David MacKinnon tells Rotarians region needs to end dependence on subsidies
© Guardian photo
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.