Conservatives give provinces short end of the stick

'The budget solidifies the federal government’s unilateral changes to equalization payments to the provinces so that they will receive $7 billion less over the next two years than they were promised.'

By Larry Brown
National Secretary-Treasurer
National Union of Public and General Employees

Ottawa (2 Feb. 2009) - One of the peculiar things about the recent federal budget is the bragging the government did about pre-budget consultations.  Never, we are given to believe, did so many people get consulted so much.

Obviously, Mr. Flaherty consulted his new advisory panel, the super rich and the corporate heads assembled on the apparent theory that anyone who knows how to make him or herself rich must be a perfect source of advice about unemployment insurance and social programs. 

One of the members of this panel is the president of Rona, the home renovation company, and one of the big features of the budget is a multi-billion-dollar program to boost the home renovation industry.  Go figure.

Mr. Flaherty says he consulted, through 680 meetings, with industry groups, too.  Missing from the list was the number of unions or civil society groups he met with.  One assumes that if the government has consulted 680 ‘industry groups’, there isn’t much left for anyone else to say.

But he did, we are told, consult with the provinces.  The government claims to have had precisely 102 meetings with provincial government leaders.  That’s quite a figure.  Given that there are 10 provinces, the federal government must have met each province, on average, 10.2 times since Nov. 27, 2008.  That’s a ton of consultation, all right.  But is consulting the same thing as listening?

Provinces are hurting

The provinces are facing the economic crisis just as much as the federal government is.  Ontario has joined the ranks of the have-nots.  Already health care unions have said 5,000 Ontario jobs are at risk this year without better funding for hospitals. 

Alberta is openly musing about cutting spending because of the downturn, possibly even cutting jobs, as foolish as that would be when what governments everywhere need to do is bolster the economy, not help to shrink it. 

Premier Williams of Newfoundland has announced that recent catch-up wage settlements will not be available any longer because of the shrinking finances there.

So what did the federal budget do for the provinces?  Hand them the short end of the stick.

The budget solidifies the federal government’s unilateral changes to equalization payments to the provinces so that they will receive $7 billion less over the next two years than they had been promised.

EI now a lottery

The budget completely fails to address the Employment Insurance (EI) crisis, whereby over 60% of unemployed Canadians are not eligible for the EI they’ve paid for.  Extending benefits slightly for those lucky few who have won the EI lottery is not going to do a thing for the ineligible. 

We have a glimpse of the Tory mindset on this thanks to Minister Finley who has said the federal Conservative government “has no interest in making it lucrative for jobless workers to stay home”. Obviously even a rudimentary understanding of the EI system is not a requirement for being the Minister in charge — $423 a week is lucrative? 

But what does that have to do with the provinces?  Simply that if unemployed workers don’t qualify for federal EI, they will become the responsibility of the provinces, and the unlucky will show up on provincial social assistance roles.  The consensus is that we face the likely loss of at least another 250,000 jobs.  If only 40% of them get EI, then 150,000 unemployed workers are potentially destined for provincial social systems this year.

Burdening the provinces

So we have $7 billion in foregone provincial equalization revenue, a huge increase in provincial social costs and provincial governments straining under revenue shortfalls. What has the federal budget done to help the provinces?  It burdens them further. 

The budget dumps another $9 billion in new expenses onto provincial shoulders.  If the provinces don’t cough up $9 billion to correspond with federal infrastructure spending, the federal government won’t actually spend its share. It's a “use it or lose it” formula with time limits for the provinces to ante up their share.

Of course the federal budget is also going to require that municipalities kick in large amounts as well for infrastructure programs to go ahead, and municipalities are under financial strain, and under provincial jurisdiction, so when cities need financial help it will be the provinces that are on the hook, not Mr. Flaherty.

$16 billion and counting

The price of all that consultation for the provinces?  It's $16 billion to start, plus extra social assistance costs plus extra costs for cash-strapped cities. Those 102 meetings Mr. Flaherty brags about seem to have cost the provinces well over half a billion dollars each on average.

Perhaps the rest of us should be glad we weren’t consulted.

Larry Brown is National Secretary-Treasurer of the National Union of Public and General Employees (NUPGE).