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Corbella: Ottawa owes Alberta money and it's not pocket change

Licia Corbella: Kenney explained the fiscal stabilization as a program created decades ago to help 'soften the blow' of 'have' provinces when they fall on hard times

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Ottawa owes Alberta money and we’re not talking pocket change.

If Alberta were treated like other provinces, the feds would have given us $6 billion more in fiscal stabilization funds over the past five years.

According to Premier Jason Kenney, who addressed his concerns at the premiers’ conference in Ottawa on Friday, this year alone Alberta should have received $3.8 billion in fiscal stabilization from the feds, but we’re only getting $266 million.

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“Over the last five years we should have $2.9 billion from fiscal stabilization; instead, we received half a billion. So, (overall) we’ve been short-changed by about $6 billion,” he said in response to a reporter’s question at the conclusion of the premiers’ meeting.

Thankfully, all of the other premiers and territorial leaders were singing from the same songbook on this issue and put out a demand of the federal government to fix the fiscal stabilization formula that treats provinces with natural resource revenues — namely Alberta, Saskatchewan and Newfoundland — like the once-rich uncle who still gets stuck with picking up the lavish dinner bill even though he’s been bankrupted and is maxing out his credit cards.

Kenney explained the fiscal stabilization as a program created decades ago to help “soften the blow” of “have” provinces when they fall on hard times.

The problem with the program is it limits how much stabilization funding gets sent to provinces that have natural resource revenues at $60 per person. Basically, all Alberta wants is some of its equalization money back during tough times. Kenney calls this “reverse equalization.”

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That arbitrary $60-per-person cap was established 33 years ago in 1987, 20 years after the program began, and it hasn’t been changed since.

“We are joined by Newfoundland and Labrador, Saskatchewan and other resource-producing provinces and are facing a real crisis. That is also why I am so grateful to my 12 colleagues from the provinces and territories, across partisan and geographic lines, for having stood with us and the people of Canada’s resource-producing regions in calling for fiscal fairness through reform of the fiscal stabilization program,” Kenney said.

“I know most people have never heard of that, and it sounds like something from a policy textbook, but it was supposed to be a key part of the system that holds the country together. And Albertans have been keeping their end of that bargain. Albertans have contributed over $630 billion more to the rest of the country through their federal taxes over the past five decades than they’ve received back from Ottawa through benefits and transfers. And they are proud to have done so, proud even in recent tough years to have contributed $20 billion more than they receive back each and every year,” said Kenney.

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Now, it’s past time for the feds to help soften the blow and return just a small fraction of that money. The way Prime Minister Justin Trudeau has been spending money throughout the COVID-19 pandemic, it’s difficult to see how he can justify not helping Alberta in its time of need.

But, making an announcement about fixing the obvious issues with the fiscal stabilization program is the kind of program announcement that causes voters’ eyes to glaze over and it’s not nearly as sexy — politically speaking — as pharmacare or a national daycare program.

Nevertheless, it’s the right thing to do.

“This shouldn’t be seen as a federal-provincial dispute, squabbling between governments,” said Kenney, who sat at a long table with two meters of distance between each of the premiers as a result of COVID-19 social distancing measures.

“It’s not about politics,” Kenney argued. “It’s about people.

“This is more desperate in Alberta than perhaps anywhere else, given the fiscal calamity that we are facing after five years of economic decline and stagnation on top of which we are now experiencing both the biggest contraction in the global economy since the 1930s and the largest decline in energy prices in history, which has resulted in a great fiscal reckoning in our province,” said Kenney.

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CP-Web. Alberta Premier Jason Kenney, left to right, Ontario Premier Doug Ford, Quebec Premier Francois Legault, and Manitoba Premier Brian Pallister hold a press conference in Ottawa on Friday, Sept. 18, 2020.
CP-Web. Alberta Premier Jason Kenney, left to right, Ontario Premier Doug Ford, Quebec Premier Francois Legault, and Manitoba Premier Brian Pallister hold a press conference in Ottawa on Friday, Sept. 18, 2020. Photo by THE CANADIAN PRESS/Sean Kilpatrick

As pointed out in Alberta’s first quarter fiscal update document on Aug. 27, due to the collapse in global oil prices beginning in the second half of 2014, Alberta’s revenues fell by nearly $7 billion — or 14 per cent — in 2015-16.

“Despite this massive decline in revenue, Alberta only received a payment of $251 million under the federal Fiscal Stabilization Program. This payment covered less than four per cent of Alberta’s revenue decline in 2015-16, and represented just one per cent of Alberta’s net fiscal contribution to Canada in 2015.”

During our time of need, most reasonable people would agree that Alberta should get back more than one per cent of its net fiscal contribution to Canada in any given year.

The premiers are united in asking the federal government “to support jurisdictions experiencing significant fiscal challenges, and it should be more responsive to economic circumstances and downturns in resource sectors.

“Premiers again call on the federal government to address this issue by eliminating the per capita limit, reducing the revenue reduction threshold for non-resource revenues from five per cent to three per cent, and reducing the threshold for resource revenues from 50 per cent to 40 per cent.

“These changes should be implemented retroactively to include both the 2015 downturn and the current economic crisis and not compromise other transfer programs,” urged the premiers.

When Trudeau was swept to power in 2015, he vowed that unlike former Conservative Prime Minister Stephen Harper, he would re-establish first ministers’ meetings and act on the premiers’ concerns. Well, the premiers have spoken. Here’s hoping that Trudeau and his cabinet are listening.

Licia Corbella is a Postmedia columnist.

lcorbella@postmedia.com

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