Alberta's booming economy has prompted the Department of National Defence to revise an allowance that gives soldiers, sailors and aircrew posted in major urban centres a cost-of-living bonus.

Three places — all in Alberta — will see either the introduction of the allowance, or an increase in the existing rate: Edmonton, Calgary and the air base at Cold Lake.

But the revised formula will mean a gradual elimination of the Post Living Differential Allowance over three years in a number of locations in Ontario, Quebec, and Newfoundland and Labrador.

Soldiers based in Edmonton have started to receive the allowance for the first time. The amount of the allowance varies depending on the city, rank and marital status.

Those living in Calgary get the highest offset bonus at more than $500 per month.

Last summer, Statistics Canada reported the cost of living in Alberta had increased nearly three times as fast as the average national inflation rate during the previous 12 months. Edmonton and Calgary had the most rapidly rising living costs among Canadian cities.

The revised formula was announced internally at the end of November and backdated to July 1, 2007. The calculation takes into account a number of economic factors, including housing prices, insurance and other household items.

"The fundamental change we made was because [the allowance] wasn't responsive to boom economies," said Maj. Terry Sokolowsky, director of domestic benefits administration.

Other urban centres lose bonus

The revision does not sit well with members who are about to lose the bonus. They describe the change as a disincentive to transfer to headquarters or training positions.

A number of serving officers and enlisted members in Ottawa declined to speak on the record, but said the eventual loss of the allowance would mean financial hardship, especially in lower ranks and among married couples who are both in the military.

"We don't have regional rates of pay and we have to compensate people who live in high-cost areas so they can have some kind of predictable living standard," said Sokolowsky, defending the decision.

Ontario, Quebec, N.L. bases affected

The bonus has been — or is about to be — eliminated in the Ontario communities of Borden, Brantford, Cambridge, Hamilton, Guelph, Kingston, Ottawa and Thunder Bay, among others.

Bases in Quebec affected by the cuts include Valcartier, Sherbrooke and Sept Îles.

The Newfoundland and Labrador communities of Corner Brook, Gander, and Grand Falls-Windsor will also feel the pinch.