Alberta Must Prepare for Federal Attack

Worth A Look, Equalization, Frontier Centre

There was an anguished cry from Ontario last week, with a report from the Institute for Competitiveness and Prosperity.

Ontario is in trouble. Deep trouble.

It’s losing manufacturing jobs due to the high price of fuel, its low electricity rates are being forced upward, its universities and hospitals are now among the lowest-funded in the country, and its taxes are significantly higher than those of competing jurisdictions like Ohio and Michigan.

Meanwhile, ominously massive auto-making capacity is emerging in China and eastern Europe.

Nonetheless, Ottawa is still cheerfully draining a net $25 billion or so out of Ontario’s economy every year (4.5% of GDP), to spend on business as usual in Quebec, the Atlantic and Manitoba–equalization, EI extensions, federal sandwich programs, and provincial civil service wage settlements.

For months, a series of blue-chip reports (from the Ontario Chamber of Commerce, the C.D. Howe Institute, and the Conference Board, among others) have warned that Ottawa’s “fiscal transfers” are killing Ontario, and killing Canada with it.

They say within five years Ontario will be a “have-not” province.

And lest Albertans gloat that it serves Ontarians right for electing such unbelievably bad national governments — don’t laugh yet. You’re next.

Ontario’s descent into welfare-province status will drive the cost of Ottawa’s “sharing” programs well above the present level of $35 billion a year, and Alberta will be the last strong province left.

That’s right, Ottawa will expect Alberta to pay for everyone.

Right now Ottawa vacuums a net $10 billion a year out of Alberta. (This Net Federal Transfer is the difference between federal taxation and federal spending within a province.)

That federal drain on Alberta is already rising sharply, because its petro economy is rising and federal taxation is rising with it. But Ottawa will have to kick it up another five notches to make up for Ontario’s decline, and for the fact that Ottawa is still increasing its transfer commitments.

In other words, we have plunged into a genuine, full-blown crisis within Confederation., and the politicians aren’t dealing with it.

Not a problem, they say, nothing we can do, Canadians value sharing, nobody wants cutbacks, and you can’t change the system.

The strangest part of all is the utter disinterest of the Klein government. The government of Ontario is at least funding studies and pleading with the feds to “do something.” Alberta politicians aren’t even doing that.

Alberta must act now, decisively.

It can either force reform or it can let the country fall apart.

Outright separation is not something most Albertans want; but they’re also mightily sick of the federal status quo.

The Alberta government should immediately put before the federation a formal constitutional amendment to severely restrict federal taxation and transfers. (This proposal is more fully explained on our Web site,

This would force the issue to a decision. Other governments can’t ignore or sidestep a constitutional demand from the last strong province in the federation. It must be either ratified or rejected within three years.

And while other governments probably won’t welcome the amendment, they (especially Ontario) will be hard pressed to come up with a better one.

The worst course for Alberta is the one the Klein government has chosen, which is to do nothing.

Link Byfield is chairman of the Edmonton-based Citizens Centre for Freedom and Democracy, and an Alberta senator-elect.

“Just Between Us” is a feature service of the Citizens Centre for Freedom and Democracy. The purpose of the Citizens Centre is to enhance freedom and democracy by enabling ordinary citizens to become active and effective on important issues outside the normal processes of party politics.