Lennie Kaplan is a former senior manager in the Fiscal and Economic Policy Division of Alberta’s Ministry of Treasury Board and Finance. New research reveals that, under a medium-growth scenario, Albertans will send an estimated $900 billion more to Ottawa than they will get back over the next 25 years (2027 — 2052). This represents an average of $35.8 billion a year, or $5,721 per Albertan per year on average over the time period.The fiscal contribution estimates are presented in the same format as those in Statistics Canada's Provincial and Territorial Economic Accounts, Table 36-10-0450-01. Three economic growth scenarios are modelled in this commentary: low growth, where Alberta’s real GDP growth starts at 1.4% per year, falling to 1.1% over the long term; medium growth, starting at 2.3% per year and falling to 1.9%; and high growth, starting at 3.2% per year and falling to 2.7% over the long term.My research shows that Albertans will be significant contributors in every year under each scenario. The cumulative totals are $531 billion under the low-growth scenario, $895 billion under the medium-growth scenario, and $1.3 trillion under the high-growth scenario, between 2027 and 2052, or $3,696, $5,721, and $7,639 per Albertan per year, respectively, on average.Albertans’ contributions grow over time. In the medium-growth case, for example, annual fiscal contributions rise from $19.7 billion in 2027/28 to $61.9 billion in 2051/52, because federal revenue tracks Albertans’ high and rising incomes, while federal spending in Alberta tracks population, prices, and ageing.Albertans’ fiscal contribution is the difference between federal government revenue collected in Alberta (i.e., personal and corporate income taxes, GST, and other taxes on products, employment insurance contributions, and other revenue) and federal government expenditure in Alberta (i.e., goods and services, transfers to persons, transfers to the provincial and local governments, subsidies, and a per capita share of interest on the federal debt). Federal revenue depends on Alberta's incomes and corporate profits. Federal tax and spending policy and provincial choices will also change the numbers. .Albertans have been major net fiscal contributors to the Canadian federation for many years. In fact, between 2007 and 2024 alone — a period of 18 years — Albertans paid $293.5 billion more to Ottawa than they received in return, according to the numbers released by Statistics Canada.To be clear, Alberta, like all provincial governments, does not directly contribute to federal revenues. Albertans face the same federal tax rates as other Canadians but pay more per person due to higher average incomes, a younger population, and a strong corporate tax base.When faced with these large fiscal imbalance numbers, some may well argue for independence, but I don’t see it that way at all. In my view, the Alberta government should use its considerable fiscal clout within Canada to request greater fiscal fairness — starting with a more rigorous, transparent process for renewing major federal transfer programs and then pursuing meaningful options to reform federal-provincial fiscal relations.I have talked a great deal over the past year about the need for greater fairness for Albertans in the realm of federal-provincial fiscal arrangements and made some recommendations for change. While I am encouraged that Premier Danielle Smith has finally taken on the issue of reforming the Equalization Program, there is a need to go much further.I believe first ministers, including the prime minister, should agree at the outset to commission a comprehensive, independent review of fiscal relations jointly through the federal and provincial governments. The review should cover the Equalization Program and other major federal transfer programs, including the Canada Health Transfer, the Canada Social Transfer, and the Fiscal Stabilization Program. It should offer recommendations that ensure fairness, reduce complexity, increase transparency, promote accountability, encourage economic growth, and ensure these programs’ continued relevance..A more open, co-operative approach to federal-provincial fiscal relations will strengthen national unity and ensure all provinces are treated fairly within the Canadian federation. I continue to believe there is a need to pursue a memorandum of understanding (MOU) between the federal government and the provinces on reforming federal-provincial fiscal relations, with Alberta playing a leadership role.Detailed analyses of meaningful options for reform of federal-provincial fiscal arrangements have been done within the Alberta government in the past (as late as 2023), especially within Treasury Board and Finance and Executive Council, Intergovernmental and International Relations. It is unclear why access to information (ATI) requests I submitted over the past two years for this type of analysis turned up so little, even in the few blank or heavily redacted pages I did receive.The Alberta government must give its citizens the economic and fiscal impact analysis they need to evaluate reasonable and meaningful options for reform of fiscal federalism. It shouldn’t come down to a choice among the unreasonable costs of Alberta independence, political posturing toward independence supporters, sitting on the sidelines, and maintaining the status quo.Lennie Kaplan is a former senior manager in the Fiscal and Economic Policy Division of Alberta’s Ministry of Treasury Board and Finance. During his tenure, he focused, among his other duties, on assisting in the development of meaningful options to reform federal-provincial fiscal arrangements.
