From the Fraser Institute

By Tegan Hill

With the tariff war continuing and the federal election underway, Canadians should understand what the last federal government seemingly did not—a strong Alberta makes for a stronger Canada.

And yet, current federal policies disproportionately and negatively impact the province. The list includes Bill C-69 (which imposes complex, uncertain and onerous review requirements on major energy projects), Bill C-48 (which bans large oil tankers off British Columbia’s northern coast and limits access to Asian markets), an arbitrary cap on oil and gas emissions, numerous other “net-zero” targets, and so on.

Meanwhile, Albertans contribute significantly more to federal revenues and national programs than they receive back in spending on transfers and programs including the Canada Pension Plan (CPP) because Alberta has relatively high rates of employment, higher average incomes and a younger population.

For instance, since 1976 Alberta’s employment rate (the number of employed people as a share of the population 15 years of age and over) has averaged 67.4 per cent compared to 59.7 per cent in the rest of Canada, and annual market income (including employment and investment income) has exceeded that in the other provinces by $10,918 (on average).

As a result, Alberta’s total net contribution to federal finances (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 as much as the net contribution from British Columbians or Ontarians. That’s a massive outsized contribution given Alberta’s population, which is smaller than B.C. and much smaller than Ontario.

Albertans’ net contribution to the CPP is particularly significant. From 1981 to 2022, Alberta workers contributed 14.4 per cent (on average) of total CPP payments paid to retirees in Canada while retirees in the province received only 10.0 per cent of the payments. Albertans made a cumulative net contribution to the CPP (the difference between total CPP contributions made by Albertans and CPP benefits paid to retirees in Alberta) of $53.6 billion over the period—approximately six times greater than the net contribution of B.C., the only other net contributing province to the CPP. Indeed, only two of the nine provinces that participate in the CPP contribute more in payroll taxes to the program than their residents receive back in benefits.

So what would happen if Alberta withdrew from the CPP?

For starters, the basic CPP contribution rate of 9.9 per cent (typically deducted from our paycheques) for Canadians outside Alberta (excluding Quebec) would have to increase for the program to remain sustainable. For a new standalone plan in Alberta, the rate would likely be lower, with estimates ranging from 5.85 per cent to 8.2 per cent. In other words, based on these estimates, if Alberta withdrew from the CPP, Alberta workers could receive the same retirement benefits but at a lower cost (i.e. lower payroll tax) than other Canadians while the payroll tax would have to increase for the rest of the country while the benefits remained the same.

Finally, despite any claims to the contrary, according to Statistics Canada, Alberta’s demographic advantage, which fuels its outsized contribution to the CPP, will only widen in the years ahead. Alberta will likely maintain relatively high employment rates and continue to welcome workers from across Canada and around the world. And considering Alberta recorded the highest average inflation-adjusted economic growth in Canada since 1981, with Albertans’ inflation-adjusted market income exceeding the average of the other provinces every year since 1971, Albertans will likely continue to pay an outsized portion for the CPP. Of course, the idea for Alberta to withdraw from the CPP and create its own provincial plan isn’t new. In 2001, several notable public figures, including Stephen Harper, wrote the famous Alberta “firewall” letter suggesting the province should take control of its future after being marginalized by the federal government.

The next federal government—whoever that may be—should understand Alberta’s crucial role in the federation. For a stronger Canada, especially during uncertain times, Ottawa should support a strong Alberta including its energy industry.

From the Fraser Institute

By Niels Veldhuis and Tegan Hill

Last week, B.C. Premier David Eby proposed new legislation to give himself and his cabinet sweeping powers to unilaterally change almost any provincial law and regulation without legislative approval or review. While the legislation—dubbed the Economic Stabilization (Tariff Response) Act—has yet to be enacted into law, the fact that the government proposed such unprecedented powers is deeply concerning and a genuine threat to our democracy.

Only five months ago, British Columbians went to the polls and delivered a sobering victory to Eby’s incumbent NDP government, which lost 8 of its 55 seats and ended up with 47 of 93 seats, the narrowest “majority” possible. The popular vote was nearly dead-even between the NDP (44.86 per cent) and the upstart Conservative Party (43.28 per cent).

Even Premier Eby acknowledged the voters sent his government a message and promised to work together with other parties. “After a close and hard-fought campaign, it’s now time to come together to deliver for people,” he said. “British Columbians have asked us to work together and make life better for them.”

“Work together” in a democracy means embracing a deliberative and, at times, messy process. Thoughtful policymaking takes time. It’s a core feature of democracy. No leader has all the knowledge to act unilaterally to do what’s right. We need the legislature to weigh competing viewpoints through rigorous and transparent debate—that’s how our system works.

Yet according to the Eby government, the Economic Stabilization (Tariff Response) Act will lead to the opposite and provide “temporary authority to cabinet… to modify the application or effect of B.C. laws and regulations.” In other words, if approved, it will allow Premier Eby and his cabinet to override provincial laws, regulations, bylaws, rules, resolutions, practices, policies, standards, procedures and other measures without approval or review by the elected legislature. That’s not how our system is supposed to work.

To put it more starkly, the Eby government is telling British Columbians that 23 cabinet ministers and four ministers of state can sufficiently decide almost any matter pertaining to the government without democratic approval or input from opposition parties. It is by all measures an extraordinary circumvention of the province’s democratic institutions.

Premier Eby, of course, knows the extraordinary nature of this type of undemocratic authority. “In extraordinary times,” he told reporters last week, “we need extraordinary powers.” And he wants these extraordinary powers for the next two years.

While President Trump’s tariffs are terrible economic policy and very damaging to Canada and other countries, many governments throughout history have tried these policies. Like in the past, our politicians and policymakers must deal with tariffs and other economic challenges purposefully and deliberately within democratic constraints, which include transparent debates, reviews, re-assessments, and genuine deliberations that include opposition parties.

Instead, Premier Eby wants absolute power and control.

As British Columbians will no doubt conclude, there’s something fundamentally wrong with suspending democracy because we’re in challenging times. We often deal with significant challenges. Should our governments have suspended democracy in the wake of 9/11, the limited outbreak of SARS, the financial crisis of 2008-09 or COVID?

Finally, this dim view of democratic constraints is not new to the Eby government. Just last year, Premier Eby tried to pass one of the most significant and fundamental legislative changes in B.C. history, giving more than 200 First Nations veto power over land-use decisions in the province. Eby hoped to rush his legalisation through the legislature without full transparency or meaningful public input, and without disclosing any analysis of its economic impact. When British Columbians caught wind of his plan, there was an uproar, and before October’s election, Eby shelved the legislation (for now, at least).

Here we are again, mere months later, with Premier Eby wanting to make unprecedented changes to our democracy in response to an economic policy from another democratically elected government that, while damaging, is hardly an existential threat.

To call the Economic Stabilization (Tariff Response) Act a significant overreach would be a gross understatement. It’s an affront to our democracy.

Niels Veldhuis

President, Fraser Institute

Tegan Hill

Director, Alberta Policy, Fraser Institute