The issue of equalization has raised its barely comprehensible head once
more. But just because it is complicated doesn't mean it's not
important. So here is my attempt to shed light on the issue.
The Federal equalization transfers are intended to ensure that Canadians
receive a similar level of public services at similar levels of
taxation, regardless of where they live.
Government finance
OTTAWA--Despite recently well-publicized spending commitments, the federal government will post surpluses totaling $24.1 billion over the next three years, according to the Alternative Federal Budget's (AFB) Economic and Fiscal Update.
In keeping with the Chretien-Martin Liberals' practice of amassing significant surpluses--belying dire economic predictions from the Finance Department--the AFB forecasts a $7.7 billion surplus in fiscal year 2004-5, rising to $7.4 billion in 2005-6 and $9.0 billion in 2006-7.
Another lowball from the federal government. Instead of a $1.9 billion surplus as forecast last year, the Liberal finance minister this week announced that the government was really sitting on a surplus of $9.1 billion.
This "surprise" surplus announcement is now an annual event. Every year, Ottawa claims to have only a contingency reserve to shield it from deficit, approximately $3 billion annually. Then, every year, it posts enormous surpluses — between $7 billion and $20 billion a year since 2000.
The recent announcement by Finance Minister Gary Collins that BC is now expected to post a $1.2 billion surplus in 2004/05 caught many by surprise. After all, it was only seven months ago that Minister Collins tabled his first balanced budget, after sky-high deficits the previous three years. What explains this dramatic shift from red to black?
Read the financial pages of our corporate press, or listen to your average political commentary, and you’ll encounter the following standard propositions: 1) Foreign investment is good and should be encouraged. 2) Public debt is bad, and needs to be paid down quickly.
When it comes to their respective merits, however, the truth is pretty much the opposite.