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Ontario has $11B fiscal gap with Ottawa, study finds

04/02/2013 01:54 EDT | Updated 06/02/2013 05:12 EDT
Ontario contributes $11 billion more than it gets back from the federal government, a fiscal gap roughly equivalent to the provincial deficit, according to a Toronto-based policy think-tank.

In the paper published by the Toronto-based Mowat Centre for Policy Innovations, policy analyst Noah Zon finds that the "federal government can, and should, reform those programs that discriminate against Ontario and Ontarians."

The billions that Ontario currently transfers to Ottawa is 1.9 per cent of the province's GDP. In total, it supplies about 39 per cent of the funds that Ottawa receives from the provinces, which is roughly in line with the percentage of the Canadian population that lives in Ontario.

CBC Radio's Metro Morning business commentator Arime Yalnizyan told host Matt Galloway that despite being a "huge number" that's "been the history of Canadian fiscal federalism" in Ontario.

"The problem is, it's getting worse with manufacturing in decline, and basically Ontario is still on its knees trying to get past recovery," Yalnizyan said. "And we're still helping out more in other parts of the country then we're getting in."

According to the Mowat study, the fiscal gap between the two governments is occurring because several of Ottawa's spending and transfer programs are unfairly redirecting Ontario's funds to other provinces.

Health care, education

In 2011, Ontario reportedly paid a whopping 40 per cent of EI premiums despite an increase in its share of Canada's unemployed population.

Yalnizyan said it's also "shameless" that currently only 27 per cent of the jobless in Ontario are receiving benefits.

"(EI benefits) been scaled back for four successive governments," she said.

The study concludes that Ontario's delivery of health care, education, transportation are all being "made worse" because of equalization and other transfer programs.

"The burden Ontario is being asked to carry is out of line with the principle of equity and is undermining Ontario’s prosperity and quality of life," writes Zon.

The research will likely aid Premier Kathleen Wynne and Minister of Intergovernmental Affairs Laurel Broten when they meet in the future with the federal government.

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