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How Much Money Has Been Stolen From Albertans?

In "A Regional Analysis of Fiscal Balances under Existing and Alternative Constitutional Arrangements," a paper by Mansell and Schlenker (1992), they study the fiscal balances by province. In other words, they measure how much more money is taxed from a province  than it receives in government spending. They study the fiscal balances from 1961 to 1989. Two provinces, Alberta and British Columbia, are net contributors to Confederation (in other words, Ottawa takes more money from Albertans and British Columbians than they return in services). Even though British Columbia has been a net contributor, you cannot compare Alberta to British Columbia in terms of what they contribute. Since 1961, Alberta has contributed over $147 billion, while British Columbia only contributed just over $10 billion. Every other province, including Ontario, has stolen this wealth from Alberta. And only one province, Alberta, has always been a net contributor in EVERY year. So much for helping out in bad times. Here are the actual numbers, in millions of 1990 dollars:

Year Balance Year Balance Year Balance
1961 20 1971 847 1981 23,213
1962 0 1972 931 1982 16,914
1963 95 1973 1,990 1983 8,450
1964 278 1974 8,930 1984 7,145
1965 383 1975 8,363 1985 5,881
1966 516 1976 7,323 1986 2,067
1967 632 1977 7,613 1987 1,430
1968 665 1978 6,755 1988 1,629
1969 1,013 1979 11,397 1989 1,950
1970 917 1980 20,402 TOTAL 147,747

$147.747 billion in 1990 dollars is equivalent to $191.165 billion in 2003 dollars (SOURCE: Bank of Canada).

Mansell and Schlenker updated this study in 2005, with information to 2002. Below are the total amounts as well as per capita amounts:

Total Per Capita
1961 -470 -353
1962 -380 -278
1963 -316 -225
1964 -253 -178
1965 -229 -158
1966 243 166
1967 396 266
1968 718 472
1969 895 574
1970 762 478
1971 660 401
1972 889 526
1973 2,229 1,294
1974 11,260 6,424
1975 10,479 5,812
1976 8,853 4,751
1977 9,176 4,729
1978 7,795 3,869
1979 13,745 6,578
1980 25,409 11,641
1981 29,089 12,735
1982 20,200 8,563
1983 9,368 3,924
1984 7,008 2,933
1985 5,501 2,292
1986 1,648 680
1987 1,418 583
1988 1,365 557
1989 1,450 582
1990 2,185 860
1991 1,502 581
1992 1,369 521
1993 2,330 875
1994 3,075 1,140
1995 3,406 1,248
1996 4,994 1,803
1997 7,263 2,573
1998 8,653 2,996
1999 8,747 2,969
2000 10,561 3,524
2001 10,244 3,358
2002 10,317 3,319
Total 243,554 105,405
Mansell and Schlenker's 2005 update employs a slightly different methodology when compared to their seminal 1992 study. The numbers are also in 2004 dollars, as opposed to 1990 dollars (we converted the totals to 2003 dollars). These are the reasons why the two tables are not consistent with each other.

However, they essentially tell the same story: Albertans pay tons of cash to Ottawa and get nothing in return.

An interesting addition is the calculation of per capita amounts. This is particularly interesting when one considers how rapidly Alberta's population has grown. If one simply takes the totals of $243 billion and divides by Alberta's population of roughly 3.2 million people, one would be severely understating the damage to your average Albertan. The average Albertan has contributed $105,405 since 1961 without getting anything in return.

This calculation is not the total amount paid, with us then employing metaphors regarding Ottawa's programs towards Albertans as sweet nothings. This number represents the difference between taxes and other moneys paid less the value of goods and services returned. And that difference represents paying for nothing.

Keep in mind that this represents the per capita amount. If we would consider a family over an 18 year span, that could be as much as $315,228 per Albertan family of four.  The average house price in Calgary (at least for the time being) is less than that.

When you see families emigrating from Canada to take employment elsewhere so that they can increase their family's income by $10,000, what do you suppose they might think about Alberta remaining under Canada's control when they lose roughly $14,000 a year?*

* - for a family of four



What Legislation is Responsible for this Theft?

The legislation that has been responsible for tens of billions of dollars from Alberta to Canada is the Federal-Provincial Fiscal Arrangements Act. You can read the legislation
here.
The Morality of Transfer Payments

As an Albertan, let me state how disgusted I am by Canada's theft of Albertans. This is nothing but looting on a grand scale. Everybody is aghast when a criminal like the Shah steals billions of dollars from his own people. Everyone is shocked when Saddam Hussein has billions of dollars in a Swiss bank account.

As noted above, we aren't talking about a few billion dollars, we are talking about a quarter TRILLION dollars. The Shah may have had his extravagant palaces, but Trudeau got a $125 million foundation. If people get upset over billions being stolen elsewhere, then I ask:

 Where is the outrage over this?

The Political Realities of Transfer Payments

This looting will not change as long as Alberta is in Canada. The status quo, which appears to be nearly incapable of change, brought us to this point. Alberta's federal representation is unable to stop this taxation. Essentially, we are suffering the same fate as the American Colonists: taxation without representation.

Nor would any unlikely changes end this looting. A Triple-E (elected, effective, equal) Senate has been rejected several times. None of Alberta's choices for elected Senator have been appointed by Ottawa, despite appointing unelected lackeys of their choosing. Yet suppose a Triple E came to be. I submit to Albertans that this would not change our fate. Alberta would have 1/10th of the Senators. Why would the 4 Maritime provinces and Quebec kill the goose that laid the golden egg? They won't.

Currently, the Harper government is in the process of "rebalancing" federalism. From an Albertan standpoint, this would mean ending Alberta's role as the milch cow in Confederation. However, for other regions in Canada, it means redistributing the surpluses the federal government is running to some provinces. The Harper government is in the process of acceding to Eastern Canadian demands, as that is where political power resides. There is no upside and a huge potential downside to the Harper government if they were to decide to end the vast transfer payments that Alberta pays Canada. They would solidify already solid support in Alberta that could not possibly result in increased representation in the House of Commons, while the downside would be the high probability of losing seats everywhere else in Canada.

The Consequences of Transfer Payments on Independence

The size of the transfers is immense, which indicates several things. First, it indicates that Alberta has enough economic strength to become an independent country. Once Alberta becomes independent, Albertans get to keep their own money.

Second, the question of whether it is worth the financial burden to remain in Canada hasn't been posed to Albertans, let alone answered. An Albertan family of four currently loses well over $15,000 per year by staying in Canada. I think most Albertans would answer an emphatic "No." Moreover, once they are confronted with such a question, it is possible  that a swift response could happen.