Following the oil price crash,…
Previously expecting Brent to hit…
Canada’s premiers agreed to call on the government to reform a fiscal stabilization program that financially supports provinces going through hard times, such as Alberta due to the deterioration of its oil industry.
The program, which dispenses federal funds, basically sees wealthier provinces helping poorer ones with a portion of their revenues--and historically, Alberta has typically been a helper rather than a province in need of help, but the 2014 oil price crisis followed by growing opposition to pipelines has stumped the industry’s recovery in Canada’s oil heartland and affected its economic growth.
“When you use the word ‘stabilization fund,’ you think the intent would be to stabilize something,” said Newfoundland and Labrador Premier Dwight Ball, commenting on the agreement for reform as quoted by the HuffPost. “Well, it didn’t work. It’s outdated. It’s been around since the ’80s.”
The reason it didn’t work for Alberta now is that there are stricter conditions for lost revenues from natural resources: these need to halve before Ottawa steps in with the support package, and things have not yet gotten that bad for Alberta.
Yet the unanimous agreement that Alberta needs help and needs it now is remarkable among the premiers. After all, Quebec and British Columbia, to mention the biggest, are firmly and vocally against the growth of Alberta’s oil industry. Yet even their Premiers signed off on the agreement that will ask the federal government to become “more responsive to economic circumstances and downturns in resource sectors without compromising other transfer programs.”
“If the federal government follows through and listens to this unanimous recommendation from Canada’s premiers, we’ll put those funds — which we paid into the federal system — to work with job creation programs in Alberta,” Premier Jason Kenney said, adding he was delighted by the unanimity.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.