Provinces should be cautious about cost-sharing agreements with Ottawa

According to Premier Danielle Smith, Alberta will withdraw from the federal government’s dental care plan by 2026 mainly because the plan would duplicate coverage already provided to many Albertans (although she plans to negotiate unconditional funding in lieu of being in the program). Indeed, all provinces should be wary of entering into such agreements as history has shown that Ottawa can reduce or eliminate funding at any time, leaving the provinces holding the bag.

In the 1990s, for instance, the federal government reduced health and social transfers to the provinces amid a fiscal crisis fuelled by decades of unrestrained spending and persistent deficits (and worsened by high interest rates). Gross federal debt increased from $38.9 billion in 1970/71 to $615.9 billion in 1993/94, at which point debt interest costs consumed roughly $1 in every $3 of federal government revenue.

In response to this debt crisis, the Chrétien Liberal government reduced spending across nearly all federal departments and programs. Over a three-year period to 1996/97, health and social transfers to the provinces were 51 per cent ($41.0 billion) less than what the provinces expected based on previous transfers. In other words, the provinces suddenly got a lot less money from Ottawa than they anticipated.

This should serve as a warning for the provinces who may find themselves on the hook for Ottawa’s big spending today. In the case of dental care, an area of provincial jurisdiction, the Trudeau government has earmarked $4.4 billion annually for the provinces on an ongoing basis. However, any change in federal priorities or federal finances could swing the financial burden from Ottawa to the provinces to maintain the program.

The current state of federal finances only heightens this risk to the provinces. The federal government has run uninterrupted budget deficits since 2007/08, with total federal debt climbing from $707.3 billion in 2007/08 to a projected $2.1 trillion in 2024/25. The current government—or perhaps a future reform-minded government focused on balancing the budget—could reduce transfers to the provinces.

The Trudeau government has committed to significant new funding in areas of provincial jurisdiction, but provincial policymakers would do well to understand the risks of entering into such agreements. Ottawa can unilaterally reduce or eliminate funding at any point, leaving provinces to either assume the unexpected financial burden through higher taxes or additional borrowing, or curtail the programs.

Authors:

Tegan Hill

Director, Alberta Policy, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Related Topics:#FraserInstitute #JakeFuss #TeganHill CostSharingAgreements

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Alberta

CPP another example of Albertans’ outsized contribution to Canada

Published on April 19, 2025

Todayville

From the Fraser Institute

By Tegan Hill

Amid the economic uncertainty fuelled by Trump’s trade war, its perhaps more important than ever to understand Alberta’s crucial role in the federation and its outsized contribution to programs such as the Canada Pension Plan (CPP).

From 1981 to 2022, Albertan’s net contribution to the CPP—meaning the amount Albertans paid into the program over and above what retirees in Alberta received in CPP payments—was $53.6 billion. In 2022 (the latest year of available data), Albertans’ net contribution to the CPP was $3.0 billion.

During that same period (1981 to 2022), British Columbia was the only other province where residents paid more into the CPP than retirees received in benefits—and Alberta’s contribution was six times greater than B.C.’s contribution. Put differently, residents in seven out of the nine provinces that participate in the CPP (Quebec has its own plan) receive more back in benefits than they contribute to the program.

Albertans pay an outsized contribution to federal and national programs, including the CPP because of the province’s relatively high rates of employment, higher average incomes and younger population (i.e. more workers pay into the CPP and less retirees take from it).

Put simply, Albertan workers have been helping fund the retirement of Canadians from coast to coast for decades, and without Alberta, the CPP would look much different.

How different?

If Alberta withdrew from the CPP and established its own standalone provincial pension plan, Alberta workers would receive the same retirement benefits but at a lower cost (i.e. lower CPP contribution rate deducted from our paycheques) than other Canadians, while the contribution rate—essentially the CPP tax rate—to fund the program would likely need to increase for the rest of the country to maintain the same benefits.

And given current demographic projections, immigration patterns and Alberta’s long history of leading the provinces in economic growth, Albertan workers will likely continue to pay more into the CPP than Albertan retirees get back from it.

Therefore, considering Alberta’s crucial role in national programs, the next federal government—whoever that may be—should undo and prevent policies that negatively impact the province and Albertans ability to contribute to Canada. Think of Bill C-69 (which imposes complex, uncertain and onerous review requirements on major energy projects), Bill C-48 (which bans large oil tankers off B.C.’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.

Canada faces serious economic challenges, including a trade war with the United States. In times like this, it’s important to remember Alberta’s crucial role in the federation and the outsized contributions of Alberta workers to the wellbeing of Canadians across the country.

Alberta

Made in Alberta! Province makes it easier to support local products with Buy Local program

Published on April 14, 2025

Government of Alberta

Show your Alberta side. Buy Local.

When the going gets tough, Albertans stick together. That’s why Alberta’s government is launching a new campaign to benefit hard-working Albertans.

Global uncertainty is threatening the livelihoods of hard-working Alberta farmers, ranchers, processors and their families. The ‘Buy Local’ campaign, recently launched by Alberta’s government, encourages consumers to eat, drink and buy local to show our unified support for the province’s agriculture and food industry.

The government’s ‘Buy Local’ campaign encourages consumers to buy products from Alberta’s hard-working farmers, ranchers and food processors that produce safe, nutritious food for Albertans, Canadians and the world.

“It’s time to let these hard-working Albertans know we have their back. Now, more than ever, we need to shop local and buy made-in-Alberta products. The next time you are grocery shopping or go out for dinner or a drink with your friends or family, support local to demonstrate your Alberta pride. We are pleased tariffs don’t impact the ag industry right now and will keep advocating for our ag industry.”

RJ Sigurdson, Minister of Agriculture and Irrigation

Alberta’s government supports consumer choice. We are providing tools to help folks easily identify Alberta- and Canadian-made foods and products. Choosing local products keeps Albertans’ hard-earned dollars in our province. Whether it is farm-fresh vegetables, potatoes, honey, craft beer, frozen food or our world-renowned beef, Alberta has an abundance of fresh foods produced right on our doorstep.

Quick facts

This summer, Albertans can support local at more than 150 farmers’ markets across the province and meet the folks who make, bake and grow our food.
In March 2023, the Alberta government launched the ‘Made in Alberta’ voluntary food and beverage labelling program to support local agriculture and food sectors.
Through direct connections with processors, the program has created the momentum to continue expanding consumer awareness about the ‘Made in Alberta’ label to help shoppers quickly identify foods and beverages produced in our province.
Made in Alberta product catalogue website