Fraser Forum

Alberta’s economic health remains a matter of national importance

Printer-friendly version
Alberta’s economic health remains a matter of national importance

It’s well known that Ottawa has run substantial budget deficits in recent years. The federal deficit weighed in at approximately $19 billion in both 2016/17 and 2017/18.

But what’s perhaps less understood, however, is that those deficits would be much larger if not for Alberta’s substantial net contribution to federal finances. In short, Albertans pay far more in taxes than they receive back in programs, services and transfers—which benefits Ottawa’s bottom line.

Without so much cash from Albertans, federal finances would look truly bleak.

Consider this. In the years following the 2008/09 recession, the federal government gradually reduced the federal deficit, effectively eliminating it by 2014/15. However, as the chart below shows, in the absence of Alberta’s net contributions, Ottawa would never have come close to eliminating the deficits that emerged during the 2008/09 recession. In fact, in 2014/15, instead of a nearly balanced budget, we’d have had a $28.2 billion deficit.

Federal Government Fiscal Balance

In more recent years, the story is similar. Again, Ottawa has run deficits of about $19 billion in each of the past two years. But without Alberta’s net contribution, those deficits would have been approximately twice as large—just less than $40 billion.

This reality is all the more remarkable given the severity of Alberta’s economic challenges in recent years, as the province has suffered from one of the worst recessions in its history followed by a comparatively tepid recovery.

And still, since 2014/15, Alberta’s net contribution to Confederation has been $92 billion (and that’s excluding the additional interest payments that would have been paid on all of the extra resulting federal debt). In other words, because Alberta punches so far above its weight when contributing to federal finances, the federal government has been spared from racking up approximately $100 billion in new debt.

Finally, this prevention of large-scale federal debt accumulation benefits Canadians from coast to coast. So it’s crucial for Canadians and other governments across the country to recognize the scale of Alberta’s contributions and to support and contribute to a policy framework that ensures all Canadians continue to benefit from Alberta’s outsized fiscal contributions.

Clearly, a strong economic recovery in Alberta a matter of national—not merely provincial—concern.

Blog Category: