PSE funding: where does it come from?

2008 July 4
by Debra Lindsay

As pointed out by Greg Cook (T-J 4 July 2008), the Liberal spin-doctors are hard at work putting the best face on a dismal picture when it comes to funding post-secondary education, one of the “public services” guaranteed all Canadians, regardless of where they live, under the Equalization Program.

Universities get help from Ottawa

Your editorial, “PSE: Not Math, But Vision” (July 1), reads: “New Brunswick’s public universities receive about $200 million a year in provincial funding.” This statement perpetuates the myth that university funding comes solely out of the pockets of New Brunswick taxpayers.

Your readers deserve to be reminded that the $200 million comes to New Brunswick out of an allotment of all Canadians’ federal taxes. This includes from the pockets of taxpayers in Alberta, for example.

The reminder is critically important if your editorials and the provincial Liberal government’s campaign slogan are continually touting “self-sufficiency” as the future.

It is time to do the math to clear the vision of whatever this slogan means.

Here’s the provincial statement on equalization:

What is the Equalization Program?

  • The principle of making equalization payments is written in section 36(2) of The Constitution Act, 1982:

“Parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.”

  • The purpose of the Equalization Program is to make sure provincial governments have sufficient revenues to provide similar levels of public services and taxation to their citizens.
  • All federal taxpayers contribute to Equalization, no matter where they live in Canada.
  • Today, 8 out of 10 provinces receive equalization payments.

Why is Equalization important to New Brunswickers?

  • Equalization is NB’s largest revenue source at $1.4 billion or 22.9% of total revenue.
  • To put this into perspective:

- The New Brunswick government will spend approximately $1.3 billion on education in 2006-
2007
- Revenues from provincial personal and corporate income taxes total approximately
$1.3 billion

  • Without Equalization, New Brunswickers would face higher taxes and fewer public services. This would have a negative impact on the province’s competitiveness.

(source)

Here’s the graph the feds use to show why equalization is needed. See where the maritime provinces sit as of 1999. Newfoundland has renegotiated its place in the payments program as a result of new revenues, and (according to recent media reports) the economy of Saskatchewan is booming no less than Alberta, but the provinces of PEI, Nova Scotia, and New Brunswick are no less reliant on EP to provide services than they were in 1999.

Source: Finance Canada, “Minister of Finance Tables Legislation to Renew the Equalization Program,” News Release, 2 February 1999.

Public schooling, PSE, Health Care and a host of other services are (theoretically) available at the same level as found elsewhere — although it is clear that education in NB is not funded as well as it is in provinces west of our border- — because of EP.

One last (unoriginal and gratuitous) comment. As the New Brunswick government contemplates tax reform, and if the tax base diminishes due to demographic changes resulting in fewer taxpayers, it is conceivable that the percentage of provincial revenues will rely even more heavily on EP — how ironic given that the LIberals promise self-sufficiency by 2026.

from → Education as a right, Elsewhere, Liberals, Resources, demographics