Provincial Economies

[thurmas]

I agree there should be equalization and it's set in the constitution but right now the HAVE NOT provinces SPEND MORE PER CITIZEN THEN HAVE PROVINCES to me that makes no sense!If a province is struggling to make ends meat they shouldn't spend more than rich provinces you just end up with a welfare dependency on equalization and you give up trying to be innovative and trying to become a have province or atleast rely less on equalization and more on your own revenues.

[jmt18325]

Originally Posted by thurmas

I agree there should be equalization and it's set in the constitution but right now the HAVE NOT provinces SPEND MORE PER CITIZEN THEN HAVE PROVINCES to me that makes no sense!

Well, that isn't a requirement of the program...it's just something that is. Generally, have not provinces have a lager number of poor people though, and so per capita, they have to deliver a larger number of services.

[thurmas]

That's not true we in manitoba have the lowest unemployment in canada.We do have a high aboriginal population but so does sask and they are a have province.

[PoscStudent]

The federal government needs to be responsible for the way equalization money is spent in the provinces if they're going to give it out. Right now they give money to the have nots and they can do whatever the hell they like with it. Have not Quebec has $8 a day childcare but none of the have provinces have such a thing. It's a bit ridiculous to think have not provinces can have better social programs, their public servants could be getting paid more and etc...

[jmt18325]

Originally Posted by thurmas

That's not true we in manitoba have the lowest unemployment in canada.We do have a high aboriginal population but so does sask and they are a have province.

It has very little to do with unemployment and employment rates. There are still a very large number of poor and working poor.

[jmt18325]

Originally Posted by PoscStudent

The federal government needs to be responsible for the way equalization money is spent in the provinces if they're going to give it out. Right now they give money to the have nots and they can do whatever the hell they like with it. Have not Quebec has $8 a day childcare but none of the have provinces have such a thing. It's a bit ridiculous to think have not provinces can have better social programs, their public servants could be getting paid more and etc...

That has nothing to do with equalization. That program only brings provinces up to average assuming they have an average tax rate. With higher tax rates, they can afford more. With lower tax rates, they can't. Places like Alberta and BC have lower taxes where Quebec has higher taxes.

[PoscStudent]

Originally Posted by jmt18325

That has nothing to do with equalization. That program only brings provinces up to average assuming they have an average tax rate. With higher tax rates, they can afford more. With lower tax rates, they can't. Places like Alberta and BC have lower taxes where Quebec has higher taxes.

How does it have nothing to do with equalization? Quebec may have higher taxes but equalization is allowing them to remain as low as they are. If there was no equalization Quebec's taxes would need to increase substantially to offer their citizens what they are currrently offering them.

[Boris2k7]

Results from the StatsCan labour force survey are interesting

Quoting the employment figures from the tables...

Originally Posted by Labour Force Survey Data - Feb 2010 to Feb 2011

Newfoundland and Labrador
Population: +1,300 (+0.3%)
Labour Force: +6,300 (+2.5%)
Participation Rate: 60.8% (+1.3%)
Unemployment Rate: 12.8% (-2.0%)

Prince Edward Island
Population: +2,000 (+1.7%)
Labour Force : +0 (0.0%)
Participation Rate: 67.2% (-1.1%)
Unemployment Rate: 11.7% (+1.5%)

Nova Scotia
Population: +3,100 (+0.4%)
Labour Force : +2,000 (+0.4%)
Participation Rate: 64.2% (0.0%)
Unemployment Rate: 9.5% (+0.3%)

New Brunswick
Population: +3,100 (+0.5%)
Labour Force : -2,800 (0.0%)
Participation Rate: 63.3% (-0.8%)
Unemployment Rate: 9.8% (+0.7%)

Quebec
Population: +69,300 (+1.1%)
Labour Force : +69,400 (+1.6%)
Participation Rate: 65.5% (+0.3%)
Unemployment Rate: 7.7% (-0.5%)

Ontario
Population: +138,300 (+1.3%)
Labour Force : +65,000 (+0.9%)
Participation Rate: 66.8% (-0.3%)
Unemployment Rate: 8.0% (-1.1%)

Manitoba
Population: +13,100 (+1.4%)
Labour Force : +11,600 (+1.8%)
Participation Rate: 69.5% (+0.3%)
Unemployment Rate: 5.3% (-0.1%)

Saskatchewan
Population: +10,100 (+1.3%)
Labour Force : +7,600 (+1.4%)
Participation Rate: 69.5% (+0.3%)
Unemployment Rate: 5.7% (+1.3%)

Alberta
Population: +44,300 (+1.5%)
Labour Force : +47,000 (+2.2%)
Participation Rate: 73.4% (+0.5%)
Unemployment Rate: 5.7% (-1.1%)

British Columbia
Population: +57,400 (+1.5%)
Labour Force : +44,800 (+1.8%)
Participation Rate: 65.8% (+0.1%)
Unemployment Rate: 8.8% (+1.1%)

Quick Analysis

• Atlantic Canada continues to trickle upwards or downwards.
• Quebec sees strong population growth and job creation.
• Ontario continues to lead the nation in population growth, but is massively underperforming on job creation.*
• B.C. leads the West in population growth while Alberta leads in job creation. Alberta also has the highest labour force participation nationwide.
• Manitoba and Saskatchewan continue to pull respectable numbers. Manitoba maintains the lowest unemployment rate nationwide.

* e.g. For every 10 new people in Ontario, there are only 5 new jobs. For every 10 new people in Alberta, there are 11 new jobs.

[jmt18325]

Originally Posted by PoscStudent

How does it have nothing to do with equalization? Quebec may have higher taxes but equalization is allowing them to remain as low as they are. If there was no equalization Quebec's taxes would need to increase substantially to offer their citizens what they are currrently offering them.

I'm not sure I see your point. The whole idea of equalization is similar services at similar levels of taxation. If a province chooses to tax more (it's their choice) then it can spend more than the average. Equalization gives all provinces the same starting point (though have provinces, with the same taxes as have not, will still have a fiscal capacity above the average). What they do from there is their own choice.

[Bassic Lab]

Originally Posted by shreddog

Not sure I agree with your statements. Looking at AB (the largest GDP in the west, #3 in the country) all energy related activites comprised 31% of the total GDP in 2010, as compared to 44% in 1980. While energy prices are higher today, overall their contribution to the overall GDP in AB is less. And as for Dutch disease, personally I think that this is really much ado about nothing. Two key things on that: Ontario and east get a good chunk of their oil externally. For ever 2 barrels of oil we export to the US, Canada imports 1 barrel from the Brits/Norway/Algeria. And secondly, while Canada exports $6B of oil every month, Canada also does over $50B of total financial clearing every day - including the money related to oil exports. At the end of the day, oil prices impact the Canadian economy less than many believe.

That said, you are correct that Ontario will have to adapt going forward as energy gets more expensive. Mind you that applies to most jurisdictions.

It doesn't really matter whatsoever how much of Alberta's GDP is based on the energy sector or where Ontario gets its energy. What matters is how the commodity price run up has affected the Canadian Dollar. It is pretty well accepted as fact that our currency's value has climbed because of the rise in commodity prices, oil in particular. This has made manufacturing less competitive internationally while capital has flowed to resource producing regions. When that happens, Ontario gets hammered and certain other provinces boom.

In the event that this becomes a more permanent situation, it isn't high energy prices that Ontario will have to adapt to since, as you point out, it affects everyone. What Ontario will have to adapt to is a higher dollar that makes manufacturing exports more expensive.

[PoscStudent]

Here is RBC's provincial outlook for March 2011. The report shows good news for some of the provinces while not so good news for other provinces.

http://www.rbc.com/economics/market/pdf/provfcst.pdf

[thurmas]

Equalization should be there to provide poorer provinces with revenue to be similar to levels of the have provinces not superior revenue levels to them. This current system rewards wasteful spending in manitoba quebec and the maritimes.The formula for equalization should be based on a per citizen spending limit therefore if have province saskatchewan spends $9600 per person then equalization should be used to bump up manitoba to be able to spend the same amount of services on it's citizens. Right now Manitoba spends $1000 more per person than sask and it's because manitoba gets more than it needs in equalization.

[Me&You]

Originally Posted by thurmas

Equalization should be there to provide poorer provinces with revenue to be similar to levels of the have provinces not superior revenue levels to them. This current system rewards wasteful spending in manitoba quebec and the maritimes.The formula for equalization should be based on a per citizen spending limit therefore if have province saskatchewan spends $9600 per person then equalization should be used to bump up manitoba to be able to spend the same amount of services on it's citizens. Right now Manitoba spends $1000 more per person than sask and it's because manitoba gets more than it needs in equalization.

While I agree that the equalization formula needs major reworking, you cannot simply say each province needs $X per citizen to provide services. I like the idea of that, and it would be a great base for calculations, but it cannot be the only factor as the costs of providing services can vary greatly.

[PoscStudent]

Originally Posted by Me&You

While I agree that the equalization formula needs major reworking, you cannot simply say each province needs $X per citizen to provide services. I like the idea of that, and it would be a great base for calculations, but it cannot be the only factor as the costs of providing services can vary greatly.

Yes different provinces need different ammounts of money to provide the same services. Newfoundland and Labrador ends up spending, or wasting, a lot of money because the population is so spread out. More roads going to know where, more health care facilities etc. etc.

[Nathan]

Originally Posted by Bassic Lab

It doesn't really matter whatsoever how much of Alberta's GDP is based on the energy sector or where Ontario gets its energy. What matters is how the commodity price run up has affected the Canadian Dollar. It is pretty well accepted as fact that our currency's value has climbed because of the rise in commodity prices, oil in particular. This has made manufacturing less competitive internationally while capital has flowed to resource producing regions. When that happens, Ontario gets hammered and certain other provinces boom.

In the event that this becomes a more permanent situation, it isn't high energy prices that Ontario will have to adapt to since, as you point out, it affects everyone. What Ontario will have to adapt to is a higher dollar that makes manufacturing exports more expensive.

Ontario isn't the only place that loses when the dollar goes up. Saskatchewan does too. I can't remember what the exact figure is, but the gain that Saskatchewan gets from higher oil prices, gets clawed right back due to the relatively rising Canadian dollar (since we are known to have a commodity currency). This is because oil is priced in $US, so while we get more $US for oil, we get less $CDN because it costs more $US to get a Canadian Dollar.

So yes, we are booming... but it isn't as purely rosy as you are presenting it.

[PoscStudent]

Originally Posted by Nathan

Ontario isn't the only place that loses when the dollar goes up. Saskatchewan does too. I can't remember what the exact figure is, but the gain that Saskatchewan gets from higher oil prices, gets clawed right back due to the relatively rising Canadian dollar (since we are known to have a commodity currency). This is because oil is priced in $US, so while we get more $US for oil, we get less $CDN because it costs more $US to get a Canadian Dollar.

So yes, we are booming... but it isn't as purely rosy as you are presenting it.

I think I heard a few years ago Newfoundland and Labrador lost $1 million an hour everytime the dollar went up like a cent. I think that's what it was anyways.

[Bassic Lab]

Originally Posted by Nathan

Ontario isn't the only place that loses when the dollar goes up. Saskatchewan does too. I can't remember what the exact figure is, but the gain that Saskatchewan gets from higher oil prices, gets clawed right back due to the relatively rising Canadian dollar (since we are known to have a commodity currency). This is because oil is priced in $US, so while we get more $US for oil, we get less $CDN because it costs more $US to get a Canadian Dollar.

So yes, we are booming... but it isn't as purely rosy as you are presenting it.

That is true but it kind of misses the point. A lower dollar makes all exporting more attractive; oil, wheat, cars, it makes no difference. The issue is that the value of the dollar has climbed, in part, with the price of commodities. Energy is a major driver here. The dollar will only rise as high as oil prices can pull it away from labour prices. It will not price out the development of the resources responsible for the rise. It might price out aspects of a manufacturing economy that were built around a much lower dollar.

[PoscStudent]

Here is an interesting report by the Canadian Federation of Independent Business titled: "Restoring Canada’s Fiscal Fitness Tools to reform government spending"

They go through all the provinces and show how they will make out over the next decade with spending, balancing budgets and debt reductions, it's not looking good for the majority of the provinces.

http://www.cfib-fcei.ca/cfib-documents/rr3218.pdf

[Migs]

Originally Posted by PoscStudent

I thought it would be interesting to find out how the provincial economies are doing after the recession, especially now that some provinces are releasing their budgets.

What recession? I think that tells you how well Saskatchewan is doing.

[North of 49]

Look for more manufacturing activity in Manitoba, especially in aerospace in the next several months, and in 2012. Boeing, Bristol and Standard are picking up contracts.