“The economic crisis in the energy sector, particularly in Alberta and Saskatchewan, may shake the foundations of transfers from Ottawa to the provinces.” That’s the assessment of Fred McMahon, a resident fellow at the Fraser Institute and author of a report on the dependency of Atlantic Canada on fiscal federalism. According to that report, federal transfers make up more than 25 per cent of Atlantic Canada’s economy. It says Alberta’s net contributions to the federal government, finance the lion’s share of the funds transferred into Atlantic Canada and Quebec. Given the hit experienced by the oil and gas industry, the report notes that these surpluses from Alberta will shrink and disappear. From 2007 to 2019, Net federal transfers amounted to nearly $83 thousand per person in Atlantic Canada and just under $25 thousand per person in Quebec.

The Fraser Institute says the massive and unbalanced flow of federal money to and from the provinces will create a huge fiscal challenge going forward because of economic difficulties emerging after COVID-19, the overhang of provincial and federal deficits, and most importantly, the decline of the energy industry.