Spare the rod...
Monday, 16 May 2005
Ric Dolphin
A psychologist I know complains about all the youngish patients coming to him for therapy who can't handle life in the real world. The profile is familiar: twenty-somethings who've been allowed to stay at home, paying no rent and having few domestic responsibilities, even though they're full-grown and have jobs. Thus unencumbered, they can afford new cars, smart clothes and active night lives, whilst retaining a domicile in a comfortable middle-class neighbourhood. At some point--for reasons of marriage, whim, or a vestigial sense that a 28-year-old "man" or "woman" should not still be at home with mother-- they find themselves out of the nest and unable to cope with the responsibilities they were shielded from for so long. A few commit suicide; some get prescriptions for Zoloft or Celexa from my friend; some even suck it up and learn to cope with the horrors of second-hand cars and apartments without high-definition big screens. Others say to hell with it and go back to living with mommy and daddy.
It's a bit reminiscent of Canada's equalization scheme. Like the coddled millennial man-child, a province is allowed to fail for as long as its little heart desires, always knowing that mother Ottawa will be there with a fistful of cash to bail it out of whatever fiscal bind it may get its sweet self into. Call it a welfare trap, call it a cycle of dependency, call it misguided parenting; it's the way this country has been run since Confederation. Guess what? All those have-not provinces that equalization was supposed to bring up to the level of self-reliance are still steadfastly attached to the federal teat. And--ironically enough--none is so attached as that distinctive mademoiselle who calls herself Québec.
I say it's ironic because, in the Canadian politic, this province has been so long coddled, humoured and deferred to, that one sometimes forgets it's hugely rich in mineral, hydroelectric and agricultural resources, peopled by proud, educated and able citizens who should have no difficulty competing in the real world--who should, indeed, want to. How, after all, can one be master of one's own house while clinging to the fiscal apron strings?
La belle province has become the quintessence of Canadian dependency. By dint of its population, Quebec receives the largest amount of transfer payments--close to $16 billion in 2004-05. That's roughly $2,000 net for every soul in the province--provided via Revenue Canada by the only two children of Confederation making it on their own, Ontario and Alberta. (Saskatchewan and B.C. are, thanks to oil and better management respectively, about to join the select group whose taxes help keep Quebec living in the style to which she feels entitled.)
Through the perversity of equalization--the "glue that binds Canada" (in much the same way, I guess, as mac and cheese binds up my intestinally challenged old mum)--the more Quebec fails, the more she gets from the feds (i.e., Alberta and Ontario). I don't want to take you too deeply into the rabbit warren of the federal equalization formula, for that way madness lies, but, rudimentarily, it's based on bringing the revenue of a have-not province up to a five-province average. The average is calculated using 33 tax categories. Thus, when a province like Quebec suffers reduced taxes because of unemployment, businesses fleeing for Alberta, strikes, et cetera, equalization payments are increased to compensate.
A few years ago, before the standing Senate committee on national finance, Université du Québec economics professor Michel Boucher was a lonely voice speaking out against "this perverse effect" and how it not only preserves unsound economies, "it also leads provincial governments to resist changes in their policy . . . by preventing provinces from having to deal with the costly consequences of their own policy. Equalization means that the cost of an ineffective provincial measure is passed along not only to its consumers and producers, but also to the residents of other regions."
Equalization also removes much of the nasty and hurtful incentives for self-reliance--a theme that, from the Canada Health Act, to the Indian Act or the welfare state, runs deep in the marrow of this country's soft bones.
The result is a province of 7.5 million (and declining), which remains the most taxed jurisdiction in the country, has an unemployment rate of nine per cent, a debt of $115 billion, and a deficit this year of $3 billion. And yet, like the Gen-Nexter who has maxed out his Visa, it clamours for yet more cash from mom and dad. Which is what Premier Jean Charest's government's caterwauling about "fiscal imbalance" is all about.
During the 2003 election campaign, and in the year afterwards, Charest showed some promising inclinations towards fixing Quebec's fiscal mess. He spoke of "re-engineering" the place--cutting back the monstrous civil service, curbing the powerful public service unions, eliminating the deficit, reducing taxes and making the province attractive to North American industries more mature than the coddled likes of Bombardier.
Polls suggested a majority of Quebecers were behind the curly pudge from Sherbrooke. His Liberal government won 76 of 125 seats in the national assembly. But the moment Charest attempted to prosecute what in Ontario, Alberta or B.C. might be considered an eminently necessary program, armies of unions and students hit the streets of Montreal and Quebec City and, with the usual Gallic éclat, started burning things. Liberal MNAs resigned. The mostly leftist French-language media stepped up its attacks. Raising the price of subsidized day care from $5 to $7 a day--quelle horreur! Subcontracting out a few government services--sacre bleu! Raising Quebec's awesomely low university tuition fees (9.2 per cent of the actual cost, compared to the Canadian average of 19 per cent)--gardez les barricades!
Charest's approval rating soon slid below 30 per cent and continues to slip further. It's no secret that Quebec is the most left-wing jurisdiction in North America. And left wing in Quebec doesn't just mean celebrating gay marriage and setting records for abortion and divorce; it means an almost pathological distrust of the free market and individual initiative. Charest may have received 45 per cent of the popular vote, but only 42 per cent of voters had bothered voting. That means less than a quarter of the electorate supported him at the polling booth--a plurality apparent in the negative polls and histrionics afterwards.
Faced with this reality, Charest followed the lead of his political mentor, the late Robert Bourassa, and crumpled. He stopped talking about "reengineering," abandoned his ambitious plans, for trimming government bloat, reducing taxes and cutting the deficit. Instead he reverted to Plan B--sucking more money out of Ottawa under that fine-sounding imperative of correcting that "fiscal imbalance." (It sounds better than "bummin' off the parents.") This plan had always been on Charest's back burner. His erstwhile finance minister, Montreal lawyer Yves Séguin, had earlier produced a paper for the PQ government on the subject.
Charest, meanwhile, clothing himself in the noble vestments of greater provincial rights, had spearheaded the creation of the premiers' Council of the Federation, ostensibly to provide a common front in negotiations with Ottawa. And certainly during last September's health care talks it served that purpose (everyone came away with a tidy per capita allotment that was promptly peed away on raises to nurses and docs). But, as has since become all too clear to other provinces, the federation's primary raison d'être was to remedy the old fiscal whatsit--a remedy that would primarily benefit Quebec.
In a nutshell, Quebec wants the equalization formula changed so that not just five, but all 10 provinces are used to calculate the national average tax rates. This means Alberta would be brought into the mix, instantly bringing up Quebec's entitlement by a couple of billion dollars a year. Although a smattering of the other basket-case provinces (New Brunswick, Manitoba and P.E.I.) support Quebec's plaint, the others do not--notably Ontario. Struggling with a deficit approaching $6 billion, the most populated province is already unhappy at contributing 23 per cent more in federal taxes than it gets back, wants that amount reduced, and is not about to countenance any increase for the spoiled baby of Confederation.
This is the point at which the Council of the Federation becomes dysfunctional. It might also mean the beginning of the end of the whole Ponzi scheme called equalization. One lives in hope.
However, like the pouting daughter who stamps her feet and threatens to break off all communication with the family, Quebec holds the perennial trump card of secession.
The way things look at the moment, the separatist Parti Québécois will win the next provincial election and, thanks to Sponsorgate, their cousins in the Bloc will all but eliminate Quebec Liberals from the federal government. Bloc leader Gilles Duceppe, having taken things as far as he can federally, may well return triumphant to replace Bernard Landry as head of the PQ, then premier, then president of the proud sovereign republic.
This would be fine with me and, I suspect, a growing number of Canadians--even Ontarians--who are finally getting tired of the tantrums (and the cost) of our prodigal province. Even politicians--long petrified by the stigma of "breaking up Canada"--could soon start changing their minds when Quebec stops delivering votes to all but the (separatist) Bloc. Clarity may suddenly overtake us and we'll realize it's finally time to nudge the little chick out of the nest.
Only we should make sure she takes her Visa bills with her.
Monday, 16 May 2005
Ric Dolphin
A psychologist I know complains about all the youngish patients coming to him for therapy who can't handle life in the real world. The profile is familiar: twenty-somethings who've been allowed to stay at home, paying no rent and having few domestic responsibilities, even though they're full-grown and have jobs. Thus unencumbered, they can afford new cars, smart clothes and active night lives, whilst retaining a domicile in a comfortable middle-class neighbourhood. At some point--for reasons of marriage, whim, or a vestigial sense that a 28-year-old "man" or "woman" should not still be at home with mother-- they find themselves out of the nest and unable to cope with the responsibilities they were shielded from for so long. A few commit suicide; some get prescriptions for Zoloft or Celexa from my friend; some even suck it up and learn to cope with the horrors of second-hand cars and apartments without high-definition big screens. Others say to hell with it and go back to living with mommy and daddy.
It's a bit reminiscent of Canada's equalization scheme. Like the coddled millennial man-child, a province is allowed to fail for as long as its little heart desires, always knowing that mother Ottawa will be there with a fistful of cash to bail it out of whatever fiscal bind it may get its sweet self into. Call it a welfare trap, call it a cycle of dependency, call it misguided parenting; it's the way this country has been run since Confederation. Guess what? All those have-not provinces that equalization was supposed to bring up to the level of self-reliance are still steadfastly attached to the federal teat. And--ironically enough--none is so attached as that distinctive mademoiselle who calls herself Québec.
I say it's ironic because, in the Canadian politic, this province has been so long coddled, humoured and deferred to, that one sometimes forgets it's hugely rich in mineral, hydroelectric and agricultural resources, peopled by proud, educated and able citizens who should have no difficulty competing in the real world--who should, indeed, want to. How, after all, can one be master of one's own house while clinging to the fiscal apron strings?
La belle province has become the quintessence of Canadian dependency. By dint of its population, Quebec receives the largest amount of transfer payments--close to $16 billion in 2004-05. That's roughly $2,000 net for every soul in the province--provided via Revenue Canada by the only two children of Confederation making it on their own, Ontario and Alberta. (Saskatchewan and B.C. are, thanks to oil and better management respectively, about to join the select group whose taxes help keep Quebec living in the style to which she feels entitled.)
Through the perversity of equalization--the "glue that binds Canada" (in much the same way, I guess, as mac and cheese binds up my intestinally challenged old mum)--the more Quebec fails, the more she gets from the feds (i.e., Alberta and Ontario). I don't want to take you too deeply into the rabbit warren of the federal equalization formula, for that way madness lies, but, rudimentarily, it's based on bringing the revenue of a have-not province up to a five-province average. The average is calculated using 33 tax categories. Thus, when a province like Quebec suffers reduced taxes because of unemployment, businesses fleeing for Alberta, strikes, et cetera, equalization payments are increased to compensate.
A few years ago, before the standing Senate committee on national finance, Université du Québec economics professor Michel Boucher was a lonely voice speaking out against "this perverse effect" and how it not only preserves unsound economies, "it also leads provincial governments to resist changes in their policy . . . by preventing provinces from having to deal with the costly consequences of their own policy. Equalization means that the cost of an ineffective provincial measure is passed along not only to its consumers and producers, but also to the residents of other regions."
Equalization also removes much of the nasty and hurtful incentives for self-reliance--a theme that, from the Canada Health Act, to the Indian Act or the welfare state, runs deep in the marrow of this country's soft bones.
The result is a province of 7.5 million (and declining), which remains the most taxed jurisdiction in the country, has an unemployment rate of nine per cent, a debt of $115 billion, and a deficit this year of $3 billion. And yet, like the Gen-Nexter who has maxed out his Visa, it clamours for yet more cash from mom and dad. Which is what Premier Jean Charest's government's caterwauling about "fiscal imbalance" is all about.
During the 2003 election campaign, and in the year afterwards, Charest showed some promising inclinations towards fixing Quebec's fiscal mess. He spoke of "re-engineering" the place--cutting back the monstrous civil service, curbing the powerful public service unions, eliminating the deficit, reducing taxes and making the province attractive to North American industries more mature than the coddled likes of Bombardier.
Polls suggested a majority of Quebecers were behind the curly pudge from Sherbrooke. His Liberal government won 76 of 125 seats in the national assembly. But the moment Charest attempted to prosecute what in Ontario, Alberta or B.C. might be considered an eminently necessary program, armies of unions and students hit the streets of Montreal and Quebec City and, with the usual Gallic éclat, started burning things. Liberal MNAs resigned. The mostly leftist French-language media stepped up its attacks. Raising the price of subsidized day care from $5 to $7 a day--quelle horreur! Subcontracting out a few government services--sacre bleu! Raising Quebec's awesomely low university tuition fees (9.2 per cent of the actual cost, compared to the Canadian average of 19 per cent)--gardez les barricades!
Charest's approval rating soon slid below 30 per cent and continues to slip further. It's no secret that Quebec is the most left-wing jurisdiction in North America. And left wing in Quebec doesn't just mean celebrating gay marriage and setting records for abortion and divorce; it means an almost pathological distrust of the free market and individual initiative. Charest may have received 45 per cent of the popular vote, but only 42 per cent of voters had bothered voting. That means less than a quarter of the electorate supported him at the polling booth--a plurality apparent in the negative polls and histrionics afterwards.
Faced with this reality, Charest followed the lead of his political mentor, the late Robert Bourassa, and crumpled. He stopped talking about "reengineering," abandoned his ambitious plans, for trimming government bloat, reducing taxes and cutting the deficit. Instead he reverted to Plan B--sucking more money out of Ottawa under that fine-sounding imperative of correcting that "fiscal imbalance." (It sounds better than "bummin' off the parents.") This plan had always been on Charest's back burner. His erstwhile finance minister, Montreal lawyer Yves Séguin, had earlier produced a paper for the PQ government on the subject.
Charest, meanwhile, clothing himself in the noble vestments of greater provincial rights, had spearheaded the creation of the premiers' Council of the Federation, ostensibly to provide a common front in negotiations with Ottawa. And certainly during last September's health care talks it served that purpose (everyone came away with a tidy per capita allotment that was promptly peed away on raises to nurses and docs). But, as has since become all too clear to other provinces, the federation's primary raison d'être was to remedy the old fiscal whatsit--a remedy that would primarily benefit Quebec.
In a nutshell, Quebec wants the equalization formula changed so that not just five, but all 10 provinces are used to calculate the national average tax rates. This means Alberta would be brought into the mix, instantly bringing up Quebec's entitlement by a couple of billion dollars a year. Although a smattering of the other basket-case provinces (New Brunswick, Manitoba and P.E.I.) support Quebec's plaint, the others do not--notably Ontario. Struggling with a deficit approaching $6 billion, the most populated province is already unhappy at contributing 23 per cent more in federal taxes than it gets back, wants that amount reduced, and is not about to countenance any increase for the spoiled baby of Confederation.
This is the point at which the Council of the Federation becomes dysfunctional. It might also mean the beginning of the end of the whole Ponzi scheme called equalization. One lives in hope.
However, like the pouting daughter who stamps her feet and threatens to break off all communication with the family, Quebec holds the perennial trump card of secession.
The way things look at the moment, the separatist Parti Québécois will win the next provincial election and, thanks to Sponsorgate, their cousins in the Bloc will all but eliminate Quebec Liberals from the federal government. Bloc leader Gilles Duceppe, having taken things as far as he can federally, may well return triumphant to replace Bernard Landry as head of the PQ, then premier, then president of the proud sovereign republic.
This would be fine with me and, I suspect, a growing number of Canadians--even Ontarians--who are finally getting tired of the tantrums (and the cost) of our prodigal province. Even politicians--long petrified by the stigma of "breaking up Canada"--could soon start changing their minds when Quebec stops delivering votes to all but the (separatist) Bloc. Clarity may suddenly overtake us and we'll realize it's finally time to nudge the little chick out of the nest.
Only we should make sure she takes her Visa bills with her.
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