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Politics Hard-hit Alberta might be eligible for federal relief, Morneau says

Minister of Finance Bill Morneau in the House of Commons on Parliament Hill in Ottawa on Jan. 29.

Sean Kilpatrick/THE CANADIAN PRESS

Alberta could be in line for financial relief from an obscure, seldom-used federal program in order to help ease the economic pain caused by falling commodity prices.

The Alberta government could be eligible for payments under the 50-year-old fiscal stabilization program, designed to compensate provinces that suffer steep drops in revenues from one year to the next, federal Finance Minister Bill Morneau said Friday.

Now Saskatchewan, Alberta's resource-producing neighbour, has taken notice.

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The Prairie province has also been walloped by the commodity slump, but its finance minister acknowledged Friday it doesn't quite meet the criteria to receive cash through the fiscal stabilization program — yet.

"I can't foretell right now what's going to happen next fiscal year, but we may get to a point where we might be eligible," Saskatchewan Finance Minister Kevin Doherty told The Canadian Press in an interview.

Doherty, who hadn't heard of the program until very recently, suggested the formula behind fiscal stabilization could be ready for an update because of the severity of the resource-related shock in several provinces.

It also has the potential to drag on, he added.

"Maybe now is the time to take a look at some type of a stabilization fund or re-tweaking of that legislation such that it recognizes the significance of those downturns in those provincial economies," said Doherty, whose province has particularly felt the squeeze of low prices in oil, potash and uranium.

"We're kind of being hit by the perfect storm in commodities right now."

He did acknowledge, however, that Alberta is facing a considerably bigger financial challenge than Saskatchewan.

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Last fall, Alberta projected large revenue declines for 2015-16. Since then, resource prices have slipped even further.

Provinces can make claims under the program when economic shifts cause their revenues to tumble by more than five per cent from one year to the next. Declines in resource revenues of more than 50 per cent are also accounted for.

They can receive up to a maximum payment of $60 for every provincial resident, an amount set in the late 1980s.

Morneau said Alberta, which has a population of about 4.1 million, could receive up to $250 million from Ottawa.

Doherty estimates Saskatchewan would receive as much as $70 million if it qualified.

"Which is not a great deal of money on a $14-billion-plus budget, but it certainly would be helpful," said Doherty, who's also calling on Ottawa to expedite its promised infrastructure spending.

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Doherty said he hadn't had a close-enough look at the formula to specifically suggest whether its eligibility requirements or the cap should be re-examined.

For his part, Alberta Finance Minister Joe Ceci said Friday that he didn't have any problems with the $60-per-person maximum.

Ceci did confirm that he spoke with Morneau and that a decision on the fiscal stabilization could be made in the coming days.

"We've had some discussion about the difficulties Alberta is in right now and the support federal assistance would mean for this province," Ceci told reporters in Calgary.

"Anything would be helpful. As a population, as an economy, as an industry it is challenging right now for all Albertans."

Morneau said Friday that Ottawa would work "expeditiously" to move forward on any claim made by Alberta.

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Alberta's situation has become a priority for the federal government.

A senior federal government source, speaking on condition of anonymity, said a fiscal-stabilization payment was just one of several possibilities Ottawa is exploring as it scrambles to find ways to help the hard-hit province.

In preparation for the spring budget, the federal government has also instructed bureaucrats across many departments to generate "innovative ideas" that could help provide specific relief for the Alberta economy, said the source, who wasn't authorized to disclose details publicly.

Alberta's woes are "dragging down the entire Canadian economy," the source warned.

Potential solutions include fast-tracking infrastructure spending and tweaking the usual, per-capita infrastructure funding disbursement formula to reflect economic need, the source noted. Another idea being examined is a boost to direct transfers to individuals, perhaps through modifications to the employment insurance program.

Trudeau is scheduled to visit Alberta next week.

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