Prudent course of action is to focus on pipelines

Equalization a can of worms we’d be wise not to push Trudeau to open

It’s not clear how many were actually clamouring for his presence at this year’s Stampede, but Prime Minister Justin Trudeau graced us with just that over the weekend.

Initially, it appeared as though Trudeau would be missing out on Calgary’s annual party, and after his (seemingly inadvertent) Canada Day Alberta snub, followed by the controversial Omar Khadr settlement, there were likely very few folks left saddened by his absence.

Mind you, so long as the prime minister is here, it’s an opportunity to press Alberta’s case directly to him.

We must also be careful to pick our battles. It should be obvious that the most pressing issue for our province, insofar as Trudeau’s government is concerned, is pipelines. How does Trudeau plan on overcoming opposition in B.C. and elsewhere to new pipeline infrastructure?

Does he fully appreciate how vital it is for Alberta — and by extension, the rest of Canada — that we allow for additional export capacity to be constructed? Moreover, does Trudeau’s government fully appreciate the importance of Alberta to the national economy?

Perhaps due to a sense that Alberta does not get due credit or respect from Ottawa or other provinces, the issue of federal transfer programs — equalization in particular — have been thrust yet again into the spotlight.

Last week, Wildrose leader Brian Jean called for an emergency meeting with Trudeau to talk “equalization fairness,” noting that we “shell out billions in transfer payments” while simultaneously facing “opposition from … provincial neighbours on projects of national interest.”

It should be noted, of course, that we don’t in any sense “shell out transfer payments.” In fact, there are no “transfer payments” in the first place. The only line item in the Alberta budget concerning any sort of “transfer payment” is the nearly $8 billion that comes to us from Ottawa. It is true that the wealth and prosperity generated in Alberta mean there are a disproportionate amount of profitable companies and high-income earners. Therefore, Alberta sends a disproportionate share of federal tax revenue to Ottawa.

As it happens, a new report (also out last week, coincidentally) from the Fraser Institute helps to quantify all of this. Looking at the period from just 2007 to 2015, it finds that Albertans paid $188.6 billion more in federal taxes than came back in federal spending ($221 billion when CPP is factored in).

In that same period, more than 30 per cent of all private sector jobs created in Canada were in Alberta, despite only 11 per cent of the country’s population residing here.

Equalization is a federal spending program, by which various sums of money are sent to various provinces according to a specific and complex formula. If equalization vanished tomorrow, it would mean the feds would have a lot more cash on hand (and certain provinces would have a lot less on hand), but it wouldn’t necessarily benefit Alberta in any concrete way.

None of this is to say that equalization is perfectly designed, or any other federal transfer program for that matter. A compelling case can be made that these programs are in need of reform. However, that represents a mammoth undertaking, as former MPs Jean and Jason Kenney ought to know very well.

Convincing Trudeau to open this constitutional can of worms seems like a rather tall order, and it’s hard to see what Alberta gains from all of this.

As the Fraser Institute report notes, absent Alberta’s contributions, “the country’s recent overall economic performance would look very different.” To that end, they urge other governments to “avoid policy choices that will unduly hinder Alberta’s prosperity.”

Hopefully, Trudeau is wise enough to understand how a thriving Alberta helps Ottawa’s bottom line, and therefore his own political fortunes. The much more pragmatic path then to take with this prime minister is to point to these numbers and to emphasize how new pipelines are a crucial step in protecting the Alberta economic engine.