Islanders Should Take Less and Contribute More

Souris Mayor Dave MacDonald recently told the Premier's Council on EI that recent changes to the federal EI program are killing his town.

Unfortunately, Mr. MacDonald did not note that Islanders receive three times as much as they contribute to the EI program. This was a subsidy in 2010 of about $150 million from citizens living elsewhere to people living on PEI.

This means that the program is out of control in Souris and on the Island. It is also out of control in the rest of Atlantic Canada because in all four provinces, benefits received by citizens greatly outweigh premiums paid.

The difference each year is about $1.5 billion.

This is meant to be insurance, after all, but no insurance company could carry on this way by routinely paying benefits that dramatically exceed premiums. It would quickly be insolvent.

The federal government needs to make changes for financial reasons but also to reflect the concerns of other Canadians.

The people of Ontario pay much of the $150 million subsidy to Islanders built into the EI program. However, they have to contend with an unemployment rate significantly above the national rate. The subsidy incorporated in EI is an additional burden that Islanders and other Atlantic Canadians should not expect them to bear.

One can only hope that the Premier's Council on EI looks at the actual numbers associated with the EI program and does not simply parrot comments of the type made by Mr. MacDonald. That would be a disservice to all Canadians.

Most citizens could be excused for not knowing the extent of subsidies conveyed to them by EI because this is not a subject that local federal and provincial officials talk about.

The issue of regional subsidies incorporated in operating programs is much larger than EI, however.

A recent study by the Fraser Institute outlined subsidies conveyed to Islanders through programs other than equalization.

The subsidy from EI, as noted, was $150 million in 2010.

Special EI for fishers on PEI was $13.5 million in 2011 and much more than that in the other Atlantic provinces. This type of EI is not available to any other group of self employed people.

Federal training expenditures per unemployed person on the Island in 2011 were $2,940. Albertans and Ontarians who were unemployed received approximately $1,000 per person.

PEI has wildly disproportionate federal government employment relative to other provinces and to Alberta and Ontario, even though Ontario has the national capital.

Disproportionate federal employment conveyed a subsidy to the province of $191 million in 2011.

Disproportionate cultural expenditures on PEI totalled $10.7 million in 2010.

Pearson Airport is charged 48 % of all ground rentals paid by airports in Canada, even though it handles only 28.5% of passengers and 32.5% of cargo for the system.

The Charlottetown airport has not been required to pay any ground rentals at all and will pay none until 2016.

The same pattern is built into many other federal programs.

The overall pattern is clear: a complex system of subsidies, in addition to equalization, funnels large subsidies from the jurisdictions west of the Ottawa river to those east of it.

This is not a healthy pattern for Canada.

Islanders need to ask several fundamental questions.

The first is one of reasonableness. Is it right, year after year and decade after decade, to expect Canadians living elsewhere to pay for both equalization and a huge system of stealth equalization incorporated in other programs?

The second is a matter of wisdom. Is it wise to build an economy that is so dependent on government and its culture?

All over the world, a consensus has emerged that economies which are primarily driven by the culture of government and its ecology of rules, regulations, top down management and sometimes cronyism are less likely to perform well than those that emphasize markets and entrepreneurship.

The third is a matter of risk. What happens if the political currents change? What happens if the relationships between Quebec and the rest of Canada change?

Many from the Atlantic region who now live elsewhere consider the economic path on which PEI and the rest of the Atlantic region are embarked to be unreasonable, unwise and very risky indeed. They voted with their feet and left.

Every day that passes without fundamental change is a lost opportunity for Islanders to demand less from their fellow citizens in other regions and to contribute more to building a competitive Canada.