Politics

Morneau 'open' to Alberta Premier Kenney's request for a boost to fiscal stabilization program

Finance Minister Bill Morneau said Monday he's willing to consider changes to the federal fiscal stabilization program to support oil-rich provinces like Alberta, Saskatchewan and Newfoundland and Labrador now grappling with low commodity prices.

Alberta premier wants cap lifted on federal support program, along with retroactive payments

Finance Minister Bill Morneau leaves the podium after speaking with the media following a fiscal update on Monday. (Adrian Wyld/The Canadian Press)

Finance Minister Bill Morneau said Monday he's willing to consider changes to the federal fiscal stabilization program to support oil-rich provinces like Alberta, Saskatchewan and Newfoundland and Labrador now grappling with low commodity prices.

Morneau's offer to consider boosting the stabilization fund came after he delivered a fiscal update that projected larger than expected deficits for this fiscal year.

The update did not include new spending commitments explicitly earmarked for Alberta or Saskatchewan; Morneau said there could be some financial relief for those provinces in the works.

Rather, the update showed an increase in spending of nearly $10 billion since the spring budget, including $5 billion for public sector pension and benefits adjustments, $2 billion for a new revenue agreement on the Hibernia oil project in Newfoundland and Labrador and millions in compensation for dairy farmers harmed by new trade deals.

Morneau said he hasn't yet had a chance to speak directly with provincial leaders about changes to the stabilization fund. He said he's willing to accept pitches for federal support at a dinner meeting of provincial and territorial finance ministers to be held in Ottawa Monday evening.

"Obviously this program hasn't been changed since 1995, so we are open minded with respect to how it works, or the changes people might propose. And once we have those, we'll take that into consideration and do some analysis of our own," Morneau said on his way into the dinner.

At a meeting of Canada's premiers earlier this month, all 13 provincial and territorial leaders signed on to a final communique that calls on Ottawa to make changes to the program to address growing political and economic alienation in Saskatchewan and Alberta.

Alberta Premier Jason Kenney says he is happy that all of Canada's premiers were willing to put a spotlight on an issue that means a lot for provinces going through prolonged economic downturns. 2:16

"We've heard from [Alberta] Premier Kenney and others that they'd like us to look at the fund ... we've been really clear that this is a program that hasn't been reviewed for a long time and that we're open to considering that," Morneau told reporters in the foyer of the Commons.

"Until I hear what the views are, and until I hear what other issues are on people's minds, I can't evaluate what actually we should do in that regard."

The fiscal stabilization program provides financial assistance to any province faced with a year-over-year decline in its non-resource revenues greater than five per cent.

However, the money available to eligible provinces is capped at just $60 per resident. Kenney has said that level of funding is inadequate, given the size of the budget deficit Alberta faces in the wake of cratering oil prices.

Alberta received just $250 million from the program last year, while Newfoundland and Labrador received about $8 million. Lifting the cap would flow more money to provinces in need.

Asked if he was willing to lift the cap or agree to retroactive payments, as Kenney has requested, Morneau said nothing has been settled.

"It's important not to have a fixed position until I hear what comes from all the ministers of finance," he said.

Ontario's Minister of Finance Rod Phillips said he was looking forward to speaking with Morneau about increasing the federal health transfer and presenting the premiers' requests on stabilization.

"I think we have something to put forward, a great starting point," said Phillips. "It reflects, particularly, the emphasis that Alberta and Saskatchewan and Newfoundland and Labrador have brought forward.

"I thank minister Morneau for putting it on the agenda, which was a request that we made. Obviously the federal government will need a chance to look at it, evaluate it and then respond."

Prime Minister Justin Trudeau met with Kenney last week and told the Alberta premier that his government would have an opportunity "to provide its views on the future operation of the program."

Prime Minister Justin Trudeau, right, meets with Alberta Premier Jason Kenney on Parliament Hill last week. (Sean Kilpatrick/The Canadian Press)

The economic update released Monday projected little growth for oil prices.

Based on a survey of private sector economists, Ottawa said the West Texas Intermediate (WTI) crude oil price will trade at roughly $57 US a barrel in 2020.

The forecast doesn't predict major oil price increases over the next five years, which could mean further fiscal troubles for oil-producing provinces.

Western Canadian Select, which includes product from the oilsands, trades at just $38.07 US — significantly less than what WTI fetches on the open market. (These prices were current as of Monday.)

The federal Liberal government conceded in the fiscal update the country's oil and gas sector faces challenges because of "ongoing transportation constraints," such as stalled pipeline projects.

The government said failing to get any new pipeline projects built would result in lower commodity prices for the foreseeable future. The Crown-owned Trans Mountain expansion is under construction but a Federal Court of Appeal case could still block the years-delayed project.

About the Author

John Paul Tasker

Parliamentary Bureau

John Paul (J.P.) Tasker is a reporter in the CBC's Parliamentary bureau in Ottawa. He can be reached at john.tasker@cbc.ca.

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