The Chronicle Herald (Provincial)
Morneau prepared to talk to his provincial counterparts about ‘equalization rebate’
OTTAWA – Finance Minister Bill Morneau will have an open ear to provinces looking for more money to deal with bad economic times, but it is unclear if he will open the federal government’s wallet.
Morneau told reporters he is happy to have a conversation on the Fiscal Stabilization Program (FSP) during an upcoming meeting with provincial finance ministers, but would not commit to a change.
“Next week is a really important first step. We’re looking forward to getting together with the finance ministers. The idea is we’re going to listen, work together, try and understand their position. That’s the important start in the discussion,” he said.
At a meeting of Canada’s premiers earlier this month, there was unanimous agreement the government should take a look at the FSP.
The program compensates provinces for sudden drops in revenue during bad economic times.
Any province that sees a five per cent drop in year over year revenue can ask for help from the federal government, but there is a cap of $60 per provincial resident, which limits how much Ottawa will pay.
That cap meant Ottawa sent Alberta just over $250 million in 2016 the maximum amount allowed. Without the cap, the province would have received more and Alberta Premier Jason Kenney wants it lifted retroactively, going back to 2014 when a collapse in oil prices begin to hit the province.
He said without that cap Alberta would be owed $2.4 billion from the federal government to cover the last five years.
Changing the program and making payments retroactive to 2014 is about fairness, said Kenney.
“We’ve been through five years of economic adversity. We’re talking about a couple of billion dollars here, like we’re talking about less than one per cent of our net fiscal contribution to the federation in the past decade. So I don’t think that’s unreasonable.”
He said it would be a sign that Ottawa is willing to work with Alberta during a bad time.
“If we can’t get action on this, then how can Albertans expect to get action on some of their deeper frustrations around equalization, the whole system of fiscal federalism?” He said. “It’s a focused, narrow, reasonable, rational request.”
On Monday, Morneau announced legislation for tax changes the Liberals promised during the campaign.
He said they’re concerned about the economies in Alberta and Saskatchewan and are open to finding ways to help. He pointed out the tax changes would help people.
“We know the challenges in Alberta and Saskatchewan are real. We want to make sure that Canadians across the country including in Alberta and Saskatchewan see the benefit from the things we’re doing,” he said. “The tax reduction we’re talking about today will help 20 million Canadians and that includes Canadians in Alberta, in Saskatchewan and other places where people are experiencing challenges.”
Kenney said he would take a payment through the FSP over larger changes to the equalization program.
“There’s no world realistically in which we’re going to start receiving equalization in the foreseeable future. And we are in an economic cash crunch right now.”
He said the stabilization program can help when they hit rough economic times.
“I call it a kind of equalization rebate. It’s kind of a recognition of how provinces pay into the system, that when they suddenly have a crash, there should be some recognition of that.”