APEC's latest Atlantic Report explains the importance of federal transfers to the Atlantic provinces, addresses some common questions and misconceptions about them, and discusses some of the current suggestions to reform equalization, the fiscal stabilization program and the Canada Health Transfer.
Federal transfers amount to one-third of total revenues in the Maritime provinces and 10% in Newfoundland and Labrador. Without these transfers, Atlantic firms would find it more challenging to attract and retain the labour they need and sustain the competitiveness of their Atlantic operations as provinces would be forced to cut social programs or increase taxes. For example, APEC estimates that it could mean approximately 500 less doctors in Nova Scotia, over 2,500 fewer P-12 teachers in New Brunswick, and an 11 percentage point increase in PEI’s general business tax rate to 27%. If Newfoundland and Labrador did not adjust its spending or revenues, its projected $800 million deficit in 2020/2021 would nearly double without these transfers.