Chapter Four

Article: http://www.allheadlinenews.com/articles/7013593596

As of March 2009, Ontario's status will become a have-not country because of the global economic crisis. Ontario, being one of Canada's leading provinces, has remitted billions of equalization payments to Ottawa in the past years. This would be the first time in history that Ontario would have to depend on equalization payments. It has been predicted that by the end of March, Ontario will suffer a $500 million budget deficit, and they will qualify for $374 million from the federal government.. One of the reasons for this crisis is because the rate of unemployment has increased up to 7.1%. In November, Ontario suffered an amount of 660, 000 loss jobs in the manufacturing sector. Meanwhile, Newfoundland and Labrador, a former have-not province, will become a have country on the same day.

Like said in the article, this would be the first time that Ontario would have to receive equalization payments. This connects with the topic in the textbook that questions if equilization payments for a province would be more beneficial, or would it hurt their economy in the long run. The textbook explains how equalization payments may discourage provinces in trying to improve their economy because they want to be elegible for those payments. Equilization payments also cause higher tax rates, thus discouraging outside investment and causes entrepreneurs to move out. After Ontario becomes a "have-not" province, Ontario may suffer these consequences as well. The deficit of $500 million, the decrease in jobs, in addition to the negative side effects of the payments would surely have a great affect on Ontario. On the other hand, the province of Newfoundland would have to work hard in order to make their economy flourish as they become a "have" province and escape what Ontario will soon go under.

Personally, I think it's a shame that Ontario would have to have such a big debt. To me, Ontario used to be like one of the economic role models of the country. For it to suffer such great debts after being one of the wealithiest provinces in Canada makes me wonder if this will soon happen to BC. In the meantime, I think this would also affect BC because it would be one of the provinces providing a part of the revenue for Ontario. Will this create a significant effect for the people in BC? I would like to think not. Fortunately, Newfoundland and Labrador is becoming a "have" province, therefore lessening the federal government's amount of equalization payments for its provinces.