Submitted by Stella Lord, a Nova Scotian researcher and activist in social policy matters.

The federal budget was intended to fix the fiscal imbalance. Amongst other things this was supposed to ensure horizontal equity so that all Canadians no matter where they live in Canada receive about the same level of services at about the same level of taxation. An important part of achieving horizontal equity is through equalization. Equalization is a transfer by the federal government to the so-called ‘have not’ or poorer provinces to compensate for differences in fiscal capacity to deliver services. Equalization is enshrined in the Constitution Act, Sec. 36–2.

The equalization proposal put forward by the Harper government will improve the financial situation of most have-not provinces but it will not achieve horizontal equity. This is because the federal government has given provinces two choices for equalization. Under both options Alberta’s capacity (or at least its non-renewable resources) will be exempt from the equalization calculation. Under the first option, provinces can maintain the 1982 five-province standard for calculating equalization or they can choose the new ten-province standard. The first formula removes both the poorest and wealthiest provinces from the overall calculation of the standard, but maintains the Atlantic Accord whereby some of the revenues from non-renewable off-shore natural resources in Newfoundland/Labrador and Nova Scotia are not counted in calculating equalization payments to these provinces for the eight year duration of the accords.1 The second option for calculating equalization is to move to a ten-province standard. The ten-province option still does not include revenue from non-renewable natural resources in Alberta (and other rich provinces) in calculating the standard, but under the Harper plan it would include all of these revenues for calculating equalization payments to equalization receiving provinces. If they chose this latter formula it means that Nova Scotia and Newfoundland/Labrador will be forced to give up the Atlantic Accord negotiated with the previous government and that Mr. Harper agreed to maintain before the election.2

Basically, Mr. Harper has abandoned leadership on the issue of horizontal equity on the grounds that the provinces could not agree amongst themselves on a fair course of action. In the process, he has reneged on election promises to respect the Atlantic Accord between the federal government and Nova Scotia and Newfoundland/Labrador and that provinces in receipt of equalization such as Saskatchewan would also have their non-renewable resources disregarded.3 In the meantime, Alberta is counted in the ten-province standard, but its non-renewal natural resources aren’t. For Newfoundland/Labrador, Saskatchewan and Nova Scotia, the new equalization plan will improve their capacity to deliver some services but may not significantly do so in the long run and it will certainly deepen horizontal inequity and do little to ameliorate regional inequalities. What Mr. Harper has chosen to do is to pass on huge amounts of money to provinces where he hopes to maintain or make gains in the next election (Alberta, Ontario and Quebec). He is playing politics with national unity at the expense of small, poor provinces that appear not to matter to his electoral plans.

The Population-Based CST and Equalization

The lack of attention to real horizontal equity through equalization payments is especially problematic for have not provinces with small populations but on top of this, the new per capita CST formula for post-secondary education and social assistance/social services means that these provinces will not benefit from “associated equalization”. The per capita formula (only pressed for by Premier McGuinty of Ontario) abandons what is known as “associated equalization” on the CST next year and on health-care by 2014-15. This was embedded within the Established Programs Financing arrangement and was intended to compensate for the fact that transfers of tax points (which formed a portion of the CST) are not worth as much in provinces with small economies as they are in the large, richer provinces. If associated equalization had been taken out of the CST formula last year, it is estimated that Nova Scotia would have lost about $45 million under the CST. This loss is only compensated for this year by the fact that there is now an increase in the CST cash transfer. Another problem with the CST that affects provinces such as Nova Scotia in particular is that while the amount received for post-secondary education has never reflected actual costs this will be made worse by the population based formula. This is because the federal CST transfer is not linked to the total number of students the province educates. In Nova Scotia, almost 13,000 post-secondary students who come from out-of-province are educated at Nova Scotia’s expense. The cost to Nova Scotia is about $25 million a year. Ideally, to ensure that the funding for services is adequate and that provinces can actually meet common standards for social services, the CST should be linked to both revenues (capacity) and expenditures (needs). This would mean that, as is the case in federations such as Australia, the real costs of delivering programs and services in each province would be calculated and factors such as the ratio of working age adults to seniors and children, the need to deliver services in rural and remote areas and the reduced economies of scale in smaller provinces would be taken into account.

Stella Lord

March 28, 2007.

Written by John Stapleton

Originally posted on March 23 2007 in the Toronto Star

Upon closer inspection, the Conservative finance minister’s Working Income Tax Benefit falls way short of the original proposal first floated by his Liberal predecessor Ralph Goodale, notes John Stapleton

There was much anticipation that the latest federal budget would follow through on the introduction of a Working Income Tax Benefit as a way to finally provide low-wage workers with some desperately needed help.

The good news is that a program like this is now part of the Canadian social policy landscape.
But the bad news is that the new WITB offers no relief to the vast majority of those workers struggling on full time low wages. It is big on symbolism but the details are worrisome.

It didn’t have to be so. Two years ago, under another minority government, former Liberal finance minister Ralph Goodale’s original proposal for a more generous WITB lapsed with the defeat of the previous government.

In an unusual turn of events, Conservative Finance Minister Jim Flaherty recognized a good idea, picked up the concept, and announced it as part of budget 2007.

The WITB had been, at least on the face of it, surprisingly resurrected.
However, a closer look at the details reveals that the similarities between the old and the new WITB begin and end at the conceptual level.

A comparison of the two programs offers some clues as to why. In rough terms, the previous WITB, which we’ll call the “Wascana WITB,” in honour of Goodale’s political roots, would have provided a maximum annual benefit of $1,000, to be reduced by 10 per cent of income in excess of $18,000, and phased out at $28,000 in income.

Indexation and plans for continued investments over time were outlined and carried through to 2011. In short, it was a promising step forward, with a coherent implementation plan.

And Flaherty’s version? The “Whitby WITB,” which we’ll also name after Flaherty’s riding, provides a maximum tax credit of $500 for single individuals and $1,000 for families.

But the credit will be reduced by 15 per cent of net income in excess of $9,500 for single individuals and $14,500 for families. It phases out completely at $12,833 for single workers and $21,167 for single parents and couples.

It is completely silent on indexation and any plan for further growth.

The generosity difference of the two approaches is further made clear in terms of overall costs. The now-defunct Wascana WITB called for $2.2 billion in expenditures over four years. In contrast, the Whitby WITB will allocate $1.2 billion over three years.

How times change! Flaherty’s Whitby WITB is less costly, less generous, and more complicated than the original.

Most important and most unfortunate, it will be less effective in supporting important segments of the working poor.

Perhaps the most startling fact of all regarding the new program is that the Whitby WITB does not provide any benefit to those who work full time at the minimum wage in most of Canada.

Couples in Ontario, where both adults work 35 hours a week for minimum wages, net more than the phase-out for couples under the Whitby WITB at $21,167 a year. As a result, they do not qualify for the WITB either.

Under the Wascana WITB, however, they would have received a modest benefit to supplement their wages.

Similarly, a single person in Ontario working 40 hours a week at $8 an hour nets about $14,700 a year. At 35 hours a week, this same single person still nets more than the $12,833 yearly end point of the WITB. These full-time minimum wage workers will not see a single penny from the new WITB.

These workers are by no means in the minority.

According to Statistics Canada, more than 89 per cent of minimum-wage workers are single people while almost 11 per cent are in families with either a spouse or children. So the vast majority of full-time minimum wage workers will not get a cent from the WITB from Whitby.

There was much optimism that the new WITB would be the answer that many had been looking for to make work pay for those who work in low-wage jobs.

That was certainly the promise of the Wascana WITB.

But by the time Flaherty finished his version of the program, many of the lowest-income working poor have been left out and an estimated $1 billion was shaved off to spend elsewhere.

It is a victory for the bottom line and an easy rebuttal to those who have criticized the government for its lack of redress for low-income Canadians.

But for full-time minimum wage earners, the new WITB stands as a lost opportunity for a more decent standard of living.

__________________________________________________________________________________
John Stapleton was research director for the Modernizing Income Security for Working-Age Adults Task Force and a former Ontario public servant specializing in income security.

Many of FAFIA’s members and allies have been inquiring about the new funds in the 2007 Federal Budget for the HPV vaccination.

Here’s a letter from Abby Lippman, Chair, Canadian Women’s Health Network, about this initiative.

Health care dollars better spent enhancing Pap screening programs

To the Editor:

The allocation of $300 million in the budget to address cervical cancer by funding the costs of a vaccine for two strains of the HPV virus associated with the development of this disease is a misleading and mistaken quick-fix approach to a more serious problem: the failure of primary care.

Of the over 100 types of HPV, most are harmless, while others are self-limited infections; most women (perhaps 90%) with HPV infection never develop cervical cancer. In Canada , women who die from cervical cancer are often poor and lack access to health care programs that include appropriate Pap smear testing; Pap smears remain the best tool in preventing cervical cancer when women with identified cell changes are followed up appropriately. In a functional system, no woman should die of the disease.

Pap screening, complemented by HPV testing, still does not reach all the girls and women that it should. The HPV vaccine may also prove to be a useful tool, but we do not yet have the full story on its long-term safety or effectiveness, especially in young girls. Until we know lots more about the currently-marketed Gardasil HPV vaccine, as well as about how effective it actually is in reducing cervical cancer rates, health care dollars may be better spent in enhancing Pap screening programs (including Pap registries), and ensuring they reach the most marginalized populations.

Abby Lippman, Professor of Epidemiology, McGill University
and Chair, Canadian Women’s Health Network

Published in The Ottawa Citizen
Wednesday, March 21, 2007

03/22/2007

Click here to view the original posting on the CWHN website:
http://www.cwhn.ca/hot/news/default.html#better