From the Fraser Institute

By Tegan Hill

Following last month’s Liberal election victory, and after a decade of damaging federal policies by the Trudeau government, some Albertans are calling for a referendum on separation. While Premier Danielle Smith said she does not support separation she “will honour” the referendum process. And according to a recent poll, more than one-third of Albertans are open to leaving Canada. But whether or not the referendum actually happens, one thing is clear—Albertans have reason to be frustrated with confederation.

In our current system, Ottawa collects taxes from people and businesses across the country then transfers that money to Canadians for federal and national programs including the Canada Pension Plan (CPP) and employment insurance. Albertans contribute disproportionately to this system thanks to the province’s relatively high rates of employment, higher average incomes and younger population.

For example, from 1981 to 2022 (the latest year of available data), Albertans’ net contribution to the CPP—meaning the amount Albertans paid into the program over and above what retirees in Alberta received in CPP benefit payments—was $53.6 billion. British Columbia was the only other province where workers paid more into the CPP than retirees received in benefits—and Alberta’s contribution was six times greater than B.C.’s contribution.

On equalization—Canada’s transfer program aimed at ensuring each province can provide comparable levels of public services—Alberta has not received payments since 1964/65. In 2022 (the latest year of available data), the federal government spent $21.9 billion on equalization while 13.5 per cent of total federal revenue came from Alberta, which means Alberta taxpayers contributed an estimated $3.0 billion to the equalization program that year—while receiving no payments.

More broadly, Alberta’s total net contribution to federal finances and national programs (that is, total federal taxes and payments paid by Albertans minus federal money spent or transferred to Albertans) was $244.6 billion from 2007 to 2022—more than five times more than the net contribution from British Columbians or Ontarians (the only other two net contributors) despite Alberta’s smaller population.

So that’s the reality—Alberta massively overcontributes to federal and national programs. But that’s not necessarily a problem, in and of itself. The problem is that despite Alberta’s outsized importance within Canada, Albertans have faced a barrage of federal policies that disproportionately and negatively impact the province including Bill C-69 (which imposes complex, uncertain and onerous review requirements on major energy projects), Bill C-48 (which bans large oil tankers off B.C.’s northern coast and limits access to Asian markets), an arbitrary cap on oil and gas emissions, numerous “net-zero” targets, and so on.

On the campaign trail, Prime Minister Mark Carney promised to keep the emissions cap and Bill C-69 (which opponents call the “no more pipelines act”). Yet in a recent interview with CTV, Carney said he will “change things at the federal level that need to be changed in order for projects to move forward” adding that he may eventually remove both the emissions cap and Bill C-69.

That would be welcomed news in Alberta, which continues to punch above its economic weight despite federal policies that prevent the province from reaching its full economic potential. And any policies that restrict Alberta ultimately limit prosperity in Canada.

Albertans may soon face a referendum on separation. The rest of Canada should understand why so many Albertans are frustrated with the status quo. Federal policies specifically target their province’s energy industry despite their disproportionate contribution to the federation. It’s time to undo these federal policies, for the benefit of all Canadians.

Tegan Hill

Director, Alberta Policy, Fraser Institute