Just what is “our fair share”?

In reference to Last Friday’s discussion (government policy?) paper by Dr. Robert Mansell of the University of Calgary, there’s been a lot of talk about “fair share”, and what it means to Alberta. (Link)

An excerpt:

[Authors Mansell and Schlenker’s] analysis shows that over more than four decades (1961 to 2002), the net federal fiscal contributions of Albertans have averaged about $2,500 per person per year (or $10,000 per year for a family of four), compared with $758 for each Ontario resident and $428 for each B.C. resident – the other two provinces with positive net federal fiscal contributions during this period.

During this period, per capita incomes in Alberta were on average six per cent higher than the national average. The comparable figures for Ontario and B.C. were 15 per cent and six per cent, respectively, above the national average. The other provinces were net beneficiaries, ranging from an annual net benefit of $4,700 per person in P.E.I., to $770 per person in Quebec .

The setup has been building for a long time. There are suggestions – by McGinty, Pettigrew, and others – that Alberta pay more into the equalization transfers program, a suggestion that tends to get westerners riled up a tad. Memories of Trudeau’s N.E.P run deep here. And remember, I’m an eastern bastard.

But talk of “our fare share” of things is becoming a bit tiresome. What is our fair share?

Well if we took provincial Gross Domestic Product as a guide, Alberta ranks 3rd in Canada, with 14.5% of the Canadian total. But these numbers are from 2004, before the huge oil and gas windfalls of the current year.

Population? We’re 10% of Canada’s population (9.97, to be more exact).

But there are only three “have” provinces, us, Ontario, and British Columbia. Of those three, we are 16% of the “have” population, and 22% of the “have” GDP (21.7% to be exact). But once again, this does not include the current years increase in oil and gas revenues. Still…

What do we contribute? According to the Mansell report, from 1961 to 2002, Alberta “contributed” 39.8% of the share towards equalization [1]. In the most recent time period presented by ther report (2000-2002), we contributed 21.5%. In light of current oil prices, the current value for 2005 has got to be in between somewhere.

So, to summarize: we have 16% of the population, and about 22% of the GDP of the three “have” provinces. And we contribute a number that’s probably greater than 21.5% of the transfers from those three provinces?

Do these seem out of line?

And considering that in 2005, our GDP is (probably) significantly [2] higher than the 22% of the three have provinces – once again due to high oil prices – do we seem out of line?

Short answer is no. We seem to be offering up a proportionate amount, given our economic output.

Still with me? It doesn’t seem like we’re giving up too much. Just about right, actually. But far in excess? Doesn’t seem that way to me.

Links
Equalization Illustrated

equalization (péréquation).
Federal transfer program that allows all provinces, regardless of their ability to raise revenue, to provide roughly comparable levels of services at roughly comparable levels of taxation. Eligibility to receive equalization funding is determined by a formula measuring each province’s revenue-raising capacity against a five-province standard. Currently, eight provinces receive equalization: Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba, Saskatchewan and British Columbia.

[1]What I call “equalization, Mansell et al. call Regional distribution of federal fiscal imbalance. You’re have to read their report to understand fully what that means. I will take it as read that it is equivelent, although it probably is not. Exactly.

[2]I know statistics. And I know I am not using the term “significantly” in a proper way here. But for the purposes of discussion here, it is good enough. Until I get comments that force me to do statistical tests for significance, in which case I shall become very unhappy. Pissed off even.