Atlantic Canadians rely on programs that rely on Albertans
Alberta’s role in federal programs such as equalization and national programs such as the Canada Pension Plan (CPP) and employment insurance (EI) is important to all Canadians including Atlantic Canadians, given the reliance on these programs in the Atlantic region. Indeed, these programs are not sustainable in their current form without Alberta’s participation.
Subsequently, as Alberta considers a provincial referendum on equalization and possible withdrawal from the Canada Pension Plan, Atlantic Canadians should take note.
Alberta contributes disproportionately to these programs due to its comparatively young population (less retirees), higher rates of employment and higher average incomes. In contrast, Atlantic Canada remains heavily dependent on these programs due to its relatively older population, higher unemployment and lower average incomes.
Consider equalization. All three Maritime provinces remain heavily dependent. In 2019, equalization represented 15.5 per cent of provincial revenue in Nova Scotia, 19.3 per cent in New Brunswick and 20.1 per cent in Prince Edward Island. Any reform to equalization will likely impact federal revenues provided to Maritime provinces.
And in 2017, the latest year of comparable data, Alberta workers contributed $2.9 billion more to the CPP than they consumed in 2017. In fact, if Alberta withdrew from the program, the CPP’s contribution rate for the rest of the country (including Atlantic Canada) would have to increase from 9.9 per cent to 10.6 per cent.
Finally, from 2007 to 2018, Albertans’ cumulative net contribution to the employment insurance (EI) program was $12.3 billion (although the recent increase in unemployment in the province has reduced its net contribution).
Simply put, in their current form, both the CPP and EI rely on Alberta’s participation. Alberta’s withdrawal would trigger fundamental changes to these programs including higher contribution rates (i.e. taxes) and potentially reduced benefits.
But this need not be the case, if the rest of Canada, particularly the federal government, recognizes Alberta’s key role in these programs. That recognition could form the basis for new agreements in areas meaningful to Albertans, including changes to the regulatory system for large national infrastructure projects including pipelines (which would mean a rethink of Bill C-69, also known as the federal Impact Assessment Act), reversal of the West Coast tanker ban (as spelled out in federal Bill C-48), and/or reforming the national carbon tax.
All Canadians, including Atlantic Canadians, should understand Alberta’s contributions to federal and national programs.