Quebec's use of some of its federal transfers means that the have province next door, Ontario, is actually helping to finance Quebec's attempt to lure business from other jurisdictions. At the very least, Quebec uses Ontario money (along with that from B.C., Alberta and Saskatchewan) to prop up Quebec business in competition with those in other provinces. Given Ontario's location, it's the one most likely to be affected by such efforts.

It's hard to think of a more inappropriate use of transferred cash and this practice may soon ignite some interprovincial fireworks. That's because Ontario may soon tip into the "have-not" category due to its softening economy. If that happens, one might theorize that Ontario's provincial government will defend the equalization program instead of calling for its reform as its premier, Dalton McGuinty, has done for years.

Except that Ontario is not likely to be in the have-not category for long. Additionally, while for equalization purposes -- and this gets confusing but bear with me -- Ontario may be a have-not province, it will still likely be a net contributor to other provinces because of other federal transfer programs to which it, along with B.C. and Alberta, are net payers. That means Canada's largest province will still subsidize many other provinces while struggling with its own bills. That might make for some interesting interprovincial premiers' meetings.