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A $251.4-million cash injection from the federal government won’t do much to revive Alberta’s ailing economy, but it will buy some favour with those in the province that feel abandoned by Ottawa in their time of need, says ATB Financial chief economist Todd Hirsch.
“There is a lot of grumbling here in Alberta, sort of, ‘what have you done for me lately’ towards Ottawa,” he said in an interview with BNN. “Symbolically, I think this will go a long way.”
The Alberta government applied for the funding earlier this month under the Fiscal Stabilization Program, which provides relief for provinces with a more than 5 percent year-over-year decline in non-resource revenue.
Premier Rachel Notley renewed her call for support from Ottawa on CTV’s Question Period Sunday. Prime Minister Justin Trudeau has promised to take swift action to assist Alberta’s sputtering economy, including a plan to fast-track $700-million in additional spending, on top the funds committed Tuesday.
Some Albertans have been skeptical that he will keep his word.
“Mr. Trudeau is saying all the right things, but talk is cheap in politics,” said Ted Morton, who served as Alberta's energy minister between 2011 and 2012, in a Feb. 2 interview with BNN.
Hirsch says the nearly $1-billion earmarked by the federal government to bolster the Alberta economy comes nowhere close to offsetting the impact of falling crude prices, which have declined more than 60 percent since June of 2014. He’s calling for a second consecutive annual recession in Alberta in 2016.
“All of that money isn’t going to get spent in 2016. It will probably be over a couple of years, which will be helpful, but not enough, and it won’t come out fast enough to swing the needle back to growth,” he said.
POTENTIAL FOR PROVINCIAL COPY-CATS
Hirsch says Albertans will see Tuesday’s announcement as a tangible sign that Ottawa intends to deliver on its promises, but other provinces, particularly those struggling under the weight of weak commodity prices, could decide to make their case for similar treatment.
“I’m really in favour of Ottawa looking favourably at Alberta and the situation we are in right now, but does it set a precedent then for other provinces to say ‘Hey what about us?’ Then you get more of this bickering between provinces over whose fair share comes from Ottawa,” he said.