Gateway Gazette

Federal Government Should Deliver $7 Billion Payment to Alberta Under Fiscal Stabilization Fund

EDMONTON, AB, June 8, 2020 – Today, Fairness Alberta released an analysis of Canada’s Fiscal Stabilization Fund and, in light of Albertans’ $324 billion net contribution since 2000, called on the Federal Government to use the original stabilization formula and increase Alberta’s 2016 and 2017 stabilization payment from $500 million to $6.996 billion.
 
Premiers across Canada unanimously agreed to support a retroactive 2.4 billion payment in December. Thus far, the Finance Minister has only said that he is “open-minded” about considering reforms.  Alberta’s revenues fell by $8 billion in 2015-16, but it only earned a “stabilization” payment of $248 million, covering 3.1% of that loss.
 
“While delivering on the $2.4b request would certainly be welcome,” said Executive Director Dr. Bill Bewick, “when you consider that Albertans’ net contribution to the federal government in 2016 and 2017 was still over $31 billion, in looking at recent expert analysis we really think it would be fair to use the 1967 formula, which would bring the stabilization payment up to $7 billion. Albertans have never shied away from doing our part to help Canada – all we are asking for is some reciprocity as we deal with multiple blows to our economy.”
 
In a recent article, economist Trevor Tombe reviews the various amendments to the Fiscal Stabilization Fund over the last 55 years, and sheds new light on the $60 per capita cap that means Alberta cannot be eligible for more than roughly $250 million regardless of their revenue drop. He also estimates that under the original 1967 formula, which excluded the first 5% of lost revenue, Alberta would have received a $6.996 billion payment for the profound two year drop in revenues. In 2019, economist Bev Dahlby presented proposals that would have garnered Alberta between $5.5-$8.5 billion in stabilization payments over the last decade.
 
Fairness Alberta recently launched a billboard and online campaign to make Canadians aware that Albertans have contributed more than $324 billion to the rest of Canada since 2000, playing a very large role in funding the social, educational, health, and infrastructure programs that make Canada one of the most livable countries on earth.
 
Despite the massive job losses and ongoing devastation in Alberta’s energy-fueled economy since 2015, the steady outflow of dollars has continued: Albertans contributed an average of $18.2 billion more per year to Ottawa than they received from 2015-2018. For a family of four, that works out to nearly $18,000 per year during the downturn.  The 20-year cumulative total is a $318,000 contribution per Alberta family, and a $42,000 benefit for families across Canada.
 
“This is about fairness and support of a province whose taxes have supported all parts of Canada for a long time,” Bewick added. “This $60 per person cap on stabilization payments is especially difficult to comprehend given that our net tax payments to the rest of the country have been fluctuating between $3,500 and $7,000 per person over the last five years.”
 
The full analysis of the Fiscal Stabilization Fund can be found in the Issues section of our website. For more information on Fairness Alberta, its mandate and future plans, please visit our website at www.fairnessalberta.ca.

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