Thursday, November 09, 2006

There is no fiscal imbalance

I said some mean things about Andrew Coyne a while back, so let me karmically balance myself by pointing you all to this speech he gave (PDF) about the fiscal imbalance, and how it's a figment of the Provincial imagination:
Maybe the federal government is hogging the available tax room, leaving the provinces with the crumbs? Well, no. Federal revenues as a share of all government revenues are at or near their all-time low.

Perhaps that’s the problem: the feds are making up the lost revenues by cutting back on transfers to the provinces? Well, no. Transfers to the provinces as a share of federal spending are at or near their all-time high....

Ottawa’s share of total revenues is the smallest of any central government in the developed world. Not only that, but it places fewer strings on the money it transfers to the provinces than any other federal government. Got that? Provincial governments in Canada have more to spend, and greater freedom to spend it, than any of their counterparts elsewhere. The feds’ share of spending is the smallest ever, and the smallest anywhere.
I'm a big fan of federalism as an organizing principle. But Canada has not been well-served by our federalism in particular. In another universe, it might be possible to say that Alberta has done such a piss-poor job organizing it's oil revenues that Albertans could only benefit by turning them over to the Feds, and that no province has the right to federally-funded tax cuts. That universe, sadly, is not the universe we live in.


Olaf said...


AC is all over the FI issue, and has provided us with one of my favourite political quotes of all time.

The fiscal imbalance is one of those things like dark matter or quantum uncertainty that defy comprehension by the ordinary layman. Its precise magnitude has been the subject of countless arcane calculations -- the government of Quebec devoted a whole white paper to the subject -- but its basic mathematical expression may be reduced, by a combination of Lagrange polynomial interpolation and dead reckoning, to two lines: 1. Ottawa has money. 2. We want it.

Lagrange polynomial interpolation is hilarious...

Olaf said...

Oh, and here's the column.