MP, Peace River – Westlock
The Fiscal Stabilization Program was created in 1967 to provide support to provincial governments when they experience a sudden and significant drop in revenue. It helps ‘stabilize’ a province’s finances by providing payments in the event of a large decline in general revenues, or a dramatic decline in resources revenue, effectively functioning as an equalization rebate for those provinces.
Since 1987, these rebates have been capped, initially at a maximum of $60 per person. In 2020, the premiers of the provinces unanimously demanded significant changes to the program.
Unfortunately, Prime Minister Justin Trudeau only made minor tweaks that fell far short of the needs of the provinces. This has left provincial governments with less money to deal with the important social programs they are responsible for such as health care, education, and most social services.
This has hit Alberta especially hard. Albertans have contributed more than $600 billion to the rest of Canada since 1967. But when Albertans went through tough economic times in 2015-16 and 2016-17, caused in no small part by the anti-energy policies of the Liberal government, Trudeau left them behind.
As a first step in restoring open and respectful federalism, Canada’s Conservatives will fix the Fiscal Stabilization Program by:
- Removing the per person payout cap.
- Lowering the revenue decline threshold so it is triggered at three per cent rather than the current five per cent.
- Lowering the resource revenue decline threshold so that it is triggered at 40 per cent rather than the current 50 per cent.
- Making these changes retroactive to 2015.
This would mean our new equalization rebate will cover the entire decline of qualifying provincial government revenues past the threshold of thre per cent and 40 per cent for natural resources.
While this would benefit all provinces, it would benefit Alberta the most. It is expected these changes would mean up to an extra $5 billion for the provinces immediately, including approximately $4 billion for Alberta. This figure includes the retroactive payments for the 2015-16 and 2016-17 fiscal years during which Alberta suffered significant economic challenges.
Our federation should mean being there for one another in good times, but also in challenging times.
Our new equalization rebate will embody this spirit of federation with the federal government stepping up for the provinces that need it the most in times of need.
This policy will strengthen our federation by making all provinces more resilient to future economic shocks that cause sharp revenue declines.