TORONTO — While Ontario’s premier preached national unity in the morning, his finance minister revived an age-old Canadian debate in the afternoon. 

“After the election, this country is divided,” Premier Doug Ford said in the legislature during question period Wednesday. “It is Ontario’s spot to stand up, unite the country right across all provinces.”

About five hours later, Minister of Finance Rod Phillips was making a point  about how the federal government uses tax revenue from Ontarians to fund services in other provinces.

“We’d like to just remind Ontarians and, frankly, remind Ottawa that … we do as taxpayers in Ontario pay $12.9 billion … more into the federal treasury than returns,” Phillips told reporters at a press conference. 

The minister had just tabled his fall economic statement, a major budget document, which included a backgrounder calling for “fairness” in federal-provincial revenue transfers. Canada needs to “do more” to make the system work for Ontarians, “who deserve a system that is fair,” it said. 

Watch: Ontario minister unveils fiscal update.

 

Phillips declined to say what problems Ontario has with the transfers or what exactly Prime Minister Justin Trudeau’s government should change. 

The federal government collects more revenue from provinces with strong economies, like Ontario and Alberta, than it does from the poorer ones. It sends billions of dollars in “equalization” payments to Quebec, Manitoba, Prince Edward Island, Nova Scotia and New Brunswick.

Without those transfers, the have-not provinces would have to dramatically raise taxes and cut services like health care and education, according to Trevor Tombe, an associate professor at the University of Calgary’s Department of Economics, who’s written extensively about equalization. 

Ontario and Alberta only contribute so much more in revenue because those provinces have the most high-income residents, Tombe told HuffPost Canada in an interview. If a high-earner moved from Alberta to Manitoba and their income stayed the same, they would still contribute the same amount in taxes.

“There’s a lot of misunderstanding about equalization already out there,” he said. “So when politicians talk about it in a vague way, they reinforce those misperceptions and then they potentially inflame regional tensions needlessly.”

But the fight over federal transfers is Canada’s “family squabble,” Tombe said, and it’s been raging since before Confederation.

“Ontario doing that is not new. Every province does that at some point or another.”

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Tombe noted that Ontario has been a net beneficiary of equalization in the past — just last year, the province received $963 million in equalization. And it wasn’t that long ago that former Liberal premier Dalton McGuinty was grumbling about the “perverse” system. 

Equalization can sometimes be a political device for Canadian premiers who want to bring up other frustrations, Tombe said. 

Alberta uses equalization to vent about pipelines: Tombe

“I do think the frustration expressed by politicians in Alberta around equalization is not about the formula itself. It is using equalization as a convenient political tool to raise other issues, in particular: pipelines.”

Alberta Premier Jason Kenneyhas said he’ll hold a referendum on equalization unless a new coastal pipeline is built. He’s accused the premier of Quebec of spreading inaccuracies about the system.

Quebec is a net beneficiary of equalization, Tombe said, and it’s also a province that is “uniquely vocal” in its opposition to pipelines.

“So connecting these two issues serves that political goal — of the government of Alberta at least — quite well.”

On Thursday, Ontario’s finance minister was asked if his complaints about equalization were prompted by Kenney’s comments. He didn’t say.

“We think that it’s important that Ontarians understand the contributions that our province makes,” he said. 

“But I know the premier is looking forward to talking with the other premiers and with the prime minister about making sure the federation works.”

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