Federal transfer payments to NB: Declining influence

Shawn Graham was in the news last week waxing about a variety of subjects but silent on maybe the most prescient aspect of the self-sufficiency agenda – the need to wean the province off its relatively high dependency on federal transfers.

Turns out Stephen Harper has the same vision for New Brunswick.  Between the 2005-2006 budget years per capita federal transfers to NB as a percentage of per capita program spending dropped from 37.2% to 32.8% in 2013-2014.  To put that in perspective if NB was still receiving 37.2% of its revenue needs from the feds – it would almost wipe out the current year deficit.

Between the 2009-2010 ad 2014-2015 fiscal years per capita federal transfers to all provinces rose by 17%.  To NB they rose by 4% – or an amount well below the rate of inflation.  As shown in the chart, Alberta and Ontario have run away with the lion’s share of increases.  Ontario is up nearly $5 billion and Alberta is up over $2 billion.

We have talked about the reasons for this before. The two big issues have been Ontario falling into the need for Equalization and the per capita funding formulas themselves which heavily favour Alberta, SK, etc. which are rapidly growing.

The bottom line is that Graham was right to worry about dependency on federal transfers.  He had an ally in Ottawa.  The big difference, of course, was that Graham wanted to reduce dependency as a consequence of economic growth.


Percentage change in per capita federal support 2009-2010 to 2014-2015



Source: http://www.fin.gc.ca/fedprov/mtp-eng.asp. Includes Equalization CHT and CST.