Alberta Minister of Finance and Grande Prairie MLA Travis Toews is not pleased with the federal transfer payment amount outlined for 2021-22.
In a letter from the Deputy Prime Minister and federal Minister of Finance to Toews on Thursday, Chrystia Freeland says Alberta will be receiving $6,835 million, an increase of $217 million from 2020-21 in transfer payments. She also said the province does not qualify under the Federal-Provincial Fiscal Arrangements Act for equalization payments.
Toews says the adjustment to stabilization transfers for Alberta is comparatively small to the province’s annual payments to Ottawa and is a far cry from the protections equalization is theoretically supposed to offer.
“Here’s the reality, we have paid close to $200 billion in net fiscal transfers to the rest of Canada through the federal government in the last 10 years. The fact that all we’re seeing is basically very minor adjustments to our general fiscal transfers… is very very disappointing.”
Stabilization payments from Ottawa were originally set to kick in if a province lost five per cent or more of its tax revenue in a given year. This was adjusted to a cap of $60 per citizen in 1987. Alberta began to qualify for stabilization payments in 2015 and 2016 when oil prices began to crash.
Toews says, had the cap on payments not been active at the time, Alberta would have received exponentially more help from Ottawa to stay on its feet.
“The fiscal stabilization program was designed to provide provinces with, ultimately, funding protection for years when they experience very significant drops in revenue.”
“Back in 2015, 2016, had the fiscal stabilization program been operating without caps, we would have been eligible for approximately $2.9 billion,” he adds. “Because of the caps that were in place over those two years, we only received about $500 million.”
Toews argues the caps on stabilization payments should be removed and the province to be reimbursed a portion of its equalization payments from the time. He claims the idea is supported by all provinces and territories.
“We believe it was a very defensible ask to remove the caps retroactively and refund the province $2.4 billion, which, again, is a very very small portion of the, on average, $20 billion a year that we’ve sent in on net fiscal transfers,” he says.
In a statement Thursday, Alberta Premier Jason Kenney said the province is asking for what he believes is its fair share of the money it generated and sent to Ottawa, though he feels the request is being ignored.
“That’s why Alberta will be holding a referendum to scrap equalization from the constitution in October 2021. Albertans demand a fair deal from Ottawa, and we will not give up that fight.”
Kenney adds, over the past five years, Alberta’s energy industry revenues have declined from roughly $10 billion to closer to $5 billion, and, as a result of the COVID-19 pandemic, revenues will be just over $1 billion.