[LINK] "Ontario gets first equalization cheque"

[rfmcdonald]

Ontario, as The Globe and Mail's Karen Howlett tells us, is now a have-not province in Canada.

Ontario is making history today, but for all the wrong reasons.

In the early hours of this morning, an electronic transfer will move $14.46-million from the federal government to the treasury of Ontario, the first-ever equalization funds for Canada's most populous province. It will be the first of 24 paydays this fiscal year that will total $347-million.

[. . .]

Until last year, Ontario appeared unassailable as the country's economic powerhouse. It was inconceivable that a province that spent decades propping up the rest of the country could be on the receiving end of the subsidy program designed for the country's poorer regions.

In fact, when federal Finance Minister Jim Flaherty first suggested back in March of 2008 that Ontario was in danger of becoming a "have-not" province, his provincial counterpart said he was outright wrong.

[. . .]

The equalization program is designed to give money to Canada's poorer provinces so they can provide social services comparable to those of the richer regions. During this fiscal year, the federal government will distribute $14.2-billion to every province except British Columbia, Alberta, Saskatchewan and Newfoundland and Labrador. This is the first year Newfoundland is not receiving equalization since the program was introduced in 1957.

With Ontario collecting equalization, observers say the federal government will come under pressure to reform the program, because it is politically unpalatable to have smaller regions subsidize a province that accounts for 40 per cent of the country's economic output. Ontario was eligible for payments in the 1970s, when energy prices were soaring, but Ottawa changed the equalization formula, and clawed back the money.