Ottawa spent more money in Alberta than it raised in tax revenues from the province in 2020, economist says

For the first time in decades, new data from Statistics Canada suggests the federal government spent more money in Alberta than it raised from tax revenues in the province last year, a Calgary economist says.

When the pandemic shuttered businesses and reduced work hours across Canada in 2020, emergency fiscal support flowed from the Government of Canada across the country.

This spending included wage subsidies, rent subsidies, boosted child benefits, topped-up employment insurance (EI) payments and forgiven loan repayments.

According to numbers released by Statistics Canada on Monday, Alberta was the largest recipient of COVID-related federal spending increases per person in the country.

In Alberta alone, the federal government also spent nearly $12 billion in business subsidies, while nearly 1.1 million Albertans received Canada emergency response benefit (CERB) payments.

Additionally, there were also transfers from the federal government to the Alberta government itself, to help offset some health-related cost pressures created by the pandemic.

When you add it all together, it's about a $30-billion increase in the amount of federal spending in Alberta, according to economist Trevor Tombe.

"Which is basically double what you normally see in a typical year," he told CBC News.

"What this reflects is that federal spending really ramped up dramatically in the pandemic, and Alberta was actually the largest recipient of that increase [per person]."

There are a lot of reasons why Alberta's economy typically outperforms other provinces in the country, according to Tombe.

Oil and gas has been a highly profitable industry that generates a lot of income for shareholders and workers, and royalties to the government, as well.

But Alberta's productivity is also higher overall in most sectors than what is seen in other jurisdictions, Tombe said — in part because it has a younger population that yields more workers.

"So that does tend to result in higher tax payments to the federal government, just because higher income means higher taxes, because that's really an unavoidable consequence of having an income tax," Tombe said.

"Because Alberta is home to a disproportionately large share of high-income individuals … Albertans tend to, on average, pay more in federal taxes. And that's largely because we're high-income relative to other provinces."