Canadian Political Identity

1. Canadian Political Identity How we think of ourselves

2. Views on Canada • Federal view • Canada is a vast region with many resources and opportunities. • Not all regions have the same opportunities. • The federal government’s job is to level the playing field based on the notion of equality for the regions. • The federal government is in the best position to ensure that all Canadians have the same opportunities.

3. Provincial view • Many regions feel that the federal government extracts the resources from the regions to fill the coffers of central Canada (read Ontario). • Newfoundlanders still smart from the divisive debate in joining Canada. • In March of 2002 Newfoundland initiated a Royal Commission to examine its relationship with Canada.

4. Newfoundland Shafted? • Newfoundland and Labrador will began public hearings in September to study everything from transfer payments to whether the province got a fair deal when it became part of Canada in 1949. • "I think Newfoundland has been shafted under Confederation, especially when it comes to the fishery," said Gord Winter.

5. Ways the provinces feel they have been shafted • Newfoundland complains that the federal government squandered their resources leaving them dependent. • Alberta has historically complained about Ottawa taking its resources but not offering help when they were in need. Examples include: • The Depression • The National Energy Program • General Taxation

6. Alberta’s complaints • During the depression little aid was provided to Western farmers. • During the dust-bowl years Western farmers suffered huge losses and blamed these on the Eastern banks.

7. Regional Demands • Provincial governments have jurisdiction over natural resources. • However, federal government comes in aid of regions when economies are failing • At other times, federal government deems the support of one region is in the national interest. • In other instances, federal government extracts goods from regions for the national interest.

8. The National Energy Program • On October 28, 1980, as part of the first budget after the Liberals were re-elected in 1980. Abolished after the Tories took power in 1984. • Introduced in the wake of 160 per cent increase in world oil prices and the prolonged stalemate between Ottawa and Alberta over energy pricing and revenue sharing. • Tried to achieve three objectives: • oil self-sufficiency as a way to attain energy security; • redistribution of wealth towards the federal government and consumers; • greater Canadian ownership of the oil industry.

9. NEP is a four letter word • Wide-ranging set of measures included: • grants to encourage oil drilling in remote areas; • grants for consumers who converted to gas or electric heating; • new taxes on the oil industry; • expanded role for Crown corporation Petro-Canada; • government share of all oil and gas discoveries offshore and in the North. • "The legacy of the NEP was billions of dollars going into the federal coffers at the expense of Albertans," Premier Ralph Klein said the Friday, after Trudeau died.

10. How the NEP fuelled Western Alienation • The NEP, kept the domestic price of oil below the world price. • It was intended to protect Canadian consumers and the manufacturing heartland in Central Canada from the high energy prices of the time. • Ottawa also wanted a piece of the pie and for Canada to achieve energy security by increasing its oil self-sufficiency. • The feds encouraged resource exploration in frontier regions such as the Beaufort Sea by giving out special grants. They took a 25 per cent share of all oil and gas discoveries on federal lands, even retroactively.

11. The effect • The overall effect was to bring resource activity in Alberta almost to a halt. • Western Canada became a less attractive place to invest. • Provincial revenue was siphoned east. • According to Robert Mansell, head of the economics department at the University of Calgary, the energy program followed a long history of economic alienation -- railway rates, monetary and other policies that worked to the advantage of Central Canada directly against the interests of the West, • Coming on top of all of these, the NEP "convinced most, I would say the majority of people in Alberta, that you couldn't trust the federal government and they were bound and determined to drive the economy into the ground," Mansell said. "It would take many, many generations for that (mistrust) to disappear. It hasn't yet."

12. Who pays in Canada? • The battle for resources is just one problem with Canadian identity and regional politics. • Because of the way in which the taxes are collected, the federal government collects both federal and provincial taxes. • It gives back the taxes to the provinces, based in part on what they raised, and in part on need.

13. How Equalization payments are calculated • First, the fiscal capacity of each province is established. That’s done by determining how much money each province could raise on its own by applying an average tax rate to over 30 possible sources of revenue (fig.1).

14. Fiscal capacity • Then, the fiscal capacity of each province is compared with the average fiscal capacity of the five middle-income provinces - Quebec, Ontario, Manitoba, Saskatchewan and British Columbia (fig.2). 

15. The Standard • This figure is called the standard. The red line represents the standard (fig. 3).  • Bringing provinces up to the standard ensures a minimum level of revenue per resident to fund public services. The minimum amount per person for the current fiscal year is $5,863. 

16. Reducing Disparities • You'll notice that a number of provinces will be brought up to the standard (fig. 4). This makes equalization the most important federal program to reduce disparities in the ability of provincial governments to raise revenues.

17. How fair is it really? • According to the Federal government, Equalization payments are calculated by a formula set out in federal legislation. This formula is applied to all provinces in the same way and determines whether they are eligible for equalization. • However, according to the CD Howe Institute, since 1990 three provinces have been singled out for special treatment.

18. CAP a different form of Equalization • The federal government limited the Canada Assistance Plan (CAP) payments to the proveniences that did not receive equalization • British Columbia • Alberta • Ontario • With CAP, Ottawa paid half the cost of provincial social welfare, transformed it into a form of equalization outside the formal program.

19. Federal Government Reducing Transfers • Under the Liberals, transfers to provinces have been greatly reduced. • CAP payments fell between 1994/95 to 1997/98 by $6.7 billion (35%). • Equalization payments increased by $400 million (5%) over the same period. • Federal program spending fell by $3.7 billion, $3 billion of that savings came from reduced EI benefits.

20. So What Does This Have To Do With Identity? • These grievances exasperate regional divides and help fuel separatist movements. • Quebec’s demands are usually centered on issues of culture, but money and resource allocation play a huge role. • This has far reaching implications including the increase and dominance of regionally based federal parties. • It also helps to entrench the power of the Liberal government.

21. In your opinion, how much influence does your province have in important national decisions in Canada, n=3,111

22. Summary • Canada developed in Central Region • Policies of the federal government deemed that National Policy would benefit central Canada because population was greatest at that point • Federal government’s role has been to stimulate the economy and spur economic development. • Result has been the creation of jobs and the support of industries in some regions over others.