Equalization payment per capita and population

This graphic is a little different than what we usualy see. The height of each rectangle represents the amount of equalization per capita that each province gets. One notices that PEI receives 2372$ per capita and that New-Brusnwick receives 1982$.

Now, the width of each rectangle represents the population of each province, one sees that the population of PEI is obviously far less than Ontario’s.

So, one understands that the surface of each rectangle represents the total amount of equalization payment received by each province (equalization per capita multiplied by population).

 It is generaly understood that Québec receives the largest amount of equalization payments because its economy is inefficient, it is referred to as a sinkhole.

Now, an interesting question : if, let’s say, New-Brunswick had the same population as Québec (its rectangle would then have the same width), what total amount of equalization payment would it get (what would be the surface of its rectangle)?

If Québec economy is a sinkhole, what does it tell of the PEI, New-Brusnwick, Nova-Scotia and Manitoba’s economy?

(If interested in some economic discussions, please take a look at What would we do without equalization payment?.)

Up date (November 27th, 2011)

Another weird looking graph. (Related to this comment : https://michelpatrice.wordpress.com/wp-admin/edit-comments.php?s=

5 réflexions au sujet de « Equalization payment per capita and population »

  1. Yannick

    It’s not really a graph anywho. But yes, it would be less misleading if the height (per capita equalization payment) and the base length (population) were explicit, and the bars removed. But I think it’s easy enough to understand.

  2. Anonyme

    Unfortunately, the graph does not factor in economies of scale in various aspects of economic distribution. For example, having an administrative overhead impacts per capita ratings as provinces require a minimum amount of administrative functionaries to handle mandated social programs. Quebec has no reasonable excuse to have such a massive transfer equalization payment.

    1. Michel Patrice Auteur de l’article

      The amount of equalization that we get seems massive to you because you look at it through a microscope. A bacteriae also looks massive through a microscope. Take a look at the graphe I just added, another weird looking one. On this graph, you will the gross domestic product of each province and just beside it, you will see the amount of equalization paid or received.

      (These figures are interesting for two reasons. First, they also give the amount of equalization paid by provinces that are contributors (these figures are almost never provided by Stat Can and you cannot get them without long calculations.) Second, these figures take into account the contribution of each province, these figures are not therefore the gross amount received but the net amount. So, taking this into account, Québec does not receive 4 billions, but 1,6 billions if you take into account that Québec also contributes to federal revenues. Here is the source : http://www.eqtff-pfft.ca/submissions/LaReformeFederaleProposeeDeLaPerequation.pdf, it is from 2004-2005, I could not find more recent datas.))

      So, just beside the GDP bar, you will see a tiny red bar, this the net equalization. Click on the figure and zoom it if you want to see it properly. This small amount of equalization is the amount about which everyone fights. It is about this amount of money that Alberta cries that it is grossly exploited by other provinces. It is for this amount that Québec is blamed daily for living at the expense of other provinces.

      It is often said that equalization is the bond that holds the country together. Personnaly, I find it a very tiny and very thin bond.

      About this issue, I would like to quote a part of Alan Freeman and Patrick Grady Dividing the House Planning for a Canada without Quebec : « So in the end, the argument over what Quebec gets out of Confederation is a dangerous one if there is no fundamental belief in Quebec that there is a value in being part of Canada for its own sake, beyond mere financial convenience. If Quebecers are convinced that they’re getting more money out of Confederation than they put in because they’re poorer, it feeds into the separatist argument that Canada is an arrangement designed to keep Ontario and the West richer. If, on the other hand, they become convinced that they would be better off if they leave Canada, they’ll be gone tomorrow. » (http://global-economics.ca/dividingthehouse.toc.htm) Food for thought.

      The equalization payment argument sometimes looks like the last federalist argument. English canadians seem to feel compelled to throw that argument at our face whenever there is a discussion about Québec, just like Pavlov’s dogs drooled earing the bell. Take a look at the graph and think about how thin is your last argument. But, eh, you have to work with what you have.



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