Smith is at it again: distorting fiscal facts to fan separatist flames

Is Alberta Premier Danielle Smith a traitor? 

That question came up earlier this year when Smith went on right-wing media in the U.S. to boast that she had been advising Donald Trump’s lackeys how best to influence the outcome of the Canadian federal election to help the Conservatives. Her advice was to “put things on pause” because Trump’s rants about tariffs and annexation were helping the Liberals.

Regardless of how one might feel about Smith’s behaviour, “traitor” may be too strong a word. Treason usually involves consorting with the enemy in a time of war, and a trade war and the mere threat of annexation probably doesn’t qualify. However, after seeing her in action as part of the Alberta Next panel, a different pejorative moniker comes to mind – Smith as a separatist leader. 

Alberta Next, created by Smith after her boy Poilievre failed to win the federal election, has spent the summer stirring up anger against the federal government at public meetings across Alberta. The panel is supposed to come up with ideas “to chart our path, secure our economy and assert our sovereignty within a united Canada” all  to “protect our province from Ottawa’s continued attacks on Alberta’s economic wellbeing” – in essence, give us everything we want or we’ll leave.

Smith herself has been front and centre at the meetings, and seeing her in action can lead one to believe that she’s less interested in hearing what the folks have to say than she is at firing them up.  This clip is from a recent meeting in Lloydminster where she was asked a question about equalization.

Her answer had very little to do with equalization, although that seems to have been missed by audience members to whom equalization is a red flag, and even some journalists, including those willing to defend the principle of equalization from yet another attack by an Alberta politician. 

To recap the clip: Smith claimed that “Alberta, year after year, has $20 to $25 billion that is siphoned out of our system to go to Ottawa so it can be spent mostly in Quebec but to other places that vote Liberal.” She went on to say that this has amounted to $600 billion in the last 40 years and now amounts to “$5,000 per Albertan that, every single year, gets transferred out of the province.”

This is mostly BS, designed to fire up separatist sentiment. 

Grossly inflated

First off, Smith has conflated equalization, which Alberta firsters love to hate, with the gap between what the federal government collects in Alberta and what it spends in the province. This year, the cost of equalization is $25 billion, with taxpayers in all provinces and territories contributing to the pot.

But what if the feds did what Smith’s more ardent supporters desire and abolished equalization? Assuming that saving was immediately replaced by federal tax cuts worth $25 billion – and good luck with that – Alberta, which in 2023 provided Ottawa with about 14 percent of its total revenue, would be better off by $3.5 billion, not $20 to $25 billion. 

Is it worth breaking up the country for $3.5 billion in a province whose 2025 budget is close to $75 billion?  That amount is not likely to move too many undecideds into the separatist column, so Smith inflated the numbers anywhere from 500 to 700 percent. 

Where she came up with the $20 to $25 billion being siphoned out is unknown but my guess is she is referring to – but also inflating – the gap between what the feds collect in Alberta in taxes and social program contributions like Canada pension, and what they spend there.

There are two main reasons why the federal government collects more revenue than it spends in Alberta, as well as in Ontario and British Columbia. Those three jurisdictions – let’s call them the payer provinces – have stronger economies and higher incomes, producing more federal tax revenue. And their stronger economies and relatively younger populations mean lower spending on things like pensions and employment insurance. 

The positive difference – or gap – between what the feds collect in revenue in Alberta and what they spend has been around for decades. The news is that (a) the gap is  way less than Smith’s $20-$25 billion and (b) it has been getting smaller over the past decade.

Padding the gap

On the first point, unless Smith is privy to some secret and more up-to-date data, the acknowledged source for measuring federal government revenue and expenditure by province is Statistics Canada’s annual “Revenue, Expenditure and Budgetary Balance” calculation (Table 36-10-0450-01). For 2023, the most recent year reported, the positive gap from Alberta was $14.5 billion, a fair chunk of change, but far off  Smith’s claim of $20-$25 billion. On a per person basis, it amounted to $3,095 in 2023, not the $5,000 mentioned in Smith’s rant.

To be fair, Alberta’s per capita gap of  $3,095 is higher than the other two payer provinces. For British Columbia it was $2,097 in 2023.  And the gap was $1,644 in Ontario – whose provincial governments of all stripes have also been vocal gap gripers over the years. 

As for the claim that the money “siphoned off” from Alberta is spent “mostly in Quebec” – that’s either Quebec-bashing or stupidity. Maybe one of Smith’s minions pointed out that Quebec’s negative gap – $15.8 billion – almost matched Alberta’s $14.5 billion positive gap. Perhaps in Smith’s camp, it amounts to proof positive that somewhere in Ottawa there’s a hose through which federal revenue collected in Alberta is siphoned into Quebec. 

Or maybe she’s confusing overall federal spending with equalization, 55 percent of which goes to Quebec because of the size of its population. Whatever the source, there’s nothing to support her claim that revenue raised in Alberta is “spent mostly in Quebec .” In fact, federal expenditure in Quebec – including equalization – was the fourth lowest among the provinces in 2023. And at $11,366 per person, it was only 5.8 percent higher than  federal expenditures of $10,703 per capita in Alberta. So, let’s go with Quebec bashing as the motivation.

Gap is narrowing

To hear Danielle Smith tell it, all of Alberta’s troubles, including the siphoning operation, began with the election of the Trudeau Liberals in 2015. To be sure, an argument can be made that federal policies on oil and gas extraction have had a dampening effect on Alberta’s economy. But if that’s the case, incomes would be lower and the need for federal supports such as employment insurance would be greater. The gap between what the feds collect in revenue and spend on programs would therefore shrink, along with the economy.  

Like the separatist leaders of the Bloc Québécois, Smith wants to have it both ways. The BQ leadership would argue that a bright future awaited an independent Quebec while ignoring the significant gap – in Quebec’s favour – between what the feds collected in revenue from the province and put back in expenditure. Simply put, separation would have left a big hole in Quebec’s budget. 

Smith wants to blame the federal government for a poor economy and for ripping off Alberta through fiscal arrangements. But the numbers show that is not how things work. Statistics Canada’s “Revenue, Expenditure and Budgetary Balance” data set goes back to 2007. 

Back then the Alberta economy was booming with high oil prices leading to massive investment in the oil sands creating population growth and healthy pay checks. In 2007, Albertans contributed $40.3 billion to the federal government, while getting back only $18.1 billion in federal expenditures in the province. In other words, for every dollar Alberta sent to Ottawa in taxes and social program contributions, they got back only 44 cents in expenditure.

The Alberta-dominated Harper government made several changes in health and social transfers that benefitted Alberta and the other payer provinces. By 2015, Albertans were getting back nearly 50 cents in expenditure for every dollar in revenue collected by the federal government. 

But by 2023 (drum roll please) Albertans were getting back in expenditures 77.5 cents for every dollar sent to Ottawa. Notwithstanding the downturn in the fossil fuel business, federal revenues from Alberta increased at a faster pace – averaging 3.7 percent a year – between 2025 and 2023 than between 2007 and 2015. But that was more than offset by a whopping big increase in federal spending in Alberta. It more than doubled between 2015 and 2023 under the Trudeau Liberals – those Liberals Smith accuses of spending mainly in “places that vote Liberal.”

I have written in the past about how the federal government’s  pandemic spending put every province, including Alberta, into a negative balance in 2020. Alberta had the sharpest turnaround, going from a positive balance of $3,800 per capita in 2019 to a negative $3,200 in 2020. Things returned to near normal in 2021 when Alberta’s positive balance was $1.6 billion, but federal spending in the province remained well above pre-pandemic levels.

The result, as the table shows, is that between 2015 and 2023, increased federal spending in Alberta was the highest in the country, slightly ahead of Saskatchewan, another province led by a quasi-separatist, Scott Moe. Quebec and the Atlantic provinces – Smith’s “other places that vote Liberal” were at the bottom, with just over half of Alberta’s per capita increase.

Table 2: Increase in Per capita federal spending by provinces

Province	2015	2023	Increase
Alberta	$6,020 per capita	$10,703 per capita	77.8%
British Columbia	$6,506 per capita	$10,028 per capita	54.1%
Ontario	$7,360 per capita	$10,911 per capita	48.2%
Quebec	$7,864 per capita	$11,366 per capita	44.5%
Manitoba	$9,621 per capita	$16,340 per capita	69.8%
Saskatchewan	$7,740 per capita	$13,669 per capia	76.6%
Atlantic Canada	$12,367 per capita	$18,029 per capita	45.8%

Source: Statistics Canada Table 36-10-0450-01

Distorting the facts about the transfer system are only one element in Smith’s campaign to boost separatist sentiment in Alberta. As discussed here and here she falsely accuses the federal government of attacking Alberta’s oil industry, while spinning a yarn about the vast riches that await if – climate change be damned – all restrictions on oil sands development are removed. Smith claims that she is not a separatist but actions speak louder than words – and the record shows those words cannot be believed. 

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