and Newfoundland and Labrador. In other words, the fiscal capacity gap among provinces was shrinking, yet recipient provinces still received a larger equalization payment.
Why? Because a “fixed-growth rule,” introduced by the Harper government in 2009, ensures that payments grow roughly in line with the economy—even if the gap between richer and poorer provinces shrinks. The result? Total equalization payments (before adjusting for inflation) increased by 19 per cent between 2015/16 and 2020/21 despite the gap in fiscal capacities between provinces shrinking during this time.
Moreover, the structure of the equalization program is also causing problems, even for recipient provinces, because it generates strong disincentives to natural resource development and the resulting economic growth because the program “claws back” equalization dollars when provinces raise revenue from natural resource development. Despite some changes to reduce this problem, one study estimated that a recipient province wishing to increase its natural resource revenues by a modest 10 per cent could face up to a 97 per cent claw back in equalization payments.
Put simply, provinces that generally do not receive equalization such as Alberta, B.C. and Saskatchewan have been punished for developing their resources, whereas recipient provinces such as Quebec and in the Maritimes have been rewarded for not developing theirs.
Finally, the current program design also encourages recipient provinces to maintain high personal and business income tax rates. While higher tax rates can reduce the incentive to work, invest and be productive, they also raise the national standard average tax rate, which is used in the equalization allocation formula. Therefore, provinces are incentivized to maintain high and economically damaging tax rates to maximize equalization payments.
Unless premiers push for reforms that will improve economic incentives and contain program costs, all provinces—recipient and non-recipient—will suffer the consequences.
Authors:
Addictions
Ontario to restrict Canadian government’s supervised drug sites, shift focus to helping addicts
From LifeSiteNews
Doug Ford’s Progressive Conservative government tabled the Safer Streets, Stronger Communities Act that will place into law specific bans on where such drug consumption sites are located.
Ontario Premier Doug Ford is making good on a promise to close so-called drug “supervision” sites in his province and says his government will focus on helping addicts get better instead of giving them free drugs.
Ford’s Progressive Conservative government on Monday tabled the Safer Streets, Stronger Communities Act that will place into law specific bans on where such drug consumption sites are located.
Specifically, the new bill will ban “supervised” drug consumption sites from being close to schools or childcare centers. Ten sites will close for now, including five in Toronto.
The new law would prohibit the “establishment and operation of a supervised consumption site at a location that is less than 200 meters from certain types of schools, private schools, childcare centers, Early child and family centers and such other premises as may be prescribed by the regulations.”
It would also in effect ban municipalities and local boards from applying for an “exemption from the Controlled Drugs and Substances Act (Canada) for the purpose of decriminalizing the personal possession of a controlled substance or precursor.”
Lastly, the new law would put strict “limits” on the power municipalities and local boards have concerning “applications respecting supervised consumption sites and safer supply services.”
“Municipalities and local boards may only make such applications or support such applications if they have obtained the approval of the provincial Minister of Health,” the bill reads.
The new bill is part of a larger omnibus bill that makes changes relating to sex offenders as well as auto theft, which has exploded in the province in recent months.
In September, Ford had called the federal government’s lax drug policies tantamount to being the “biggest drug dealer in the entire country” and had vowed to act.
‘No’ new drug sites in Ontario, vows Health Minister
In speaking about the new bill, Ontario Minister of Health Sylvia Jones said the Ford government does not plan to allow municipal requests to the government regarding supervised consumption sites.
“Municipalities and organizations like public health units have to first come to the province because we don’t want them bypassing and getting any federal approval for something that we vehemently disagree with,” Jones told the media on Monday.
She also clarified that “there will be no further safe injection sites in the province of Ontario under our government.”
Ontario will instead create 19 new intensive addiction recovery to help those addicted to deadly drugs.
Alberta and other provinces have had success helping addicts instead of giving them free drugs.
As reported by LifeSiteNews, deaths related to opioid and other drug overdoses in Alberta fell to their lowest levels in years after the Conservative government began to focus on helping addicts via a recovery-based approach instead of the Liberal-minded, so-called “safe-supply” method.
Despite public backlash with respect to supervised drug consumption sites, Health Canada recently approved 16 more drug consumption sites in Ontario. Ford mentioned in the press conference that each day he gets “endless phone calls about needles being in the parks, needles being by the schools and the daycares,” calling the situation “unacceptable.”
The Liberals claim their “safer supply” program is good because it is “providing prescribed medications as a safer alternative to the toxic illegal drug supply to people who are at high risk of overdose.”
However, studies have shown that these programs often lead an excess of deaths from overdose in areas where they are allowed.
While many of the government’s lax drug policies continue, they have been forced to backpedal on some of their most extreme actions.
After the federal government allowed British Columbia to decriminalize the possession of hard drugs including heroin, cocaine, fentanyl, meth and MDMA beginning January 1, 2023, reports of overdoses and chaos began skyrocketing, leading the province to request that Trudeau re-criminalize drugs in public spaces.
A week later, the federal government relented and accepted British Columbia’s request.
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