So it comes out now that Ontario is a “have-not” province under the government’s equalization scheme. The opposition freaked out, the government downplayed it, but what does it mean? One of the things it means is that Ontario is actually paying itself back under equalization.
To me, what this means is that equalization is seriously messed up. As the Grope and Flail points out, you can play the system to get a bigger payout. While the goal of ensuring that there is some parity among the provinces, these attempts to beat the system combined with the intense politicization of this topic makes for a real mess. This is how you get the absurdity of Ontario paying into equalization and yet qualifying for a payout as well.
It’s time to streamline and, if possible, depoliticize equalization.