We are sending more than two billion dollars out of our pockets as a gift to Alberta for subsidies for the oil industries
said the PQ leader at a press briefing on Tuesday.
This is a statement that deserves nuance.
The Parti Québécois relies on the average of recent years of subsidies granted by Export Development Canada to the oil and gas sector (including loans and loan guarantees).
Between 2016 and 2020, this federal agency granted an average of $10.7 billion per year to this industry. The Parti Québécois estimates that Quebec’s share reaches 20% of this annual sum, therefore approximately $2 billion, due to its demographic weight within the Canadian federation.
In fact, it is very difficult to demonstrate this. Since the subsidies come from Ottawa coffers, we cannot conclude that it is a sum paid directly by Quebec.
We are looking for an example that pleases us on the electoral level, but we do not take into account the whole picture
estimates the independent economist Jean-Pierre Aubry.
Although it is possible that sums levied in the province might be used to grant subsidies to the Alberta oil industry, it must however be remembered that the federal government spends more money than it collects overall in the province.
In 2019, Ottawa earned $61 billion in revenue in Quebec while spending nearly $80 billion there, including transfers for health and other social programs, equalization and transfers to households, in particular allowances.
Quebec therefore withdrew almost $19 billion more than it paid into federal coffers. For Alberta, it is the opposite situation. This Prairie province contributed $16 billion more that year than it received from Ottawa.
Considering these data, it is difficult to conclude that Quebec can send money to another province through its contributions to federal revenues, moreover Alberta.
Exceptional situation in 2020
In 2020, federal spending increased tenfold in Quebec, in particular due to the pandemic. The federal government paid $69.5 billion more than it received from Quebeckers.
In addition, all the provinces that contributed more than they received from the federal government saw the situation reversed during the pandemic, in particular due to the payment of the CERB to Canadians. The government had run up large deficits to get through the crisis.
Equalization
If it is risky to claim that Quebec finances Alberta’s oil industry, the same logic applies to equalization. We cannot say that Alberta foots the bill for the equalization transfers that are sent to Quebec.
The federal government plans to pay nearly $22 billion in equalization payments this year, including $13.7 billion in Quebec.
This program, which aims to redistribute wealth between the provinces, is financed with a portion of taxes collected by Ottawa from coast to coast. If a portion of the revenue collected stems from the economic activity generated by the oil industry, this is once more an indirect contribution.
It is therefore neither Quebec that pays subsidies to Alberta, nor Alberta that pays equalization to Quebec: these are transactions through the federal government.
explains Pierre-Olivier Pineau, holder of the Energy Sector Management Chair at HEC Montréal.
Accurate accounting is very difficult to do. The war of numbers is constant and, to a certain extent, quite futile
he concludes.
With the collaboration of Nathalie Lemieux
