The Senate Standing Committee on Finance looking at the federal government’s equalization payments to the provinces has released its report and two of CUPE’s recommendations are endorsed.
In our submission to the Senate’s public hearings last year, CUPE recommended that the federal government drop its present cap on equalization payments and restore the ten-province standard.
“The Senate report and its strong endorsement for the equalization concept are good news for Manitobans as well as other Canadians,” says CUPE Manitoba president Paul Moist who presented CUPE’s submission at the hearings.
The Senate report called the equalization program, which became part of the Canada’s constitution in 1982, “one of the pillars of Canadian federalism.” The program works to ensure that all provinces have sufficient revenue to provide comparable levels of public services at comparable levels of taxation.
But by last spring, the equalization ceiling had dropped more than 25 per cent since it was first set in 1982. The ceiling had cost the recipient provinces a loss of more than $3 billion in equalization payments.
The money from federal equalization payments is spent by the provinces in a number of ways: to provide health care, public services, floodway protection and clean water, to train existing workers, and other social programs. In recommending a return to the ten-province standard over the current five-province one, the report said the move had “imposed a burden on the recipient provinces that has translated into reduced services for some Canadians.”
The recommendations, if implemented by the federal government, could put an estimated $300 million more annually into Manitoba’s hands. Last year, the province’s Finance Minister Greg Selinger said that it was “unconscionable that the federal government should be amassing surpluses by clawing back entitlements from the seven less affluent provinces in Canada.”
The Senate report agreed and said the increases to the provinces were affordable as federal revenues had increased more rapidly than entitlements since the ceiling was implemented. The federal surplus for 2000/2001 was $10 billion and it has risen to about $11.5 billion for the first ten months of this fiscal year.
The federal government levies 60 per cent of personal and corporate income tax while the provinces and local governments deliver roughly double the level of services.