The Fraser Institute

The Fraser Institute

December 09, 2014 06:15 ET

The Fraser Institute: Nova Scotia, New Brunswick Rely on Equalization While Shunning Resource Development

HALIFAX, NOVA SCOTIA--(Marketwired - Dec. 9, 2014) - Equalization payments are discouraging at least two provinces - Nova Scotia and New Brunswick - from developing their natural resources and generating prosperity for their residents, finds Nova Scotia, New Brunswick and the Equalization Policy Crutch, a new essay released jointly today by the Fraser Institute and the Atlantic Institute for Market Studies (AIMS), two independent, non-partisan Canadian public policy think-tanks.

"Equalization makes it easier for Nova Scotia and New Brunswick to forego natural resource development that would help spur economic growth while Saskatchewan, for example, is developing its natural resources and is now a net contributor to Canada's equalization program," said Ben Eisen, director of research and programs at AIMS.

Through annual payments, Canada's federal equalization program redistributes income to poorer provinces. From 2005/06 to 2013/14, New Brunswick received $14.5 billion in equalization while Nova Scotia received $12.9 billion.

Yet New Brunswick recently introduced a moratorium on hydraulic fracturing (also known as fracking) despite the province's estimated 15 trillion cubic feet of known shale gas reserves. And Nova Scotia, with its 120 million cubic feet of natural gas and eight billion barrels of oil, recently extended its own fracking moratorium.

"Resource development is a proven prosperity driver, but by banning fracking, the governments of Nova Scotia and New Brunswick are keeping the door shut on a potential source of jobs, economic growth and government revenue," said Mark Milke, study co-author and senior fellow at the Fraser Institute.

The study finds that on a wide range of economic measures, Nova Scotia and New Brunswick perform poorly compared to most other provinces.

For example, in 2013 only Prince Edward Island had an average household income lower than Nova Scotia ($37,456) and New Brunswick ($36,373) whereas Saskatchewan ($44,288) ranked second in Canada.

Moreover, from 2004 to 2013, the average unemployment rate in Nova Scotia (8.6 per cent) and New Brunswick (9.2 per cent) ballooned over rates in Saskatchewan and Alberta (4.7 per cent each) where many young Maritimers have moved in search of work.

And from 2004 and 2013, only Prince Edward Island attracted less private sector investment than Nova Scotia and New Brunswick.

"If the governments of Nova Scotia and New Brunswick want to help create more jobs at home, raise incomes for workers, and increase tax revenues for their respective governments, they should pursue policies that do not harmfully restrict natural resource development," Eisen said.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.

Contact Information

  • Media Contact - Atlantic Institute for Market Studies
    Ben Eisen
    Director, Research and Programmes
    (902) 429-1143 ext. 231

    Media Contact - The Fraser Institute
    Mark Milke
    Senior Fellow
    Office : (403) 216-7175 ext. 423 or Cell: (403) 510-6270
    mark.milke@fraserinstitute.org
    @MilkeMark

    The Fraser Institute
    Mark Hasiuk
    Media Relations Specialist
    (604) 688-0221 ext. 517
    mark.hasiuk@fraserinstitute.org
    @FraserInstitute