Premiers urge Ottawa to boost fiscal stabilization program retroactively to cope with downturn in resource sector – The Globe and Mail

Jason Kenney speaks to the media after a meeting of the Council of the Federation in Mississauga, Ont., on Dec. 2, 2019.

Nathan Denette/The Canadian Press

Premiers are calling for the expansion of a federal emergency fund that is meant to kick in when a provincial economy takes a sharp and sudden hit.

They also want the changes to be retroactive so that they help soften the blow of the recent downturn in Canadas resource sector.

The request is included in a final statement issued by the Council of the Federation, the grouping of Canadian premiers that met Monday in Mississauga, for the first time since the October federal election. Those election results which saw the governing Liberals reduced to a minority and shut out in Alberta and Saskatchewan fuelled calls from those two provinces for a new policy direction from Ottawa, particularly on oil and gas issues.

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In line with those calls, the final communique said premiers will work with Ottawa on improvements to the federal environmental assessment regime and to strengthen the fiscal stabilization program.

Canada's premiers agreed Monday to press the federal government for higher increases to health-care funding, but most expressed hesitation about a national pharmacare program. The Canadian Press

That federal program allows Ottawa to offer help when a province experiences a decline from the year before in non-resource revenues that is greater than 5 per cent.

A sharp decline in resource revenues can also be taken into account if it exceeds 50 per cent.

However, no province is expected to face a steep year-over-year economic decline in 2020.

The premiers said changes could include removing the programs per-capita cap of $60, lowering the qualifying thresholds and approving retroactive payments covering the past five years.

This was a tremendous moment of solidarity," Alberta Premier Jason Kenney said. This language on reforming the fiscal stabilization program is a key element of our ask for fairness.

Mr. Kenney said his broader request to renegotiate the much larger federal equalization program was put off for another time.

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Alberta applied to the stabilization program in February, 2016, and was quickly approved by Ottawa for the maximum payment allowed of $251.4-million. Newfoundland and Labrador also received $31.7-million that year, which the province says was later revised to $7.9-million.

The year before, Quebec received $103.4-million under the program. That had been the first time the program had been used in 18 years.

Newfoundland and Labrador Premier Dwight Ball called the current program outdated and insignificant.

The proposals, including other requests in areas such as health care, are now the main provincial demands heading into a first ministers meeting with Prime Minister Justin Trudeau early in the new year.

Alex Lawrence, a spokesperson for Deputy Prime Minister Chrystia Freeland, said the federal government is open and keen to discussing the issues raised Monday by the premiers.

The premiers recommendations are broadly in line with a report on the stabilization program by Bev Dahlby, research director for the University of Calgarys School of Public Policy.

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In an interview, Mr. Dahlby said provinces such as Alberta, Saskatchewan and Newfoundland and Labrador are more vulnerable to large economic swings because of their resource-based economies, which is why he recommends that the programs formula be changed.

Further, Mr. Dahlby said Ottawa should better communicate how payments are calculated.

Its a rather non-transparent program and almost entirely up to the minister of finance to determine these things, he said.

Provincial-level growth will swing considerably from this year to next, according to a recent Conference Board of Canada outlook.

Saskatchewan and Alberta are on pace to post the weakest GDP numbers in the country for 2019, with Saskatchewan dipping into negative territory and a mild recession.

However, Alberta will jump from second-worst to second-best in terms of growth for 2020, according the Conference Board. Saskatchewan is also expected to have a better year, with GDP growth of just over 1 per cent.

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Premiers urge Ottawa to boost fiscal stabilization program retroactively to cope with downturn in resource sector - The Globe and Mail

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