New Brunswick has officially assumed the title of Canada’s poorest province and will begin receiving the most funding per capita from the federal government’s equalization support program, starting in April.
The bottom ranking and the poor economic numbers that caused it are unlocking significant new federal financial support for New Brunswick, but that is cold comfort for ending the longtime reign of Prince Edward Island as Canada’s neediest province, according to New Brunswick Finance Minister Ernie Steeves.
“Wow. That’s tough to take,” said Steeves in an interview Tuesday.
“When your transfer payments go up, it’s a sign your economy is weak. I’m not crazy about that. We want New Brunswick to be a have province, not a have-not province.”
The federal Finance Department released figures late Monday of what equalization-receiving provinces will qualify for in funding next year.
New Brunswick’s share is jumping 9.2 per cent to $2.21 billion, the largest increase among receiving provinces.
A sign of the times
The new amount is calculated by Ottawa to be worth $2,826 per person in New Brunswick, the most ever paid to a province, and a razor-thin $1 per person more than P.E.I. will receive.
It’s a remarkable turnaround for both provinces.
Last year, P.E.I. received $65 per person more in equalization than New Brunswick and, as recently as three years ago, was receiving $301 per person more — a sign of how quickly P.E.I.’s economy has closed in and, for its size, surpassed New Brunswick’s.
Equalization is a $20.6-billion federal program designed to help poorer provinces provide comparable levels of service to citizens at similar levels of taxation to richer provinces.
Payments are determined by a complex mathematical formula that measures the revenue-generating ability of each province against a national standard. Those with a below average ability to raise money for themselves qualify for funding.
Quebec receives the most money from the program — $13.25 billion next year — but at $1,547 per person in Quebec, it’s 45 per cent less than what New Brunswick will get.
Equalization amounts per person:
- New Brunswick: $2,826
- Prince Edward Island: $2,825
- Nova Scotia. $2,184
- Manitoba: $1,815
- Quebec: $1,547
The three territories do not receive equalization, but have a separate financing formula with the federal government.
New Brunswick hike ‘stood out,’ says prof
Trevor Tombe, an economics professor at the University of Calgary and one of Canada’s leading experts on equalization, said the $187-million jump in New Brunswick’s equalization allotment next year is remarkable, but the causes will take some time to analyze.
“The increase in New Brunswick is actually something that stood out,” said Tombe. “lt’ll be interesting to dig deeper to see what’s driving that specific change.”
The equalization formula uses three years of data and, according to Tombe, next year’s payments are based on provincial economic performance recorded between April 2016 and March 2019.
New Brunswick’s GDP growth over those three years was an estimated 3.7 per cent. That’s the weakest among equalization-receiving provinces, less than the national average and well below the 10 per cent growth recorded in P.E.I..
New Brunswick has long vowed to get itself off equalization. In 2006, former premier Shawn Graham set a “self-sufficiency” goal to be free of equalization payments by 2026. Instead amounts owing to New Brunswick have grown by $900 million, including by $550 million in just the last three years.
Steeves said being a “have” province is still New Brunswick’s goal even though, as Canada’s poorest provincial jurisdiction now, the need for equalization is undeniable.
“We want to be the ones that help everybody else, but right now we do need the help,” said Steeves.
“We’re trying to get our debt back in place where it should be and get it lowered so that we won’t need as much help. But right now we are reliant on Canada and Canadians.”