Money is the root of all principle
-- Old adage.
Yes, but -- the way to get the money is to talk about the principle. And if there is one principle that applies to any discussion about money in Canada, that is it. Suppose, for example, you are a corporation. And suppose that you are angling for a government handout of some kind. (I know, it almost never happens, but just suppose.)
Under no circumstances do you simply ask for a handout. That would be gauche, and beneath you. No, you invoke some important-sounding principle: fairness in the face of subsidized foreign competition, say, or the preservation of a way of life, or the Third Law of Thermodynamics, or ideally all three.
Nor do you accept the handout in the form of a handout, ie cash. Only mobsters and former prime ministers deal in cash. Rather, you call it accelerated depreciation, or flow-through shares, or zero-interest loans, or temporary export quotas, anything to suggest something other than a simple transfer of money -- some, you know, principle.
Panhandlers operate on much the same basis. (It’s not the money -- it’s the busfare.) And so, inevitably, do the premiers. Dependent as they are for much of their revenues on the federal government, the first art that is expected of any premier is an ability to beg. Only, practiced beggars that they are, premiers know that you do not simply ask for money. You stand on principle.
Over the years, the premiers have devised any number of lofty principles to justify a single, unchanging, ceaseless demand: more. For a time it was the “pre-1995 ratio,” then it was “the Romanow gap,” lately it has been the “fiscal imbalance.” And so long as all provinces received their share of the loot, the provinces could all agree that these were very important principles indeed.
But now we are talking about equalization, a program that benefits some provinces but not others, and suddenly it is not so evident what immutable law of Nature should apply. Should payments be based on the average tax capacity of five provinces, or ten? Should all resource revenues be included in the calculation, or none, or half? And which sorts of resources should we include? Oil? Hydro? High-school graduates? (“Our people are our greatest resource.”)
Now, I have my views on these questions; possibly so do you. For the record, it strikes me that a program that is supposed to bring all provinces up to the average should be based on the average of all provinces. And while it’s true that oil is a non-renewable resource whose price tends to jump around a lot, that’s true of a lot of things. There are ways of smoothing out short-term price fluctuations -- averaging over several years, for example -- that don’t involve arbitrary decisions to exclude particular sources of revenue, or particular provinces.
That sounds principled to me, though it may strike you as just a personal preference. And certainly everyone agrees that equalization needs to be put back on a principled footing, after Paul Martin’s frantic thrashing about. But the one sure thing in all this is that the premiers have no interest whatever in broad questions of principle, except as these can be folded, spindled and mutilated in support of their province’s fiscal interests.
Technically, it shouldn’t matter what the premiers think: equalization is a federal program. But as the political decision has been made to leave the matter to negotiations among the provinces, it is worth considering whether and to what degree these should, in fact, be based on principle.
That the premiers would prove unable to agree -- the last meeting ended with one premier accusing the others of being “anti-Canadian” -- was entirely predictable. Why? Because they’re not talking about the money, or not publicly: they insist they’re defending certain principles. Hands off Alberta’s oil! Sharing is the Canadian way! People are prepared to compromise over money. We do so every day. (That’ll be $20. How about $10? Make it $15.) But they’re not so willing to compromise their principles.
So why not confine the discussion to money? Because in politics, your bargaining position depends on your ability to motivate your base. And nothing gets voters fired up like a good old-fashioned brawl over principle. In the long run, that can be a source of stability. One of the arguments for basing policy on principle is precisely that the debates are so contentious: once settled, people will be reluctant to revisit them. It’s getting there from here that’s the problem.
Is there a way to square this circle -- to put the equalization program on a recognizably principled foundation, and yet to leave some room to haggle? Yes there is -- for example, the formula proposed by Stéphane Dion. Every province is included in the calculation, and every revenue source: that’s the principled part. But you don’t necessarily have to bring the poorer provinces up to 100% of the average. Maybe you only bring them up to 95%. Or 98%. Close enough. Or as it says in the Constitution, “reasonably comparable.”
The exact figure is plainly negotiable. Because, put like that, it becomes obvious to all: It’s the money.
6/14/2006
