Ontario takes $2.2 Billions in Transfer Payments

[mentalfloss]

I think that it's fair to say that any economist would not support the Canadian model as it currently exists as a form of state welfare.

....

The authors also say that Ontario is still a net contributor to federal coffers and likely will be in the future. Based on the most recent 2005 data, they say Ontario residents contributed $21 billion more to Ottawa than they got back in federal spending.

So if Ontario does end up getting equalization payments, "Ontario residents will, in effect, be paying the equalization tab with their own money," according to Drummond and Burleton.

The authors suggest that it may be time to take another look at the equalization formula, even though the new formula has been in place for just a year. "Ontario's transformation into an equalization-receiving province underscores the impact of the inclusion of 50 per cent of non-renewable resource revenues for all provinces in the formula at a time of soaring energy prices," they write.

 

[Durry]

I notice that you never answered the question... But let's cut to the chase on the equalization issue: It has morphed into a form of quasi-provincial welfare wherein some recipients have an utter dependency on it to float a program of unsustainable spending. The take-away on this is that if the Feds perpetuate this program, the have-not provinces have an incentive to not develop their economies independently as there will always be the soft option available.

I think that it's fair to say that any economist would not support the Canadian model as it currently exists as a form of state welfare.

Your absolutely correct.
This is something the poster your replying to would not understand tho. !!

 

[captain morgan]

The report notes that last year's change to the equalization formula from a five-province to a 10-province standard "brought Alberta into the picture and their soaring resource revenues" have driven up the base upon which equalization payments are based.
T
he federal equalization program is designed to compensate "have-not" provinces so that their residents can have the same level of services as richer provinces. In the 2008-09 fiscal year, six provinces — the four in Atlantic Canada, Quebec and Manitoba — will receive more than $13.6 billion in equalization payments.


The authors say Ontario's relative decline is "not so much a story of Ontario weakness as it is of booming economic strength in Canada's commodity-based economies."


Since Ontario is a net importer of commodities, its economic performance relative to the west has been hurt.....

This comment still does not develop an argument as to why Ontario requires a weak dollar to compete on the global markets.

As for the 'net importer of commodities' reference, that is a circumstance that existed for decades - including those times when they were competitive on the world stage AND the Canadian dollar was strong.

 

[Corduroy]

Show me a Canadian Birth Certificate and not a Provincial one.

Why?

I notice that you never answered the question...

I don't answer stupid questions.

Your absolutely correct.
This is something the poster your replying to would not understand tho. !!

Oh hey Durry, you're back! What was the name of that province you're from that has never received equalization payments? Can't quite remember...

 

[mentalfloss]

This comment still does not develop an argument as to why Ontario requires a weak dollar to compete on the global markets.

As for the 'net importer of commodities' reference, that is a circumstance that existed for decades - including those times when they were competitive on the world stage AND the Canadian dollar was strong.

The equalization payment formula (which is what we're actually talking about here), takes into account non-renewables now. And that is the primary reason it put Alberta so high on the map - which is also the reason that Ontario has also become a "have not" province.

It's beyond obvious - to such a degree that the thread is getting to faux-news stupidity levels now. Whether or not you can accept that model because you think it's commie socialism is besides the point.

 

[captain morgan]

I don't answer stupid questions.

Pretty ironic considering that you ask most of them

The equalization payment formula (which is what we're actually talking about here), takes into account non-renewables now. And that is the primary reason it put Alberta so high on the map - which is also the reason that Ontario has also become a "have not" province.

It's beyond obvious - to such a degree that the thread is getting to faux-news stupidity levels now.

Alberta has been high on the map since the seventies, the non-renewables have nothing to do with it other than to placate the collective consciousness' of the equalization recipients.

So, back to my question about why Ontario can't compete in the mfg sector... Care to answer or just deflect?

Your absolutely correct.
This is something the poster your replying to would not understand tho. !!

I takes more than being a first year philosophy student to generate any kind of understanding of real-life issues.

 

[petros]

So, back to my question about why Ontario can't compete in the mfg sector... Care to answer or just deflect?

I know, I know but you didn't ask me.

 

[captain morgan]

I know, I know but you didn't ask me.

Not to worry Petros, you'll get your turn; but you also have to let the less gifted kids in the class have a chance too...

 

[Tonington]

The comment goes nowhere in recognizing why Eastern mfg is uncompetitive in the global markets.

Why would it? The comment I was addressing expressed incredulity at the reality of how equalization is calculated. As for the weakness in Ontario's economy, I agree with Petros. It's R&D. Germany has a strong national commitment to advanced manufacturing. I don't think many people would say that Ontario or Canada has a comparable plan. Our country is a resource rich country, and seems perfectly willing to shove aside productivity gains and knowledge based economies.

 

[mentalfloss]

Alberta has been high on the map since the seventies, the non-renewables have nothing to do with it other than to placate the collective consciousness' of the equalization recipients.

So, back to my question about why Ontario can't compete in the mfg sector... Care to answer or just deflect?

I just gave you evidence showing the primary reason for this equalization shift is due to non-renewables included in the equation this year. And you flippantly pass that off as if it has no significance full well knowing that Ontario's manufacturing capabilities still would not overcome this resource barrier.

Corduroy was definitely right about you asking some pretty stupid questions.

 

[captain morgan]

Why would it? The comment I was addressing expressed incredulity at the reality of how equalization is calculated. As for the weakness in Ontario's economy, I agree with Petros. It's R&D. Germany has a strong national commitment to advanced manufacturing. I don't think many people would say that Ontario or Canada has a comparable plan. Our country is a resource rich country, and seems perfectly willing to shove aside productivity gains and knowledge based economies.

I believe that it is fair to say that while equalization was established to provide access to similar services across the nation, it has morphed into a welfare program that is a bastardized version of what was intended. A good example of such is the access in Quebec to cheap day-care ($7/day I believe) or the cheapest access to post-secondary education. To my knowledge, that is not being offered anywhere in the nation so why Quebec, and more importantly, is the Equalization Program subsidizing this inequality?

I just gave you evidence showing the primary reason for this equalization shift is due to non-renewables included in the equation this year. And you flippantly pass that off as if it has no significance full well knowing that Ontario's manufacturing capabilities still would not overcome this resource barrier.

Thanks for coming out.

Petros, the less gifted have had their chance... Your turn.

 

[mentalfloss]

Thanks for coming out.

Petros, the less gifted have had their chance... Your turn.

Right...

The resource boom in those petro economies has had a double effect on Ontario, having sent the Canadian dollar soaring by roughly 40% since 2004. The higher dollar has in turn clobbered Ontario’s struggling manufacturing sector, which has hemorrhaged 290,000 full-time jobs over the past decade.

In economic theory, that scenario is known as “Dutch disease”, so coined by the Economist in 1977 after manufacturing in the Netherlands was decimated by the discovery of a large natural gas field.

“We’re just too small an economy to try to have one of the largest resource operations in the world at the same time as trying to have a world class manufacturing sector,” says Courchene, one of the most prolific and well-respected scholars in Canada.

And that's from the same link in the OP -- if Durry (or the gifted, such as yourself) had bothered to read it. Oh, but I highly doubt The Economist's description of a well documented scenario would be satisfactory for your cavalierness.

It's only what thou asked for.

 

[captain morgan]

Right... The resource boom in those petro economies has had a double effect on Ontario, having sent the Canadian dollar soaring by roughly 40% since 2004. The higher dollar has in turn clobbered Ontario’s struggling manufacturing sector, which has hemorrhaged 290,000 full-time jobs over the past decade.

I get it now.. Ontario was competitive on the intl mfg scene right up until 2004 when commodities prices began to rise.

Gotcha.

Out of curiosity, way back in the day when it too $1.25 USD to buy $1.00 CAD (1970's I believe), how was it possible that Eastern mfgrs could compete successfully (and they did I might add)?

Fact is, high energy prices are the wholesale excuse for an inefficient mfg sector in Canada, the industry in Canada has been conditioned as such.... Hell, it was only a few years ago that one of the oilsands groups put out an RFQ for a large piece of equipment (cooling tower?) to industrial concerns and engineering groups all over the globe (incl Ontario & Quebec)... The winning bid came from China despite the reality that they would have to ship through the Sinai Canal (the extra long route) to Canada and then via rail to AB... The piece was so large that it couldn't navigate the (sharp) turns through the Rockies.

Bottom-line, the commodities price for materials were the same for all and transportation would be a massive cost-savings for Canadian mfgrs, yet it was still cheaper and equal or better quality from China AND having to ship 2/3 the way around the globe at a time when oil was through the roof.

... So, tell me again how it's solely the commodities price that is hurting Eastern mfgrs....

 

[mentalfloss]

It clearly states that the nation needed to focus on resource management over manufacturing because it couldn't do both. It also acknowledges that Ontario's manufacturing sector was already struggling - nowhere did I state otherwise. That still doesn't deny that management of these non-renewables also had a substantially negative impact on manufacturing.

 

[captain morgan]

It clearly states that the nation needed to focus on resource management over manufacturing because it couldn't do both. It also acknowledges that Ontario's manufacturing sector was already struggling - nowhere did I state otherwise. That still doesn't deny that management of these non-renewables also had a negative impact on manufacturing.

Are you reading The Economist?

Did you understand the Dutch Disease principle?

You do know that the tar sands are increasing in development over the last decade because we have less crude right?


You do know that the investments in this type of resource development is a recent initiative, right?

I love The Economist.. Clearly you've been dumpster-diving in some upscale neighbourhoods.

As per the suggestion of focusing on resource mgmt over mfg is a confusing statement at best. Relatively speaking, Eastern Canada has a massive advantage over mfg nations like Germany or S.Korea in that they have access to cheaper energy AND plentiful commodities right in their back yard than the aforementioned and yet they have not developed their mfg sector to compete against either example.

Face facts on this, North American mfgrs are not competitive despite having identifiable advantages over the competition (for the record, I do understand that these other nations also have their advantages over N. America) yet it is like pulling teeth to get folks like yourself to see the situation for what it is.

The moment that you stop making flaky excuses to absolve Canada's mfg sector is the very moment that you will be able to generate some solutions.

BTW - We aren't running out of crude.

In the 1970's, we ran out of $20 oil

In the '80's, we exhausted $40 crude

In the 1990's, $50 oil came to an end.

... You getting the picture here?

 

[mentalfloss]

The moment that you stop making flaky excuses to absolve Canada's mfg sector is the very moment that you will be able to generate some solutions.

Obviously the recent increase in resources isn't the only factor, but the model itself is a robust and accurate one..

There is the non-traded good sector (this includes services) and two traded good sectors: the booming sector, and the lagging sector, also called the non-booming tradable sector. The booming sector is usually the extraction of oil or natural gas, but can also be the mining of gold, copper, diamonds or bauxite, or the production of crops, such as coffee or cocoa. The lagging sector generally refers to manufacturing, but can also refer to agriculture.

A resource boom will affect this economy in two ways. In the "resource movement effect", the resource boom will increase the demand for labor, which will cause production to shift toward the booming sector, away from the lagging sector. This shift in labor from the lagging sector to the booming sector is called direct-deindustrialization. The "spending effect" occurs as a result of the extra revenue brought in by the resource boom. It increases the demand for labor in the non-tradable, shifting labor away from the lagging sector

Dutch disease - Wikipedia, the free encyclopedia

 

[TenPenny]

Face facts on this, North American mfgrs are not competitive despite having identifiable advantages over the competition (for the record, I do understand that these other nations also have their advantages over N. America) yet it is like pulling teeth to get folks like yourself to see the situation for what it is.

Because we focus on the easy bucks. We mine iron ore, and ship it somewhere else. We cut wood, and ship it to China to be processed.

North Americans only want the easy pickin's, we don't complete the task. It's easier to farm it out to someone else who can do it a tiny bit cheaper (as long as we train them and tell them what to do), and then we slog our fat asses down to the mall to buy that crap.

It's our mentality, and it needs to change.

 

[captain morgan]

Obviously the recent increase in resources isn't the only factor, but the model itself is a robust and accurate one..

Well, I'm at a loss in this discussion. I have pointed to 2 nations that have (virtually) no resource base and are fully exposed to the costs of the commodities sector, yet they continue to lead the globe in the very sector that Canadian's can't compete in.

Why is it such a chore for you to consider what these groups are doing 'right' and focus on that as opposed to making excuses for the Canadian mfgrs and seeking a solution through gutting Canada's energy sector?

Because we focus on the easy bucks. We mine iron ore, and ship it somewhere else. We cut wood, and ship it to China to be processed.

North Americans only want the easy pickin's, we don't complete the task. It's easier to farm it out to someone else who can do it a tiny bit cheaper (as long as we train them and tell them what to do), and then we slog our fat asses down to the mall to buy that crap.

It's our mentality, and it needs to change.

Bingo!

Sad, but unfortunately, true

 

[mentalfloss]

Well, I'm at a loss in this discussion. I have pointed to 2 nations that have (virtually) no resource base and are fully exposed to the costs of the commodities sector, yet they continue to lead the globe in the very sector that Canadian's can't compete in.

Why is it such a chore for you to consider what these groups are doing 'right' and focus on that as opposed to making excuses for the Canadian mfgrs and seeking a solution through gutting Canada's energy sector?

I understand that the manufacturing sector could do much better. I can't vouch for the credibility of the notion that we necessarily have to focus either on exploiting resources or manufacturing. I'm just pointing out that this was the voluntary course of action that was taken, and as such, it has made manufacturing susceptible.

If we didn't decide to exploit these resources so vociferously, maybe there would be a better balance between the two sectors. As you said, maybe the two could compliment each other very well, but it seems as if there is a conscious decision to develop one side because it's just that lucrative, and this is the lopsided effect (Dutch disease).

Either way, it makes me want to go play some Starcraft.

 

[lone wolf]

Heavy industry requires energy - AKA Hydro - and Ontario's is ridiculously priced since it was sold off to the for profit sector.