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Ontario: the Province that thinks it's Canada Amid regional grievances, McGuinty fights for a fair share of taxpayers' dollars MURRAY CAMPBELL From Saturday's Globe and Mail August 2, 2008 at 12:00 AM EDT Dalton McGuinty was doing a favour for reporters afflicted with summer-brain stupor. “Here's the news,” the Ontario Premier said, helpfully, after a speech late last month. “Ontarians are coming together to more effectively assert themselves in the face of an unfairness caused by the financial arrangements between us and Ottawa.” Indeed, it would be news if this coming-together was actually happening, and it would be momentous given the suggestion by the federal government this week that it is prepared to shift some economic powers to the provinces. But the residents of Canada's most populous province do not have an unbroken history of rising up as one to take on the federal government. Ontario is not Alberta, and the philosophy that provincial rights should be paramount has always had to compete with a powerful sense that Canada comes first. Mr. McGuinty embodies this duality. For more than three years, he has wasted few opportunities to make his claim that Ontario is being treated unfairly in Confederation because it receives, by the latest estimate, about $20-billion less in services from federal government than its taxpayers remit to Ottawa. He criticizes the federal equalization program – financed predominantly by Ontario taxpayers – for redistributing money to provinces that are more prosperous than his. He takes issue with health and other transfer payments that are less generous than those given to other provinces. And he asks why an unemployed worker in Ontario is treated more severely than in the rest of the country and why the Harper government wants to leave the province under-represented in the Commons. Ontario Premier Dalton McGuinty gestures during his public lecture 'Ontario's Place in the 21st century' at the London School of Economics and Political Science in London, Monday, May 19, 2008. Hanging over all this is the feeling in Ontario that the 1988 U.S. free-trade pact broke the bargain of Confederation in which Canadians bought their manufactured goods from Ontario in return for a recycling of some of its wealth through programs such as equalization. The Premier is always careful to say that he is a proud Canadian and that he understands his province has been blessed by geography and circumstances that give it a responsibility to share its wealth. But the Premier's sustained effort – reflected in his website fairness.ca – suggests a growing sense of regionalism in Ontario. “My friends, it is time to stand up for our province, time to stand up for Ontario,” he said in his speech last month to the Chamber of Commerce in London, Ont. He suggested that lessons could be learned from other provinces that have gone mano-a-mano with federal administrations although he shied away from emulating Newfoundland Premier Danny Williams, who stormed out of one federal-provincial meeting in protest and then removed Canadian flags from provincial buildings. Ontarians who realize that Newfoundland has a much larger per-capita income than Ontario, thanks in part to $477-million in equalization payments this year may wish their Premier to be as aggressive. But while his tactics may be lower-key, Mr. McGuinty isn't going away. “It's becoming more and more urgent, and there's a continuing need to speak about it, because there hasn't been an appetite at the federal level to really engage in fixing the system,” said an official in the Premier's office. The question is whether Ontarians are likely to respond to his appeal or whether circumstances will transform Ontario into a province with a profound regional grievance. The trend line of estrangement from Ottawa suggests it is possible, but this has to be countered by the strong identification with Canada that Ontario residents have always shown. Mr. McGuinty recognizes other provinces will resent Ontario throwing its weight around. “There is a lazy caricature that is convenient for people, which people can resort to, which is that we're being greedy, we're being uncharitable, we're being un-Canadian,” he told the editorial board of The Globe and Mail in 2006. He also knows that talk of regionalism makes his voters uncomfortable. He is fond of comparing the province's role in Confederation to his own situation growing up as the eldest of 10 children. “My responsibility in the eyes of my parents could be summed up in one word: compliance,” he said in London. “Just be quiet and set a good example. Maybe there is a little bit of that to us here in Ontario.” Neither analysis deals completely with Ontario's complex, shifting history. The province had a very strong sense of identity right from the formation of Canada in 1867 but it also was proud that one of its own, John A. Macdonald, was its first prime minister. And Ontario was conscious that it owed its growing prosperity to the high-tariff walls erected as part of Macdonald's National Policy that sustained its manufacturing industries. But, as historian Randall White notes, long-serving premier Oliver Mowat (1872-1896) battled Macdonald for control of provincial resources (earning the nickname “the little tyrant”) and, later, both Howard Ferguson and Mitch Hepburn fought pitched battles with Ottawa over federal encroachment on provincial jurisdiction. Prevailing attitudes changed during the Second World War, which transformed Canada into a modern industrial state with Ontario at its centre. The postwar province was so diversified economically that it was touched by almost every federal policy. As Queen's University political economist Thomas Courchene has noted, “national policy had frequently had little choice but to be cast in a pro-Ontario light.” Leslie Frost believed that political relations had to reflect these economic ties. When he became Ontario's premier in 1949, he set about building a co-operative relationship with Ottawa. The province surrendered much of its taxing authority and agreed to the equalization scheme that vexes Mr. McGuinty. During Mr. Frost's 12 years in office, the old confrontations died away and the modern notion of Ontario as a helpful saviour of Confederation – exemplified by John Robarts' Confederation of Tomorrow conference in 1967 – took hold. So complete was this subsuming of Ontario's regional identity that historian Arthur Lower concluded in 1968 that the province had little collective will and asked in an article: “Does Ontario exist?” No one laughed and, indeed, historian Peter Oliver questioned seven years later why “anyone would attempt to write the history of a region which isn't.” Ontario was firmly by the federal government's side during the energy battles of the 1970s, supporting Ottawa's move, through the National Energy Program, to gain a larger share of Alberta's oil revenues. And Ontario forsook its old alliances with Quebec to side with the Trudeau government's push to patriate the Constitution and enact the Charter of Rights and Freedoms. The MPs that Ontarians send to Ottawa are still more likely to represent the federal argument to Ontario than vice versa – Mr. McGuinty has found few allies in any federal government caucus – but MPPs at Queen's Park began to fall out of step in the 1980s. The Peterson government was impatient with Brian Mulroney's agenda of fiscal restraint and free trade. In particular, Ontario saw the free-trade pact with the United States – the end of the old National Policy – as evidence that Ottawa was promoting the rest of Canada at its expense. By the early 1990s, Bob Rae concluded that the country seemed to be “based on the premise that everyone else could speak ill of Ontario and that this inherently wealthy place would continue to bankroll Canada.” In a 1993 speech, he described Ontario as “the part of Canada that dare not speak its name.” Mr. McGuinty owes much to Mr. Rae's decision to engage a consulting firm to draft a cost-benefit analysis to buttress his belief that the structure of Confederation in the wake of the free-trade deal and cuts in transfer payments neglected Ontario. Mr. Rae's “fair shares federalism” argument is the precursor of the current premier's “fairness” campaign. Mr. Harris agreed that the structure of Confederation served Ontario ill. He, too, fought the federal government (often along with other premiers) on everything from employment insurance to the Kyoto greenhouse-gas protocol. But the federal government at the time was preoccupied with Quebec, after the wake of the 1995 referendum that narrowly kept that province in the country. The federal Liberals' stranglehold on Ontario gave Mr. Harris's Progressive Conservative government no allies on Parliament Hill and Ontario's fundamental objections remained. Mr. McGuinty has earned some concessions in the past three years but the broad-ranging reform of fiscal relations he is seeking eludes him. His efforts seem to resonate with voters who find the notion of a $20-billion “gap” easy to comprehend. One opinion poll earlier this year gave him two-to-one support over federal Finance Minister Jim Flaherty in their war of words over Ontario's economic strategy. But will 13 million Ontarians find a will to act collectively and heed their Premier's call to arms? Mr. White concedes only that the province “is gradually recovering some sense of a regional identity it lost after the Second World War.” Mr. Courchene, too, is careful about predicting the future. “They're thinking of themselves as meriting better treatment from the federal government,” he said. “Does that make them a region? I don't know.” Certainly not in the way that Quebec is distinctive or the West feels it has been victimized by Bay Street and the NEP. It is also hard to define Ontario: The northwest feels closer to Manitoba and there is little identification with Toronto in the eastern part of the province. In addition, immigrants – and Ontario has been getting 125,000 or more a year – have only to look at their new passports to discern their allegiance. But circumstances may yet push Ontario into regional belligerence as the belief grows that the equalization program is unsustainable. Its taxpayers contribute 40 per cent of the cost of the scheme – $13.6-billion now, and growing by leaps and bounds – and this burden rises every year whether its economy grows or not. Conversely, while Alberta's oil revenues are part of the equation that determines payouts, the revenues themselves are off limits to the federal treasury. Mr. Courchene calculates that, partly as a result of this scheme, Ontario's per-capita revenues trail every other province. The prediction that Ontario will soon become a have-not province and qualify for payments that, absurdly, are largely funded by its own taxpayers casts a harsh light on the scheme's shortcomings. Mr. Courchene calls this prospect “fiscalamity,” and if Ontarians catch his drift Mr. McGuinty will have a blank cheque to throw some weight around. The eldest child may decide he's fed up with setting a good example and looking after the other kids.