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Vive la différence! Our spending mosaic makes us stronger Add to ...

President and CEO of the Public Policy Forum

'Where all think alike, no one thinks very much," goes the adage. If so, we can take some comfort in the interesting variety of Canadian public-policy responses to the current economic malaise.

Many believe we are witnessing a fundamental redefinition of the role of the state, especially given the extraordinary government interventions we've seen in the United States. But judging by the initiatives of Canada's federal and provincial governments, it's clear that our country, at least, is not simply turning the clock back to a previous era marked by big, activist government. Instead, we're seeing a textured, nuanced and highly regionalized approach to policy-making.

At the end of January, when the federal budget was presented in Ottawa, it was evident that the Conservative government had undergone a conversion to an emerging international consensus in favour of large-scale stimulus spending in order to fight the recession.

Forecasting a deficit of almost $34-billion next year, the budget featured significant infrastructure spending intended to stimulate a declining economy. And this approach was certainly aligned with the declared ambitions of most G20 countries.

Nevertheless, Canada is a federation - the most creative public policy is often found at the provincial level of government, not the federal. And it's important to note that the combined spending of the provinces easily exceeds Ottawa's expenditures.

How, then, are the provinces dealing with the economic downturn?

Now that most of the provincial budgets have been presented - only Nova Scotia and Prince Edward Island have yet to table theirs - it's obvious that not everyone is following Ottawa's lead. Indeed, while the federal government has enthusiastically joined the international chorus encouraging other sovereign states to boldly spend their way through the global recession, persuading provincial governments to do the same has been a more difficult task.

Even though "deficit" no longer seems to be a dirty word in Canada, not all provinces are running deficits, and not all are spending more than they did last year. Manitoba, for instance, is boasting of its 10th consecutive balanced budget, and booming Saskatchewan is forecasting a surplus of more than $400-million.

New Brunswick has introduced one of the most interesting budgets: While calling for a deficit of $740-million, the government is also planning significant tax reductions. In fact, its ambitious plan, to be phased in over the next few years, aims to establish the province as the Canadian jurisdiction with the lowest rates of taxation.

On the other side of the country, both British Columbia and Alberta had to amend their own laws requiring balanced budgets in order to run deficits.

In B.C.'s case, the deficit projected by the governing Liberals of $495-million is relatively small. (But it's worth noting that a provincial election campaign is under way, and the opposition New Democrats are promising that, if elected, they will run a somewhat larger deficit, of $877-million.)

Alberta, in contrast, has announced the largest shortfall in its history: $4.7-billion. (On a per capita basis, only Newfoundland is predicting a larger deficit.) Yet, at the same time, the Alberta government, so highly sensitive to fluctuations in resource revenues, will actually spend less this year than last.

Quebec and Ontario are also studies in contrast. Quebec is forecasting its first deficit in a decade, a shortfall of $3.9-billion, with some targeted infrastructure expenditures and little sense of emergency. And Ontario, with the largest provincial budget by far, is planning for a record $14.1-billion deficit, along with a dramatic restructuring of tax and economic policies that includes harmonization of the provincial sales tax with the GST.

Ontario's budget is easily the most closely aligned with the federal government's efforts. And it should be noted that equalization payments to the "have not" provinces somewhat skew the reported budgetary forecasts. For example, about 20 per cent of the revenue forecast by both Manitoba and New Brunswick comes from equalization payments.

Nevertheless, these varied responses are as diverse as the economic trends they seek to ameliorate, and driven by the very different realities of Canadian regionalism. In a federation such as Canada, public policy can never be completely homogeneous.

Nor can it be one-dimensional. And the different approaches taken by all of our governments - federal, provincial, territorial and municipal - seem to make us stronger. Certainly, they make our public life and politics more interesting. Vive la différence!

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