The real imbalance is between Ottawa and the taxpayers

2006 textes seuls

In Maurice Duplessis's final years as premier of Quebec, he kept complaining Ottawa had too much money and power, while Quebec had too little of both.
To prove his point, Mr. Duplessis appointed a blue-ribbon panel of citizens to investigate the relative strength of the federal and Quebec governments. Mirabile dictu: The commission concluded the premier had been right after all.
Ottawa did have too much money and power, reported the Tremblay commission in 1956, and Quebec too little. This unfairness needed to be rectified for Canadian federalism to function properly.
The Tremblay commission report's ideas have returned half a century later, although under another name, proving if nothing else that everything changes while remaining the same in the emotionally arid world of federal-provincial fiscal relations.
Today, the Tremblay commission's ideas are called the "fiscal imbalance," or the "fiscal disequilibrium." They reflect an old idea for a more decentralized federation that's never been far from the surface of Quebec's view (and that of a few other provinces) of federal-provincial relations.
The ideas are back in more ways than one. Those who promote the existence of a "fiscal imbalance" are recycling the Tremblay commission's ideas for how to solve it. Essentially, this means giving more money straight up to provinces -- and enriching equalization payments for poorer provinces.
You don't need to be a genius to know these ideas are powerful in Quebec where governments a) usually want more power; and b) want Ottawa to finance that additional power through transfer of money and/or more equalization. Which is why neophyte Prime Minister Stephen Harper, his eyes fixed more than anything on political gains in Quebec, has promised to rectify this "fiscal imbalance."
Quebec (and other provinces) has one reasonable point in the post-Paul Martin years. The federal government, under his helter-skelter leadership, did invade areas of provincial jurisdiction such as daycare, cities and health care, using the federal surplus as a battering ram. Ottawa basically bribed the provinces into negotiating agreements that let it play in their jurisdictional territory, or hand over money to a provincial government.
That federalism became messier -- and equalization became all messed up courtesy of the Martin government's one-offs -- does not mean, however, a fiscal imbalance, as defined by complainers, actually exists. It exists only because the complainers look at Ottawa's surplus, and not at the taxing powers of each level of government. Apart from imports, provinces can tax what they like -- and do.
Moreover, they rake in lottery moneys they shared with Ottawa until the feds vacated the field. (The Ontario Lottery and Gaming Corporation will put almost $2-billion into provincial coffers in 2005-06.)
Only two provinces today are running deficits, and one (Ontario) could be in surplus. The McGuinty government opted not to balance the books this year, deciding instead to spend the windfall from a stronger than-anticipated economy. It could have booked that money, tightened the purse strings elsewhere, and recorded a tidy surplus.
Quebec, too, could have shown a surplus but it refused again to follow the advice of a group of concerned citizens to raise hydro rates to pay down debt.
That group of federalists and separatists produced an excellent manifesto -- Pour un Québec lucide -- that pointed the way to a more prosperous future for the province. Premier Jean Charest promptly endorsed the report, said it confirmed the wisdom of his government's policies (it did not), and forgot about the recommendations.
Premiers McGuinty and Charest are heading into elections within 18 months or so. They just don't want to make hard decisions on spending that would allow them to cut taxes and/or pay down debt. The reasons are obvious: Canadians generally want more spending rather than tax cuts.
The same priority surfaced in an Ipsos-Reid survey of the Harper Conservatives' five top priorities. More people wanted the promised wait-times guarantee, no matter how inconsequential it will be, than the one-point cut in the GST.
There is a fiscal imbalance -- between Ottawa with its surpluses and taxpayers. And there's a better way of dealing with it than lowering the GST.
The Conservatives should cut personal income and corporate taxes by $10-billion, thereby rectifying the real fiscal imbalance, and then invite the provinces with all their taxing power to move into that tax room, if they dare.

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