PBO says reformed fiscal stabilization program to cost Ottawa $4.5 billion

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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.

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