Comment by nogabebop23 | Hacker News Reader

Comment by nogabebop23 | Hacker News Reader

Parent Full thread

>> does someone living in Toronto get any benefit from this increase in GDP?

As someone living in Alberta your comment answers a question we ask each other frequently: Do people outside of Alberta understand the benefit they've enjoyed from energy revenues over the past 20 years?

Your comment suggests NO, but I'm not sure where you are located.

Canada has a massive transfer payment process from "Have" provinces to "Have Not". This is not something as academic as "overall GDP increase" but is BILLIONS of actual dollars that Alberta has contributed during all the good times that were then redistributed to other Canadians, just like people living in Toronto. Not to over-emphasize the point, but I'm talking cold hard cash literally taxed from one province and given to the others, with the Federal government taking their vig during the transfer.

If you're not Canadian it's unlikely you are aware of the direct positive impact this has had on the entire nation. If you are Canadian and unaware of the relative value of transfer payments... well, this accounts for a huge amount of the alienation the Western prairie provinces are feeling.

This is an issue outside of the debate around where our energy comes from. The reality is a huge part of the entire country's expenditures has been financed by oil and gas revenues for a large part of the past 20 years.

Albertans overrate this. Equalization took about 4.4% of Alberta’s provincial revenues in 2017-2018. And Alberta is tiny within Canada: 11.7% of population roughly.

So this is....not that big an amount? 4.4% of a fairly small budget relative to the total country.

Further, Alberta has had a large net inflow of young, productive workers from the rest of Canada. If there was no oil, these workers would mostly go work and be productive elsewhere, increasing local tax revenues.

Alberta did contribute wealth to the rest of the country. But Albertans tend to both overestimate this contribution and also ignore that they benefit from young workers trained and educated by provincial budgets elsewhere.

Source for equalization percent: https://en.m.wikipedia.org/wiki/Equalization_payments_in_Can...

(Alberta is not the only province to pay into equalization)

> If there was no oil, these workers would mostly go work and be productive elsewhere, increasing local tax revenues.

Can you provide examples of equivalent work at the same pay level these young workers would engage in if not for O&G?

I don't know if out of work oil workers will move out of Alberta, but Alberta is famously full of Newfoundlanders who have left that high-unemployment province. (NL's fishing industry, once its primary employer, has been moribund for a few decades.)

Obviously, a COVID-19-triggered recession would not create an employment boom to replace oil jobs.

(FTR: I support the immediate shutdown of the tar sands, but we need a job replacement/retraining strategy...)

It wouldn’t be the same pay. But, they would be working, and providing taxes and local spending in their communities.

The maritime provinces have a very high average age in part because many workers left for alberta. This cuts the tax base.

That was my point. The workers do get a higher wage in Alberta, but most of this benefit is spend within Alberta or taxed there. Good for workers, good for Alberta....but not obviously a win for the rest of Canada.

And again, Alberta didn’t have to pay for 18 years of schooling and child health care for these workers: that was paid by the home province.

Majority of equalization goes directly to Quebec, very little goes to the maritimes.

Per-capita, more goes to the maritimes.

Alberta is the only province to pay into equalization every single year since they started it (except the very first year where they weren't allowed to). They've never got one equalization payment. Quebec gets billions every year. Why exactly?

Quit moving goalposts.

How is it moving goalposts? He says Alberta contributes very little. They've always contributed, never taken. On the other hand the second biggest economy in Canada (Quebec) is basically the opposite.

To be completely fair, it's not "Alberta" transferring that money, it's money paid in tax to the federal government being transferred to have not provinces. It's not an additional tax placed upon us, it just happens that the math works out because we've been lucky to be earning more on average, which I think only makes sense as a Albertan and a Canadian.

Always have wondered, what makes Quebec a have not province?

Short answer: much lower salaries.

The average Albertan's salary is (still) much higher than that of workers from other provinces. Thus, each Albertan pays (on average) more federal income tax than workers from other provinces. Whether a province is "have" or "have not" is based on comparing the average federal income tax collected from that province compared with the national average.

The equalization payments is the income tax that gets partially redistributed - it is not a transfer from Alberta to other provinces.

For a given salary, the average income tax (combined provincial and federal) paid by someone in Quebec (or any other province) is much higher than that paid by someone in Alberta. Add to that the provincial sales tax (not paid by Albertans) ... and you get a situation where people outside of Alberta see Albertans as spoiled rich whiners as they: 1) earn a higher salary and 2) pay less taxes.

Meanwhile, Albertans (with their lower unemployment - still today) see "their" money wasted to these undeserving lazy Easterners ("lazy" = collecting money from EI). Politicians of all stripes contribute to fanning the flames. And, in spite of all this, we are generally considered to be a nice bunch, eh?

>For a given salary, the average income tax (combined provincial and federal) paid by someone in Quebec (or any other province) is much higher than that paid by someone in Alberta. Add to that the provincial sales tax (not paid by Albertans) ... and you get a situation where people outside of Alberta see Albertans as spoiled rich whiners as they: 1) earn a higher salary and 2) pay less taxes.

People in Quebec also get way more services for that. Like under $10 a day daycare.

This is reflected in the Canadian dollar which has been behaving like a petrodollar. Alberta is in for some hard times, I think its GDP will be about eventually become equivalent to that of the slightly more populous Alabama, provided the exchange rate holds and Alberta GDP makes the anticipated drop.

I think most Canadians recognize Alberta as a have province from the perspective of transfer payments, but that may change quickly if oil prices stay at this level for long making Albertans net recipients of transfer payments. I'm less sure that most Albertans realize just how badly managed benefits from oil resources have been used in the province. I'm talking Alberta Heritage Savings Trust Fund compared to Norway (Government Pension Fund), or even Alaska (Alaska Permanent Fund). It's bad even when you consider the high price of oil sand extraction, never mind the higher clean-up costs.

As a BCer, can I just mention that BC is doing just fine supporting the Canadian economy with a balanced approach to conservation and natural resource extraction?

Alberta is certainly contributing to the Canadian economy, but the heavy reliance on fossil fuels to do so isn't a long term approach to take and the province seems highly reluctant to pivot to better industries.

BC has the biggest coal export terminal in NA. It's biggest export is coal. BC's clean image is bullshit.

True. BC only exists due to rampant resource exploitation. We are certainly more diversified than Alberta, but should definitely do better. Alberta built their whole economy on garbage quality oil and didn't prepare for the inevitable. Adapt or die. It sure makes the "prosperity" cheques look premature.

Fun fact, Albertan politicians wanted to nuke the tarsands[0] in the 1950's and the plan got way further down the road than it ought to have. They thought it would liquefy the oil and they could just pump it out.

If there will be a silver lining to this pandemic, it will be people realizing how precarious their ongoing existence is. Maybe people will be more willing to drop the entitlement, accept reality and do what needs doing.

[0] https://en.m.wikipedia.org/wiki/Project_Oilsand

Reply on news.ycombinator.com