Chapter 4 Government in Canada

http://forum.canucks.com/lofiversion/index.php/t214430.html

Summary:

The article talks about the usage of equalization payment to help the provinces in need (the have-not provinces), and the effects it has on these provinces. For the first time in Canadian history, a sum of 347 million dollars will be received by Ontario through equalization payments. According to Jim Flaherty, finance minister, for Ontario to receive such a big amount of equalization payment shows how serious, unstable and unprofitable their economy is. Moreover, he states that Ontario is forced into economic hardship and will be receiving equalization payments for awhile because of the global economy crisis, unstable American dollar and their weak manufacturing industry. On the other hand, as of 2009, the most current report shows that British Columbia, Alberta and Saskatchewan do not receive these payments. Alberta is not affected by the economic crisis as much due to their oil industry. However, even Alberta is pushing for external assistance. Alberta and other richer provinces are asking for aid; this shows how serious the situation is.

Connection:

The connection between this article to our text book is the effect of the federalist system that Canada follows. Canada has equalization payments to make sure that different provinces have adequate revenues to offer reasonable and qualified service to their citizens. Usually, these payments of equalizations are only given to the Maritime Provinces because their economy is affected greatly since the Cod Fishery times. To show how much need of aid these Maritime Provinces are in, they are also given stabilization payments along with equalization payments to avoid declining of provincial tax revenue. Progressive taxation funds these equalization and stabilization programs, distributing the money to the weaker provinces. The weak American economy pulled the Canadian economy down as well, hence for the first time, a rich province like Ontario is giving external aid for equalization payments.

Reflection:

I have the same opinion as Jim Flaherty, finance minister. By putting out more job opportunities and encouraging more international trade, the Canadian economy will re-stimulate itself. I see equalization payments as a momentary solution to our weak economy. Ontario receiving external help through these payments in years to come, I believe, will give investors a sense of lost-faith because even our rich province is need of aid. If investors lose interest in investing in Canada then the economy will have a smaller chance of re-stimulating itself. This is a big dilemma for the Canadian Government. On one side, saving a rich provincial is necessary to save the Canadian economy in the long run. However, on the other side, by aiding rich provinces like Ontario shows the seriousness of the current problem in Canada to investors and international traders. Immediate actions should be taken right now, so Canada does not recess into a depression or else job losses and poverty will be hard to find a solution for.