Federal money not solution for Atlantic economy, speaker warns

Connor Doucette
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David MacKinnon tells Rotarians region needs to end dependence on subsidies

Charlottetown Rotary Club members Larry Sider, left, and Lorne Moase, right, thank David MacKinnon for speaking at the Rotary Club of Charlottetown’s regular meeting. The topic of MacKinnon’s address was Financial Reality is Needed in Maritime Canada.

The Atlantic provinces need to get away from their dependence on subsidies and federal money if they ever want to become successful, a speaker told Monday’s Charlottetown Rotary Club meeting.

David MacKinnon, of Wellington, Ont., is a native of Prince Edward Island. He is chair of the West Park Healthcare Centre in Toronto and worked in planning and economics for provincial governments.

He’s a frequent commentator on Canadian fiscal issues and has spoken on BNN and TVO, and in the Toronto Star and National Post.

MacKinnon addressed fellow Rotarians about the real threats to the economy in Atlantic Canada.

“The biggest danger is that these provinces and, to a lesser extent Quebec, now have artificial economies sustained in significant measure by compounding levels of subsidies coming from other Canadians,” he said.

What this means is relying too heavily on the federal government for money is not the right thing to be doing on the Island and in other provinces, he said.

“P.E.I. is one of the most heavily subsidized jurisdictions in the developed world with an economy that is dominated by a localized public sector at a time when economies are both market-driven and global.”

MacKinnon has travelled in India and China and seen the things those countries are capable of.

“If we think we can compete with these giants by subsidizing whole regions and writing cheques to each other, we are sadly mistaken.”

MacKinnon said there are several ways to get out of the hole he perceives the provinces are in, including abolishing the phrase ‘getting more money from Ottawa’, voting any politicians asking for subsidies out of office, and listening to the many new directions researchers have identified to deal with the difficult problems Atlantic Canada faces.

“In summary, federal regional subsidies have been a complete failure over the decades they have been in place. But there are possibilities for change which would give this province and others a chance to be genuinely self-sufficient and able to develop their own plans for the future.”

MacKinnon offered some solutions to ensure a brighter economic future. He said the solution will have many elements but all would mean change for the regional subsidy system.

He said the principal possibilities are:

- moving to a new equalization arrangement based on need and capacity;

- transferring GST revenues to provinces in return for an end to some or all transfer payment schemes;

- federal assumption of part of provincial public debt in return for an end to some or all transfer arrangements and a commitment not to run provincial deficits in future;

- a transformation of the EI program so it treats all similarly situated Canadians in the same way, regardless of where they live;

- major efforts in recipient provinces to bring out-of-control expenditures in line with practices prevailing elsewhere.

MacKinnon said one thing he urges is for the P.E.I. government to undertake an external spending review along the lines of the recent Drummond review in Ontario.

Organizations: Charlottetown Rotary Club, West Park Healthcare Centre

Geographic location: Prince Edward Island, Atlantic Canada, P.E.I. Wellington Toronto Quebec India China Ottawa Ontario

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Recent comments

  • urban maclellan
    July 07, 2012 - 21:31

    why do we need mackinnon who left p ei years ago to come back and tell us whats good for us we have one of the best provence in canada , are we a country or what are we going to be ? its people like that divides canada i hope for my grand kids that the people stand against this hate talk about any place in canada we dont need them here, some of my family gave there life for this great country

  • Pius from BC
    April 06, 2012 - 17:22

    David MacKinnon made some valid points in his speech. The Atlantic provinces should strive to become self-sufficient. And- no province should be allowed to run a deficit budget. If they do go over budget, deduct it from the equalization/health payments. Canadians have to learn to live within their means. By the way, what is the debt on PEI now?

  • John W.A.Curtis
    April 05, 2012 - 17:47

    The Ghiz government increase the debt by 500 million how many fulltime jobs were created? I have a grandson, I want change now for his generation, my children's generation and my generation.

  • Eyes Wide Open
    April 03, 2012 - 13:15

    It's funny how the guys who say we're so heavily subsidized in Atlantic Canada forget that we are the market for much of their manufacturing sector. They are also good at figuring out how much transfer payments we get, but then they can't figure out or acknowledge the federal assistance the auto sector and major corporations get in Ontario. Major Ontario manufacturers (private sector, so therefore great guys) get EI subsidies to pay some of the salary for their "full-time" staff, they have much lower energy costs, are closer to major markets, etc. How does Mr. MacKinnon account for any of that in deciding that Atlantic Canada is heavily subsidized? I think the faces of the two Rotarians in the photo with Mr. MacKinnon properly convey how wise his presentation was!!

  • Garth Staples
    April 03, 2012 - 12:40

    Training dollars and Holland College was all set to provide the service.

  • bring back nep
    April 03, 2012 - 11:53

    Natural resources should belong to all Canadians, not only to the province they are located in, and all Canadians should be able to realize the profits from such. Trudeau had it right with the NEP but of course the Conservatives ( and red neck Westerners) opposed such and overturned this when they got the chance. And where is our current Prime Minister ( the man who wields so much power with only about 40000 Canadian voters in his own Calgary riding giving him this power) from ? Not only was the Conservative Party as most of us knew it, usurped by this individual, but now the rest of Canada suffers also. Good luck Canada. In other oil rich countries, oil revenues belong to the state, not to the province or region of the country it is located in.

  • Phil
    April 03, 2012 - 11:52

    If you read the list of suggestions from MacKinnon they are easily translated to read take less money take less money, we are paying your bills , take less money and spend less. He has not one suggestion on how a province of 133k replaces what he calls a type of welfare and Alberta calls business investment.This man is a CPC flunky trying to sell the budget for Flaherty. Read his bio and you'll find connections to a number of right wing non profit education charities. He's a fiscal radical terrorist. Joe Oliver wants CRA to investigate what he calls radical eco terrorists. They should investigate these guys as well.

  • intobed
    April 03, 2012 - 11:43

    If MacKinnon is such an expert on what the Atlantic Provinces needs to do, what is he doing up in Ontario for the last few decades? And he left out the Harper solution to transfer payments: make conditions in the Maritimes absolutely horrible, so they will all move to Alberta and work for the rich corporations. You know, the corporations who will line Harper's pockets with millions in consulting fees once we get rid of him as prime minister.

  • Jean
    April 03, 2012 - 11:30

    Before complaining about the handouts given to the small fries, how about insisting the governments quit giving handouts to the big fries like Cavendish Farms, Irving, the oil industry, Monsanto, etc., etc. Low taxes and subsidies with rewards to politicians with lower yet taxes to the big corporations, subsidies to wealthy banks. Money makes the world go round.

  • Anton
    April 03, 2012 - 10:51

    How funny - ironic, Prince Edward Island that monetarily and systematicly abuses it's disabled, sick and poor, with it's low self-esteem population that slit each other's throats with their ignorant mouths every chance the gossips get is itself a province where they all are being supported by the rest of we Canadians. THIS makes the PNP scam and the people involved even more disgusting..

  • bob
    April 03, 2012 - 10:25

    Is this the same David MacKinnon that is good friends with Jim" Flaherty END OF STORY.

  • SG
    April 03, 2012 - 10:09

    What PEI needs is Savy Politicians and constituents that demand the same and who will cast their Vote for the Best Candidate based on Qualifications, Experience and Knowledge regarding Leadership. But PEI has and is still voting on Decade Old Party Loyalties and Principles. There has always been but two parties on PEI since I began voting 50 plus years ago. Way Past Time for Change. Time to stop doing the same thing and expecting difficult results! It has never happened thus far and it never will.If you repaint a wall the same color you get the same color!

  • Karma
    April 03, 2012 - 09:43

    @ Striker so you want to continue to live on the hand-outs the Liberal governments over the years have bought your votes with. Typical PEI welfare mentality. Don't stand up and 'do', sit up an beg. You and people like you, along with the politicians who love for you to be dependant on them, have mortgaged your and your childrens' futures for years to come. Your leaders have turned PEI into a 3 world state and like addicts hungry for the next fix, you and those like you are willingly pay your dealer with your votes. Thank goodness I convinced my children to leave and make something of themselves rather than be dependant on a group of self-serving politicians who have made you into gimme gimme slaves.

  • Gill
    April 03, 2012 - 09:41

    There's a kettle and a pot and someone calls someone else black, I can't remember the rest but the moral is lack of self criticism...Ontario relies on subsidies as well, Mr. "I've been to Ontario and have seen the world". The only places in the world able to sustain themselves in the current economy are those who "happen" to live 500 meters above a rich natural resource. It has nothing to do with planning for many. I watch Albertans screw it up again and again but it doesn't matter, since there is so much rich natural resource they can spoil millions and go back to the same well again and again. No pun intended.

  • The Facilitator
    April 03, 2012 - 09:35

    Perhaps Prime Minister Harper was right. The Maritimes appears to be the perpetual economic basket case of Canada. Where would PEI be without Federal Government Handouts? Perhaps we would be the Haiti of the North. Almost nothing is done here without government handouts. The norm is for companies to come here and get tax breaks and grants. Once the money runs out these companies close up and leave. People are always whining for more services from government but are unwilling to pay for these services. How can a economy prosper with seasonal jobs and regular reliance on EI? I guess the truth as stated by the Prime Minister, hurts!!

  • STRIKER
    April 03, 2012 - 09:03

    Ha Ha , Harper did state that Atlantic Canada was living in a defeatest society and now his fogies are trying to convince us of this. How Iornic is this .??

    • Garth Staples
      April 03, 2012 - 09:32

      A Ghiz Govt baited by lefties(state controlling socalists) turned thumbs down on 400 hi tech jobs when they run Litton out of town. The company went to NS. I toured the plant and met many workers from PEI. We lost .NS won. Left-wing/socialist ideas harnessed to the Liberal party have been a rope around the free enterprise idea on PEI.

    • Frank
      April 03, 2012 - 12:01

      Garth, how many socialist dollars was the company looking for from our provincial government to set up shop on PEI?