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The net outflow from Ontario to Ottawa is $23-billion a year. That's the difference between what the feds collect in taxes from Ontario and what it returns in the form of program spending. Ontario gets shortchanged in almost every big spending category.

The province has about 40 per cent of Canada's population, and generates about 44 per cent of GDP. Yet it gets only 37.2 per cent of the transfer payments to universities, 23.5 per cent of the cash transfers to the provinces and 32.6 per cent of the transfers to persons, that is, the amount spent on individuals for unemployment insurance benefits, education scholarships and the like. The list is endless. The feds pay Ontario an average of $800 for each immigrant. The amount covers services such as language training and job placement. Quebec gets an average of $3,800 per immigrant.

Alberta is another province that ships out far more loot than it gets back. If the concept of paying a little to get a lot appeals to you, your best value for money can be found in Newfoundland, PEI, Nova Scotia, New Brunswick and Manitoba.

Ontario has been a net exporter of tax wealth for decades. Various premiers have tried to stem the flow and failed. So why is Mr. McGuinty suddenly getting his knickers in a twist? Blame Newfoundland Premier Danny Williams. He huffed and puffed and blew Paul Martin's house down: In a deal officially signed yesterday, Newfoundland gets to keep 100 per cent of offshore oil and gas revenues for eight years.

In the past, these revenues would have come at the expense of equalization payments -- every offshore dollar taken in meant one less dollar from the feds. The deal is worth an estimated $2.6-billion for Newfoundland. Nova Scotia negotiated a similar arrangement. Mr. Martin is being hailed as a hero in the East.

Mr. McGuinty said it was "unacceptable" for the feds to negotiate sweetheart deals at the expense of the rich provinces. He's right. But he can thank Mr. Williams for handing him an opportunity to whine and be taken seriously. Equalization payments and cash transfers can be made because Ontario creates a disproportionately large share of wealth. Newfoundland can afford to spend 41 per cent more than Ontario for each post-secondary student partly because of the tax money siphoned out of Ontario.

The wealth transfer system assumes that Ontario can keep generating wealth that can be transferred. That's a bold assumption. As its university, college, hospital, infrastructure and environmental budgets gets starved, the province's ability to compete for jobs, talent, investment and head offices can only suffer. The damage won't happen overnight. But in a decade, Ontario's ability to act as national sugar daddy could be severely compromised.

Ontario has no miracle industry poised to take up any economic slack. It fights an international war to keep what auto jobs it has. It loses company after company to global consolidation. Toronto hasn't built a class A downtown office tower in well more than a decade. There are no oil sands to guarantee decades of multibillion-dollar investments and job creation opportunities.

Ontario's chances of eliminating the net tax outflow are zero. But it can reasonably make the case that it deserves to keep a few billion a year. Enough to plug the $5.5-billion budget deficit would be a fine start. If a good portion of that amount were delivered to post-secondary education, the province might have a fighting chance at a future.

But how to convince the have-not provinces and the feds that the care and nurturing of Ontario is good for the whole country? It won't be easy. Viewed from the rest of the country, save Alberta, Ontario looks like the promised land. Its wealth gives it the ability to attract more than half of all of Canada's immigrants. The McGuinty government's failure to deliver a balanced budget could be dismissed as incompetence, not the result of the great tax-sucking machine in Ottawa.

The reality, though, is that Ontario gives far more than it gets and the outflow is unsustainable. Mr. McGuinty has no choice but to pursue a mad-as-hell strategy. His leverage is the 74 federal Liberal seats in Ontario. If the Liberal MPs won't fight for Ontario, they'll risk getting turfed in the next election (or so Mr. McGuinty should tell them). Little Newfoundland's victory should be viewed as inspiration.

ereguly@globeandmail.ca