A Friend in Need: How Albertans Continue to Keep Federal Finances Afloat, 2020

Summary

• In studies published in 2017 and 2019, we measured Alberta’s net contribution to Canada’s economy during the most recent economic boom in the province. The first of these studies showed that when it comes to overall economic growth, job creation, or business investment, Alberta made a substantial contribution to the health of the Canadian economy from 2004 to 2014, a contribution significantly disproportionate to the size of the province’s population.
• Since 2014, Alberta has struggled and much has changed. However, Alberta continues to punch well above its weight in at least one critically important respect—its net contribution to federal government finances. Our 2019 study measured this contribution in the years during and since the recession. This research bulletin updates that work with the latest available data.
• Even through the recent recession and uneven recovery, Alberta has remained the largest net contributor to federal finances by far.
• Alberta’s net contribution to Confederation peaked in 2014 at $27.4 billion. Since then, due to economic weakness in the province, its net contribution shrunk considerably, reaching a low of $13.4 billion in 2017 before rebounding slightly to $15.3 billion in 2018. In total, from 2014 to 2018, Alberta’s net contribution to Confederation was $94.9 billion.
• Alberta’s large contribution has helped stabilize federal finances and prevented the federal government from running even larger deficits. In 2018/19, for example, in the absence of Alberta’s net contribution and if all else had remained equal, Canada’s deficit would have been over $29.3 billion—more than twice the $14 billion that was in fact the case.
• Alberta’s economic health is a matter of national importance and its struggles in recent years have implications for all Canadians. In short, Canada cannot reach its full economic and fiscal potential unless Alberta is able to do the same.