Monday, November 3, 2008

Courting Ontario/Shafting Quebec?

From The Globe And Mail:

This morning, Finance Minister Jim Flaherty will be meeting his provincial and territorial counterparts in Toronto, and he will not be bearing good news.

With most forecasters predicting that Ottawa will go into deficit next year if not sooner, Mr. Flaherty will be sending an early signal that transfer payments will not be spared from forthcoming federal budget cuts. Tellingly, last week he noted that equalization payments to the provinces have been growing at 15% a year, suggesting that Ottawa is about to cap the magnitude of the annual increases.

Some observers interpreted this as a shot across Ontario's bow; that is, as a signal not to expect to receive equalization payments from Ottawa. In fact, as the largest recipient of equalization dollars, it's Quebec that has most reason to be concerned. Moreover, in light of the election results, Stephen Harper's Conservatives may now see their future fortunes tied to Ontario, and not to Quebec.

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