The East Wants In

When I was in graduate school—and later, teaching graduate students—the reading lists covering Quebec nationalism and Western Canadian regionalism were fat. The number of books on Ontario’s perspectives were sparse, but most of us concluded that Ontario’s dominance of Canadian politics made a uniquely Ontario perspective unnecessary: Ontario’s story was implicitly Canada’s. In all of this, Atlantic Canada, though, was an afterthought. We studied Atlantic Canada’s perspectives on the federation, but the extent to which students internalized anything resembling a uniquely Atlantic view was weak.

Yes, we learned about a series of unfavourable decisions visited on Atlantic Canada by the federal government at the time of Confederation and in the decades following. But the political science literature boiled the political culture of Atlantic Canada down to two key terms: “clientelist” and “parochial”—which meant: show us the money, and we will reward those politicians who deliver.

In Equal as Citizens: The Tumultuous and Troubled History of a Great Canadian Idea, Richard Starr seeks to correct the gaps in our knowledge. He recounts the story of Canadian history as a long march of slights against Atlantic Canada, and particularly the Maritimes. As the book’s title implies, these decisions, particularly over fiscal issues such as equalization, have undermined equality in Canada for less prosperous provinces. Each chapter provides useful reminders of key issues, major federal or provincial reports that outlined Atlantic Canadian concerns, documented proposed remedies and the federal government’s failure to respond—demonstrating, yet again, how the Maritimes got “the short end of the stick.”

For those who never studied, or who have forgotten, the pre-Confederation debates about fiscal resources and debt allowances, and later the building of rail, pipelines and seaways in the interests of other provinces, the book is a useful primer. Starr tells a persuasive story of federal economic decisions taken over two centuries with regions other than Atlantic Canada in mind. For example, there is a strong case to be made that the federal government decision that gave away the northern territories in the early 20th century to Quebec, Ontario and the new western provinces, with little compensation to the Maritimes, eventually enriched the western provinces but left the Maritimes further marginalized economically.

But in Starr’s narrative, even when the Maritimes get what they ask for, it always comes with a “yes, but…” When the federal government acts on many of the recommendations of the Rowell-Sirois Commission, laying the foundation for the Canadian welfare state, as demanded by the Maritimes, this serves only as further evidence of federal perfidy, this time to rob the Maritimes Rights Movement of its mojo. The fact that in 2007 Nova Scotia and Newfoundland and Labrador were allowed to choose which equalization formula they wanted—the old or the new—is just another sign of federal deviousness.

But this book is more than a simple retelling of grievances. It places Atlantic Canadian history within the context of debates over equalization and fiscal transfers, and reminds us that disputes about fiscal federalism echo throughout our history. Starr makes a persuasive case that the Canadian promise of equal citizenship falls short if provinces have very different fiscal resources to provide services and opportunities to their ­residents.

Historically, the Maritimes have argued they need more fiscal resources to realize this promise. When 19th-century politicians such as Joseph Howe and Charles Tupper sought “better terms” for Atlantic Canada, it was figures such as George Brown and Edward Blake who resisted their demands. Starr’s recounting of the debates over the financial terms of Confederation right through to modern-day discussions of the fiscal imbalance are chronicled with a “plug and play” quality that always ends the same: Ontario and Alberta won, the Maritimes lost—usually with “Ontario-born” politicians cast as villains.

To Starr, Atlantic Canada’s economic problems can be laid squarely at the feet of the federal government, Ontario and the Atlantic Canadian politicians who sold out to them. Visceral contempt for the federal government, western provinces, and Ontario in particular spills from the pages. “The nobs of the Empire Club” (his term for the Laurentian elite), “The National Post,” “The Toronto Star,” “those channeling Oliver Mowat,” “the Ontario Premier,” even my own “Mowat Centre,” are rarely mentioned without scorn. It is as if merely pointing out that an argument was made in “Toronto’s Globe and Mail” serves as proof of its foul origins.

While I enjoy a bracing slap in the face as much as the next guy, the book’s tone suggests it is targeting an audience already converted to the author’s own assumptions about the Canadian narrative. Equal as Citizens might be a more exasperating read for a broader national audience that does not automatically accept the assumption that any reference to Ontario should be accompanied by menacing background music.

Ontario is not the only villain in Starr’s book. Neoconservatism is as well, and Starr situates any criticism of equalization within the broader context of an ideological attack on redistribution generally. The book documents a consistent attack on the current structure of fiscal federalism by conservative politicians and neoconservative think tanks such as the Fraser Institute, Atlantic Institute for Market Studies and Macdonald-Laurier Institute.

And there is no doubt that this is part of the contemporary debate. There is a neoconservative attack on equalization, and Starr accurately summarizes its main elements. The network of neoconservative think tanks divides Canada into “makers” and “takers,” with the makers living west of the border between Quebec and Ontario and the takers living to the east. The makers are virtuous and hard working; the takers are lazy leeches. It is understandable that Starr and many from Canada’s eastern provinces get their backs up in the face of such an assault. It is all the more galling to many in the Maritimes that these lectures often originate in provinces prospering from vast natural resource wealth given away without compensation to the original Maritime provinces.

But by focusing exclusively on the most cartoonish criticism of equalization, the author risks becoming a caricature himself. In rising to the bait, he merely matches every comical neoconservative western grievance with one of his own.

In a book so preoccupied with the concept of region, Equal as Citizens is remarkably blind to the regional interests of other provinces, portraying any opposition to the Maritime perspectives as a Trojan horse for an ideological—rather than a regional—agenda. Starr dismisses the impressive and exhaustive scholarship of Thomas Courchene, which documents the changing political economy of the Canadian federation, as “blaming the victim.” He shakes his head at then Ontario premier Bob Rae’s campaign for fairness for Ontario in fiscal transfers as having bought into the arguments of neoconservatives against redistribution. When the federal government decides to reduce fiscal transfers to Ontario in a manner that is particularly punitive, these actions are dismissed with a chortle: “Unfair (to Ontario)? Perhaps, but…” While Starr bemoans Atlantic Canada’s treatment as an “all-purpose punching bag,” his objection is not to punching per se, just that the bag should be Ontario—and the West—instead.

Starr repeatedly claims that Ontario premiers want to see a one-to-one return for every dollar Ontarians send to the federal government. But he never cites an Ontario premier who has said that, and as far as I am aware, no Ontario government or premier has ever said that. In fact, Ontario premiers have repeatedly stated the opposite: I have watched Ontario premiers specifically say that Ontario’s structural concerns with fiscal federalism should not be interpreted as suggesting that Ontarians expect every dollar they send in taxes to return in federal spending. A stingy, selfish Ontario may be a useful straw man, but a little more commitment to the facts would have made the narrative more credible.

But the neoconservative attack is not the only criticism of our current fiscal arrangements. Starr’s preoccupation with Friedrich Hayek, the Koch brothers, the Cato Institute and others who make up the neoconservative idea mill in the United States may have blinded him to many of the other criticisms of equalization and employment insurance.

His rejection of the simplistic makers/takers labels is certainly appropriate. But he mimics the same simplistic analysis by regularly referring to two groups of provinces: “richer” and “poorer,” with Alberta and Ontario being the former, selfishly refusing to share their wealth with the others.

Yet Ontario and Alberta share almost no interests on issues related to fiscal federalism anymore. They haven’t for a decade. There are at least three groups of provinces possessing very different interests on issues of fiscal federalism: the carbon-producing provinces (Alberta, Saskatchewan), the less prosperous provinces (the Maritimes, Quebec, Manitoba) and Ontario (note that the place of British Columbia and Newfoundland and Labrador in these alliances is evolving and uncertain). This leaves many of us with a very different critique of the current system of interprovincial redistribution than the neoconservative one that dominates Starr’s analysis.

Starr is aware of this alternative critique, which argues that the two most important forces at work undermining the health of Canadian fiscal federalism are the growing importance of provincially owned natural resources, which has led to rising inequities between provinces, and the impact of globalization and free trade agreements on the ability to finance inter-regional redistribution. Because natural resource revenues are not available to the federal government for redistribution, the main cause of growing inequities between provinces—the sustained commodity boom—cannot in fact be used by the federal government to moderate the inequities. Likewise, it is realism—rather than neoconservatism—for businesses that are competing globally in open markets to be more concerned about the competitiveness of our tax system (and the ability to fund inter-regional redistribution) than they were when they operated in a protected market.

This alternative critique does not find its way into the heart of Starr’s analysis. In fact, criticisms of our current system that are not grounded in a neoconservative framework simply perplex him, with our own Mowat Centre studies “muddying the waters” around the simple story he wants to tell of neoconservatives who despise equality doing whatever they can to undermine inter-regional redistribution.

For example, one of the main design features of the employment insurance system today is a redistribution of funds away from low-income, part-time workers in Ontario and toward seasonal workers in Atlantic Canada. Objecting to this and proposing alternatives is not driven by a hatred of the less fortunate. It is driven by a desire to redesign unemployment insurance so that it accommodates the new forms of labour market risk in today’s economy. In Starr’s chapter on unemployment insurance, reasonable objections to the program are greeted not with engagement but a sneer. Even Lloyd Axworthy (!) is added to the list of Starr’s neoconservative villains. It would have been nice if there had been some recognition that, perhaps, once in a while, opposition to asking low-income people in urban areas and small businesses to pay higher payroll taxes in order to support coastal fishers might be motivated by something other than a neoconservative ideology.

Likewise, the equalization program, as currently designed, cannot accomplish its core mission during resource booms because resource wealth is not redistributed. Over the last five years, despite Ontario having below average fiscal capacity, the equalization program has made Ontario worse off, not better. To dismiss Ontario’s concerns about the operation of fiscal federalism as another example of a neoconservative attack on the poor is to misunderstand the implications of the global economic transformation taking place over the last three decades. The Mowat Centre’s critique of the current system of fiscal federalism is framed in the language of “common citizenship.” This is not, as Starr would have it, a cynical ploy masking an agenda to impoverish children in rural Nova Scotia; rather, it concludes that there is strong evidence that equalization is not achieving its goals for Canadians in Ontario.

Canadians value the principle of equalization. They embrace the notion that less prosperous provinces should receive more fiscal resources. They almost universally believe that all provinces should have sufficient financial resources to provide good-quality public services. Atlantic Canadian premiers can stand in front of crowded halls anywhere in the country and say “we believe in equalization” and risk little pushback. But simply believing in equalization—and equality of citizenship—does not provide easy policy solutions.

What happens if we assume that Starr’s interpretations of Canadian history are all accurate, that the story of Canada is one of a long series of decisions to undermine Atlantic Canada? Where is the evidence that Canadians in the Maritimes are suffering from “unequal citizenship” today? It certainly is not in Starr’s book.

Beyond making the obvious point that Alberta is able to provide better quality services at lower levels of taxation than other provinces, Starr has not provided evidence that Canadians in the Maritimes have less access to public services. While Starr readily highlights that public funding in Maritime schools was lower than elsewhere in the 1940s, he does not provide any compelling evidence for that being the case today.

But there are reasonable ways to move forward, and Starr highlights some of them: more “needs-based” transfers, greater inclusion of natural resource royalties in equalization calculation, clawing back some portion of transfers from wealthier provinces, national carbon pricing and an independent agency to report publicly on fiscal information and imbalances. Building coalitions in favour of any of these ideas requires an appreciation for the perspectives of other regions. Derision and scorn rarely serve as a foundation for a common agenda built around equality of citizenship.

Despite different regional narratives about the meaning of the country, Canadians have been remarkably good at getting along. This has been in part due to a Canadian political culture that values consensus building. Those attracted to ideological purity dismiss this as a cliché or bemoan it, complaining that we often just muddle through, limping from one cobbled-together solution to another. But it is hard to imagine the country having succeeded if we did not.

Starr’s perspective on our country, and the Maritimes’ place in it, is important. The Maritimes’ narrative—and Starr’s version of that narrative—is a legitimate one. But so too are the Laurentian, New Ontario, Quebec, aboriginal and western narratives. In Canada, the most important job of a federal government is to find ways of accommodating disparate regional narratives, all the while elaborating a unifying one as well.

Starr has reminded us of the negative impact on the Maritimes of a long list of federal decisions—from the building of the St. Lawrence Seaway to the giveaway of natural resources to Western Canadian provinces. Perhaps this will lead to more civilized conversations about inter-regional equality emanating from other regions of the country. But such respectful conversations require all regions to make a good faith effort to understand the narratives of other parts of Canada, an effort that Starr clearly is not up for.