Both Jeffrey Simpson and Chantal Hebert wrote this week about what is happening in Alberta and Ontario. Simpson captured the Dickensian contrast quite accurately:
Alberta’s government will get bigger in spending and personnel; Mr. Drummond said Ontario’s must shrink. Alberta is heading for big surpluses, Ontario for large deficits – $30-billion in 2017-2018, Mr. Drummond reckons, if nothing is done. Alberta has no provincial debt; Ontario’s debt has reached a ratio of 35 per cent of the provincial economy and is going higher. Alberta has the highest bond rating; Moody’s Investor Service just knocked down Ontario’s from stable to negative.
Rough calculations, based on his figures and finance department estimates, suggest that the Drummond plan will end up throwing roughly 250,000 additional Ontarians out of work by 2018. Even without another global crisis, that translates into an unemployment rate of about 11 per cent.
That's the problem with implementing austerity in tough economic times. When people are unemployed, government tax receipts go down -- and deficits go up.
This is not the first time it has been the best of times for Alberta and the worst of times for Eastern Canada. Back in the seventies, after the Arabs raised the price of oil, interest rates spiked along with oil prices. Eastern Canada was thrown into an economic funk. In an effort to share the pain, the Trudeau government introduced the National Energy Program. To this day, the phrase infuriates Stephen Harper.
The problem with the NEP was that it was imposed shared sacrifice. And its failure has made any mention of shared sacrifice suspect. But that is exactly what is required now.
We know where Stephen Harper stands on the issue. He is concentrating on selling oil to the Chinese. Yet he said nothing when Caterpillar moved its locomotive operations to Indiana at the end of January. However, if unemployment in Ontario spikes, so does the federal deficit. The prime minister from Alberta cannot afford to neglect Ontario.