Order Respecting the Remission of Fiscal Stabilization Overpayments Made to Certain Provinces Under the Federal-Provincial Fiscal Arrangements Act: SI/2019-52
Canada Gazette, Part II, Volume 153, Number 14
SI/2019-52 July 10, 2019
FINANCIAL ADMINISTRATION ACT
P.C. 2019-962 June 22, 2019
Her Excellency the Governor General in Council, considering that it is in the public interest to do so, on the recommendation of the Minister of Finance and the Treasury Board, pursuant to subsection 23(2.1) footnote a of the Financial Administration Act footnote b, makes the annexed Order Respecting the Remission of Fiscal Stabilization Overpayments Made to Certain Provinces Under the Federal-Provincial Fiscal Arrangements Act.
Order Respecting the Remission of Fiscal Stabilization Overpayments Made to Certain Provinces Under the Federal-Provincial Fiscal Arrangements Act
Fiscal stabilization overpayments
1 Remission is granted to a province set out in column 1 of the schedule of the amount set out in column 2 in respect of the fiscal stabilization overpayments made by the Minister of Finance under the Federal-Provincial Fiscal Arrangements Act, for the fiscal year beginning April 1, 2015 and ending March 31, 2016, to avoid any negative impact on the province’s fiscal situation.
Coming into Force
2 This Order comes into force on the day on which it is registered.
Newfoundland and Labrador
(This note is not part of the Order.)
Pursuant to subsection 23(2.1) of the Financial Administration Act (FAA), the Order Respecting the Remission of Fiscal Stabilization Overpayments Made to Certain Provinces Under the Federal-Provincial Fiscal Arrangements Act (the Order) remits $3,066,900 to the province of Alberta and $23,747,670 to the province of Newfoundland and Labrador.
The objective of the Order is to extinguish the amount owing for the final determination of Fiscal Stabilization in respect of the fiscal year 2015–2016 for Alberta (AB) and for Newfoundland and Labrador (NL).
The Fiscal Stabilization Program is a long-standing transfer program, authorized by the Federal-Provincial Fiscal Arrangements Act (the Act) and its regulations. It enables the federal government to provide financial assistance to any province faced with a significant year-over-year decline in its revenues, to help stabilize provincial revenue streams in the wake of acute economic shocks.
To qualify for fiscal stabilization, in the general case, a province must have a year-to-year decrease of at least 5% in revenues subject to stabilization, which comprises certain own-source revenues and equalization payments. In the case where resource revenues decline by more than 50%, only the portion of the year-over-year decline in excess of 50% is taken into consideration. Each claim is then subject to analysis and verification by the federal government. The maximum payment to a province that makes a claim for a given fiscal year is $60 per person.
The Governments of AB and NL filed preliminary claims in 2015–2016 based on early indications that they would experience extraordinary revenue declines in that year following the fall in global oil prices in 2014.
Both provinces received advance fiscal stabilization payments in 2015–2016 as a result of those claims — AB received $251.4 million in February 2016 and NL received $31.7 million in March 2016.
In September 2017, both provinces then submitted their official claims, with updated revenue data, in support of the final determination of fiscal stabilization payments in respect of the 2015–2016 fiscal year.
Under the Act, the assessment of final claims has to be made within 32 months after the end of the fiscal year in respect of which a claim has been filed. As such, the assessment of the claims in respect of 2015–2016 had to be made by November 30, 2018.
Revenue data available between the time the claims were submitted and the November 30, 2018, assessment deadline indicated that revenues in both provinces had not declined by as much as had originally been estimated based on the sharp decline in the first few months of the 2015–2016 fiscal year. As a result, the Government of Canada made its final determinations of the two claims, and advised both provinces that their final entitlements were lower than the advance payments.
Alberta was advised that the final determination was $248.3 million and that a recovery of $3.1 million was due to be reimbursed to the Government of Canada. NL was advised that the final determination was $7.9 million and that a recovery of $23.7 million was due to be reimbursed to the Government of Canada.
Under the Act and its regulations, recovery of overpayments is mandatory. The only way to extinguish the debt owing by AB and NL is through a remission order under the FAA (section 23). The remission of this debt avoids the negative impact repayment of these amounts would have on the provinces’ fiscal situation.
The Order impacts the provinces of AB and NL, and is relieving in nature. Therefore, no external consultations were undertaken.
For more information, please contact:
Federal-Provincial Relations Division
Federal-Provincial Relations and Social Policy Branch
Department of Finance Canada