Trevor Tombe published an article on CBC estimating Alberta’s share of the massive Covid spending package from the federal government and pointing out that we will be a net recipient for the first time in 55 years.
If you only heard about this on social media you probably didn’t hear that he also acknowledged that due to the massive debt-fuelled spending from the Feds every province is a net recipient this year (i.e. every province has a big red bar in his chart, and they are all larger per capita than Alberta’s).
The editors at CBC slapped the very misleading headline on the piece saying:
This headline is completely false. “Have-not” provinces are those whose below-average fiscal capacities make them eligible for Equalization payments. They also tend to receive the most government funding from other measures. Despite Tombe’s estimate that Alberta will be a net recipient of roughly $20 billion this year, Alberta will still almost surely have the least spending per capita from the federal government, and certainly not get a dollar of Equalization.
Tombe’s calculations were still helpful though, certainly. They show that Albertans are getting slightly more than other provinces from the various programs the federal government has rolled out. This is an unusual experience for Albertans, who are used to counting themselves lucky to get an equal per capita share of anything the federal government does.
There are two reasons for this unique situation producing unique results. First, as Tombe notes, there is around $1b coming to Alberta to help with reclamation of orphaned well sites. This is welcome, but falls far short of anything like the $9b that went towards restructuring the auto sector in 2009. As Fairness Alberta has noted elsewhere, given Albertans pay about 16% of revenues, we chipped in more to bail out one of Ontario’s key sectors than the entire country is putting towards our economic engine as it faces global price wars, domestic economic barriers, and a covid-based crash in demand.
The second reason, which Tombe omits, is that the government and Covid have compelled the shutdown of vast swaths of the economy. In response the government has created generous employment supports, including CERB being eligible to contractors. Since our young population means more people of working age, it stands to reason that employment supports would benefit us slightly more than others.
Before thinking that slightly higher benefits this year is some kind of gift to Albertans, we have to keep in mind that these programs are not actually being funded by other provinces. They are 100% funded by debt. Given Albertans’ younger population and higher share of federal taxes, there is no reason not to assume that we will be more than paying for any benefits we get in 2020.
So the big picture is that despite 2020 being a very unique year, some things haven’t changed:
Alberta is still the lowest net recipient in terms of taxes paid / federal spending, and if you somehow included an estimate of how much of that debt we will be paying, we would once again be the largest net donor.
Alberta will also likely still have the lowest per capita spending in Canada despite how hard our key sector has been hit by global forces and domestic policy (Significant stimulus/assistance this fall is unlikely but could change that).
Alberta will certainly not be getting any Equalization payments.
Anyone trying to take Tombe’s analysis as some kind of vindication of the federation and its unfair fiscal flows is sorely mistaken.