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Statement By Premier Dalton McGuinty On Report Of The Council Of The Federation Panel

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Statement By Premier Dalton McGuinty On Report Of The Council Of The Federation Panel

Office of the Premier

I'm pleased that the COF Panel's report on the fiscal imbalance supports our fight for fairness for all Canadians -- including Ontarians -- in several significant ways.

The report agrees with Ontario that the federal government has more revenue than it needs and all provinces, including Ontario, need a greater share of that revenue.

It agrees with Ontario that, in principle, transfers to provinces outside of Equalization should be delivered on a strictly per-capita basis.

And the report agrees with Ontario that these transfers should be increased to provide provinces with adequate funding for the cost of programs in high-cost areas such as health care.

It agrees with Ontario that a $4.9 billion increase in the Canada Social Transfer would be a good first step forward.

Finally, the report recognizes that the Equalization Program must be fair to all Canadians -- including those in provinces such as Ontario that receive no equalization.

The Equalization Program has grown by 30 per cent over the past four years, and Ontarians' contribution to it has grown by the same amount during that time.

The program was enhanced significantly in October 2004 -- and it's already designed to grow by 3.5 per cent per year into the future.

Enhancing equalization again -- beyond the growth currently anticipated -- is something Ontario taxpayers just can't afford.

That's not fair to the people of Ontario.

That's not fair to our businesses.

Ontarians shouldn't have to absorb the cost of an even larger Equalization Program.

We will support a solution to the fiscal imbalance that ensures fairness for all Canadians -- all of the population -- not just half of it.

We won't support a solution that helps half the population at the expense of the other half.

As I've said all along, Ontario supports equalization.

We know that different provinces and territories will have different financial capacities.

We are proud Canadians, and we are proud to help pay for social programs in other parts of Canada.

But the way for Ontarians to support these services is through one affordable, fair, transparent Equalization Program.

We don't support the unfairness that has crept into other transfers -- transfers that should be paid out on an equal, per-capita cash basis, transfers that should be large enough to allow provinces to deliver the public services Canadians need and deserve.

I want to thank the panel, its members, and, in particular, its co-chairs Janice Stein and Robert Gagné.

Our fiscal arrangements are incredibly complex and I know the panel worked very hard to prepare their findings.

Their report will help us in our work to make our federation work better for the people we are privileged to serve.

But, while it's a step forward, it doesn't carry us to our ultimate destination: fiscal arrangements that on the one hand ensure fairness for all Canadians, including Ontarians, and on the other, promote Canadian prosperity in an era of open markets and a globalized economy.

Ontario has some concerns with the report.

For example, we cannot support what the report calls the Tax Point Adjustment program, which would create a second tier of equalization. It would undermine the goal of ensuring our fiscal arrangements are fair, transparent and easily understood by all Canadians.

The panel's mandate was only to examine transfers to governments. A more thorough approach would also look at the unfairness that currently exists in transfers to individuals.

For example, an unemployed Ontarian gets $3,310 less in regular employment insurance benefits than an unemployed person in other provinces.

Finally, the report merely addresses our fiscal arrangements as they are currently constructed.

It does not, for example, address the need to involve our cities, given their growing role in keeping Canada prosperous and competitive.

Nor does it suggest new fiscal arrangements that would make it easier for Canadians to create wealth, which is a necessary first step before wealth can be redistributed.

Ontario continues to believe that we need a national commission to recommend long-term improvements to Canada's fiscal architecture.

This kind of "big picture" examination -- which hasn't taken place since the Rowell-Sirois Commission of the 1930s -- is long overdue.

The striking of a commission, with a broad mandate to take the long view, should not and would not preclude improvements in the short and medium term.

The report the Council of the Federation received today represents a contribution to that conversation.

It is now up to all of us to continue to work towards our goal: fairness and prosperity for all Canadians, including Ontarians.