Earlier this month the Institute for Competitiveness and Prosperity issued a report prepared for the Ontario government on the effect of federal transfer payments. Established four years ago, the Institute is a non profit organization that provides research to the province of Ontario on issues of competitiveness, productivity and economic progress.
The report was prepared to bolster Premier Dalton McGuinty’s contention that the annual transfer of $23 billion to the federal government is excessive and one way to point this out is to show that the funds are not being used wisely. The excess funds could be put to better use in deficit-ridden Ontario whose present government can simply not stop spending. It makes more sense than giving it to the feds who will use it to add to their surpluses.
The rationale for these transfer payments is to attempt to equalize the economies of the "have" and the "have not" provinces.
The report found that the federal transfers amounts to $1400 per person in the receiving provinces and that this transfer amounts to nothing more than a "welfare trap" for the "have not" provinces who receive these monies. according to the Institute of Competitiveness and Prosperity, the transfers result in an increase in disposable income and consumption but do nothing to boost productivity of the provinces who receive the largesse. The report recommends that the transfer funds be used for investment and provincial deficit reduction and not for current consumption.
There is no doubt that Dalton McGuinty will embrace this report because it supports his contention that not only does the federal government take too much money out of Ontario; that money is put to use in unproductive ways.
Like all true small "l" and capital "L" Liberal, Dalton has two sets of rules — one for something that affects him personally and one set for everybody else. It as absolutely hypocritical to criticize this so called welfare trap when provinces are involved while praising the merits of the welfare state within Ontario that is alive and well. But then again, Dalton (you won’t pay one penny more in taxes) McGuinty is hardly a stranger to hypocrisy.
The theory of the current welfare state is that in a rich country like Canada some people are unable, for a variety of reasons such as physical or mental infirmities, to look after themselves. So we built a social safety net to prevent these people from falling through the cracks. Very few Canadians would argue that people who are unable to look after themselves should be left to die and not be taken care of by the state.
But the reality is far different from the theory. There is no social safety net; it’s a bottomless pit and people aren’t falling through the cracks, they’re diving in. We have extended the concept of the welfare state by taking money from those who work and giving it to those who simply refuse to work. Our motto should be "if it moves, tax it — if it refuses to move, subsidize it". Much like the "have not" provinces, there is absolutely no incentive for the many people who are not unable to look after themselves but are simply unwilling, to change their lifestyles. Look to McGuinty to argue that the "have not" provinces have to become more productive while not doing anything to encourage Ontarians to follow suit.
What McGuinty will argue that the "have not" provinces should do will not be very different than what former Ontario premier Mike Harris tried to do — give people a hand up, not a handout. But McGuinty will never see it that way. He’ll never see the parallels between provinces caught in a welfare trap and individuals in his own province who are in the same position.
Then again, if McGuinty ever got the stage where he was consistent, Ontarians wouldn’t be able to recognize him.