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.
Subscribe to:
Post Comments (Atom)
Posts
7 comments:
I have to agree with you: the event in this article is a shame. Ontario has always been a symbol of our country's prosperity, to me, as well. But the passing years have proved that nothing stays certain. Do you remember when Pluto was stripped of its planetary status?
Anyways, your comment "[I] wonder if this will soon happen to BC" worries me. It seems to me that equality payments essentially circulate money throughout the country, from the richer provinces to the poorer provinces. To quote a line from my Chapter Four article, "Throwing more money at troubled industrial sectors merely transfers tax dollars from healthy businesses to unhealthy businesses and delays the day of reckoning". As it applies to your article, that translates to "Giving money to troubled provinces merely transfers dollars from the healthy to the unhealthy". It seems like a cynical view, and I don't want to believe it, but I'll admit theoretical concepts like equity don't always work.
- Krista Wong
I also agree that it is a shame because for the head province to receive equalization payment will make investors lose faith in the Canadian economy. To have one of the richest provinces in Canada receive the equalization payment proved how powerful the effects of the economic crisis was. Yet, I don't think BC will be receiving equalizaiton payments as oppose to Krista's comment. Because Ontario economy is based on commercial industries, it was heavily affected. BC, like Alberta is a resource base province and should not be affected as much. Currently, the only solution is to stimulate the economy through increasing job opportunities and trade is what I believe.
John Hui
Blk. F
Having Ontario in equalization payments is going to be horrible because it contains the capital city Ottawa. If this city is in debt, then similar things may happen to provinces of wealth. i.e. BC
Nevertheless this is caused by the global economic crisis which caused a mess in everything. By having the equalization payment in Ontario, there will be even more taxes in the future. They should make certain things to create more revenue in taxes i.e. - create more job openings so people can pay taxes and have tax cuts for those who cannot afford to pay taxes in ontario. I dont think BC will have equalization payments because tourists come here, and BC is one of the provinces keeping canada alive.
I am quite shocked that of all places Ontario – the one place that I thought was financially stable – has now become a “have-not” province and must rely on the federal government to supply billions of dollars of equalization payments. Honestly I cannot believe that the global economic crisis impacted the rate of unemployment to increase by so much that it caused Ontario to be in this position. Mostly I am surprised by how much the province will suffer and will need $374 million from the federal government. I also agree with your concern about BC and what could happen to our financial situation; since Ontario being quite similar to BC, there is certainly a possibility that this could happen to us. After reading this article and my own, I can predict that Ontario and Newfoundland are going to face many changes.
- Stephanie Murao
Block F
It’s hard to believe of all the provinces in Canada, Ontario will finally have to receive equalization payments. Ontario is like the richest province in Canada, and it has to receive payments which indicates how strong the economic crisis was. What worries me is if Ontario receives equalization payments; will this also cause other provinces to receive equalization payments too? Unlike Ontario I think B.C will not receive equalization payments because B.C is one of the provinces that keeps Canada alive for it is considered a “have” province. B.C has a high employment rate and shouldn’t need to get equalization payments.
k.Lau
blk F
Isn't Ottawa, the capital of this country, in Ontario? It is definitely a shame to see Ontario's status as being a have-not pronvince. This shows us how much toll the economic crisis has on us that a rich province like Ontario needs external aid from the Federal government. The solution, as of right now, is to stimulate more job opportunities for the people in Canada, especially in the have-not provinces. More job opportunities will push us away from the unemployment rate increase of 7.1%. If Ontario, a once "have" province, is able to make enough revenue through jobs and trades, then the $374 million dollars spent on them, can be spent else where where it is more beneficial to the whole nation.
K.Ip
Block F
Post a Comment