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Canada's Equalization Program: C.D. Howe's Proposals for Reform Miss the Mark

November 1, 2004

Just prior to the final negotiations between the federal and provincial governments on how to improve the stability, predictability and growth of the Equalization and Territorial Formula Financing programs, the C.D. Howe Institute released a Backgrounder paper by Jack Mintz and Finn Poschmann entitled, Follow the Cash: Changing Equalization To Promote Sound Budgeting and Prosperity. Contained in this paper was an alternative approach for calculating provincial equalization entitlements that, according to the authors, is based on provincial “cash flow” and would “improve the growth and fiscal incentives that provincial governments confront.”   The following Commentary is offered by APEC on their paper. The gist of APEC’s concern is that perceived problems with provincial debt ought to be dealt with directly and outside of the equalization program so as to not compromise the legitimate principles that have been established for Canada’s equalization program, principles that have been corroborated by the extensive Canadian literature on the economics of this program.

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November 1, 2004

Canada's Equalization Program: C.D. Howe's Proposals for Reform Miss the Mark

 

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