At first blush, this week’s news that the province will benefit from federal largess appeared to be a rebuke to angry Albertans. The billions in funding flowing from Ottawa to the province in pandemic aid this year demonstrates that the province needs the rest of Canada, badly.
Take that, separatists and/or “fair deal” proponents – it’s time to give up your magical, landlocked thinking.
In pre-COVID-19 times, Alberta was contributing about $20-billion more in federal taxes than it gets back in national spending. This pandemic year has flipped the script. Calgary economist Trevor Tombe crunched the numbers and discovered that for the first time in 55 years, the province will likely be a net receiver of federal funds – a not-insignificant $22-billion.
Dr. Tombe wrote in a CBC column that the change is due to massive federal spending on emergency measures, combined with much lower income and sales-tax revenues in the province. Unemployment is high among Alberta’s younger and usually well-paid work force, and the price of oil is low.
All other provinces are going to be net recipients of federal funds this year, too, but Alberta is hit harder. Dr. Tombe estimates that federal revenue raised will decline by 15 per cent more per capita here when compared with the average decline for the country as a whole.
In June, Mélanie Joly – the federal Minister of Economic Development – said that “demand is higher from Alberta” for federal aid programs.
This month, the minister’s communications staff sent unprompted e-mails to The Globe and Mail including a data chart for the Regional Relief and Recovery Fund. This is a federal program offering interest-free, partially forgivable loans to help with COVID-19-related financial hardship for small and medium-sized businesses. The chart shows that of the Western provinces, Alberta businesses have received more loans and money than those in British Columbia, Saskatchewan and Manitoba combined.
But those who make the argument on these data points, that Albertans should just be quiet and be grateful to exist in such a country where we bail each other out, are wrong.
First of all, they are inadvertently making the case for those who think the province’s taxpayers are underappreciated by Ottawa or other parts of Canada. This is a “bizarre year” – as Premier Jason Kenney has described it.
Yes, Alberta is benefiting at this moment by being part of something larger than itself. But that still leaves all the other decades in which oil wealth and the associated high incomes – and the secondary and tertiary jobs connected to the energy industry – helped to pay for a significant part of federal spending for the country as a whole.
“It proves that the only way we are a net recipient is during a year when we have global crisis,” said Wexit Canada interim leader Jay Hill, who added that the flow of cash to Alberta this year will not shake the beliefs of his party members.
The former MP said Wexit party members are aghast at the size and scale of the projected $343-billion federal deficit. He said he wants to see the real government figures for COVID-19 spending, to make sure money is not flowing in a lopsided manner to vote-rich Quebec, or other provinces.
I also think the frustration in Alberta is not only about money.
It’s about a lack of political power, and despair about the loss of identity. For decades, the province had investors and workers beating at its door – it was the place to be. It was where you went if you wanted to work. That has all changed in five or so years. Global climate concern and a lack of energy infrastructure (i.e., pipelines) means Alberta assets are being written down, and oil majors are leaving town.
Shopify Inc. now has the largest market capitalization of any Canadian company. Around the time the Ottawa-headquartered e-commerce company was being launched, a decade and a half ago, the largest Canadian company was Encana. The company once lorded over downtown Calgary as an oil and gas giant, but now exists as a split, shrunken and renamed version of its former self, headquartered in Denver.
It also goes back to the same frustration about opposition or indifference to oil pipelines in many other parts of Canada, a position some Albertans view as hypocritical while the same regions benefit from a federal pot of money significantly bolstered by oil revenues.
There’s resentment that virtue-focused federal Liberals, in their messaging and laws – and despite the Trans Mountain pipeline purchase – seem embarrassed by Canada’s production of 5 per cent of the world’s oil. The pandemic hasn’t seemed to soften these views for many Albertans.
This week, Mr. Kenney – who has fully rejected separatist movements but has pushed for “fair deal” measures for Alberta – told Calgary Herald columnist Don Braid that his government will present “a brutally frank picture of the disaster in Alberta’s finances” in August.
If these numbers hold up under scrutiny, the province is heading toward a massive reckoning. And it’s going to take years, perhaps much longer than other provinces, for the economic situation to improve in Alberta.
There is no doubt that Ottawa’s pandemic-aid programs have been lifelines for many. And even in Alberta, there is significant understanding that the global energy and business landscape is undergoing a massive transformation.
But developing a thriving Canadian, or Alberta, tech sector to replace a resource-focused export economy does not happen overnight. Dr. Tombe noted in an e-mail that Alberta will still be a “have” province in the federal equalization formula for at least the next two years. (Although he predicts it will rank behind British Columbia and Ontario in fiscal capacity).
It is possible to walk and chew gum at the same time. Canada will need all parts of the economy firing, including the fossil-fuel sector, to regain control of the country’s finances.
But anyone arguing that the bleaker economic picture for Alberta, or this year’s reliance on federal aid, is going to blunt provincial angst and alienation is mistaken.