Ideas to assert Alberta’s sovereignty within a United Canada

Constitutional

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The Canadian Constitution – including its Charter of Rights of Freedoms and sections on the division of powers between the federal and provincial governments – is foundational to our democracy.

The enforcement of the Constitution by governments and the courts ensures our rights and freedoms are protected, and that our provincial and federal governments generally function as they should. 

But no document is perfect. Some things that made sense 150 years ago, may no longer make sense today. That is why the Constitution contains an amending formula that permits the Constitution to be altered should enough provinces and the federal government agree to it.

Over the last decades, several outdated and unfair problems with the Constitution have been identified, but no tangible progress has been made to fix them due primarily to a lack of federal and provincial leadership.

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Examples of proposed constitutional reforms include the following:

Amending the division of powers to indicate that core areas of provincial jurisdiction, including over natural resources and health, are immune from federal legislation, and to also ensure that in shared areas of jurisdiction, such as agriculture and immigration, provincial laws prevail over federal ones. 

Imposing constitutional limits on the federal spending power in areas of provincial jurisdiction, including a provincial right to opt out of federal spending measures with proper compensation should they so choose.

Adhering strictly to representation by population in the House of Commons. Right now those living in smaller provinces are greatly over-represented when compared to those living in larger ones.

Either abolishing the Senate entirely, or having it actually represent provincial interests as originally intended, by mandating an elected Senate with the same number of Senators representing each province.

Allowing provinces to appoint their own King’s Bench and Court of Appeal justices – rather than having those appointments made by the federal government.

Expanding the Supreme Court to allow for more justices from Western Canada and making prior service on a province’s court of appeal a mandatory requirement of becoming a Supreme Court Justice.

Eliminating the Ottawa residency requirement for judges on federal courts to ensure more Western Canadian representation; and

Mandating provincial approval of the appointment of a Lieutenant Governor to a province by the federal government.

There are of course many other potential constitutional amendments that are worth discussion, but this is a start.

So, what are the benefits of Alberta choosing to withdraw from the CPP to create its own pension plan?

A big upfront payout

Alberta would get back a significant lump sum by exiting the CPP. The Chief Actuary in Ottawa has indicated our share would be at least $140 billion. That’s plenty to start and build a strong Alberta Pension Plan from day one.

Better Benefits for Seniors

Lower premiums for Alberta Workers

Thanks to our younger, more productive population, an Alberta Pension Plan could result in Alberta workers paying lower pension premiums on their paycheques or seniors enjoying higher pension benefits – or a mix of both.

Local control & boosting our economy

An Alberta Pension Plan would be managed right here at home, creating more jobs and growing Alberta’s financial sector. We would also be insulated from the economic and demographic decline in Canada. Our investment decisions could also be steered clear of ideological decision making, and instead remain focused on the long-term rate of return for Alberta pensioners.

But there are some risks to consider:

Uncertain payout

The CPP exit rules aren’t clear in the federal legislation, and Ottawa is notoriously anti-Alberta with its decisions, so the size of the lump sum Alberta is offered could be lower than it should be. This could result in a lengthy court battle with the federal government, and it could lower our ability to increase benefit payments for seniors or lower premiums for workers.

Long-term risk

As with any pension plan, if the plan is mismanaged or Alberta’s economy and demographics fall behind Canada, premiums would have to rise in the future in order to guarantee our seniors the same benefits they enjoy today under the CPP. Regardless, as with Quebec, Alberta’s government would still be able to guarantee that an Alberta Pension Plan provide the same or better benefits to Alberta seniors as they now enjoy under the CPP.

Portability concerns

The Quebec Pension Plan and CPP have an agreement in place to ensure pensioners get the same single pension regardless of where they worked or lived in Canada during their career. Alberta would expect a similar arrangement with Ottawa, but it is not guaranteed.

So, should Alberta take a lead role in working with other provinces to pressure the federal government to amend the Canadian Constitution in order to empower and better protect provincial rights?

And if so, which of the amendments discussed or other proposals should the Alberta government advocate for?

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FAQ

How much do Alberta taxpayers provide the federal government annually?

Albertans’ annual net contribution to Canada has averaged over $23 billion over the last 20 years.

That’s roughly $20,000 per family of four, yearly.

In those 20 years, $475 billion was taxed from Albertans and spent elsewhere (2022 dollars).

That’s not a cheque written by the Legislature. That’s the difference between what Albertans paid in federal taxes and what Ottawa sent back to Alberta in benefits, transfers, and other spending.

Some of that total, of course, is legitimate federal spending like the military, borders, and interprovincial infrastructure. Higher income regions will always pay disproportionately more taxes – still, even with our military bases, national parks, and vast highway system, Alberta gets a low proportion of federal dollars spent back here.

For legitimate federal spending Albertans are willing to pay our share. But at least half of the dollars Ottawa taxes are used for spending or regulating in provincial areas. Whether it is health, social services, housing, post-secondary education, policing, infrastructure, economic development, or energy policy - these are all entirely or predominantly provincial jurisdiction.

Not only do these dollars get disproportionately spent in the eastern part of the country, the portion that does come back has strings attached from a second layer of federal bureaucracy (that gets paid first).

Provincial areas are where most of the spending, and spending pressures, are. So why do Canadians send so much more of their taxes to Ottawa than to the provincial government delivering these services?

All Premiers have agreed that Ottawa is too involved in provincial jurisdiction. Four premiers have called for Equalization reform, but that’s just a part of the picture. ($3 billion of the $23 billion we subsidize Ottawa with goes towards Equalization.)

We need to unite as provinces and tell Ottawato take a big step back so we have autonomy and accountability over provincial jurisdiction. The question is how we think fiscal federalism should work.

How would a tax point shift work?

The federal government would end many of its transfers and other programs that violate provincial jurisdiction, then cut federal tax rates by that amount. Provinces would fill that tax room and not have to count on Ottawa for provincial funding.

We get equal per capita payments in health and social transfers, why not let Ottawa pay?

There is only one taxpayer. Given that Albertans pay more taxes per person, even when we get the average back from Ottawa we have lost dollars that could stay in Alberta to support our services.

Doesn’t Ottawa have a role to play in supporting services nation-wide?

There are some shared areas of jurisdiction, but in general, our constitution says no.

Whenever Ottawa comes in to help with funding something, there are one-size-fits-all strings attached, added bureaucracy, and no assurance they will maintain the funding. Autonomy in service delivery means we can tailor our spending to our priorities and plan better for the future. Different provinces trying different approaches is a good thing. 

There is a good reason our constitution set out so many areas as provincial.

Shouldn’t there be equalization payments? It is in the Constitution.

Equalization is a principle affirmed there in 1982, but the requirements are fairly vague and the formula is not defined. 

Currently, the program is bloated and flawed. Its payments grow with GDP regardless of how equal the provinces are. The payments are so large that in most years billions are sent to recipients even after they have reached the national average. Ontario now gets a payment because the “have nots” are getting pushed above it! 

Equalization contributes to the subsidy problem Albertans face, but if most of the indirect forms of interference and redistribution were fixed then a reformed, transparent equalization formula could be broadly supported.

One issue B.C. and Newfoundland have identified is large provinces like Ontario and Quebec getting subsidized by small provinces through equalization. One solution that has been proposed is that the four largest economies should not be directly subsidizing each other via Ottawa. Quebec currently has lower productivity than the other three, but should the second largest economy in Canada be getting a $13 billion cheque every year? For equalization, after the smaller provinces are brought close to the national average, a reformed formula could see the four large provinces share in the rest of the budgeted amount evenly, or not spent at all. 

Is reforming Fiscal Stabilization still needed as well?

Yes. The Fiscal Stabilization program is meant to give a one-year boost to stabilize finances when a province has a sudden drop in revenues. When Alberta’s revenues dropped $8 billion in 2015 our “stabilization” payment was $0.25 billion. Albertans routinely provide $5,000 per capita to stabilize federal revenues, but when we were in need Ottawa’s help was capped at $60 per person. 

Provinces unanimously agreed five years ago that the cap should be lifted, and that Alberta should get a retroactive payment for 2015 and 2016. The Feds ignored the retroactive payment and only raised the cap to $172 per person.