When the Maritimes were considering whether to become part of the Canadian Confederation in the 1860s, they had two viable options: form a Maritime Union to put themselves in a strong position for a later confederation with Upper and Lower Canada, or join the other colonies immediately. Largely for pragmatic reasons – Canada promised to build a new railway – they decided to take their chances as smaller provinces in a larger federation. As we approach Canada’s 150th birthday in 2017, there is an opportunity to rethink the Maritimes’ position, again for entirely pragmatic reasons.
Sometime later this year, we expect to find out what the federal position is on equalization. The current agreement, like the health accord, is due to be “renegotiated” in 2014; but don’t be surprised if, as with the health accord, there isn’t a lot of negotiation with the feds.
Since 2009, there has been a cap in place that links funding increases to the rise in GDP. The current government clearly sees that the country’s best interests are aligned with policies of economic growth that encourage labour and capital mobility. The equalization program, and other federal programs such as Employment Insurance, create a disincentive (for labour in particular) to move where the jobs are.
At the same time, the ability of the Maritimes to influence the course of the debate on equalization is weakening. Western Canada is increasingly calling the shots and will push for a shift from federal entitlement programs to public policy rooted in market realities.
Maritimers have moved a long way from the days of self-sufficiency in 1867, as federal entitlement programs now make up roughly 35 per cent of the value of their combined provincial budgets. Since Ottawa capped the equalization program, its share of provincial government budgets is projected to decline eight to 16 per cent by 2012-13. In 2017, a similar formula will kick in for health and social services that will reduce the growth in entitlement payments from six per cent to three per cent.
At a time when the Maritime population is aging and is increasingly on fixed incomes, Maritimers are starting to ask how their provinces are going to make up the slack in funding. The first instinct of the provinces will be to demand more money from the federal government. Nova Scotia Premier Darrell Dexter is more circumspect: He wants to rewrite the current equalization formula, but the effect would be to take more from Ontario, which is starting to crowd out other provinces’ equalization entitlements.
Ottawa might simply impose an overall formula and allow the provinces to battle out the distribution, perhaps at this summer’s premiers’ conference in Halifax. Politically, there is a lot of merit in having distribution issues battled out at the provincial level, but this is unlikely to play to Maritime interests.
As a transplanted Maritimer working “away,” I think it is time to start developing more solutions at home. If the three Maritime provinces began acting as one administration – at least in the delivery of health, education and social welfare services – the administrative savings could be significant. Each ministry could be accountable to a joint provincial ministerial committee, whose minister would report to his/her respective provincial cabinet. Each province could have a head office.
The institutional forces opposing this idea would be considerable, and there are geographic and cultural differences between the provinces; but provinces like Ontario and Quebec have as much diversity as the Maritimes and seem to make it work.
As we move forward to the time when the equalization formula is renegotiated, our provincial leaders must think creatively and practically, just as our forefathers did. If we can merge companies and city services, we can merge provincial ministries as well. At a minimum, it is the type of thinking the federal government and donor provinces are going to appreciate as the Maritimes lobby for more money.
As an old idea that was once rejected, does Maritime Union offer a partial way out?