[LINK] "Ontario to lose equalization payments as Alberta's economic fortunes fall"

[rfmcdonald]

Karen Howlett and Jane Taber in The Globe and Mail report about the unpleasant way in which Ontario is no longer a have-not province.

Ontario will shed its status as a poor cousin of Confederation in the coming years, not because its economic fortunes are rebounding, but because resource-rich Alberta is falling on hard times.

The federal government is expected to announce how much each province will receive in the fiscal year 2016-17 from transfer payment programs, which include equalization, before Finance Minister Bill Morneau meets with his provincial and territorial colleagues in Ottawa on Sunday evening.

The equalization program redistributes national income to help poorer provinces provide services comparable to those of their richer counterparts. But equalization experts say the formula for calculating the payments is slow to respond to changes, including volatile commodity prices, which will leave Alberta carrying a disproportionate burden when the numbers are announced this weekend.

Ontario began receiving equalization for the first time in 2009, a dramatic reversal of fortune for the country’s one-time economic powerhouse. It is now set to reclaim its status as a “have” province because the disparity between its economy and that of Alberta is shrinking.

“What we’re talking about here is the bad way of coming out of equalization,” economist Don Drummond said.