Ontario to get Equalization Payments Next Year

On Friday the Globe and Mail reported that in the wake of a looming deficit, Ottawa would be limmiting the growth of the equalization program. Since the economy has only grown by 1% instead of the predicted 2.9%, the government is arguing that it cannot afford to let the program to grow.

Speaking to reporters after the first meeting of Stephen Harper’s new cabinet yesterday, Mr. Flaherty said the equalization program, which redistributed $13.6-billion in the current fiscal year, is growing at an unsustainable pace of about 15 per cent a year.

However, today’s Globe and Mail is reporing that for the first time in its 51 year history, Ontario will be receiving equalization payments. More importantly, Flaherty said that it will be more than what Ontario is expecting and that “Ontario will be very happy with the figure I give them.”

Is this development really becuase Ontario is facing poor economic times?

The economy of Canada’s largest province is being battered by the global financial crisis and a recession in the United States, events that have destroyed demand for Ontario’s factory exports.

Ontario has faced tough times before and has never, in 51 years, been on the receiving end of the equalization program.

I wonder though. Perhaps this has more to do with the recent election results than actual financial need. For its role in enhancing the Conservatibe minority Ontario has already been given thanks. This took the form of numerous strong Cabinet positions. Is this simply a continuation of rewarding Ontario for its help? As Ontario has shown that it is willing to vote conservative I wonder if we will we see a move to put less emphasis on Quebec and more on Ontario?