PBO says reformed fiscal stabilization program to cost Ottawa $4.5 billion
Posted January 20, 2021 7:49 am.
Last Updated January 20, 2021 8:02 am.
OTTAWA — Canada’s parliamentary budget officer says reforms to a federal support program for provinces will nearly triple the cost to Ottawa next year, with the price tag projected to be about $4.5 billion.
Yves Giroux says the government’s fiscal stabilization program, which transfers cash to provinces that experience steep year-over-year revenue drops, will increase by $2.9 billion in fiscal 2021-22.
Prime Minister Justin Trudeau announced a major change to the program in the government’s fall economic update.
The revenue-insurance plan, which has been around since 1967, will now index the cap on provincial payments to Canada’s rate of GDP growth per person, a ceiling that was previously fixed at $60 per person in 1987.
Alberta Premier Jason Kenney has said the overhaul does not go far enough, calling it a “slap in the face,” since even major declines in resource revenue might not trigger the fiscal stabilization, while a five per cent drop in non-resource revenue will.
The beefed-up federal support comes as provinces wobble under the strain of record deficits and revenue shortfalls amid the COVID-19 pandemic.
This report by The Canadian Press was first published Jan. 20, 2021.
The Canadian Press
