Alberta
Prominent Alberta Conservative Voice Explains: Why I am voting Yes to End Equalization…
From Danielle Smith
To me, equalization, the health transfer and the social transfer combined, are a measure of how much the federal government is overtaxing us. The Constitution has a very limited role for the federal government. The federal government likes to use its spending power to meddle in areas that aren’t its jurisdiction. My view is this – if you want to pass policy for health care, long term care, drug plans, day care, welfare – then RUN FOR PROVINCIAL OFFICE. Don’t take money from the provinces, launder it through the federal bureaucracy and then divvy it up unfairly to give back more money to the provinces that you think will vote for you. (Yep – that’s how I see it.)
So let’s analyze the numbers a bit shall we? I have three tables to show you that tell the whole story.
The level of overtaxation (on these three programs alone) is easily quantified. In the 2021-22 fiscal year it will be $83.890 billion. In just 10 years, the federal overtaxation has grown from $60.085 billion – that’s a 40 per cent increase.
Per person Ottawa transfers an average of $2,181. But of course we know, because of equalization, some provinces are more equal than others.
Take a look at Alberta. Our transfers have grown from $3.661 billion to $6.835 billion in the same period, or from $946 per person to $1,523 per person.
Now take a look at Quebec. Their transfers have grown from $17.329 to $26.306 in the same 10 year period, or $2,148 per person to $3,039 per person.
How would an equal per capital model impact the other provinces?…
In my column, I said we should eliminate equalization and instead do equal per person transfers to every province. If we did that, Alberta would receive $9.788 billion this year, a difference of $2.953 billion more. Alberta isn’t the only one getting hosed. Look at the final line in the table below. So are BC and Ontario. Saskatchewan is shortchanged $781 million, and poor Newfoundland and Labrador, which in on the brink of bankruptcy but still doesn’t qualify for equalization, would get $343 million more. If we eliminated equalization and gave everyone the same per person amount, Quebec would receive $18.879 billion or $7.427 billion less than is expected this year. As it should be. Saskatchewan and Newfoundland and Labrador should not be subsidizing Quebec.
There are a couple of things I really like about a per person transfer model.
- It encourages provinces to compete to attract people, because the more people you attract the more dollars you attract.
I understand the Fairness Alberta argument about changing equalization. They suggest a markup to market on the electricity price that hydro rich provinces charge, they want to stop growing equalization with GDP growth, and they want to account for the different cost of services in each province. But in the end, if we create a program that rewards provinces only for attracting people then they have to implement policies that attract people. Like having low rates of taxation, making it easier to start a business, having affordable housing, and so on. There is a lot that is in the power of government. But if we keep giving provinces more money as they adopt policies that reduce their attractiveness it is counterproductive.
- A per person model is going to give a greater benefit to smaller provinces with lower costs of services than larger provinces with a larger cost of service.
Even if making Alberta pay more is the objective of Ottawa, an equal per capita transfer amount still has Alberta paying disproportionately into the pot. Alberta has higher wages, higher workforce participation rates, higher spending so we will stay pay more in personal and corporate income taxes, GST, fuel tax, EI, CPP and other federal taxes, than we receive back in per person federal transfers. This won’t eliminate the net payer status we have; but it will get us on our way to narrowing the gap.
- Once we have established a single per person transfer that is the same across the country we can move to the next step, which is convert the cash transfer into tax points instead.
If Alberta was getting its proper share of transfers – $9.79 billion – we could then move to the next stage of negotiation with Ottawa. Which is to convert the cash to tax points instead. I’ll leave it to the accountants to figure out the precise numbers, but conceptually let’s say it would mean reducing the federal income tax by 5 percentage points across all categories and increasing provincial income tax by 5 percentage points across all categories. The reason to do that is this, as Alberta grows so would it’s share of own-source revenues. Rather than have Ottawa continue to capitalize on our growth, we would.
- Once we have fixed the problems with federal provincial transfers, we can move on to fix CPP and EI next.
Alberta pays disproportionately into CPP and EI too – we pay roughly 30 per cent of the premiums for CPP and only get back about 10 per cent of the spending. I haven’t done the calculation on EI but I suspect it’s even worse. If we can stop the overtaxation on income tax, these two programs should be next.
Enough is enough…
For too long we have just accepted that this is the way the country works. I think we’ve been bullied into thinking that paying disproportionately into Confederation was our penance for the federal government cancelling the National Energy Program. It’s almost as if we collectively felt that if only we paid off central Canada, they wouldn’t come after our resource wealth again. How wrong we were. Now Quebec is so bloody minded they don’t care if they hurt themselves by killing off our energy industry.
That’s fine. If they don’t want the revenues that come from our energy resources, we should be happy to keep it for ourselves. Let’s start to show them we are serious by strongly voting yes to end equalization on October 18.
Alberta
Premier Smith says Auto Insurance reforms mean lower premiums and better services for Alberta drivers
Premier Smith says Auto Insurance reforms may still result in a publicly owned system
Better, faster, more affordable auto insurance
Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.
After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.
Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.
“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”
“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”
Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.
Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.
Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.
In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.
Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.
By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.
“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”
Quick facts
- Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
- A 2023 report by MNP shows
Alberta maintains a balanced budget while ensuring pressures from population growth are being addressed.
Alberta faces rising risks, including ongoing resource volatility, geopolitical instability and rising pressures at home. With more than 450,000 people moving to Alberta in the last three years, the province has allocated hundreds of millions of dollars to address these pressures and ensure Albertans continue to be supported. Alberta’s government is determined to make every dollar go further with targeted and responsible spending on the priorities of Albertans.
The province is forecasting a $4.6 billion surplus at the end of 2024-25, up from the $2.9 billion first quarter forecast and $355 million from budget, due mainly to higher revenue from personal income taxes and non-renewable resources.
Given the current significant uncertainty in global geopolitics and energy markets, Alberta’s government must continue to make prudent choices to meet its responsibilities, including ongoing bargaining for thousands of public sector workers, fast-tracking school construction, cutting personal income taxes and ensuring Alberta’s surging population has access to high-quality health care, education and other public services.
“These are challenging times, but I believe Alberta is up to the challenge. By being intentional with every dollar, we can boost our prosperity and quality of life now and in the future.”
Midway through 2024-25, the province has stepped up to boost support to Albertans this fiscal year through key investments, including:
- $716 million to Health for physician compensation incentives and to help Alberta Health Services provide services to a growing and aging population.
- $125 million to address enrollment growth pressures in Alberta schools.
- $847 million for disaster and emergency assistance, including:
- $647 million to fight the Jasper wildfires
- $163 million for the Wildfire Disaster Recovery Program
- $5 million to support the municipality of Jasper (half to help with tourism recovery)
- $12 million to match donations to the Canadian Red Cross
- $20 million for emergency evacuation payments to evacuees in communities impacted by wildfires
- $240 million more for Seniors, Community and Social Services to support social support programs.
Looking forward, the province has adjusted its forecast for the price of oil to US$74 per barrel of West Texas Intermediate. It expects to earn more for its crude oil, with a narrowing of the light-heavy differential around US$14 per barrel, higher demand for heavier crude grades and a growing export capacity through the Trans Mountain pipeline. Despite these changes, Alberta still risks running a deficit in the coming fiscal year should oil prices continue to drop below $70 per barrel.
After a 4.4 per cent surge in the 2024 census year, Alberta’s population growth is expected to slow to 2.5 per cent in 2025, lower than the first quarter forecast of 3.2 per cent growth because of reduced immigration and non-permanent residents targets by the federal government.
Revenue
Revenue for 2024-25 is forecast at $77.9 billion, an increase of $4.4 billion from Budget 2024, including:
- $16.6 billion forecast from personal income taxes, up from $15.6 billion at budget.
- $20.3 billion forecast from non-renewable resource revenue, up from $17.3 billion at budget.
Expense
Expense for 2024-25 is forecast at $73.3 billion, an increase of $143 million from Budget 2024.
Surplus cash
After calculations and adjustments, $2.9 billion in surplus cash is forecast.
- $1.4 billion or half will pay debt coming due.
- The other half, or $1.4 billion, will be put into the Alberta Fund, which can be spent on further debt repayment, deposited into the Alberta Heritage Savings Trust Fund and/or spent on one-time initiatives.
Contingency
Of the $2 billion contingency included in Budget 2024, a preliminary allocation of $1.7 billion is forecast.
Alberta Heritage Savings Trust Fund
The Alberta Heritage Savings Trust Fund grew in the second quarter to a market value of $24.3 billion as of Sept. 30, 2024, up from $23.4 billion at the end of the first quarter.
- The fund earned a 3.7 per cent return from July to September with a net investment income of $616 million, up from the 2.1 per cent return during the first quarter.
Debt
Taxpayer-supported debt is forecast at $84 billion as of March 31, 2025, $3.8 billion less than estimated in the budget because the higher surplus has lowered borrowing requirements.
- Debt servicing costs are forecast at $3.2 billion, down $216 million from budget.
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