P.E.I. overpaid on equalization, says think tank

Prince Edward Island received $90 million more than it should have in equalization payments in 2010, says the Mowatt Centre for Policy Innovation at the University of Toronto.

The Mowatt Centre bases that on the province's level of health spending, which is the second lowest per capita in the country.

Equalization money is meant to allow provinces to offer roughly equivalent services, but the formula for doling out the money is not connected to the provinces' expenses.

"It only looks at the ability of provinces to raise revenue," said Mowat Centre policy director Josh Hjartarson.

"The formula also needs to look at the costs of delivering services. For example, in some parts of the country it's more expensive to hire doctors than others. In some parts of the country you have more senior citizens than other parts of the country. And these factors should be factored into the equalization formula."

The study found P.E.I. had relatively low per capita spending on healthcare in 2010 despite the province's aging population.

Under the Mowat Centre's equalization model, the province of Ontario would see increased federal transfers.