Wheels in motion to rework payments to budget-strained provinces, Morneau says

OTTAWA — Federal Finance Minister Bill Morneau is ordering his officials to come up with ways to soon change how Ottawa hands out money to cash-starved provinces, but left the details to be determined in 2020.

Energy-rich provinces like Alberta and Saskatchewan had put proposals on the table at Tuesday’s finance ministers meeting to expand the fiscal stabilization program that helps provinces and territories facing sudden holes in their budgets from, say, cratering oil prices.

Morneau said the Finance Department will analyze the various options and come back with suggestions for potential changes in January.

But he suggested that whatever his officials say will be a step in a longer path towards updating the program.

Pushing things off to next year, possibly for when Prime Minister Justin Trudeau meets with the country’s premiers, was a recurring theme as Morneau and the country’s finance ministers emerged from their day-long meeting in downtown Ottawa.

The group repeatedly said the conversation was cordial, that Morneau was open to provincial suggestions, and expressed optimism that the federal Liberals would come up with financial help for resource-rich provinces relatively soon.

The same was true of talk about increased payments to widows and widowers through the Canada Pension Plan, which the Liberals promised in the fall campaign, and on increasing the money Ottawa provides provinces and territories to pay for health care.

The group had issued warnings on their way into the meeting that few concrete decisions would be made at the gathering.

The fiscal stabilization program is easier to change than the more complex equalization program, and amendments could be worth billions to provinces whose finances have been hit by low oil prices.

The stabilization program provides financial assistance to provinces facing a year-over-year decline in its non-resource revenues, but the money available to eligible provinces is capped at just $60 per resident.

Prior to attending a working dinner Monday evening with his provincial and territorial counterparts, Morneau acknowledged the program, which has not changed since 1995, needs some adjustments to how stabilization payments are calculated.

Meanwhile finance ministers from some other provinces, including Manitoba, Prince Edward Island and Quebec, said increasing federal transfers for health care was their most pressing concern.

For his part, Morneau said it came as no surprise that the provinces would be requesting more funding at their meeting.

None of those going into the meeting Tuesday morning expressed strong concerns about the federal government’s ballooning budget deficits, saying they believe Ottawa has more room to manoeuvre.

Figures released Monday showed the federal deficit is slated to hit $26.6 billion this fiscal year, up from last spring’s projection of $19.8 billion.

Jordan Press and Terry Pedwell, The Canadian Press