Alberta's outsized economic contribution must be recognized and protected, think tank tells Canada

The Fraser Institute says the rest of Canada should appreciate how much Alberta contributes financially to the federal government.

Fraser Institue report says Alberta contributed $221B more than it got back from Ottawa from 2007 to 2015

A study by the Fraser Institute says the rest of Canada needs to realize how much Alberta contributes financially to the federal government, and policy makers need to be careful not to hinder the province's economic position. (Gregory Bull/Associated Press)

The Fraser Institute says the rest of Canada should appreciate how much Alberta contributes financially to the federal government.

The Vancouver-based conservative think tank says that between 2007 and 2015 Alberta handed over $221 billion more than it got back from the federal government.

Ben Eisen, who co-authored the study, says that within about the same time frame, more than 30 per cent of the private sector jobs generated in Canada were in Alberta, despite the province having only 11 per cent of the country's population.

"For Canada to reach its full economic potential it absolutely needs a strong Alberta. Alberta's having a difficult time right now but its contribution to Canada is still very large when it comes to public finances," he said.

"And over the last decade its contribution to public finances and the overall health of the Canadian economy has been very large."

Eisen says Alberta's continued prosperity will increasingly hinge on getting its oil and gas to overseas markets, and opposition to energy infrastructure prospects imperils it.

"While the federal government has approved new pipeline capacity, those pipelines actually need to be built to help Alberta get its oil to market," the study says.

Pipeline construction vital, study says 

The Fraser Institute says the federal government and other provinces should stand with Alberta to counter the strident opposition in B.C. to the Trans Mountain pipeline.

Alberta’s economy created 32.5 per cent of all private-sector jobs in Canada despite having only 11.7 per cent of the country’s population, the Fraser Institute says. (Fraser Institute)

"[Ottawa] can help Alberta by demonstrating its resolve to proceed with projects that it has determined are safe and not bow to pressure from activist groups who appear determined to erect obstacles to nearly any type of traditional energy infrastructure," the study says.

The institute also takes aim at recent federal and provincial tax increases it says have reduced competitiveness in Alberta, which used to have the lowest top personal income tax rate in North America.

"Alberta's combined top rate has plunged from lowest to a tie for 45th lowest, and will fall to 46th lowest after Saskatchewan's personal income tax cut takes effect," the study says.

Imbalance due to 'good things'

University of Calgary economist Trevor Tombe says it's a little known fact that the big gap between what Alberta sends to Ottawa versus how much it receives is attributable to taxation.

"Most of that is due to income taxation — personal and corporate. Simply because Alberta is a very high-income province, it's naturally going to be paying a disproportionate share of federal … income taxes," he said.

Alberta's relatively youthful population also means the province takes in less federal money in the form of Old Age Security (OAS) and Canada Pension Plan (CPP) payments.

"So the vast bulk of the fiscal transfers between Alberta and the rest of the country that are implicitly a consequence of uniform federal policies are due to good things, not due to some kind of poorly designed equalization system, as some might suggest," he said.

"Although in fairness, this report does not suggest that."

The think tanks says Canadians in other provinces should think of Alberta "as a friend in need" — one that endured a recession that created a 3.6-per-cent GDP contraction — and not make policy choices that hinder its recovery.

"That doesn't mean that Alberta needs a handout. It simply means that other governments should remember how essential a strong Alberta is to a strong Canada, and avoid policy choices that will constrain Alberta's economic growth prospects in the years ahead," the reports says.