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This article was published 12/11/2014 (2146 days ago), so information in it may no longer be current.
Manitoba’s share of federal transfer payments has shrunk dramatically over the last five years and it’s mostly Ontario’s fault.
A study released today by the Frontier Centre for Public Policy and the Atlantic Institute for Market Studies looked at federal equalization payments made to four small, historic "have-not" provinces – Manitoba, New Brunswick, Nova Scotia and Prince Edward Island.
It found Manitoba’s equalization as a share of GDP shrunk more than 24 per cent, the most of any of the small provinces. In real dollars, Manitoba’s annual equalization cash has shrunk by $300 million in the last five years.
The decline isn’t because Ottawa has been stingier with transfer payments to the provinces, says co-researcher Ben Eisen. In fact, federal transfers as a share of the gross domestic product have recovered from the cost-cutting of the 1990s and are now as high as they were in the generous 1970s.
Eisen say the decline in federal cash to provinces like Manitoba is caused by Ontario. That province became a have-not during the recent recession and consumed a huge share of federal equalization cash. Eisen says the Ottawa has made it clear it won’t boost the size of the equalization pie, and it’s risky for have-not provinces to bank on an economic boom in Ontario. That means Manitoba should expect tight budgets and frugal fiscal management.
Equalization payments, and how to ensure Manitoba no longer needs them, have been frequently-raised issues at the Manitoba legislature, with the Conservative opposition often lamenting Manitoba’s have-not status. Eisen says it’s a laudable goal for provinces to move away from equalization payments over the long haul. The problem now is the steep decline in equalization in a short period, especially at a time when several provinces, including Manitoba, are struggling with budget deficits and increased debt.
Updated on Wednesday, November 12, 2014 at 11:56 AM CST: Writethru.
12:10 PM: Manitoba’s annual equalization cash has shrunk by $300 million in the last five years.
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