Canadian Political Canadian Political IdentityIdentity

How we think of ourselvesHow we think of ourselves

Views on CanadaViews on Canada

Federal viewFederal view Canada is a vast region with many resources and Canada is a vast region with many resources and

opportunities.opportunities. Not all regions have the same opportunities.Not all regions have the same opportunities. The federal government’s job is to level the The federal government’s job is to level the

playing field based on the notion of equality for playing field based on the notion of equality for the regions.the regions.

The federal government is in the best position to The federal government is in the best position to ensure that all Canadians have the same ensure that all Canadians have the same opportunities.opportunities.

Provincial viewProvincial view

Many regions feel that the federal government Many regions feel that the federal government extracts the resources from the regions to fill extracts the resources from the regions to fill the coffers of central Canada (read Ontario).the coffers of central Canada (read Ontario).

Newfoundlanders still smart from the divisive Newfoundlanders still smart from the divisive debate in joining Canada.debate in joining Canada. In March of 2002 Newfoundland initiated a Royal In March of 2002 Newfoundland initiated a Royal

Commission to examine its relationship with Commission to examine its relationship with Canada.Canada.

Newfoundland Shafted?Newfoundland Shafted? Newfoundland and Labrador Newfoundland and Labrador

will began public hearings in will began public hearings in September to study everything September to study everything from transfer payments to from transfer payments to whether the province got a fair whether the province got a fair deal when it became part of deal when it became part of Canada in 1949. Canada in 1949.

"I think Newfoundland has "I think Newfoundland has been shafted under been shafted under Confederation, especially Confederation, especially when it comes to the fishery," when it comes to the fishery," said Gord Winter. said Gord Winter.

Ways the provinces feel they have Ways the provinces feel they have been shaftedbeen shafted

Newfoundland complains that the federal Newfoundland complains that the federal government squandered their resources leaving government squandered their resources leaving them dependent.them dependent.

Alberta has historically complained about Alberta has historically complained about Ottawa taking its resources but not offering Ottawa taking its resources but not offering help when they were in need. Examples help when they were in need. Examples include:include: The DepressionThe Depression The National Energy ProgramThe National Energy Program General TaxationGeneral Taxation

Alberta’s complaintsAlberta’s complaints

During the depression During the depression little aid was provided little aid was provided to Western farmers.to Western farmers.

During the dust-bowl During the dust-bowl years Western farmers years Western farmers suffered huge losses and suffered huge losses and blamed these on the blamed these on the Eastern banks.Eastern banks.

Regional DemandsRegional Demands

Provincial governments have jurisdiction over Provincial governments have jurisdiction over natural resources.natural resources.

However, federal government comes in aid of However, federal government comes in aid of regions when economies are failingregions when economies are failing

At other times, federal government deems the At other times, federal government deems the support of one region is in the national interest.support of one region is in the national interest.

In other instances, federal government extracts In other instances, federal government extracts goods from regions for the national interest.goods from regions for the national interest.

The National Energy ProgramThe National Energy Program On October 28, 1980, as part of the first budget On October 28, 1980, as part of the first budget

after the Liberals were re-elected in 1980. after the Liberals were re-elected in 1980. Abolished after the Tories took power in 1984. Abolished after the Tories took power in 1984.

Introduced in the wake of 160 per cent increase in Introduced in the wake of 160 per cent increase in world oil prices and the prolonged stalemate world oil prices and the prolonged stalemate between Ottawa and Alberta over energy pricing between Ottawa and Alberta over energy pricing and revenue sharing.and revenue sharing.

Tried to achieve three objectives: Tried to achieve three objectives: oil self-sufficiency as a way to attain energy security; oil self-sufficiency as a way to attain energy security; redistribution of wealth towards the federal government redistribution of wealth towards the federal government

and consumers; and consumers; greater Canadian ownership of the oil industry. greater Canadian ownership of the oil industry.

NEP is a four letter wordNEP is a four letter word Wide-ranging set of measures included:Wide-ranging set of measures included:

grants to encourage oil drilling in remote areas; grants to encourage oil drilling in remote areas; grants for consumers who converted to gas or electric grants for consumers who converted to gas or electric

heating; heating; new taxes on the oil industry; new taxes on the oil industry; expanded role for Crown corporation Petro-Canada; expanded role for Crown corporation Petro-Canada; government share of all oil and gas discoveries government share of all oil and gas discoveries

offshore and in the North. offshore and in the North. "The legacy of the NEP was billions of dollars "The legacy of the NEP was billions of dollars

going into the federal coffers at the expense of going into the federal coffers at the expense of Albertans," Premier Ralph Klein said the Friday, Albertans," Premier Ralph Klein said the Friday, after Trudeau died. after Trudeau died.

How the NEP fuelled Western How the NEP fuelled Western AlienationAlienation

The NEP, kept the domestic price of oil below the The NEP, kept the domestic price of oil below the world price. world price.

It was intended to protect Canadian consumers and It was intended to protect Canadian consumers and the manufacturing heartland in Central Canada from the manufacturing heartland in Central Canada from the high energy prices of the time. the high energy prices of the time.

Ottawa also wanted a piece of the pie and for Canada Ottawa also wanted a piece of the pie and for Canada to achieve energy security by increasing its oil self-to achieve energy security by increasing its oil self-sufficiency. sufficiency.

The feds encouraged resource exploration in frontier The feds encouraged resource exploration in frontier regions such as the Beaufort Sea by giving out special regions such as the Beaufort Sea by giving out special grants. They took a 25 per cent share of all oil and gas grants. They took a 25 per cent share of all oil and gas discoveries on federal lands, even retroactively. discoveries on federal lands, even retroactively.

The effectThe effect The overall effect was to bring resource activity in Alberta The overall effect was to bring resource activity in Alberta

almost to a halt. almost to a halt. Western Canada became a less attractive place to invest. Western Canada became a less attractive place to invest. Provincial revenue was siphoned east. Provincial revenue was siphoned east.

According to Robert Mansell, head of the economics According to Robert Mansell, head of the economics department at the University of Calgary, the energy program department at the University of Calgary, the energy program followed a long history of economic alienation -- railway rates, followed a long history of economic alienation -- railway rates, monetary and other policies that worked to the advantage of monetary and other policies that worked to the advantage of Central Canada directly against the interests of the West, Central Canada directly against the interests of the West,

Coming on top of all of these, the NEP "convinced most, I Coming on top of all of these, the NEP "convinced most, I would say the majority of people in Alberta, that you couldn't would say the majority of people in Alberta, that you couldn't trust the federal government and they were bound and trust the federal government and they were bound and determined to drive the economy into the ground," Mansell said. determined to drive the economy into the ground," Mansell said.

"It would take many, many generations for that (mistrust) to "It would take many, many generations for that (mistrust) to disappear. It hasn't yet." disappear. It hasn't yet."

Who pays in Canada?Who pays in Canada?

The battle for resources is just one problem The battle for resources is just one problem with Canadian identity and regional politics.with Canadian identity and regional politics.

Because of the way in which the taxes are Because of the way in which the taxes are collected, the federal government collects both collected, the federal government collects both federal and provincial taxes.federal and provincial taxes.

It gives back the taxes to the provinces, based It gives back the taxes to the provinces, based in part on what they raised, and in part on in part on what they raised, and in part on need.need.

How Equalization payments are How Equalization payments are calculatedcalculated

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

Fiscal capacityFiscal capacity

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

The StandardThe Standard

This figure is called the This figure is called the standard. The red line standard. The red line represents the standard represents the standard (fig. 3). (fig. 3). 

Bringing provinces up to the Bringing provinces up to the standard ensures a minimum standard ensures a minimum level of revenue per resident level of revenue per resident to fund public services. The to fund public services. The minimum amount per minimum amount per person for the current fiscal person for the current fiscal year is $5,863. year is $5,863. 

Reducing DisparitiesReducing Disparities

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

How fair is it really?How fair is it really?

According to the Federal government, According to the Federal government, Equalization payments are calculated by a Equalization payments are calculated by a formula set out in federal legislation. This formula set out in federal legislation. This formula is applied to all provinces in the same formula is applied to all provinces in the same way and determines whether they are eligible way and determines whether they are eligible for equalization. for equalization.

However, according to the CD Howe Institute, However, according to the CD Howe Institute, since 1990 three provinces have been singled since 1990 three provinces have been singled out for special treatment.out for special treatment.

CAP a different form of CAP a different form of EqualizationEqualization

The federal government limited the Canada The federal government limited the Canada Assistance Plan (CAP) payments to the Assistance Plan (CAP) payments to the proveniences that did not receive equalizationproveniences that did not receive equalization British ColumbiaBritish Columbia AlbertaAlberta OntarioOntario

With CAP, Ottawa paid half the cost of With CAP, Ottawa paid half the cost of provincial social welfare, transformed it into a provincial social welfare, transformed it into a form of equalization outside the formal form of equalization outside the formal program.program.

Federal Government Reducing Federal Government Reducing TransfersTransfers

Under the Liberals, transfers to provinces have Under the Liberals, transfers to provinces have been greatly reduced.been greatly reduced.

CAP payments fell between 1994/95 to CAP payments fell between 1994/95 to 1997/98 by $6.7 billion (35%).1997/98 by $6.7 billion (35%).

Equalization payments increased by $400 Equalization payments increased by $400 million (5%) over the same period.million (5%) over the same period.

Federal program spending fell by $3.7 billion, Federal program spending fell by $3.7 billion, $3 billion of that savings came from reduced $3 billion of that savings came from reduced EI benefits.EI benefits.

So What Does This Have To Do So What Does This Have To Do With Identity?With Identity?

These grievances exasperate regional divides These grievances exasperate regional divides and help fuel separatist movements.and help fuel separatist movements.

Quebec’s demands are usually centered on Quebec’s demands are usually centered on issues of culture, but money and resource issues of culture, but money and resource allocation play a huge role.allocation play a huge role.

This has far reaching implications including This has far reaching implications including the increase and dominance of regionally the increase and dominance of regionally based federal parties.based federal parties.

It also helps to entrench the power of the It also helps to entrench the power of the Liberal government.Liberal government.

In your opinion, how much influence does your In your opinion, how much influence does your province have in important national decisions in province have in important national decisions in

Canada, n=3,111Canada, n=3,111

Less than its fair share,

70.3%

About its fair share, 27.7 %

More than its fair share,

2 %

0

10

20

30

40

50

60

70

80

SummarySummary Canada developed in Central RegionCanada developed in Central Region Policies of the federal government deemed that Policies of the federal government deemed that

National Policy would benefit central Canada National Policy would benefit central Canada because population was greatest at that pointbecause population was greatest at that point

Federal government’s role has been to Federal government’s role has been to stimulate the economy and spur economic stimulate the economy and spur economic development.development.

Result has been the creation of jobs and the Result has been the creation of jobs and the support of industries in some regions over support of industries in some regions over others.others.