MacPhee, Sarah; Perrault, Louis

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Assessing the Insurance Properties of the Fiscal Stabilization Program

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Sarah MacPhee; Louis Perrault

Published on November 25, 2021 PDF

This report assesses the insurance properties of the Fiscal Stabilization Program, its recent changes and proposed modifications.

Highlights

Under the FSP, the federal government provides payments to provincial governments experiencing extraordinary year-over-year declines in their revenues.
PBO analysis quantifies the extent of insurance coverage that the current FSP provides, as well as the impact of recent changes and proposed modifications to the FSP.
Based on the current structure, in cases where a province experiences a significant decline in total revenues, FSP payments would provide coverage ranging from 4 per cent (Newfoundland and Labrador) to 19 per cent (British Columbia) of all revenue losses, on average.
By design, insurance coverage for resource-intensive provinces is well below the coverage the FSP provides to other provinces.
Recent changes in 2020 have increased the insurance coverage provided by the FSP, particularly for resource-intensive provinces. Modifications proposed by Canada’s Premiers would further increase FSP insurance coverage.

Public administration

Fiscal policy

Transfer payments

Fiscal Sustainability

Demographic indicators

Gross domestic product