Kathleen Wynne is calling on Jim Flaherty to give his home province a break and cancel a planned reduction in transfer payments in Tuesday’s budget.
The Ontario Premier appealed to the federal Finance Minister, who represents a riding east of Toronto, to make up the $641-million shortfall between what Queen’s Park received in federal transfers this year and what it is entitled to next.
“Quite frankly, Minister Flaherty is an Ontario MP and I would expect that some of the concerns I’m raising in terms of fairness for Ontario would be concerns of his as well, as an MP for Ontario,” she said Monday while touring an auto-parts plant. “I would look for that kind of adjustment in the budget.”
The province learned in December that its transfers will drop next year, largely as a result of its improving economy. Since 2010, Ottawa has made up the difference for provinces that were going to see a reduction in transfer payments, under a program called Total Transfer Protection. But this year, it told Ontario the program had been axed, and the province would have to take the reduction.
Ms. Wynne argues this is unfair. In the past four years, seven provinces – including Quebec, Manitoba and Saskatchewan – have received transfer protection, which Ontario has never used.
“The $641-million in a cut that was announced in December, had that happened last year to another province in Canada, then the province would have been held harmless … the province would have been made whole,” Ms. Wynne said. “What happened this year is the federal government decided not to hold Ontario whole and to do something different than they’ve done in previous years.”
Mr. Flaherty promptly shot down Ms. Wynne’s request.
In a statement, he pointed out that, overall, transfer payments to the provinces have grown in the eight years the Conservatives have been in power federally.
He said the reduction between this year and next is entirely due to decreasing equalization payments – a sign that Ontario’s economy is getting better in relation to the rest of the country.
“The only thing that has changed for Ontario recently is there equalization entitlement,” he said. “To claim this is politically motivated shows their lack of understanding of how equalization works.”
Mr. Flaherty suggested that, instead of looking for more money from Ottawa, Ontario should concentrate solely on improving its economy.
“Instead of focusing on increasing equalization payments for the province, our Government wants to work with the Wynne government to strengthen Ontario’s economy so that it doesn’t have to rely on being an equalization-receiving province in the first place,” he said.
Mr. Flaherty did not directly address the ending of Total Transfer Protection, but the federal government has previously said the program was always meant to be temporary, and simply ended this year.
Ontario accuses Ottawa of treating it differently by shelving the program when the country’s largest province was the only one scheduled to benefit from it.
“They seem to be treating Ontario differently than other provinces,” Ms. Wynne said.
She also reiterated her request that the federal government help craft a national infrastructure strategy.
Ottawa announced a new infrastructure fund last year that operates on a project-by-project basis; other levels of government approach it with projects and it decides whether to help pay for them. Ms. Wynne, however, wants a more detailed, long-term plan on what exactly will be built.
“We’re doing our bit here, $35-million over the next three years,” she said. “I would expect to see in the federal budget an investment strategy that would allow Ontario to partner with the federal government and municipalities to build the infrastructure – roads, bridges and transit – that are needed in the province.”