What Albertans Get Wrong About Equalization

Equalization payments aren’t a punishment, they’re a promise. Here’s how they actually work, and why Alberta’s outrage misses the point.

What We Owe Each Other

Photo by Hayffield L on Unsplash

In a country as vast and varied as Canada, it can be easy to forget we share more than a border. We share roads and schools, electricity and air ambulances. We share labour markets and railways, disaster relief teams and pension systems. But perhaps most importantly, we share a belief, enshrined in our Constitution, that every Canadian should have access to a comparable standard of public service, regardless of where they live.

This belief isn’t sentimental. It’s structural. It’s built into how Canada funds itself. Equalization payments, the subject of so much anger in Alberta, are not optional handouts or partisan bribes. They are a legal and moral commitment to each other as citizens of a federation. Understanding them requires a shift in thinking from "what does my province get?" to "how do we make sure no Canadian is left behind?"

What Are Equalization Payments?

Equalization payments are transfers from the federal government to so-called "have-not" provinces, those with below-average capacity to raise revenue through provincial taxation. The goal is to ensure that public services like hospitals, schools, and infrastructure can be funded to roughly the same standard across the country, assuming similar tax rates.

These payments are not funded by one province cutting a cheque to another. No province, not Alberta, not Ontario, not Quebec, directly contributes a cent to equalization. Instead, they are financed entirely out of federal revenues, primarily income tax, corporate tax, and GST, collected uniformly across the country. A person making $75,000 in Alberta pays the same federal tax rate as someone making the same amount in New Brunswick or British Columbia. That tax revenue flows into the federal treasury and is then distributed according to need.

Why Alberta Pays More But Not to Equalization

So why does it feel like Alberta is footing the bill? The answer lies in income levels. Albertans, on average, earn more money than residents of many other provinces. When people make more, they pay more in federal taxes. This leads to a larger share of federal revenue coming from Alberta, but that is not unique to equalization. It's true for national defence, the Canada Child Benefit, and every other federal program.

Alberta doesn’t pay into equalization, it pays into Canada. Just like everyone else.

Yet some Albertans, particularly political leaders, frame the program as if Alberta’s government is being forced to subsidize Quebec's daycare or the Maritimes’ hospitals. The language is emotionally charged words like "unfair," "exploitative," and even "theft" getting thrown around. But this outrage relies on a false premise: that provinces pay, and other provinces take. In reality, individuals pay federal taxes, and the federal government redistributes them based on need and ability.

Quebec, the Favourite Target

Quebec is often the lightning rod for Alberta’s frustration. Critics point to Quebec’s extensive social services, publicly owned hydroelectric utility, and frequent appearance as a top equalization recipient. The implication is that Quebec is living luxuriously off the sweat of the West.

But this, too, is misleading. Quebec receives more in equalization dollars not because it’s lazy or corrupt, but because it has a large, aging population and a lower per-capita revenue base when compared to provinces like Alberta or Ontario. It also chooses to tax its citizens more heavily, allowing it to fund broader services. Equalization ensures Quebec meets a minimum standard; Quebec’s taxes pay for everything beyond that.

And crucially, the formula used to determine equalization was last revised under a Conservative federal government, with significant input from Alberta politicians. If the system feels tilted, it is tilted by design and with Alberta’s fingerprints all over it.

Misunderstanding the Math

At the heart of the controversy is a misunderstanding of how the formula works. Equalization is based on a three-year average of a province’s "fiscal capacity," its potential to generate revenue at average tax rates. That means even if a province has natural resources, like oil or hydro, those revenues may not be fully counted. For example, Quebec’s hydroelectric income is excluded in part, which understandably frustrates critics. But so too are parts of Alberta’s oil revenues, which are notoriously volatile.

The formula doesn’t track how much each province “puts in” and “gets out.” It doesn’t account for where workers retire or how much infrastructure one province provides to another. It merely tries to level the playing field of public services, because we agreed, as a country, that opportunity shouldn’t depend on the mineral wealth beneath your feet.

What Alberta Gets

While Alberta doesn’t receive equalization payments, it benefits immensely from being part of Canada. Federal infrastructure projects, pandemic support, railway construction, pension contributions, immigration services, and economic stabilization payments have all flowed to Alberta. The oil industry itself was jump-started by capital and labour from across Canada.

And it’s worth noting that Albertans are not trapped. If anyone envies Quebec’s social programs or resents Ontario’s transit funding, they are free to move there. But migration works both ways; many Albertans are people who left Atlantic Canada or Quebec for jobs out West, and may retire back East. The taxes they paid while working in Alberta will support them through federal programs, no matter where they live.

Moving Beyond the Myth

The myth of Alberta being “ripped off” is politically useful but factually baseless. It reduces a complex national program to a grievance narrative that pits province against province. It erodes national solidarity. It turns a collective promise into a transactional complaint.

Equalization is not perfect. The formula could be revisited to better reflect today’s economic realities. But scrapping or attacking the program based on false assumptions would not make Alberta richer. It would only make Canada weaker.

A Country Is Not a Bank Account

If we want a stronger Canada, we must start by rejecting the false narrative that sees equalization as charity and national citizenship as a zero-sum game. A country is not a bank account. It's a bond between people, an agreement that no matter where you live, you deserve a fair chance.

The next time a politician claims Alberta is being robbed, ask them for proof. Ask them what services they plan to cut in poorer provinces. Ask them if they plan to tax Albertans less once equalization is gone. Ask them what they think happens to a country when we stop believing in each other.

And if you learned something from this, please share it with a friend. Refer someone who’s confused about equalization. Subscribe for more myth-busting pieces like this or buy me a coffee so I can keep writing them. Because understanding how our country works is the first step in fixing what’s broken.