Monday, January 16, 2006

How expensive is Conservative committment on fiscal imbalance?

For those who've missed it, the economist who endorsed the Conservative platform as economically sound has issued a clarification: the Conservative platform that he had seen did not include the commitment to pay for out-of-jurisdiction health-care or for correcting the so-called fiscal imbalance.

The Conservatives have an explanation (here):
Conservative finance critic Monte Solberg said last night the Tories did not put a price tag on fixing the fiscal imbalance because that remains to be worked out in deals with premiers.
The Conservatives, of course, could tell us what their proposal would be and cost it out. As it happens, we already have a provincial proposal made by Quebec's Commission on the Fiscal Imbalance, which concluded that
to restore fiscal balance within the federation, the provinces must have additional financial resources. In Qu├ębec's case, the Commission estimated these financial resources at a minimum of $2 billion per year in the near term, and at least $3 billion annually in the medium term.

For the provinces as a whole, the Commission estimates that $8 billion in additional financial resources is needed annually in the near term.
Now, it may well be that the Conservatives' proposal to fix the 'imbalance' is less expensive. But even if a Conservative government met Quebec half way, we're looking at an extra $4 billion per year. That is not a trivial amount.

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