Beyond the budget

More on the budget. More specifically, more on the fiscal imbalance.

In the federal election, the Conservatives promised to fix the fiscal imbalance, which is the idea that the feds have billions of dollars more than they need, while the provinces are billions of dollars short. The Liberals say the fiscal imbalance doesn't exist. Harper says it does. His stance was a key to the Tories' modest electoral breakthrough in Quebec, where complaints about the fiscal imbalance began. Fixing the imbalance will provide much of the next year's work for Harper's government.

But to fix a problem, you first need to define it. If you define the imbalance the way the provinces do -- roughly, as "all the billions we could ever dream of getting from Ottawa" -- you'll bankrupt even a flush and province-friendly government like Harper's. So Harper's definition is crucial. And as we've learned to expect from him, it's clever.

It turns out the fiscal imbalance is four problems. One, federal budget-making is too vague about the size of future surpluses. Two, the feds spend money on provincial responsibilities -- hospitals and schools -- while ignoring their own duties, like armies and Indian reserves. Three, when Ottawa does increase transfers to the provinces, it does so at the last minute and for the short term, so provinces can't plan. Four, the limited "efficiency and competitiveness of the economic union" hobbles everyone's ability, be they governments, companies or families, to increase prosperity.

Well's nut graf:

Central-government fans worry that the fiscal imbalance argument is about Ottawa surrendering power to the provinces. This is more of a trade: we'll get out of your hair if you act like you deserve it. And all that nice language about the Liberal record? It's not cute, it's crucial.

I think this is an interesting/important, if slightly esoteric subject, so I'll likely follow it for a while. Seeing as I'm averaging a whole 10 readers a day. of which 50% leave within 5 seconds, I don't doubt that this is just a note to myself...