June 24, 2013 2:22 pm
Updated: June 25, 2013 12:46 pm

Alberta pledges $1B in aid, but Ottawa may shoulder bigger share of final bill

Watch: Premier Redford announces flood aid

The province of Alberta is deploying $1 billion in aid to repair damaged infrastructure and to provide a financial cushion for tens of thousands returning home to find heavily damaged houses and businesses.

Alberta Premier Alison Redford said Monday her government will tap the province’s Contingency Fund to start delivering aid by the middle of the week.

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Global News

What’s unclear is whether Alberta will seek to have some – or much – of that money reimbursed by Ottawa, which provides substantial disaster-related financial relief to provinces that request it.

There’s been a steady flow of funds from Ottawa to Alberta in recent years to deal with flood-related recovery efforts – although the amount is comparatively small versus the sum announced by the province on Monday.

But since 2006, the province has received roughly $129 million from the federal government. The money stems from flooding in Calgary and the surrounding area eight years ago, in 2005, which saw the province ask for aid under the Disaster Financial Assistance Arrangements (DFAA) program, which is administered by Public Safety Canada.

The department’s final payment of $84 million, which was paid to cover costs to repair private and public property damaged during the event, was just made in April.

“Our government works closely with the provinces and territories to assist Canadians when large natural disasters strike,” Josee Picard, a spokesperson for Public Safety Canada, said.

A request for comment from the office of the premier of Alberta about whether the province would seek federal assistance this time around was not immediately responded to.

The DFAA was set up in 1970 to help cover costs private insurers won’t, like overland flooding.

In an interview with Global News, federal minister of citizenship and immigration Jason Kenney said the program typically bears the biggest share of the financial burden when natural disasters hit.

“There should be no doubt in anyone’s mind that the federal government will be making a very substantial contribution after the province sends us the bills,” he said.

A threshold must be met before provinces can qualify for the federal program, but the bar isn’t particularly high: For initial aid, costs must exceed $1 per member of the population in the province applying for aid. Meaning to qualify in Alberta, repair costs would have to exceed $3.6 million. The share of the burden Ottawa covers escalates as costs climb, reaching as high as 90 per cent of eligible claims.

“There is a proven process in place, based on existing guidelines and cost sharing formula, for the provision of financial assistance,” Picard said.

Eligibility requirements for aid were still being ironed out, Redford said Monday, but the province’s aid efforts won’t be “defined” by what Ottawa will or will not pay for, the premier said.

Under the relief framework, a province can request an advance as well as seek to recoup what it spends on aid over time. Final payment requires the submission of the expenditure documentation that must undergo a federal audit.

Once a review of the federal audit findings is completed, a payment is issued to the affected province or territory, Picard said.

Analysts at Bank of Montreal estimate the full cost of the damages inflicted by the floods could climb to between $3 billion and $5 billion.

The Contingency Fund is a new savings vehicle set up by Alberta in its 2013 budget to bank oil royalty related revenues. The account replaced the Alberta Sustainability Fund.

The purpose of the fund is to allow the province to absorb fiscal shocks and provide “short-term stabilization.”

With a file from Rebecca Lindell

© Shaw Media, 2013

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