For the first time in more than 50 years, Alberta received more money from Ottawa than it sent
Alberta received roughly $68.5 billion in federal spending in 2020, almost double what it received in 2019
EDMONTON — For the first time in several decades Alberta received more money from the federal government than it sent to Ottawa, according to a new analysis — a nearly unprecedented shift due to a major economic contraction in Canada and astronomical levels of pandemic spending by Ottawa.
In crunching the figures, Trevor Tombe, a University of Calgary economist, found that Alberta had received roughly $68.5 billion in federal spending in 2020, and had sent roughly $57.6 billion in taxes, leaving a net gain to Alberta of roughly $10.9 billion.
“You’re seeing a large increase in federal spending everywhere, because the emergency response benefits did flow to Canadians living everywhere,” said Tombe. “The change for Alberta, though — the per-person increase in federal spending — was larger than any other province.”
Since the mid-1960s, Alberta has been a net contributor to Canada’s finances, sending tax money to Ottawa but receiving less back through various transfer payments, including equalization, Old Age Security and Canada Social Transfer payments.
Between 1968 and 2018, this totalled more than $630 billion, working out to $3,700 per Albertan per year over this time period.
This fiscal imbalance has been a significant driver of Alberta alienation, and the sense that the federation is unfair to Alberta inspired the recent referendum on equalization, a program that, since 1957, has distributed federal tax dollars to poorer provinces so all provinces could afford reasonably similar levels of services.
Yet, 2020 upended this balance for Alberta.
“In 2020, all provinces had negative contributions to the federation, due to the one-time impacts of COVID and related federal emergency response measures,” said an emailed statement from Alberta Finance Minister Travis Toews’s office.
When the COVID-19 pandemic hit, the federal government rolled out hundreds of billions of dollars in spending. As of March 31, 2021, the parliamentary budget office estimated this spending had topped $330 billion. In April, when the Liberals released a much-delayed budget, they said that over the past year the deficit had reached $354 billion.
“This federal debt will have to be repaid and when this happens, a disproportionate share of this COVID-incurred debt will continue to come from Alberta’s taxpayers,” said Toew’s office.