(The following article is from the December 1-31, 2008, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $25/year, or $12 low income rate; for U.S. readers - $25 US per year; other overseas readers - $25 US or $35 CDN per year. Send to: People's Voice, c/o PV Business Manager, 133 Herkimer St., Unit 502, Hamilton, ON, L8P 2H3.)

By Liz Rowley, leader of the Communist Party (Ontario)

The Harper government's fight with Ontario over equalization payments is part of its overall plan to eliminate such payments altogether, and to blame the Liberal government in Ontario for its demise.

     In fact, the Ontario government's demand that the province receive its share of equalization payments in 2008 reflects the catastrophic effect of job losses in the manufacturing sector from 2003 when Dalton McGuinty defeated Mike Harris, to the present.

     Qualifying for equalization is no gift, but a sign of a rapidly deteriorating economic situation. That was true before the September economic meltdown, which all governments in Canada were aware was coming, and have been busy passing the blame from one to the other for some time now.

     This includes the comments by federal Finance Minister Flaherty that no-one should invest in Ontario because of high corporate tax rates levied by the Liberals. In fact provincial tax rates are very low for corporations in Ontario, thanks to the Harris Tories, and no thanks to the McGuinty Liberals. Low corporate taxes have steadily emptied the provincial Treasury over 15 years, stewarded by not one but three governments, one of which was led by Premier Bob Rae.

     Qualifying for equalization payments is, in Ontario, an indicator of both the terrible structural impacts of free trade and the loss of the Auto Pact, and of the bankruptcy of tax cuts, privatization and de-regulation of the economy - the four horsemen of neo-liberalism.

     The Harper government's battle over equalization was an effort to pin the blame for economic crises on Ontario Liberals. But it was also an effort to end equalization, and vaporize some of the glue that holds Canada together. Equalization payments ensure that all provinces provide the same services and the same access to services in every province and territory, regardless of the relative wealth or poverty of each. Equalization ensures that universal social programs including Medicare and education are delivered at the same consistent levels of quality everywhere in Canada.

     The attack on universality is part of the methodology of facilitating privatization and deregulation. It aims to weaken Canadian sovereignty, break down north-south borders, and ease the penetration of US corporate interests into Canada's public sector.     Ontario is entitled to its share of equalization payments. But the Ontario public is entitled to a government that delivers on its 2003 promises to eradicate public-private partnerships in hospitals and healthcare, and not expand these into other areas, including education, cities, and infrastructure.

     To pull Ontario out of recession, the provincial government must also use its considerable powers to protect jobs in manufacturing and auto, not with corporate handouts, but with equity investments combined with conditions including no layoffs or shutdowns, no wage or pension cuts, and no two-tier wages. It could introduce plant closure legislation to prevent corporations from closing productive plants because wages are lower elsewhere. 

     The provincial government has the power - but not the will - to introduce legislation to take over the auto plants and produce a small, fuel-efficient, affordable, and environmentally sustainable Canadian car. It could demand the federal government take over the gas and oil industry, establish an east-west power grid, and introduce a two-price system for gas and oil including a lower domestic price for fuel and home heating.

     The Ontario legislature could raise the minimum wage to $15, demand federal action on EI to protect all unemployed workers for the duration of unemployment (not just the 40% who still qualify), and introduce a guaranteed annual income above the poverty line. It could legislate real rent controls, and launch a massive social housing construction program to put the province back to work, house the homeless, and build affordable housing. It could finance a massive municipal and provincial infrastructure program, and set up a provincial system of quality, accessible, affordable, public childcare. It could introduce progressive tax reform based on ability to pay, and give cities a new financial deal.

     All that would put Ontario back in category of a "have" province, a much more desirable place to be. But it would require more than a pillow fight in the media. In this case, it will take all of the muscle of the labour and democratic movements to turn the situation, and ensure that the social and economic costs of the current crisis are paid for by the corporations, not by the working class and working people who are its victims.